Regulation of Managed Care and Third Party Administrator Companies

20 Mr Desmond Choo asked the Minister for Health (a) whether the Ministry will consider regulating managed care and Third Party Administrator (TPA) companies as healthcare entities; and (b) how can transparency on the fee arrangements between doctors, TPAs and insurers be improved.

The Minister of State for Health (Mr Chee Hong Tat) (for the Minister for Health): Mdm Speaker, the Ministry of Health (MOH) had earlier received feedback from medical professionals on their concerns with the charging practices adopted by some Third Party Administrator (TPA) companies. In doing the review, MOH has consulted professional bodies, such as the Singapore Medical Council (SMC), the Singapore Medical Association, the Academy of Medicine Singapore and the College of Family Physicians Singapore, as well as industry associations like the Life Insurance Association (LIA). There is agreement amongst stakeholders that the charging practices must not compromise patient safety and well-being and should not lead to escalation of healthcare costs.

Managed care companies (MCCs) and TPAs provide a wide range of intermediary services, including management of employer medical benefits and claims administration. Those that provide healthcare services directly to patients will be regulated under the Private Hospitals and Medical Clinics Act (PHMCA).

To provide clarity on how doctors should engage MCCs and TPAs, the SMC has recently revised its Ethical Code and Ethical Guidelines (ECEG) to state that doctors must not allow financial arrangements to lead to any compromise in the care of patients. Any charges which doctors pay to MCCs or TPAs should be commensurate with the actual administrative work done by these intermediaries in processing the cases, and not based primarily on the fees charged to patients. The revised guidelines will take effect from 1 January 2017.

To enhance transparency of TPA fee arrangements, the revised ECEG indicates that doctors should disclose any such arrangement and referral fees to their patients, if these fees are passed on to the patients. MOH is assessing if these disclosure requirements should be further reinforced through our regulations. We are also working with LIA and the Integrated Shield Plan (IP) insurers to ensure that their appointed TPAs do not have any conflict of interest. In addition, the insurers should disclose to their policyholders any financial arrangements they have with the doctors.

MOH will monitor the situation and, where necessary, we will not hesitate to take further steps to protect the interests and well-being of patients and safeguard the integrity of our healthcare system.

Mdm Speaker: Mr Desmond Choo.

Mr Desmond Choo (Tampines): I thank the Minister of State for his reply. There are two points of clarification. One, is there a need for MOH to regulate the practice of percentage-based fee arrangements? Two, how do we mitigate against TPAs from resulting in undue medical fee increases for patients; and three, has there been any breach of the disclosure requirements by MOH?

Mr Chee Hong Tat: Can I clarify the last point? Any breach of disclosure requirements by MOH?

Mr Desmond Choo: The Minister of State clarified earlier that there will be timing requirements for the insurers to disclose to improve transparency of fee arrangements. I would like to ask if there has been breaches of such disclosure arrangements previously and, going ahead, how would we tackle the disclosure arrangements.

Mr Chee Hong Tat: Mdm Speaker, I thank the Member for his supplementary questions and the clarification as well.

First, as I explained in my answer, we need to regulate such fee arrangements to protect the well-being of patients and to prevent conflict of interest. We do not want the TPAs to end up driving up healthcare costs and affecting patient care. These are the primary considerations for MOH and SMC when the SMC issues its guidelines.

On the breach of disclosure requirements, I do not think there is currently a breach because the requirements have not taken effect. After the requirements have taken effect, we would certainly monitor the compliance and make sure that TPAs which have such arrangements, and doctors who are in such arrangements with TPAs, the information would be disclosed appropriately to patients.