THE Health Insurance Task Force (HITF) on Thursday issued a set of recommendations aimed at reining in rising claims rates of Integrated Shield Plans (IPs).
The escalation of claims raises the spectre of steep premium hikes which may become unaffordable especially as policyholders age and cease to work. Eventually, IPs themselves may become unsustainable. Data from the Life Insurance Association Singapore (LIA) shows a sharp deterioration of underwriting profit margins between 2011 and 2013.
IPs paid out a total of S$488 million in claims in 2014. Insurers have undertaken not to raise premiums for 12 months following the introduction of MediShield Life in November 2015. This suggests that policyholders should brace themselves for premium hikes before the year-end. Already, some insurers are understood to have hiked IP rider premium significantly for older policyholders. Premiums were last raised in 2013.
IPs are offered by private insurers and serve to enhance the basic cover offered by MediShield Life in the CPF umbrella. Riders are available to cover the deductible and co-insurance portions of costs.
Among other things, HITF recommended the introduction of a medical fee benchmark or guidelines, and clarification of the existing process to "surface inappropriate medical treatment".
On product features, it recommended the use of a panel of "preferred healthcare providers" and the adoption of a framework to "pre-authorise" or approve medical treatment. It also recommended deductibles and co-insurance features. At the moment, half of IP policyholders have a rider to cover these costs.
The Ministry of Health (MOH) on Thursday welcomed the HITF report as "timely and commendable". It said stakeholders such as insurers, healthcare service providers, policyholders and patients must work together to ensure the sustainability of the healthcare system.
The HITF task force comprises 11 members from bodies such as LIA, the Singapore Medical Association and the Consumers Association of Singapore. It is chaired by Mimi Ho of Regulatory Professionals.
Ms Ho said in a statement issued by LIA: "Recommendations put forth . . . are practical first steps to maintain the affordability of health insurance premiums and, more importantly, to sustain the accessibility of quality healthcare for all Singapore residents. While we recognise that it might take some time to fully realise the benefits of the recommendations, these initiatives will set the foundation for a sound and sustainable insurance-based healthcare financing system as we face the challenges of an ageing population."
LIA president Khoo Kah Siang said the recommendations are a step in the right direction, "breaking down silos and bringing together different parties along the healthcare value chain to find even better ways to manage increasing claims costs".
"In the long term, this will result in improved efficiencies, and cost savings within the healthcare ecosystem will allow life insurers to continue providing IPs for Singapore residents in a way that is sustainable for both insurers and the public," Dr Khoo said.
HITF said the publication of a medical fee guideline is "paramount" to improve the transparency of medical costs. "It will help bridge the information asymmetry gap that currently exists between healthcare providers and consumers, mitigate cases of overcharging by providers and empower insurers to detect inflated claims and take an active approach towards claims adjudication."
MOH said there is value in improved fee transparency as it helps patients and healthcare providers to make informed decisions. MOH has begun to publish total operation fees of private hospitals; it has published public hospital operation fees since 2014.
The Competition Commission of Singapore (CCS) has earlier said that a medical fee guideline is not illegal if it is compiled from actual bills of patients. In response to queries, CCS said it welcomes and supports MOH's effort to make available historical price for common procedures and conditions.
"CCS will continue to work with MOH on the HITF recommendations, particularly on ways to further improve price transparency in the market," the Commission said.
On the process to weed out inappropriate medical treatment, HITF said insurers are well-placed to detect potential anomalies in medical treatment through their review of claims. Insurers can refer cases to the Singapore Medical Council (SMC) should there be concerns of overcharging and "inappropriate medical intervention amounting to professional misconduct".
"It is thus critical for insurers to be aware and utilise this process when necessary," HITF said. It said MOH should work with SMC and LIA to refine the existing process, while keeping the impact on affected policyholders to a minimum.
On the use of preferred healthcare provider panels, HITF noted that such panels are a common practice among insurers providing employee benefits insurance. It said IP insurers should make clear to policyholders that their choice of healthcare provider is not restricted to the panel, although their coverage may be affected. The use of such a panel "should not compromise the standard of care" received by policyholders.
It said the introduction of as-charged IPs and IP riders results in zero co-payment by policyholders and may have played a part in the escalation of claims. Co-insurance and deductible features encourage consumers to play a more active role in managing their medical-care costs as they are more acutely aware of the charges.
It said insurers should ensure that changes in the product design of IPs and IP riders should not put existing policyholders at a disadvantage.
On pre-approval of medical treatment, HITF said a pre-authorisation framework is commonly used by insurers internationally.
It allows insurers to assess the medical necessity of the treatment and ensure that the cost is covered by the policy. It also gives clarity to healthcare providers on the type of procedures covered by insurance.
Aviva chief operating officer Lee How Teck said it is committed to pursuing measures to contain costs.
"We have recently partnered a medical group with a network of experienced private specialists, whose fees fall within a reasonable fee schedule that has been pre-agreed. With a pre-agreed fee schedule, it can help minimise cases where customers may be over-serviced and/or over-billed," she said. There is no penalty for customers who wish to see specialists outside the network.
In response to queries, Prudential Singapore chief marketing officer Angela Hunter said: "We are supportive of the tripartite efforts of the Health Insurance Task Force to address rising healthcare costs and will be studying their recommendations carefully.
"As a leading life insurer, we are committed to ensure our customers continue to have access to quality healthcare in the long term."
READ MORE: Rising claims costs point to premium hikes