KUALA LUMPUR — The Association of Private Hospitals Malaysia (APHM) has proposed a national medico-legal committee be set up to manage and contain claims and payouts as part of measures to reduce insurance and private healthcare costs.
A medico-legal committee can review and recommend measures, including the mandatory use of arbitration, it also suggested.
“The set up of this committee aims to mitigate the practice of defensive medicine and reduce legal and insurance costs, both of which are direct and indirect contributors to the rise in healthcare costs,” APHM said in a statement today.
This and other proposals were made to the Finance Ministry, Health Ministry, Bank Negara Malaysia and representatives from Insurance and Takaful Operators (ITOs) at a meeting at the Finance Ministry in Putrajaya today.
Defensive medicine refers to the practice of recommending unnecessary tests or procedures, or even avoiding procedures, to protect the healthcare practitioner from the possibility of a medical negligence suit.
In recent years, the courts have awarded damages in the millions to patients who took up legal suits in medical negligence cases. In November last year, Free Malaysia Today quoted Federal Court judge Datuk Vazeer Alam Mydin Meera who said damages awarded by the courts in medical malpractice suits are like to continue rising as the cost of healthcare also increases.
Another proposal presented by APHM was for an independent healthcare cost and reimbursement review committee to oversee fair pricing and reimbursement practices.
This committee can also conduct regular reviews of premium pricing and reimbursement structures to ensure alignment with actual healthcare costs and prevailing market conditions, APHM added.
It suggested the committee comprise representatives from the Finance and Health ministries, APHM and ITOs.
“It would promote promote structured, data-driven negotiations between hospitals and ITOs, fostering transparency and ensuring the long-term sustainability of the healthcare system,” APHM said.
The association also proposed another joint working committee, between APHM and ITOs to review billing structure and ensure fair pricing.
The Finance Ministry and Bank Negara can provide oversight of this committee, with support from the Health Ministry.
“Its primary objective is to review the current billing structure and address the issue of cross-subsidisation, ensuring that charges more accurately reflect the true cost of delivering healthcare services, including drugs and medical supplies.
“This initiative aims to improve transparency in hospital pricing while maintaining affordability for patients. The committee will also work towards developing a fair pricing model for drugs and consumables, balancing cost sustainability for hospitals with reasonable reimbursement structures.
“By aligning reimbursement rates with market realities, the initiative seeks to prevent selective coverage and cost-shifting, fostering a more equitable and financially sustainable healthcare system,” APHM said.
Other proposals made were to expand and include primary care in the patient care pathway to reduce costs and increase the appropriateness of seeking hospital services.
APHM said it also supports a comprehensive review of industry costs and greater transparency to establish fair and appropriate claims payouts to healthcare providers while ensuring premium structures remain sustainable
It will also develop a clear plan towards industry self-regulation with continued oversight by the Health Ministry, as a measure to reduce regulatory burdens on healthcare providers and hospitals.
APHM also said under-declaration of health status by individuals applying for insurance policies must be addressed.
“Since pre-policy medical screenings are not mandatory for all insurance policies, applicants may not fully disclose pre-existing conditions or family health history, which could affect their future coverage.
“APHM recommends that all private hospitals reinforce to their clinicians the importance of fair and transparent reporting of medical history and diagnoses in medical reports, to ensure accurate insurance coverage adjudication.”
Lastly, to better alight private hospitals with ITOs, APHM said there should be an industry-wide joint communication working group between the two sectors.
The Finance Ministry is currently in a series of discussions with healthcare providers, ITOs and other stakeholders to address the issue of excessively high insurance premiums and escalating private healthcare charges. – March 17, 2025