The debate surrounding the "Deny, Delay, Revoke" The Unjust Aspect of the Complaint

 The Other Side of the Coin: 

The debate surrounding the "Deny, Delay, Revoke" practices of Malaysian health insurers has correctly generated sympathy for the patient. However, the loudest complaints often come from the private hospital sector—a constituency whose financial dependence on insurance payouts creates a significant commercial incentive to advocate against insurer scrutiny.

To fully understand this dynamic, we must first appreciate the scale: In 2023, the total medical claims payout by life insurers surged to RM7.7 billion. This money is the financial lifeblood of the private healthcare sector, which recorded an overall revenue of approximately RM27.7 billion in the same period. While a precise percentage of private hospital revenue derived from insurance is often guarded, the data makes it clear: the private healthcare model thrives on the cashless facility that insurance provides.

This high reliance means that a denial of a Guarantee Letter (GL)—the initial promise of payment—immediately disrupts a hospital's cash flow, leading to an inherently biased complaint against the insurer's attempts at prudence.

The Unjust Aspect of the Complaint

When private specialists complain about the denial or revocation of a GL, their justified ethical concern for the patient often masks a commercial grievance against the insurer’s control over their revenue stream. This complaint often overlooks three crucial commercial realities:

1. The Conflict of Interest: Driving Revenue vs. Patient Necessity

In a highly concentrated private hospital market, there is an inherent risk of moral hazard and provider-induced demand. When a hospital knows the insurer is paying, there is less incentive to employ the most cost-effective treatment. Over-utilization—using high-cost inpatient services for procedures manageable on an outpatient basis—inflates the collective cost of healthcare.

When an insurer rejects a GL for being "not medically necessary," they are not questioning the clinical quality; they are questioning the financial necessity of the admission. The hospital, focused on filling beds and maximising the billable services that fuel their revenue, views this challenge to its billing practice as interference in clinical judgment. In reality, the insurer is simply fulfilling its fiduciary duty to challenge potential inflation and protect the premium pool from being drained by excessive utilisation.

2. The Pricing Disparity and Lack of Transparency

A persistent issue, often raised by insurers, is the perceived "Insurance Card Premium"—the suggestion that insured patients are charged more than cash-paying patients for the same procedure. Although regulatory bodies attempt to curb this, the opaqueness of itemized billing makes it difficult to verify.

Hospitals often complain that insurer scrutiny is onerous, but their refusal to fully embrace standardized, transparent pricing models (like Diagnosis-Related Groups or DRG) puts the onus back on the insurer to meticulously vet every item. When a GL is denied, the hospital is essentially losing a guaranteed, pre-authorized, and potentially inflated, source of payment. Their complaint is a defence of their billing autonomy, often at the expense of premium sustainability.

3. The GL is Not a Payment Guarantee

The most critical misconception, perpetuated by convenience, is treating the GL as a final claim approval. As an insurance professional, I must stress: a GL is merely a provisional pre-authorization based on initial documents. It signifies that the patient has a valid policy.

When a specialist complains that a GL is revoked after treatment, the insurer is often acting on final diagnostic data that contradicts the initial provisional approval. For example, if a patient is admitted for "suspected stroke" (GL issued) but the final diagnosis is "severe dehydration" (non-covered, non-inpatient necessity), the insurer is contractually obligated to pay for covered services, but they must revoke the admission guarantee itself. The hospital views this as a lost payment; the insurer views this as an unavoidable correction of risk based on factual information.

Systemic Solutions: Shifting the Financial Burden Away from the Patient

We need to de-link the hospital's financial security from the patient's urgent need for care. The battle between the RM7.7 billion in claims paid and the small fraction of GL denials cannot be fought on the patient’s bed.

A Financial Safety Net During GL Review: The key innovation lies in providing instant liquidity to the patient while the GL is being reviewed or appealed.

 * Hospital-Insurer Revolving Credit: Instead of outright denial, the insurer issues a "Claim-in-Process" letter. This letter authorises the hospital to proceed with treatment while simultaneously initiating an automatic, zero-interest Credit Facility (similar to a 'Buy Now, Pay Later' system) with the hospital's bank or a third-party financier for a capped amount. If the final claim is approved, the insurer repays the credit directly. If the claim is ultimately rejected, the patient repays the structured, low-interest loan over a set period. This shifts the immediate financial risk from the patient to the hospital/financier, making the hospital a stakeholder in the final claim's approval.

 * Medical Emergency Bond: For life-threatening, complex cases above a certain threshold, the government or BNM could establish a Sovereign Medical Emergency Bond. This bond would act as a temporary collateral for the hospital during the GL dispute, ensuring the hospital is paid immediately. The final financial burden is then placed on the insurer (if the claim is valid) or the policyholder (via a safety-net loan if the claim is invalid), removing the hospital's justification for denying care.

Ultimately, the frustration from the private hospital sector must be balanced against its high profitability and dependence on the insurance pool. True reform requires transparent pricing, accountable clinical decisions, and innovative financial mechanisms that guarantee patient access without compromising the financial sustainability of the entire system.