Kuala Lumpur: Increasing the supply of affordable, mid-tier hospital beds and providing incentives for the expansion of not-for-profit hospitals can help mitigate spiralling medical insurance and medical costs.
According to BERNAMA News Agency, Bank Negara Malaysia (BNM) has suggested that private hospitals should display the price of drugs and the price range of hospital services to promote healthy competition among medical insurance policyholders.
Unveiling a series of strategic thrusts and initiatives to address the sharp rise in medical inflation, BNM highlighted the potential of the affordable hospitals initiative through implementing and expanding the Rakan KKM initiative by the Ministry of Health (MOH). This initiative could also serve as a price benchmark, as outlined in a box article titled ‘Securing Sustainable Access to Medical and Health Insurance/ Takaful Protection’ in BNM’s 2024 Annual Report.
The Rakan KKM programme provides ‘premium economy’ services at selected public hospitals for elective outpatient, daycare, and inpatient services. These strategies aim to offer cost-effective options for medical and health insurance/takaful (MHIT) policyholders, who are financially burdened to maintain access to medical insurance. BNM is collaborating with key stakeholders, including the Ministry of Finance, MOH, insurers and takaful operators (ITOs), private hospitals and clinics, and consumer groups to implement these initiatives.
To enhance price transparency, private hospitals are encouraged to display retail prices for drugs and publish price ranges for common healthcare services, enabling policyholders and insurers to compare prices across various medical providers. BNM noted that MOH will also conduct a regulatory and legislative review of current oversight arrangements of private hospitals to evaluate how inflation is calculated.
BNM proposed the implementation of a Diagnosis-Related Groups (DRG) payment mechanism to replace the existing fee-for-service provider payment system at hospitals. Under the DRG system, patients are categorised into groups based on their diagnoses and medical needs, with payments adjusted for severity and co-morbidities. This approach incentivises efficiency and health outcomes while providing greater price predictability.
Another cost-reduction initiative is to enhance the interoperability of electronic medical records (EMR) across hospitals. EMR will address the current fragmentation of health records in different healthcare facilities, improving quality and continuity of care while reducing duplication of diagnostic tests and procedures, ultimately increasing operational efficiency and reducing costs.
As of 2023, 7.7 million individuals were covered under MHIT in Malaysia. The country spent RM84.2 billion on healthcare in 2023, with MHIT funding increasing sixfold over the past two decades, from RM0.96 billion in 2003 to RM6.75 billion in 2023. BNM pointed out that the interim measures introduced in December last year to alleviate the immediate impact of premium adjustments to policyholders were temporary and unsustainable if high medical inflation persists. It is, therefore, crucial for key stakeholders to implement broader health reforms to address medical inflation effectively.