Buyers of new Integrated Shield Plan (IPs) riders will have to co-pay a minimum 5% of a medical bill, with a cap on the amount of co-payment each year, the government has announced. New riders with the co-payment requirements will be ready within a year. The move is aimed at ensuring that health insurance remains sustainable.
Senior Minister of State for Health Chee Hong Tat announced this yesterday saying that most insurers are planning to launch their new riders with an annual cap of S$3,000 (US$2,280). The ceiling places an upper limit on the risk exposure for policyholders, to protect them against very large bills, he said.
The changes in requirements will affect those who will pay for what is known as “full riders”, on top of IPs. Such riders cover the entire co-payment amount, so the policyholder does not pay anything towards the bill size. Currently, about 29% of Singapore residents have these full riders, Mr Chee said.
IPs comprise two components: the first is a government-run basic medical insurance plan called MediShield Life and the second is an additional private insurance coverage component run by private insurers, typically to cover more expensive wards in public hospitals or private hospitals.
The MOH is giving insurers until 1 April 2019, to offer new riders that include the co-payment and cap. To prevent people rushing out to buy full riders before then, anyone buying a rider from today has to switch to the new scheme by 1 April 2021 at the latest.
“We expect the new riders to have lower premiums than full riders, so the switch will result in premium savings for policyholders,” Mr Chee said.
The S$3,000 cap applies only if patients are treated by doctors on the insurer's approved panel, or have received prior approval from the insurer. Otherwise, they still have to pay the 5%, but there will be no cap on how much they need to pay each year. Currently, only four of the six insurers have such panels and pre-authorisation.
Runaway costs
The zero co-payment feature of full riders has resulted in a “buffet syndrome”, leading to over-consumption, over-servicing and over-charging of healthcare services, Mr Chee said. “This is a key reason why rider premiums have increased by up to 225% over the past two years,” he said.
“Our objective is to address the concerns with over-consumption, over-servicing and over-charging, as these will lead to patients and policyholders paying rapidly escalating fees and premiums over time,” he said.
Mr Chee gave some of the examples of over-consumption and over-servicing, which he described as “disturbing”.
In one case, a full rider policyholder made claims for 12 nose scopes in a year, without clear medical need, and another policyholder who underwent an expensive surgery for a small breast lump removal that cost S$70,000 in doctor fees alone, when there was an equally effective alternative procedure at S$5,000.
In 2016, the average medical bill size for full rider policyholders was about 60% higher than the average bill size for those without riders, even though rider policyholders are younger and generally in better health, he added.
LIA Singapore's response
The Life Insurance Association Singapore (LIA Singapore) says in a statement that it supports the Ministry of Health’s requirements for all six IP insurers to incorporate co-payment features in new IP riders. This is in line with a recommendation made by the Health Insurance Task Force (HITF) in October 2016 aimed at addressing rising healthcare and health insurance costs in Singapore.
LIA believes that the incorporation of co-payment into IP riders will:
- encourage consumers to play an active role in choosing their medical providers and treatments for their health care,
- encourage healthcare providers to recommend medically appropriate and cost-effective treatments to patients,
- enable IP insurers to better manage claims cost and reduce the need over time for significant premium increases, as well as
- enable IPs/IP riders to continue to be viable and sustainable options for consumers who seek additional benefits to complement the coverage by MediShield Life.
“LIA supports the new requirements from the Ministry of Health. IP insurers’ adjustment to their product design is another proactive tool to help manage rising premiums, rather than relying on raising premiums to cope with higher claims.
With each stakeholder - life insurers, policyholders, healthcare providers, medical professionals, patients and government agencies - playing a part, LIA Singapore is confident that healthcare in Singapore will continue to be accessible and affordable for Singaporeans,” said Mr Patrick Teow, President of LIA Singapore.
Other efforts
In line with the HITF recommendations, LIA Singapore has also developed two best practice guidelines to help consumers manage their healthcare costs:
Pre-Authorisation Framework – Establishing a process for policyholders to obtain a review and approval for a medical treatment and its estimated bill size prior to the actual procedure.
This serves to guard against unnecessary treatments, any unexpected out-of-pocket payments, and possible denial of claim.
A common practice amongst international health insurers, this framework provides numerous benefits including:
- Allowing insurers to assess the medical necessity and cost of the treatment before the treatment is carried out,
- Providing policyholders certainty, informing whether the treatment is or is not within their insurance coverage, and
- Providing healthcare providers clarity, informing whether the treatment is or is not within the insurance coverage of their patients.
Panel of Preferred Healthcare Providers – Establishing a list (panel) of doctors which IP insurers are confident of offering appropriate and cost-effective medical services to policyholders
This initiative, which is common for employee benefit insurance, has proven to be effective in managing fees charged by healthcare providers.
The industry agrees that the use of a panel of preferred healthcare providers for IP plans with fees ascertained upfront will help to keep claims within reasonable range. Policyholders who use panel doctors have the assurance that their claims will be covered by their insurer.
Panel insurers should aim to have a sufficient network of preferred healthcare providers who can offer a wide range of medical services to its customers.
The insurers should aim to ensure that the standard of care provided by their panel of preferred healthcare providers is consistent with customary medical treatment and in accordance with generally accepted medical practice in Singapore.
IP insurers have agreed to adopt the best practices, and have or are planning to roll out the above initiatives.
Promotion of health and wellness
Insurers are also rolling out creative efforts to encourage customers to stay healthy and well. These include encouraging the use of health monitoring devices, attending exercise and wellness programmes, as well as adopting healthier dietary choices.
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