The Singapore Medical Council (SMC) last Friday warned that doctors working with Third-Party Administrators (TPAs) who charge administrative fees based on medical services or consultation fees will get into trouble for running afoul of its new ethical guidelines.

The guidelines — first announced in September last year, and taking effect from this Saturday — state that administrative or referral fees can be paid by doctors to TPAs.

However, the amount must reflect the actual work done by TPAs in handling and processing the patients. Such fees — which must be disclosed to patients — cannot be so high as to constitute fee-sharing.

According to the SMC, fee-sharing happens when the referral cost or payment made to TPAs are of such a quantum that these “become an incentive to charge patients large sums, or over-service patients”, and allow TPAs “to profit at the expense of patients”.

The warning by the SMC that it will act on any complaints against doctors has left no doubt about how serious the government body that regulates doctors here is in enforcing the new rules.

TPAs here have worked with both doctors and employers for years.

On one hand, they recruit family doctors and specialists into their panel with the promise of access to a large patient base.

On the other hand, they sell to employers medical plans that are less costly than market rates.

Some can have up to hundreds of thousands of patients in their system, therefore many doctors are willing to work with them, and charge lower fees than usual.

There are more than 10 TPAs in the market who constitute a huge market force in the private sector.

Most of them used to charge 10 to 20 per cent of doctors’ fees as administrative cost. But the new SMC guidelines mean such arrangements have to end.

Several TPAs have since proposed a revised charging method: The tier system.

Surgical procedures in Singapore are graded into seven different tables based on their complexity. For instance, gastroscopy is in Table 1 while liver transplantation is in Table 7.

Some TPAs now want to tie the amount of administrative costs to the table of surgery, charging doctors S$100 for performing Table 1 procedures, and up to S$1,000 for Table 7 operations.

The TPAs claim that such an arrangement does not constitute collection of a percentage of the doctors’ fees. And they argue that more administrative work is needed for claims involving more complex surgeries.

For consultations, TPAs have proposed a similar tiered system whereby administrative costs are charged based on how much the medical bill would be.

As reported by Today this month, doctors remain concerned that some TPA payment proposals would contravene the spirit of the new SMC ethical guidelines.

None of the TPAs I personally work with have proposed a flat and fixed administrative fee system, as earlier recommended by three medical professional bodies here — the Singapore Medical Association (SMA), the College of Family Physicians Singapore (CFPS), and the Academy of Medicine, Singapore (AMS).

With July 1 fast approaching, many doctors are understandably anxious about the situation. Leaving TPAs may mean a loss of patients. But staying on the TPA panel risks being penalised by the SMC.

In its response last Friday, the SMC said that its new guidelines did not prohibit tiered, fixed-fee structures per se.

However, payments by doctors to TPAs cannot be based primarily on the services the doctors provide, or the fees they collect.

While the SMC could not comment on each and every individual fee structure proposed by the TPAs, it clarified that some of their tiered schemes would not comply with its rules as they appear to be based largely on doctors’ services or fees.

By 7pm on the same day, the three professional bodies — the SMA, CFPS, and AMS — issued a joint advisory, stating that a tier system is inappropriate as the administrative fees are still dependent on the medical bill.

The three bodies strongly urge their members to refrain from entering into a business agreement with TPAs that could not justify how the administrative fees are charged.

A further twist came an hour later in the form of an email from the CEO of one of the TPAs in response to the SMC advisory.

The CEO said his company has consulted its lawyers and the Ministry of Health, and its understanding is that its tiered-fee system is compliant with SMC’s new guidelines.

In the space of a few hours, doctors received three different advisories. Amidst all the confusion and opposing claims, what should they do?

Some doctors feel the tier system could be justified, and have chosen to remain on the panel of TPAs.

Other doctors interpret the tier system as being non-compliant with the revised SMC guidelines, and are worried about being penalised with a fine or suspension.

Although most doctors have purchased indemnity insurance for malpractice lawsuits, complaints by SMC on fee-splitting are unlikely to be covered by these indemnity insurance companies, as such complaints are not medical or professional issues.

A doctor hauled up for a SMC disciplinary hearing will likely need to hire his own lawyer to argue his or her case, and the legal fees can be costly to their medical practice.

No matter how TPAs reassure doctors, in the event of a SMC complaint, doctors will be very much on their own. Many doctors I know are therefore confused and undecided.

Different TPAs have come up with different tiered-fee systems, and each has its own ways of justifying that it is compliant with the revised SMC guidelines.

Doctors are hoping the council can comment on each individual TPA plan before June 30.

At the end of the day, the healthcare industry also needs to answer some questions.

First, medical bills for TPA patients are already lower than the market rate. Must TPAs take another cut from the doctors’ fees?

Secondly, while various medical bodies have repeatedly recommended a fixed-fee system, why is it that none of the TPAs have adopted it?

In addition, should not patients in the system be referred to the best doctor, rather than a doctor willing to pay the referral fees?

Lastly, while doctors are regulated by the SMC to ensure they provide ethical and professional care to patients, who, then, regulates TPAs to ensure their practices are fair and ethical?

ABOUT THE AUTHOR:

Dr Desmond Wai is a gastroenterologist and hepatologist in private practice.