The Ministry of Health (MOH) has issued a firm reminder to managed care organisations (MCOs) and third-party administrators (TPAs): interfering with doctors’ clinical decisions and medical practices may violate federal law.
Health minister Dzulkefly Ahmad, citing a previous stance by health director-general Dr Mahathar Abd Wahab, warned that any actions undermining the independence of medical practitioners could be interpreted as inconsistent with the Private health care Facilities and Services Act 1998 (Act 586).
“The MOH maintains its position that the primary role of MCOs and TPAs is to facilitate financial and insurance claims administration, not to regulate the practice of medicine,” Dzulkefly stated in a written Dewan Rakyat reply to Tanjong Karang MP Dr Zulkafperi Hanapi, who had raised alarms over third parties dictating charges and treatment plans in private clinics.
The tension highlights a structural gap that has persisted for more than three decades. While TPAs have become an integral part of Malaysia’s private health care ecosystem, they continue to operate without a comprehensive statutory regulatory framework.
From Claim Processors To Health Care Gatekeepers
Originally established to handle paperwork and process claims, modern TPAs have grown into massive operations. Major TPAs in Malaysia — many of which are foreign-owned —command an estimated gross revenue of RM600 million to RM800 million annually.
Because they manage both high-volume, lower-cost outpatient (GP) benefits and low-volume, high-cost inpatient (hospitalisation) claims, it is no longer accurate to describe them as mere “clinic administrators”.
Today, they function as comprehensive benefit administrators coordinating access across an entire web of health care services:
- General practitioner (GP) clinics.
- Specialist consultations.
- Private hospitals.
- Pharmacies and diagnostic laboratories.
- Allied health providers.
This immense scale gives TPAs significant market influence, effectively turning them into de facto health care gatekeepers.
Depending on their contracts with employers and insurers, TPAs now hold the power to decide which doctors patients can see, which clinics are admitted to provider panels, which medicines are reimbursed, and how much and how fast doctors get paid.
A Matter Of Good Governance
Medical associations stress that the call for oversight is not a campaign against TPAs, nor is it an attempt by doctors to avoid accountability. Many TPAs provide vital services that keep health care financing running efficiently.
In fact, responsible TPAs have publicly welcomed regulation, recognizing that clear rules eliminate unethical operators and level the playing field.
Instead, stakeholders argue this has evolved from a simple health care dispute into a matter of essential governance.
In a mature society, organisations with substantial power over public money and lives are strictly regulated—including banks, insurers, hospitals, doctors, and even private ambulances. Leaving a highly influential intermediary unregulated defies logical governance.
Why Health Care Is Different
Health care operates outside the rules of ordinary commerce. A patient having a heart attack cannot negotiate a contract, and a doctor treating a critical patient cannot delay care over a payment dispute. Commercial interests must never supersede clinical judgement.
Furthermore, thousands of GP clinics serve as the frontline of Malaysian health care. When primary care facilities are squeezed by unfair contracts, opaque billing practices, or delayed payments, their financial sustainability is threatened, and patients ultimately lose convenient access to local care.
The Path To Multi-Agency Oversight
The Malaysian government has acknowledged this regulatory void and has begun taking initial steps by requiring MCOs and TPAs to register while evaluating long-term oversight options.
To manage immediate friction, the MOH participates in the health care Partners Protocol and Solutions Committee (HPPSC). This platform brings together Bank Negara Malaysia (BNM), the Malaysian Medical Association (MMA), the Association of Private Hospitals of Malaysia (APHM), the ITO Association, and TPAs to address ongoing disputes regarding professional fees and treatment financing.
However, registration is merely the first step. Medical Associations are urging the government to expedite a clear statutory framework that splits oversight among specialised regulatory bodies:
- MOH: Oversees medical conduct and protect clinical autonomy.
- BNM: Regulates financial conduct wherever TPAs administer insurance funds or health care financing.
- The Malaysia Competition Commission (MyCC): Ensures market power is not abused and that the concentrated power does not remain in the hands of the few.
As Malaysia aims to cement its status as a regional health care hub, robust governance is vital to offering regulatory certainty to investors, transparency to patients, and fairness to health care providers.
Clear regulation is not an economic burden; it is an investment in a world-class health care system that all Malaysians can trust.
Fun Fact: For over 30 years, 60 to 70 per cent of private GP clinics patients are channeled via TPAs. These TPAs leveraged this volume advantage to prolong stagnant consultation fees, low reimbursement rates, payment delays, and lopsided contractual terms favouring TPAs.
The author is the immediate past president and founding president of the Association of Private Practitioners Sabah (APPS).
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
