Unregulated TPAs Are Driving Up Private Healthcare Costs in Malaysia

The Malaysian Medical Association (MMA) calls for urgent private healthcare reforms to address challenges faced by specialists, GPs, facility sustainability, rising costs, and the overall ecosystem. (Source: ChatGPT)

As of March 2025, Malaysia is reforming its private healthcare sector to control rising costs and improve efficiency. The Ministry of Health (MOH) is reviewing the Private Healthcare Facilities and Services Act and considering the Diagnosis-Related Group (DRG) system to enhance cost transparency and hospital operations. However, healthcare professionals have raised concerns about implementation challenges.

Rising Costs and Insurance Gaps

The Malaysian Medical Association (MMA) is urging reforms to address high hospital service fees, unregulated third-party administrators (TPAs), and insurance claim inefficiencies. While medical professionals' fees remain regulated, hospital charges and medical supplies are the main cost drivers.

Gaps in private health insurance (PHI) make treatments like immunotherapy and targeted therapies unaffordable for many. As a result, patients often begin treatment in private hospitals but later transfer to overcrowded public hospitals due to financial limitations, disrupting continuity of care.

Challenges with TPAs and Insurance Claims

TPAs, acting as middlemen between insurers and healthcare providers, impose pricing restrictions, payment delays, and inefficiencies, raising costs for doctors and patients. Despite their influence, they lack proper regulation, leading to unfair practices.

The MMA has called on Bank Negara Malaysia (BNM) and MOH to implement stricter oversight and fair pricing regulations. Delayed insurance claim approvals, particularly for critical illnesses, further burden patients. Stronger regulatory oversight from BNM is necessary to streamline approvals and prevent undue financial burdens on patients.

Diagnosis-Related Group (DRG): Balancing Efficiency and Accessibility

The government is exploring the DRG system, which standardizes hospital payments to improve cost efficiency and resource allocation. While effective in countries with national health insurance, a one-size-fits-all approach may not suit Malaysia’s diverse healthcare landscape. If poorly implemented, DRG could strain healthcare providers financially and limit treatment options for patients. A phased and localized approach is essential to mitigate risks and ensure a smooth transition.

Strengthening Primary Care

General practitioners (GPs) are key to preventive care, yet their needs are often overlooked. The MMA advocates for fair fees and better support to strengthen primary care services.

As Malaysia pushes forward with healthcare reforms, transparency and patient-centered policies are essential. The MMA continues to engage policymakers to drive sustainable, balanced solutions for a more efficient healthcare system.

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Source: Code Blue