Black Hole Trek: Into Darkness

SMC’s new requirements on doctors with regard to Third Party Administrators (TPAs) are finally in force. But not before some frantic and often bewildering announcements by many stakeholders; including the SMC, the three professional bodies (PBs) and of course, the TPAs themselves.

Many of the TPAs announced some new charging system that did not involve percentages but in fact, still looked like they were fee-splitting, thereby undermining the spirit and substance of the new SMC requirements. Of course, SMC had to respond with a last-minute Advisory and the three PBs also then added in their bit to remind doctors. Finally, several TPAs then responded with a literally last-gasp amendment to the charges and contracts they were offering doctors. A handful of TPAs were issuing new charging schedules on as late as 30 June 2017 – the eve of the new SMC requirements’ implementation.

All these last-minute jostling and positioning maneuvers underlined several hard truths which this Hobbit would like to point out now (and not earlier, as we all have just recovered from brain-freeze and acute attack of attention deficit arising from the FamiLEE saga):

  • TPAs’ primary reason for existence is to maximise profits (like any other commercial entity)
  • There is much ambiguity in the SMC requirements.
  • Indirect regulation of TPAs via SMC is highly unsatisfactory

The first point is obvious. That’s why many TPAs, while removing percentages from the schedules, actually charged more from the doctors and also allowed the doctors to raise their fees. They are there to maximise profits first, then try and save money for their corporate and insurance clients. Nothing wrong with that. But we need to recognise this. TPAs exist to maximise shareholder value (which usually means maximise profits).

The second point is TPAs were prepared to protect or even enhance their margins by eliminating percentages from the charging schedule, but in essence, they were trying to get doctors to skirt the fundamental intent of SMC requirements – which is to prohibit fee-splitting. In the first instance, almost none of the TPAs gave any detailed justification as to how their charges were arrived at on a cost-plus basis. If they gave, it was only the barest and skimpiest one or two-liner justifications.

Some of the TPAs made assurances that actually meant little to the doctors. They told doctors they had consulted their lawyers and their lawyers had assured them their fee schedules were in-line with SMC requirements. The interpreter of any SMC requirement are the Complaints Committee and Disciplinary Tribunals of SMC. The FINAL interpreter of SMC requirements is the Court of Three Judges. If I get hauled up to a SMC Disciplinary Tribunal and get suspended for three to six months, is the TPA going to indemnify me for my loss of earnings, legal costs etc? Not to mention my loss of professional reputation and emotional suffering? Remember, a company can indemnify you for civil damages, but it cannot (and should not) indemnify you financially for the consequences of SMC disciplinary proceedings that are “quasi-criminal” in nature. So as far as this hobbit is concerned, whatever the TPAs’ lawyers said to the TPAs is not worth very much to me unless I am given a copy of the lawyer’s advice in writing. And even then, what redress can I get from the lawyers? They are the TPA’s lawyers, not mine. The lawyers owe a professional duty to the TPA, not me.

This whole episode of last-minute and frantic issuance of advisories and TPA fee schedules and contracts reflects the painful fact that SMC is NOT the correct body to regulate TPA activities and TPAs should be directly licensed and regulated as healthcare institutions. And this hobbit is still wondering why the authorities are so reluctant to do so.

The full weight and risk of this approach of indirect TPA regulation now falls on the doctors and not the TPAs themselves. The uncertainty of SMC’s new requirements, and hence regulatory risk, falls on the doctor, not the TPA. That is why the TPA is willing to take risk by issuing fee schedules that followed the letter but not the substance of SMC’s requirements initially. If the doctor gets hung, the TPA still gets away scot-free (unless the TPA is run by a doctor). It is an unfair playing field manifestly. A simple principle of regulation is that the party who gets the most benefit should be the one that gets punished most severely, but all parties that benefit should be punished. This is the approach taken by MAS (Monetary Authority of Singapore) when they punish both the rogue bankers and the bank if there are money-laundering activities. This was well put by the Managing Director of MAS, Mr Ravi Menon, recently.

But if you take the example of TPA, there is nothing remotely close to this level of thinking. The doctor may get punished severely by SMC, then the TPA changes the way it charges. But can anyone fine or suspend a TPA? Probably not. Who gets the money? Yes, the doctor, but also the TPA. The regulatory risk and downside is fully loaded onto the doctor. TPA – practically ZERO.

Politically it also doesn’t make sense (And this hobbit doesn’t make any comments about politics usually, but he will make an exception here). If the authorities regulate TPAs, they may just displease a few folks who own and operate TPAs. The current regime of loading 100% regulatory risk onto doctors probably irritates and angers thousands of doctors. So the political math just doesn’t add up either.

If you think this is bad, well, things just got worse and darker. We now move into the area of  medical concierge. We are going into pure darkness here. There is no light. We are into the stuff of black holes.

Firstly, medical concierges are not new. They have existed for a long time and there is a role for them, especially for foreigners trying to get medical care here. They help foreign patients find the right doctor, book air-tickets, hotels, service apartments and conduct other support activities etc. They may charge the doctors and/or the patients.

But two new developments have led to a new phenomenon – medical concierges for local patients! One must wonder why would a local need medical concierges since Singapore is so small and connected.

These new developments are:

  • Dwindling number of rich foreign patients, due to our high costs and charges in the private sector
  • As-charged Integrated-Shield Plans (IPs) (especially those with first-dollar coverage riders)

In the recent past, many of these medical concierges were actually insurance agents. Insurance agents are regulated by the authorities through the regulation of insurance companies (“insurers”). These insurance agents/medical concierges were referring patients to specialists and asking for a percentage-based admin fee, not very much unlike what TPAs were doing.

The authorities then reminded these insurers that their agents CANNOT take a fee for such activities. The agents can get paid commissions when insurance policies are bought and premiums paid, but certainly not for referring patients for episodic care.

So the insurance agents stopped doing so, which is good. But then some agents realised “hey, healthcare fee-splitting for referrals is better business than selling policies!”. Quite a few of them promptly left the insurance industry. They are now full-time medical concierges and no more insurance agents. Medical concierges are completely unregulated.

Apparently, these concierges can demand up to 25% of the doctor’s and hospital bills as admin fees. For example, for one inpatient episode: professional fees may be $10,000 and hospital portion is another $10,000. Total: $20,000. The concierge will ask for 25% which is $5,000. This amount may be split between the hospital and the doctor, or more often than not, paid fully by the doctor (i.e. Out of the $10,000 professional fees portion, the doctor takes $5,000 and splits the other $5,000 with the concierge).

The concierge, who is no longer an insurance agent, may work with his former colleagues in the insurance industry to get a steady stream of patients who bought IPs. The specialist bumps up the professional bills to cover the admin fee, knowing that for IPs that have first dollar coverage and as-charged riders, the insurers will pay what is charged. The patient doesn’t feel the financial pain, the concierge gets paid and the doctor gets paid for work. Nobody gets hurt ostensibly (except the insurer).

Where does the admin fee go to? This hobbit hopes that it only goes to the medical concierge. But if one is intellectually honest, one cannot exclude the mathematical possibilities that the admin fees can also go to the insurance agent and/or the patient, in terms of cold hard cash or just a good meal or even a few cans of abalone or bird’s nest. You never know.

These medical concierges here are also acting as one-man TPAs essentially. They are even more difficult to track than the usual TPAs which are companies. This hobbit is told that several concierges are behaving haughtily in the private hospitals because they bring so much business to them. They are not to be messed around with.

How should the authorities address this new front of medical concierges benefiting from local patients with Integrated-Shield Plans? Should SMC now issue advisories on medical concierges?

Frankly, the answers are obvious. But it is not for this hobbit to say them here.

It’s getting really dark, and maybe it’s time for this hobbit to take Flight NCC 1701 to the Undying Realms.

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