PAC says rising health insurance premiums fuelled by unregulated non-professional fees in private hospitals, not doctors’ charges.
KUALA LUMPUR: The Public Accounts Committee (PAC) has found that rising health insurance premiums are driven primarily by increases in non-professional charges imposed by private hospitals rather than doctors’ professional fees.
PAC chairman Datuk Mas Ermieyati Samsudin said doctors’ professional fees have been regulated since 2013, while non-professional charges, including medical supplies and equipment, medicines and diagnostic and laboratory tests, are not subject to regulatory control.
“They also include higher costs of medical technology and treatments, rising operating expenses at private hospitals such as labour, utilities and technology, as well as litigation and defensive medicine,” she said.
Her statement on the issue of rising health insurance premiums, private hospital charges and their impact on public healthcare was tabled in the Dewan Rakyat today by PAC member and Kapar MP Dr Halimah Ali on her behalf.
The report also found that the absence of a standardised billing structure among private hospitals has undermined transparency by making it difficult to determine the actual cost of medical services and basic items.
PAC said high medicine prices are often used to subsidise operating costs that are not billed separately, such as nursing services and utilities.
It also found instances of unbundling, where hospitals separately charged for basic items such as clinical waste disposal, pillowcases and alcohol swabs, which should ordinarily be included in room charges or basic services.
The committee also found evidence of price discrimination, with hospitals charging patients using guarantee letters (GLs) higher rates than those paying in cash or through the pay-and-claim method.
In addition, PAC found significant median mark-ups at various stages of the pharmaceutical supply chain, including cases where generic medicines were priced higher than branded innovator drugs.
It said the situation was compounded by the presence of more than 1,500 medicines with only a single registered manufacturer in Malaysia, creating monopolies that allow high prices to be imposed without competition.
To address the issue, PAC submitted 17 recommendations to the government, including expediting the implementation of the Diagnosis-Related Group (DRG) payment system and amending legislation to enable regulation of private hospital charges beyond doctors’ professional fees.
Among the recommendations were for the Ministry of Health (MOH) and the Ministry of Domestic Trade and Cost of Living (KPDN) to establish mechanisms to regulate the prices of medicines and medical equipment, while exploring direct procurement from manufacturers, particularly local producers, to reduce reliance on suppliers or cartels.
PAC also recommended amending the Private Healthcare Facilities and Services Act 1998 (Act 586) to empower the MOH to regulate private hospital service charges beyond doctors’ professional fees.
Meanwhile, 12 Members of Parliament from both the government and opposition blocs debated the report, calling on the government to tighten regulation of private hospital charges and medicine prices, improve transparency in the insurance industry and expedite implementation of the DRG payment system.
They also urged the MOH, Bank Negara Malaysia (BNM) and relevant stakeholders to strengthen cooperation in addressing medical cost inflation.
At the same time, MPs called for greater investment in the public healthcare system, a review of laws relating to insurance, a freeze on fee increases at university hospitals until sufficient alternatives are available, and higher taxes on private hospitals generating substantial profits from the medical tourism sector.
