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Life insurers issue fuller rebuttal to doctors' complaints, saying IP panel payouts span full range of MOH benchmark

SINGAPORE — The Life Insurance Association Singapore (LIA) on Friday (April 2) issued a fuller response to criticisms by the medical fraternity on how private insurers manage Integrated Shield Plans (IPs).

Life insurers issue fuller rebuttal to doctors' complaints, saying IP panel payouts span full range of MOH benchmark
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  • LIA said private insurers’ doctor panel sizes had grown and will continue to expand
  • It added that insurers have reimbursed these doctor fees that spanned a “full range” of MOH’s benchmark
  • These are in response to criticisms from the Singapore Medical Association
  • It warned that risk pooling effect may “break down” if claim rate continues to climb, potentially reaching 64 per cent in 10 years 


SINGAPORE — The Life Insurance Association Singapore (LIA) on Friday (April 2) issued a fuller response to criticisms by the medical fraternity on how private insurers manage Integrated Shield Plans (IPs).

Among other things, the LIA pointed out that insurers have been increasing the size of their panel doctors and approving claims with surgeon fees spanning the full range of Ministry of Health’s (MOH) benchmark.

Last Thursday (March 25), the Singapore Medical Association (SMA) had issued a 10-page position statement accusing private insurers of forming “highly exclusive” medical panels for patient consultation that excludes many private specialists, on top of clustering their fee scales around the lower limit of the fee benchmarks set by MOH.

LIA, representing insurers, had issued an interim 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.

In its fuller, nine-page-long response on Friday, LIA said that the number of private specialists on current IP panels has grown and now range from 250 to 400.

“This is comparable to the typical size of an employee benefits private specialist panel. They should grow beyond this size over time,” LIA added.

The 250 to 400 range would translate to about 15 to 24 per cent of private specialists here, based on MOH’s 2019 data that there were 1,682 active private specialists.

Asked how many private specialists used to be on the panels before the range grew to 250 to 400, LIA told TODAY that there were about 150 to 290 in March 2019, and about 200 to 350 in March last year.

In rebutting SMA’s point that insurers disrespect MOH’s fee benchmarks, LIA said claims data suggested that insurers are “fair in practice” as insurers had reimbursed surgeon fees that spanned the full range of the fee benchmarks. 

There were even instances where claims went above the upper bound of the fee benchmark range, it pointed out, suggesting that “insurers do give due allowance for cases that are more complex than the norm”.

Notwithstanding these, LIA warned that if the current claim rate of 25 per cent continues to climb at a compound annual growth rate of 10 per cent, the claim rate could potentially reach 40 per cent in five years and 64 per cent in 10 years.

This could, at some point, lead to the breaking down of the risk pooling effect, and cause claim cost per life assured to rise at many multiples of income growth, which means that the affordability of IPs will become a concern, it said.

“This is a complex issue that requires much deeper analysis, including segmentation by policyholder groups, and an assessment of what types of claims are driving the increase in claim rate,” it said.

Reiterating that managing healthcare costs is a complex issue with no simple solutions, it said the way forward is for all parties to “work collaboratively to achieve better outcomes for all”.

“LIA Singapore has consistently advocated the need for collective action on the part of multiple stakeholders to tackle this issue,” it added.

“We remain open to engaging with other stakeholders to chart a way forward that balances the interests of policyholders, patients, and healthcare providers, and leads to better outcomes for all.”

Here’s a more detailed look at LIA’s responses to SMA: 


SMA’s point: IP insurers should take a “hard look” at how it justifies its management and commission costs as the first step in ensuring that the IP industry is sustainable.

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) between 2016 and 2019.

LIA’s response: 

  • The growth in management expenses and distribution costs – which includes agent commission, agents’ training costs and rental of agency offices – have generally lagged that of claims when considering figures over a longer period

  • Between 2010 and 2019, total claims grew by six times, from S$267 million to S$1.6 billion, while management expenses had grown 3.1 times, from S$53 million to S$166 million

  • The increase in the growth rate for management expenses after 2017 could be a result of insurers’ efforts to implement recommendations put forth by the Health Insurance Task Force. The task force, comprising industry and government representatives, convened in 2016 to address the issue of escalating claims costs for IPs

  • Management costs could also have been inflated due to new entrants in the IP market between 2016 and 2018. “As new entrants have relatively small portfolios, they will tend to have higher management expenses as a fraction of premiums. In addition, distribution costs are higher for policyholders in the first year of a policy, as considerable work is involved in the inception of IP policies,” it added


SMA’s point: There is no reasonable justification for highly exclusive panels, given that MOH fee benchmarks have been published for the most common 222 procedures since late 2018 to address overcharging.

LIA’s response: 

  • Preferred healthcare provider panels are not new

  • They let insurers use their bargaining power to negotiate preferential rates from healthcare providers in exchange for higher volumes of customers for them

  • This is a reasonable approach to take so long as a reasonable fee is left on the table for the doctor, and savings are passed on to policyholders in the form of lower premiums

  • “Insurers are playing the role we should in stretching the healthcare dollar for policyholders”

  • Removing panels would likely lead to increased premiums, increased co-pays and stricter application for pre-authorisation 

  • However, panel sizes have expanded and will continue to rise as it is in the interest of insurers to ensure that panels are comprehensive, to avoid policyholders having to consult non-panel doctors which incur higher costs


SMA’s point: Only one insurer fully respects the entire span of MOH’s fee benchmarks. Most are not even reimbursing doctors rates that match the midpoint of the benchmarks, with one IP insurer persisting in reimbursing below the lower limit.

LIA’s response: 

  • A study conducted last November found that all five insurers that offer IPs have approved claims above the upper bound of the fee benchmarks. They made up 5 per cent to close to 10 per cent of insurers’ surgeon fee claims from panel doctors last year

  • Those that ranged from the midpoint to the upper bound of the benchmarks contributed to 16 per cent to 55 per cent of panel doctor claims among insurers, while those that fell below the lower bound ranged between 8 per cent and 28 per cent

  • The system of having panel doctors helps to address the lack of an enforcement mechanism for MOH’s benchmark fees

  • This way, insurers set a default fee below the upper bound and make panel doctors sign contracts to be legally bound to charge within an agreed fee range

  • This is because doctors are not required to abide by fee benchmarks, which merely provide guidance as to what are considered acceptable charges, but about two per cent of procedures have an upper bound that is 4.2 to 6.3 times the lower bound

  • Doctors also hold considerable discretion on how much to charge, as it is not spelt out on many procedures when they should charge toward the upper end 


SMA’s point: No doctor or policyholder knows what actual quantitative or qualitative measures make up the criteria for how doctors are selected to be on a panel

LIA’s response:

  • It updated its guidelines on March 29 to call on insurers to publish the general criteria for how they select their doctors as a “best practice”

  • Insurers would typically review the prospective panel doctor’s past claims to see if the historical charges have been reasonable, such as whether there are any red flags in terms of volume of suspicious claims and readmission rates

  • They will also check on the doctors’ overall reputation, training records and credentials and whether they have any disciplinary issues with the Singapore Medical Council

  • “Insurers will work with stakeholders to better communicate their criteria to doctors”


SMA’s point: 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.

In Singapore, 75 per cent of gross premiums went to insurance claims between 2016 and 2019, while 7 per cent went to management expenses and 9 per cent to commission.

LIA’s response: 

  • It may not be appropriate to “directly transplant” US’ regulatory requirement to Singapore

  • Insurers in the US, such as Cigna, United Health and Blue Cross Blue Shield, operate at a much larger scale than insurers here, covering over 10 million lives each, more than the population of Singapore

  • Health insurance premiums are also much higher in the US than in Singapore, which make it easier to cover management costs at a lower percentage of premiums

  • Evidence on the effectiveness of such “medical loss ratio” regulation in the US is anyway mixed. Some research suggested that it brings insurers to cut down on their cost containment efforts so as to allow claim costs to grow to meet targets

  • “LIA Singapore will defer to the relevant regulators to make a more detailed analysis and determination on the feasibility and value of introducing (medical loss ratio) regulations for policyholders”

Related topics

Singapore Medical Association LIA Integrated Shield Plan insurance doctors cost healthcare

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