Managed Care Companies and Third Party Administrator Companies

Name and Constituency of Member of Parliament

Mr Ang Wei Neng
MP for Jurong GRC

Question No. 348

To ask the Minister for Health (a) whether there is empirical data that reveals that managed care companies (MCCs) and third party administrator (TPA) companies are driving up healthcare costs significantly; and (b) what are the main factors that are driving up healthcare costs in the private and public healthcare sectors.

Written Answer

1    Managed care companies (MCCs) and third party administrator (TPAs) play a role in the healthcare system by providing information to patients and helping them with the administrative and claims processes.  The Singapore Medical Council (SMC) is not prohibiting such services.  The SMC’s concern is with the charging practices adopted by some MCCs and TPAs, which compromise patient care and contribute to rising healthcare costs.  For example, there are MCCs and TPAs which charge doctors referral fees of up to 25 percent of doctor’s fees.  Their financial incentives are not aligned with the patient’s interests as the decisions on referrals and care can be unduely influenced by the fee arrangements.  In addition, the high referral fees will ultimately be borne by patients in the form of larger bill sizes or higher insurance premiums. 

2    This was why medical professionals and the insurance industry have highlighted their concerns with these charging practices to MOH and SMC.  The SMC has sinced revised their Ethical Code and Ethical Guidelines 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 commensurate with the actual administrative work done by these intermediaries in processing the cases, rather than based primarily on the fees charged to patients.  The SMC’s position is supported by the Singapore Medical Association, Academy of Medicine Singapore and College of Family Physicians Singapore. 

3    A key priority for MOH is to keep our healthcare system sustainable for the longer-term.  There are many factors which can contribute to increases in healthcare costs.  For example, an ageing population and a higher rate of chronic diseases like diabetes and hypertension will increase the volume and complexity of healthcare services.  We are investing in health promotion initiatives to help Singaporeans lead healthy and active lives.  Another priority is to provide appropriate care for patients by moving healthcare services beyond hospitals into the community, and to improve productivity and efficiency in our healthcare institutions.  MOH is also working with the professional bodies and industry players to enhance information transparency on fees and charges, and to discourage over-servicing by healthcare providers.  All of these factors are important to develop a sustainable and affordable healthcare system that delivers quality care and outcomes for all Singaporeans.