Doctors in uproar over third party administrators' charges

Some private-sector doctors are up in arms over the way some managed care companies in Singapore operate, in particular their fee practices; and the uproar has intensified in recent weeks with the Singapore Medical Association (SMA) leading the charge.

In its August newsletter dedicated to managed care, SMA not only called for transparency on such charges but also sounded warnings on the pitfalls of joining the system, stopping short of calling for an outright boycott.

The outcry comes as doctors in the private sector face mounting pressure from greater competition and higher operating costs, which have in turn lowered profit margins compared to earlier years.

Some managed care players known as third party administrators (TPAs) have been blamed for shrinking the profit margins even further by charging doctors under their schemes administrative fees calculated as a percentage of the doctor's total bill.

Typically, TPAs help their clients manage costs and offer a panel of doctors and specialists to companies and insurers, which would then pay them an admin fee calculated as a percentage of the medical bill (refer to table and flowcharts).

In return for this large pool of patients, those on the panel typically pay TPAs an admin fee that is between 8 and 25 per cent of each patient's total bill.

SMA president Wong Tien Hua wrote in the newsletter that the issue becomes more complex with specialists coming into the picture.

"TPAs offer specialists a large referral pool of patients from their panel general practitioners (GPs), who in turn are obligated to refer to specialists under the same scheme.

You can see that the percentage fee computation quickly becomes a lucrative figure in the specialist market, especially for complicated and expensive procedures," he wrote.

The problem with this is that patients would expect the referrals to be in their interest, professional and not dependent on how willing specialists are in allowing TPAs to retain a fee for the treatments.

"The more such referrals are made, the more TPAs benefit," he said, adding that this goes against the trust patients place in their doctors.

Articles in the SMA newsletter mentioned at length such transactions' lack of transparency - patients have no clue how much the panel doctor gets; the patient's employer and insurer are also not privy to the amount paid to doctors and TPAs.

Some doctors are also taking issue with how TPAs are not subject to any regulation.

When approached, the Ministry of Health (MOH) said: "There is a range of TPAs in the market, some are operating in the managed care space and provide admin services to corporates and insurers, while others operate referral/concierge services for patients/individuals. MOH is currently engaging various stakeholders on the issues."

Other frustrations of being on the panel, doctors said, include low remuneration from GP consultations, complex claims procedures, lower margins for drugs and procedures, as well as late payments for treatments already provided.

Despite these, many in the private sector still sign up for the schemes. This is especially true of those just starting out as they see TPAs as a quick way to provide a ready pool of patients and, in turn, revenue stream.

For human resource directors and insurers, the lack of medical expertise is a key reason for engaging doctor-led TPAs that help monitor medical bills for discrepancies to manage costs.

Lee How Teck, chief operating officer at Aviva Singapore, said the insurer has partnered a medical group with a network of experienced private specialists "whose fees fall within a reasonable fee schedule that has been pre-agreed". This, she said, helps to minimise cases where customers may be over-serviced or over-billed.

Over the years, the number of TPAs here has grown and they are entrenched in private healthcare delivery. They include Alliance Healthcare Group, MHC Asia Group, Adept Health, Healthway Medical and Parkway Shenton.

Of late, relative newcomer Fullerton Health, which has a 15 per cent levy on panel doctors, was singled out by some for aggressive fee practices.

Its co-founder and group chief executive, Michael Tan, pointed out that the 15 per cent levy falls below the higher end of the market range, and goes towards covering operating costs such as the setting up of the IT system, use of data analytics, running of a 24/7 call centre for patients and panel doctors, among others.

Those who are vocal on TPAs' fee practices are a minority, he said, adding: "There will be increasing scrutiny on doctors' billing. This is necessary to keep healthcare cost affordable, accessible and sustainable."

As for the calls to regulate TPAs, Fullerton Health's co-founder Daniel Chan said: "The doctors are only regulated on their ability to practise but their fees are not regulated. So the counter argument is: Do they want their fees to be regulated too?"

Health economist Phua Kai Hong is of the view that third-party healthcare financing, which includes insurers, TPAs and medical concierges, will drive up Singapore's healthcare costs in the long term as they capitalise on the existing information gap between patients and doctors. And this, he said, is something some doctors are guilty of as well.

Given that it is a free market here, Dr Phua said industry players will continue to take advantage of this asymmetry, unless "relevant regulatory framework and appropriate laws" are in place to regulate the sector and improve transparency.

Read also: Doc bills patient twice in 1 consultation