Explainer: Why the Singapore Medical Association and private insurers are locked in battle over Integrated Shield Plans

• The Singapore Medical Association (SMA) and Life Insurance Association Singapore (LIA) are at odds over the mechanics of Integrated Shield Plans 
• SMA issued a position statement decrying that the insurers had formed “highly exclusive” medical panels and disrespected fee benchmarks
• SMA also complained that insurance premiums had increasingly been used for non-healthcare cost items
• LIA’s comeback alluded to “over-treatment” by medical providers
• It also criticised SMA for using misleading analysis 

SINGAPORE — An ongoing tussle between the medical fraternity and insurance companies is intensifying over the payouts, premiums and doctor panels of Integrated Shield Plans (IPs).

Such insurance plans are made of two parts: A MediShield Life component managed by the Central Provident Fund Board, and the other is provided by private insurers.

About seven in 10 residents here had bought these plans from private insurers to get added coverage on top of MediShield Life, the Government’s basic health insurance plan for all citizens and permanent residents.

Last Thursday (March 25), the Singapore Medical Association (SMA) launched an offensive and spelt out in a position statement how IP insurers had been curtailing doctor choice by:

• Forming “highly exclusive” medical panels for patient consultation that excludes many private specialists

• Clustering their fee scales around the lower limit of the fee benchmarks set by the Ministry of Health (MOH)

This came after weeks of exchanges among insurance policyholders, doctors and the Life Insurance Association Singapore (LIA) on the topic in The Straits Times’ Forum page.

SMA also said that insurance premiums collected were “excessively” spent on non-healthcare cost items, pointing out that the growth in insurers’ management expenses (56.6 per cent) and commission for insurance agents (50.4 per cent) had far outstripped that of the medical claims (35.9 per cent).

“Instead of repeatedly lamenting that healthcare providers and policyholders are to blame for the losses incurred by some IP insurers through overconsumption, overservicing and overcharging, IP insurers should take the necessary steps to explore cutting their own management and commission costs to enhance the sustainability of the IP sector,” it said.

LIA, representing insurers, issued a response to SMA on Monday, saying there were cases of “over-treatment” by medical providers and calling out SMA for using misleading analysis on insurers’ costs and claim costs.

On its part, SMA has chosen to take matters into its own hands by introducing an initiative to rank insurers on an annual basis to show the public how appropriate each of the insurers’ fee scales are, and how difficult it is for policyholders to use non-panel doctors. 

SMA has also set up a complaints committee for patients and doctors to flag issues related to IPs and health insurance, including when patients are being denied insurance coverage or when doctors are not adequately reimbursed for their services.

Here is a breakdown of some of the problems raised by SMA and what LIA said in response.

HIGHLY EXCLUSIVE PANELS

The situation: Each insurer’s IP panel has just about 21 per cent of private specialists, based on a study by Singapore’s Academy of Medicine last year. However, no doctor or policyholder knows why some are in and some are out.

What SMA said:

• There is now no reasonable justification for such highly exclusive panels, given that MOH fee benchmarks have been published for the most common 222 procedures since late 2018 to address overcharging

• “Panels, if needed, should be inclusive in the first instance and private sector specialists should be excluded only if they have a poor track record.”

What LIA said: 

• SMA has not responded to LIA’s repeated calls for “greater transparency”

• LIA has asked for clinical quality measures and guidelines to prevent over-treatment on numerous occasions, but to no avail

• “Clinical quality measures will enable insurers to make better, evidence-based decisions on admitting doctors into panels. Policyholders will ultimately benefit because they will receive better care.”

• LIA has updated its guidelines on panel management on March 29, adding that IP insurers should explain their criteria for how they select their panel doctors

NOT RESPECTING FEE BENCHMARKS

The situation: Only one insurer fully respects the entire span of MOH’s fee benchmarks, SMA said, pointing out that most are not even reimbursing doctors rates that match the midpoint of the benchmarks and that one IP insurer persists in reimbursing below the lower limit.

What SMA said: 

• “If the LIA and IP insurers are sincere about respecting the MOH fee benchmarks, then they should not be reimbursing at rates that only approximate the lower limit.”

• Several insurers use third-party administrators to run their IP programmes, so insurers’ decision on whether fees align with MOH’s benchmark should exclude fees taken by these administrators

What LIA said: 

• The upper bracket of MOH’s fee benchmark range for a procedure is 1.8 times the lower bracket on average

• If insurers expand panels to include all private specialists and for all panel doctors to be compensated up to the upper bracket of MOH’s range, it may lead to substantial cost increases and further premium increases for policyholders

• “Striking this balance is critical, and we invite SMA for a discussion on how this can be done in a way that will not disproportionately burden policyholders with higher premiums.” 

COSTS OF NON-HEALTHCARE ITEMS

The situation: The insurers’ management expenses and commission of insurance agents grew more than 50 per cent between 2016 and 2019 — from S$237 million to S$363 million — outstripping that of medical claims, which went up 36 per cent, from S$1.19 billion to S$1.62 billion.

These were against the backdrop of a 33 per cent growth in gross premiums collected yearly, from S$1.61 billion to some S$2.14 billion in 2019.

In all, 75 per cent of gross premiums goes to insurance claims, while 7 per cent goes to management expenses and 9 per cent to commission.

What SMA said:

• “We suggest that the IP industry should take a hard look at how it justifies its management and commission costs as the first step in ensuring the IP industry is sustainable.”

• The average payout for each claim in Singapore had gone down by 1 per cent between 2016 and 2019

• The authorities here should take a leaf from the Affordable Care Act in the United States, which formally states that insurers must spend at least 80 to 85 per cent of premiums on health costs, and that rebates must be issued to policyholders if this is violated

• “Since the IP sector is already subsidised indirectly by the Government through voluntary downgrading, the SMA recommends that the relevant authorities impose a 85 per cent or 90 per cent claims ratio on each IP insurer, to instil cost discipline in IP insurers and ensure that premiums collected are directed to healthcare costs and not frittered away on non-healthcare cost items.”

What LIA said: 

• SMA’s analysis of insurers’ cost and claims costs is misleading. LIA stressed that increases in insurance payouts are the main driver of premium increases

• “It is important that organisations put out objective analyses (that) avoid biased conclusions.”

• LIA will fully address this point in due course, along with more detailed comments on the rest of SMA’s position statement

TODAY has sent queries to MOH, SMA and LIA on the points raised. They did not respond by the time of publication.