Health Minister Dzulkefly Ahmad’s suggestion of a voluntary basic private health insurance product, to be developed by the government and industry, sounds like an enlarged PMCare, a third-party administrator (TPA) that serves government-linked companies (GLCs) and other corporations.
With this new private health insurance product, the government is using taxpayers’ money to set up an insurance company to compete against existing private insurers.
The so-called “value-based” payment system is diagnosis-related groups (DRG). An illustration of DRG: a patient for a coronary artery bypass graft (CABG) procedure will be rated by their consultant as low risk, intermediate risk, or high risk. A fixed price is attached to each category.
Three scenarios could occur:
- The consultant will tend to evaluate the patient towards a higher risk rating to justify a higher payment.
- Complicated cases will be sent to government hospitals, since operating on such patients may incur losses.
- Worse, overall charges across the board will be increased right from the start.
DRG doesn’t work when there is no universal health care coverage. By this, I mean that health care providers in the country are split between public and private; there are also multiple payers for health care, rather than a single payer. DRG also doesn’t work because data on health care cost structures in Malaysia is not reliable.
Why is it that a CABG in Kuala Lumpur costs about RM100,000 or more when it can be done in other areas for less than RM70,000?
How do you set a fixed rate for an MRI, when there are different MRI scanners like the 1.5 Tesla and 3 Tesla? One can argue that the Ministry of Health (MOH) can go into detail into the types of MRIs, but this would have to apply to all services and treatments.
For example, the cost of treatment for atrial fibrilation (AF) with non-vitamin K oral anticoagulants (NOAC) versus warfarin for each encounter. Although NOAC is superior in the long term over many years, it is 10 times more costly than warfarin.
“Government-owned private insurers” must have the capacity and capability to understand and vet all these minute details. Even with existing insurance companies, the Association of Private Hospitals Malaysia (APHM) has complained about how some insurers only have ordinary medical officers, not specialists, whose flawed assessments have led to the withdrawal of guarantee letters from patients.
Under DRG, there is also the risk of itemising every single disease. For example, a person needing CABG who presents with heart failure + chronic kidney disease + diabetes mellitus + hypertension. Each disease category is treated by different doctors with a different set of DRG, leading to an initial surge in costs.
Bear in mind that Malaysia has a non-communicable disease (NCD) crisis, so a patient having multiple comorbidities is common.
DRG only works for elective procedures AND only if there is proper integration of public and private health care facilities with universal coverage.
Furthermore, the fee-for-service model will have to be abandoned (which I will support when there is a national health insurance policy.)
For DRG to work properly, apart from the integration of public and private health care providers, digitisation is critical so that any outliers in the practice and charging by providers can be closely monitored.
MOH should be focusing on ways to lower the national total health expenditure, while maintaining quality care for everyone and then working out how to fund this expenditure.
The plan as suggested by the minister doesn’t work.
MOH might as well just buy out PMCare and expand coverage to all civil servants, GLCs, and other private entities, and use monopolistic power to squeeze private hospitals into lowering their charges. (Note: I’m being sarcastic here.)
It’s naïve to assume that the government can be more efficient and effective (except for monopolistic power) in running private health insurance by competing against well-established TPAs that have been in business for 30 years.
Lastly, MOH performing multiple roles in conflict as service provider, funder via this new private health insurance, regulator, and enforcement agency is counter-intuitive to good governance.
Dr Lee Boon Chye is a consultant cardiologist and former deputy health minister.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
