Great Eastern suspends Mount Elizabeth pre-authorisation - time to relook how health insurance is managed?
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You're listening to a CNA Podcast. Hey everyone, welcome back to another episode of Deep Dive with Otelli and myself, Steven. Now, Otelli, let me ask you, are you an insurance kind of person? Do you buy travel insurance, medical insurance, all that kind of stuff? I'm not super fond of it. Like, I do not buy travel insurance. But we'll save that for another day because today we're here to talk about health insurance and all that. That I have.

Okay, you're not worried that, you know, because insurance is there sort of as a backup plan in case something happens, right? Sure, sure, sure. But I think for like travel insurance and all of that, if it's just like amounts to a few hundred dollars, I'm okay handling with that. It's more of the hospitalization that goes up to the tens of thousands that I'm worried about. So that's where I'm covered.

But I heard that you actually have a folder or some kind of a file with all your family members' insurance in there. It's just, well, it gets so hard to organise. So I have, whenever we buy the insurance, I put it online in the cloud so I know

So you've got it all covered, basically. Yeah, I mean, I'd like to think we're covered enough, but not over-insured. So are you with Great Eastern, by the way? No, I'm not. I won't tell you who I'm with. Yeah, because that is what we're here to talk about. It's been in the news, you know, Great Eastern, which is one of Singapore's largest insurers, basically, they have stopped pre-authorisation for two private homes.

hospitals, Mount Elizabeth Orchard and Mount Elizabeth Novena. So in a nutshell, what does it mean for policyholders? What are our options and choices? That's what we're here to explore today. That's right. And to help us break down what this all means, we have two guests, Associate Professor Jeremy Lim at the Sausage Hawk School of Public Health. Thank you. Delighted to be here.

And Dr. Yong Siu Lee, a healthcare consultant. She was formerly on the Medical Fee Benchmark Committee as well. For two years. Yes. Welcome, welcome. Yeah, okay. So yeah, we gotta kick things off by talking about the technical stuff first. Because, I mean, just like a lot of people, I didn't even know what pre-authorization was about. Because I have my policies with public hospitals.

So there isn't such a thing as that. Yeah, so the pre-authorization and the letter of guarantee, what does that actually mean? All right, so pre-authorization is a service given by insurers to assess the claim or the episode of care to see whether they will pay for it.

So it was recommended in 2016 by the Health Insurance Task Force, right? In order to mitigate rising premiums. So at that time, insurance premiums were also going up too rapidly. So there were three recommendations to control the rise of premiums. One is medical panel. The second is fee benchmarks. And the third is to implement pre-authorization. So pre-authorization is a process whereby prior to the admission, the approval is sought from the insurer as to the medical condition,

the estimated bill size and the procedure that will be done. So this is only meant for planned admissions. So planned surgeries that you plan ahead of time. But wasn't it some insurers actually have this pre-authorization and you have others like income for instance that don't require that? Yes. So pre-authorization is a service to be able to give some the customer the assurance but

But it's an added step because it happens before the admission and there's a sort of time pressure in order to approve it. And once pre-auth is approved up to the sum of money that the doctor has put in and the hospital has put in, it's virtually guaranteed. So after the stay, the patient is assured of that. It's bringing forward the claim assessment.

And that's kind of a bit of a rush for some insurers and it has added costs. So I think all insurers weigh the pros and cons of implementing pre-op and whether they want to do it. There's an opportunity to negotiate with the doctor. But it's good for the patient because they know that they won't be out of pocket in any way. Yes. Is that the same as a letter of guarantee? No, it's not the same. So the letter of guarantee guarantees that the insurer will pay up to a certain amount.

So it's maybe $30,000 or $50,000. So the letter of guarantee, because the insurer guarantees to the hospital they will pay up to that amount, then the hospital will not demand the deposit.

So with the pre-off, the hospital says, "Alright, I don't need the deposit. You have a pre-off approval. It's guaranteed. My doctor can admit you and do the surgery." So with the LOG, it's slightly different. The insurer guarantees it. So prior to issuing a letter of guarantee, insurers will actually assess in some ways the chances that they will pay for the claim. There is a chance they won't pay for it.

In which case, they will recover the money. I think that is a negotiation process. It's guaranteed to the hospital, but not to the patient.

So the insurer might recover it from the patient later on. So they tell the hospital, I will pay for this bill, but they don't tell the patient that I'm paying for you. So the difference between pre-auth and LOG, right? But the LOG allows the patient to be admitted without the... Let's just clarify again. So pre-authorization means the insurer is saying, I will pay for the treatment. Let's say you get your appendix out. I've agreed with the hospital. X amount price, I will pay for it. Letter of guarantee just means...

that up to this sum of money, so the bill could be $200,000, but the lateral guarantee is for $50,000. So if the hospital says, okay, up to $50,000, I don't take a deposit. Anything above that, I still need it, right? Okay, so in a nutshell, what does that mean for the Great Eastern policyholders, especially those who have doctors at Mount E? Because now they don't have that option, right? Yeah, but some insurers also don't have. So it goes back to the pre-2016 days when they didn't have the option anyway.

So it goes back to before when they were not given the assurance they are under the risk of going in, having the procedure done. But it's not easy for insurers to decline claims. So they can educate themselves as to what is covered. It's not easy. And in this case, just to clarify, GE is not saying they won't pay for the bill. They're just saying you pay first and then do a reimbursement and I will. GE actually said you take an LOG first.

Right? Okay, okay. They're just basically making it a bit more challenging to... But I'm not guaranteeing... But still, that is very stressful for the patient, right? Because you're lying there. I disagree. You disagree? Yeah, because not being guaranteed and not knowing how much I have to pay in the end, it would be very stressful, especially when I'm sick, you know? I have to go for this surgery. Yeah, doctor, why are you using the new one? It's okay, never mind. Can we use the cheaper scalpel? No, no. I disagree. I disagree with that. Because...

I think the insurance is there, right? To cover your hospital bills. But it's not a guarantee, you see. So what I mean is, I don't know how many zeros there are at the end. The contract is guaranteed. Professor Lim, let us get you in on this. So from the patient point of view, like you're telling me, there will be some concern, right? I think patients understandably want guarantees. That's why they purchase...

these insurance products and anything that creates this seed of doubt, this uncertainty changes behavior. Right. Right. And if we read the fine print, every insurer says,

pretty much says it will cover what is reasonable and customary. However, what that term means is essentially subject to debate. You ask 15 people, you may have different ideas. So in terms of the cost, right? So basically Great Eastern is saying, basically there are other hospitals out there providing the same kind of treatment with the same kind of outcome is charging 20 to 30% less. Right.

So therefore, in other words, so what Great Eastern is trying to do is trying to actually maybe get their clients to switch hospitals, perhaps to the ones that... To get services, to get medical care elsewhere. I think it is very reasonable that every payer, the insurer, whether it's a private insurer, whether it's the government, will want to get value.

And the challenge here in my mind is that it's almost he says, she says. Great Eastern says that these two hospitals have higher charges for the same outcomes, for the same case mix, for the same type of patients. IHH disagrees. And where's the data? Healthcare becomes a little more complicated than buying a phone or buying a laptop because different patients may have different risk factors.

Steve, you may go into hospital and you may have an uneventful two days. Someone with kidney failure who had a bypass last year may be at much higher risk. And this creates the uncertainty. So the ability to, in essence, use advanced analytical methods to be able to compare apple for apple is absolutely integral in really healthcare. And this is what we call risk adjustment.

And I've not seen any data from any party that has done this in a convincing way. And they were actually in the midst of negotiations. We know this is an evolving thing. They always renegotiate to review prices, right? Yes, absolutely. So what happened here? I mean, and again, we must remember they're only marking out these two hospitals, but under IAH, there are other hospitals too. Yes, there's also Glen Eagles, Parkway East. So why not them, right? Why are they charging? Why are hospitals charging differently for the same treatment? I mean, what?

What would be some of the reasons behind that? It is a different customer segment. I mean, at the end of the day, every private healthcare business is still a business in a large F&B group. Let's say, Tung Luk, there'll be different price points for different offerings. So similarly, if we look at the IHH suite, there's not just differences in clinical expertise and equipment, but the service offerings may be different also.

To break it down, I think different hospitals have different charges and GE will have access to the data as to the charges. So the detailed bills actually show the differences. So you have surgeon fees that can be standardised with fee benchmarks, but you also have OT facility fees. You have bed charges which vary between the hospitals.

So like a five-star bed versus a three-star bed. Versus a six-star, all right? So the facilities are all different and that attracts different price points. Some insurers have actually dealt with that by tiering the insurance. So if you choose a certain tier of insurance, you can go to all the hospitals, right?

or you choose a sub-tier, you can go to some of the hospitals and you pay a lower premium, right? So if they pull all the hospitals, then naturally the premium will go up if everybody chooses the most expensive hospitals. But right now we don't, right? We either have, if you choose to adopt the private one, you have access to all the private hospitals. No, not all the insurers are like, so insurers have different schemes for customers with different pockets. You know how deep the pockets are. I think it's time for me to talk to my insurance agent. Yeah, so,

Different expectations. I mean, what was the difference between choosing like public versus private? I mean, because public, you can choose the A ward or the premium as well, right? So, what would you say is the main difference there? Generally, the insurers don't impose a pre-authorization on the public hospitals and this includes the private wards of the public hospitals because there's a high degree of predictability in the public hospitals because...

doctor's fees are pretty much set. The hospital charges for room, for other services and so on, very, very predictable. And they're well within the range of what the insurers are prepared to pay. So policyholders who go to a public hospital, generally the experience is pretty fuss-free because there is high degree of conviction amongst the insurers that the fees are going to be reasonable.

So versus the private hospitals, which what you seem to be suggesting is a bit more volatile. There is much more variability because the doctors price differently, which as you mentioned, has been attenuated by the fee benchmarks and by the negotiations that the insurers have had with the doctors. So isn't all that enough to keep things in check?

for them to pull this move now must say... It's a constant tug and pull, you know. That's a constant, you know. And if we look at the data, Steve, once upon a time, the doctor's fees were the equivalent of the larger part of the total bill size. Okay.

Now that the doctors portion, the surgeons, anesthetists, the other doctors who may be involved in the care of the patient, all this has been negotiated since the 2016 Health Insurance Task Force with the impanelment and all that. So the doctors side of the total bill has been managed downwards. But the facilities portion has been

pretty much neglected until relatively recently. Did you hear this from maybe some of your clients or, you know, some of the patients that say, oh, you know, I'm choosing to go public and not private because I don't want the unnecessary x-rays or the MRIs or, you know, going with private. Sometimes people associate that. I mean, to what extent that

is an issue that's been raised. And it's always a trade-off. In the public sector, generally, there is less servicing and hence the bill size in the public sector is smaller than in the private sector. However, the convenience, the waiting times and so on are much more amenable in the private sector.

Whereas in the public sector, you may have to wait a couple of days or a couple of weeks. So policyholders or customers need to balance all these factors and decide for themselves what's important to them and then buy the right insurance product. So in a way, because when we tend to go public, the waiting time just always feels like it's very much longer, forever. Do we have an estimation of like, on average, are we talking about...

What sort of... What sort of extra waiting time, you know, being involved? What do you mean? If you go to a private doctor, you can see the guy like... For the same surgery. ...tomorrow, if I call him today. Mm.

Oh, is that right? Yeah, pretty much it. Okay, okay, okay. So that is the main trade-off, is the waiting time is just greatly reduced. It's waiting time, not just for the doctor, but for the downstream facilities if the patient needs an MRI or some sort of imaging diagnostic test. I do agree that the waiting time or the method of getting a different appointment in a public hospital...

it's a lot more the process takes longer than in the private sector I mean if you are unwell they tell you oh there's something in your wherever you're like I want to know what it is I want to get it out as soon as possible right so waiting three months for an earring you know it's just like oh my gosh every day I'm worrying about you know so if I choose to go private right what is the fine print that I really have to look out for if without pre-off is that what you're asking about both let's just give us both

You have to be aware of what's being covered by your insurance. You need to understand your disease condition. I think that's one of my pet projects, you know, to get people to be more educated about the treatment that they are getting. You need to know what's being covered by your insurance. I say that insurance, you know, there are some things that will always be rejected.

such as cosmetic surgery, unnecessary surgery, preventative, it also tends to be rejected, right? So be aware of the condition. Be aware of the risk. Without a pre-off or LOG, you can always check with your insurer if you're not sure. And I think for every customer, they should be aware whether there are pre-existing diseases that are excluded from their policy. And if it's been too long since they bought their policy, just give your insurer a call and check.

So if these changes suddenly appear, right? Like GE just said, okay, no pre-authorization for these two hospitals. I mean, do policyholders have any right, any recourse or it's just you're at the mercy of... If they are your insurance company, then I think you're a bit stuck, right? No, I think

pre-off is a service it's an added service right because we're so used to the added service that once it's taken away you feel a bit yeah correct you feel a bit deprived but actually I think we just need to figure out what the expectation level is and if as what Dr. Yung mentions if our service expectation is pre-2016 then of course today the world is beautiful right

But if our expectation is basically 2025, before all these measures will come into place, then clearly it will be perceived as unfair, perceived as unjust, and the customers do have limited recourse. But we have other insurance providers like Prudential, AIA, they are not withdrawing their pre-authorization, right? Actually, that was my question. Is this going to be the start of a move that other insurers might then say, hey... I guess from the private hospital's point of view,

is this the start of the slippery slope? If I give in to one, will I give in to all of them? And will I then see margins erode? And these doomsday scenarios can be very worrying for the private healthcare operators. That said, I guess the question that enough insurers have asked me is that insurers typically have low single-digit profits at the end of everything. Private hospitals typically do 20%, 30%.

and they look and say, well, we're all hard at work. Why are you doing these margins? And why am I dealing with these much more modest margins? I mean, there's always this argument about who's taking all the excess off the table, right? Yeah, to your question, whether pre-off will ultimately be removed by all the other insurers. I think the question is whether the insurance experience with pre-off has been good. It has been recommended as a means of managing costs, but pre-off is expensive in itself to run.

It takes a logistics, there's a lot of time pressures, a lot of people. And I know a lot of doctors have fed back to me, they hate the pre-off process. Because the insurer keep asking them a lot of questions, they have to keep going back. So a lot will depend on the experience. If pre-off is not effective in reducing the cost of

claims, right, then naturally it will be removed and we shouldn't see it as a bad thing. Because if the administrative costs go down, then ultimately your premiums will go down. But if pre-off is effective in actually reducing the claims cost, then pre-off should stay. But Dr. Yung, insurance...

At its heart, it's about peace of mind. And however we slice the deck, the patients are not experts. They cannot be expected to know this is covered, this is not covered. Beyond the most glaring tummy tuck, boob jobs are unlikely to be covered. But once we start slicing into implant A versus implant B, the use of a da Vinci robot versus something else, all of these, the patients cannot be expected to know.

And if we go back to the purpose of why we buy insurance, it's for financial protection against medical catastrophes and it's for peace of mind. And if we don't achieve either of these, then... If it's not in the fine print that Da Vinci is not allowed, by all means, claim it.

But if it was in the pre-off and it says, no, I don't allow it, then of course the insurer has a right, right? So I think it's, like I said, you know, it's quite difficult to really change the contract and say, I'm not covering it, you know, and put the customer at risk. No. It's challenging also because now we've got the insurer, the doctor and the patient. It's that triangle, right? And then everybody's involved. So we rely as a patient a lot on the insurer and the doctor to work things out.

to give me the best option available for the price. The insurer always feels left out, you know. Oh, really? Yes. Yes, because the information between the patient and the doctor is very rich, right? The insurer doesn't know what has been... But then again, why should I tell the insurer? The doctor is going to be talking about my life here, right?

You just need to know how much to pay as an insurer, right? Yeah, the doctor says you have insurance, let's order two other tests. So the insurer is left out of that conversation, right? Should the insurer be in that conversation? Would that make things better? Okay, I've heard this before. And patients said that because my insurance doesn't pay for this test, my insurance is responsible if I become very sick. And the insurer says, you know, you should decide on the test based on whether you really need it medically or not.

And whether it's in my fine print that I will pay for it is a separate matter. But I trust my doctor. He says I need Da Vinci, I'm like, go for it, right? Unless the insurance said, you know, Da Vinci said... Because insurance has to be fair to all their patients. So the contract is applied to all the customers.

And they have to be consistent in that. So now there's a lot of discussion and consultation going on, right? I mean, what do you think of some of the things that you're trying to hash out and iron out? Are they trying to standardise certain things, certain procedures, certain costs? I think premium inflation is something that's on everyone's mind.

I think one man's meat is another man's poison. And so there is a high degree of a zero-sum game. The more that the private hospitals or private healthcare charge, the less the interest will be able to obtain as margins at the end of it. And really patients and customers can only bear that much premium escalation year on year before the whole system breaks. So I know people who downgrade.

And you know, they've been paying this super high premium for the last 10 years and now they have to downgrade and they feel like, oh, I've lost out the whole benefits from the last 10 years when I've been well. But you know, that's... But the whole point of medical insurance is that it covers you for that 12-month period. So it's really like your travel insurance which you don't buy. Yeah, yeah. Right? That...

Might change my mind actually. When you don't claim it, you should feel happy. Yeah. Exactly. You buy it but you don't want to claim it. But of course, very few people feel that way and look back and say, wow, that was the $5,000 that I didn't have to use and that's great. So, but the challenge then is, and I really want to take us back to this notion of value. Right?

I've worked with many of the insurers. They are very willing to pay for value. The difficulty then is in defining what this value is. And very broadly, value is the outcome divided by the cost of the resource. And if we don't have the data,

it's very difficult to say whether we're getting value or really we're not. Actually, I mean, as you're saying, the doctor's bills seem to be okay. You know, it's really the hospital, the room you're paying for, the ward. So maybe that's what they should be doing, talking about saying, let's take lobster off the menu, you know, and make sure it's gone forever. You can just have it cut beneath instead. You know?

And absolutely, it's almost like for all of us in the corporate world, you have travel policies. If it's less than three hours, six hours, these are the class of travel and so on. So I would divide the hospital facilities into those that impact service quality and those that impact clinical quality. Service quality like lobster and so on, I think very reasonable that we negotiate these down or out.

But where we run into issues like, for example, robot versus laparoscopic, that's when, personally, I think that the insurers can actually up their game. I didn't know that they were not paying. Sorry. This example is not really good. And basically figure out something.

the new day. No, that's true. As a patient, the doctor says, which machine do you want? You're like, which is cheaper, right? But I think it should be an option to say, for your food, you can have menu A or menu B with lobster which costs $50 more, for example. But this is not covered. And then you pay for it as a patient. And it's like any restaurant, right?

this is the set meal. These are the options plus 10 bucks and plus 15 bucks. So as long as customers know what they are paying for fare. As we just begin to wrap up, one more question. So how worried should we be about this? Is it a chance that other insurers will jump on? Is there a point where government needs to step in and say, hey, cool it guys, let's work something out?

I think we shouldn't worry that insurers are looking for means or ways not to pay for the services that the customer requires. But this having to manage the overall cost is something that it's a tool that insurers use to try to reduce the premium increase for.

the following years. I don't pretend that premiums will ever come down. But I think premium escalation is going to happen because the bills escalation has happened. So in the past one year, in 2024, it was terrible. So can you give us year on year, are we talking about like 5% increase? I think maybe 10% to 15%. They are saying that in 2024, that was a 20% increase, right? In hospital claims, in hospitalisation claims.

So premiums will go up by that. So I think every insurer is feeling the need to reduce. That's my understanding. I think basically rising healthcare costs bad for everybody. We as society, the dollar we spend in healthcare is the dollar we don't spend in education or anywhere else. But I do hope the insurers and the healthcare providers can come to an equilibrium because they need each other.

If there weren't private hospitals, nobody would need to buy insurance. That's true. And if there wasn't insurance, very few of us would walk into a private hospital and say, take out our credit card and say, do whatever you need to do. Yeah, that's right. Wow, okay. And with an ageing population, we cannot deny that. It's costly affair. Yeah, that's why there's more hospital treatment, right? Because more of us need it to get older. Yeah, so this is an issue that will not go away, but it has to be better managed. Yeah.

So I've learned quite a fair bit today. You're going to buy travel insurance now? Let's just, yeah, it's certainly going to re-look as well across my insurance. We hope this has been insightful and helped create some awareness on what's been going on out there and we do love to hear from you. So if you have any thoughts, comments, do drop us a note, of course, on our YouTube channels or just drop us an email. Right.

And just before we go, a big thanks to our team. We've got Tiffany Ang, Junaini Johari, Joanne Chan, Saye Win, Ho Painting, Shaza Dalila and Alison Jenner. And let's not forget, video by Hanida Amin. Alright, that's all we've got for you this week. See you next week.