Doctors barred from paying percentage of fees to 3rd-party agents

SINGAPORE — In a move set to shake up the administration of medical claims here, the medical watchdog on Tuesday (Dec 13) barred doctors from paying fees to third-party administrators (TPAs) that are calculated as a percentage of fees these doctors charge their patients.

TPAs help process medical claims for employers, insurers and doctors. The Singapore Medical Council (SMC) said fees doctors pay to TPAs “must reflect the fair work done” by them in handling and processing patients’ claims, and must also be transparent to the patient. As the amount of TPAs’ work does not vary based on the fees that doctors charge their patients, paying percentage fees to the TPAs may be construed as a form of “fee-splitting” and could inadvertently promote cost escalation, said SMC president Tan Ser Kiat in an advisory to doctors on Tuesday. 

Fee-splitting is deemed unethical in the medical profession, as it could be akin to paying a sales commission to the TPA. Some major TPAs here charge percentage fees and have done so for years, but what had doctors crying foul in recent months was a few players charging fees of up to 25 per cent of doctors’ professional fees — in some cases, for merely the “referral” of patients on a particular insurance scheme or panel.

The SMC said the payment of percentage fees will be a breach of the new ethical code and ethical guidelines that take effect from Jan 1. But to give doctors time to modify or end existing agreements with TPAs that are in breach of the rules, the provision barring the payment of prohibited fees comes into force only on July 1 next year.

Tuesday’s clarification came after the SMC in September released the new ethical code and guidelines that said fees charged by TPAs “must not be based primarily on the services (doctors) provide or the fees (doctors) collect”. Doctors must also not pay fees that are so high as to constitute “fee splitting” or “fee sharing”, or which impact their ability to provide the required level of care.

Two TPAs told TODAY they would review their fee models in light of SMC’s latest advisory. MHC Asia Group’s chief executive Low Lee Yong said MHC hopes to meet the SMC for a dialogue on the matter “since it affects the livelihood of over 1,200 doctors in our panel”. He defended the model of charging percentage fees, saying a flat fee could ironically end up “punishing” doctors for keeping their fees low. “A flat fee of S$5 is 25 per cent to the doctor who keeps the healthcare cost low at S$20. But it is only 5 per cent for the doctor who charges S$100,” he said.

Ms Veronica Allen, chief executive officer of Parkway Shenton, said it is studying the SMC’s latest advisory and working out a fair fee structure that reflects the value it provides and that benefits all doctors. Parkway Shenton, it was reported last month, charges a flat 10 per cent fee, but had decided in the wake of SMC’s new guidelines (before yesterday’s advisory) to offer a variation of fixed and variable fees to be launched by the end of this year. 

Ms Allen said on Tuesday: “While some TPAs have significantly raised their fees, we’ve kept the TPA administrative fees charged to our panel doctors unchanged for more than the past six years. We agree that administrative fees charged should primarily reflect the work of the TPA and not be so high as to constitute fee splitting with the doctor.”

Meanwhile, doctors welcomed the SMC’s clarification on the issue. The Singapore Medical Association, which represents the majority of doctors here, said it is happy the SMC has addressed concerns on whether doctors’ contracts with TPAs meet the requirements of the new guidelines. SMA has consistently advocated that doctors should work only with TPAs that are prepared to be transparent with their fee structure, said Dr Chong Yeh Woei, past president and council member of the SMA.