The Singapore Medical Council (SMC)’s revised Ethical Code and Ethical Guidelines came into effect this month, with its new rule on Third Party Administrators (TPA) attracting the most attention.

It effectively bars doctors from paying fees to TPAs that are calculated as a percentage of fees that doctors charge their patients — which is the current practice.

The new guidelines, though more transparent, could have wider implications for the medical industry and the quality of healthcare for patients.

TPAs provide intermediary services such as managing employer medical benefits. As they service many companies and have a large patient base, doctors are prepared to accept discounted fees to be on a TPA panel. This benefits companies and their employees through lower medical fees at general practitioners (GPs) and specialists.

These TPAs charge both parties — companies and doctors. They bill companies for their employees’ healthcare expenses, and also collect 10 to 25 per cent of the doctors’ fees as administrative fees.

SMC president Tan Ser Kiat, however, has likened doctors paying a percentage of their fees to TPAs as a form of “fee-splitting”, which could inadvertently lead to cost escalation.

IMPACT ON PATIENTS AND THE HEALTHCARE SECTOR

In light of the new SMC guidelines, the Singapore Medical Association (SMA), the College of Family Physicians Singapore, and the Academy of Medicine Singapore have issued a joint statement recommending a fixed administrative fee structure, based on a cost-plus model.

The three doctors’ bodies also pointed out that not all percentage charging might be in breach of new ethical guidelines in “very specific and limited circumstances”. This includes situations where the TPA fee represents a “small percentage” of the doctors’ fee, or when the doctor’s practice is such that the vast majority — over 80 per cent, for example — of bill sizes falls within a “narrow range”.

As it stands, the SMC — a statutory board that regulates doctors — may take action against doctors who continue to pay a percentage fee to TPAs after July this year.

Understandably, doctors, not wanting to risk being taken to task by SMC, may choose to terminate their contracts with TPAs before the grace period is over. These doctors would have to find a replacement doctor on the TPA panel for their existing patients.

Yet, it could be challenging for doctors to do so if a TPA has only a handful of doctors or specialists left.

This will adversely affect patients. As most TPA arrangements with doctors may well terminate, patients will have a more limited choice of medical services within the TPA panel.

If patients choose to see doctors who are not on the TPA panel, even if it is the same doctors they used to see when the doctor was on the TPA panel, they would have to pay the market rates for medical fees, which are usually higher than TPA fees. And their employers may not cover the extra medical expenses.

Patients covered by TPA contracts should start asking their employers about how their health coverage will be affected after the new rules start on July 1.

While those who can afford it will probably continue to visit their usual doctors, others may switch to restructured hospitals and polyclinics which provide subsidised care. This adds an extra patient load to the public sector, which will further stretch public resources.

Such potential problems may not materialise if the SMC guidelines compel the half-dozen or so TPAs to change their fee structure. A couple of them have indicated that they would do so, with some starting discussions with SMC.

What can a TPA do to comply with the new guidelines?

First, it can simply just charge the panel doctors a fixed fee for all patients, based on a cost-plus model.

Instead of charging 10 per cent to 25 per cent of the doctors’ fees, a TPA can charge panel doctors a fixed fee of, say, S$10 for each consultation. The amount can be adjusted subsequently if TPAs’ overheads, such as manpower costs, rise.

Alternatively, a TPA can amend its reimbursement arrangements with doctors. For example, when a patient goes for a gastroscopy, the TPA will reimburse the doctor S$100 for the consultation, and S$600 for the gastroscopy fees. At the end of the month, the TPA charges 15 per cent of the doctor fees as administrative fees, and this is considered unethical by SMC.

But it will be completely fine if the TPA simply reimburses the doctor S$85 for consultation and S$510 for gastroscopy. This does not mean less revenue for the TPA, as it would have collected the same fees. This would also not be tantamount to fee-splitting, which the SMC is against.

What this requires the TPAs to do is to be completely transparent with companies and doctors about the fees it collects from them.

With the new SMC regulations, it is time for TPAs to change their mode of charging, and be more transparent about their charges to all stakeholders — doctors, employers and patients.

These TPAs serve a need, helping employers arrange for discounted medical care for their employees, who can choose their preferred specialist and GP from a large panel of doctors. They should continue to evolve and play this middleman role, without compromising on the cost and standard of healthcare.

ABOUT THE AUTHOR:

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