pitals cannot bill directly, including maintaining intensive care units and 24-hour emergency departments.

The PAC further found instances where patients using guarantee letters( GLs) paid higher treatment charges than those settling bills through cash payments or pay-andclaim arrangements. During the inquiry, hospitals explained that pricing differences could arise from commercial discount arrangements with insurers, while cash-paying patients often opted for fewer investigations

or shorter hospital stays to reduce costs.

INSURANCE DESIGN MATTERS

Beyond hospital billing, the committee identified structural features within the insurance industry that it believes contribute to rising premiums.

Among its concerns is the continued use of closed risk pools, where insurers stop accepting new policyholders into older products while introducing newer plans with lower

premiums. According to the PAC, this leaves older insurance pools increasingly concentrated with higher-risk policyholders, resulting in escalating claims costs and substantial premium increases for those who remain insured.

The committee also highlighted investment-linked policies, noting that increasing insurance costs as policyholders age are borne directly by consumers. As medical costs continue to rise, some policyholders may face sizeable premium top-ups to maintain

their existing level of coverage.

The PAC concluded that these interconnected issues demonstrate the need to address medical inflation through a broader examination of healthcare financing rather than focusing solely on professional fees. Its findings suggest that improving affordability will require greater transparency in hospital billing alongside closer scrutiny of insurance structures that determine how consumers ultimately share healthcare costs.

MALAYSIA ' S private healthcare cost debate has moved beyond identifying the causes of rising hospital bills and insurance premiums to the more difficult question of how meaningful reforms can be delivered.

After concluding that the problem is rooted in structural weaknesses across hospital billing, insurance practices and regulation, Parliament ' s Public Accounts Committee( PAC) has outlined a series of recommendations aimed at improving transparency, strengthening consumer protection and making private healthcare more sustainable over the long term.

PAC chairperson Datuk Mas Ermieyati Samsudin said one of the committee ' s key proposals is the establishment of an independent governance structure to bridge gaps in the current regulatory framework.

ADDRESSING REGULATORY GAPS

According to the committee, responsibilities for regulating private healthcare are currently divided among several agencies, creating limitations in oversight.

" The primary gap is a regulatory fragmentation and vacuum regarding private hospital business operations and supply chain pricing," said Mas Ermieyati.

She noted that while the Ministry of Health( MoH) regulates professional consultation and surgical fees under the Private Healthcare Facilities and Services Act 1998( Act 586), many nonprofessional charges, including room rates, nursing care, pharmaceutical mark-ups and laboratory tests, remain outside direct statutory control.

" While Bank Negara Malaysia( BNM) regulates insurers and takaful operators to guarantee financial stability and protect policyholders, it lacks the statutory mandate or legislative instruments to

regulate the external pricing of treatments at private hospitals," she said.

To bridge these gaps, the PAC has recommended establishing an independent governance structure involving the Ministry of Finance( MoF), MoH and BNM to review premium structures, regulate health insurance benefits and strengthen oversight of hospital charges. The committee has also called for amendments to Act 586 to expand the MoH’ s authority beyond regulating doctors ' professional fees.

The PAC has further urged the government to accelerate implementation of the Diagnosis Related Group( DRG) payment system in the private sector.

" The DRG system will fundamentally transform healthcare by replacing the inflationary fee-for-service model with standardised, package-based clinical episode pricing.”

She said the system would allow patients to compare treatment costs more easily while preventing hospitals from adding arbitrary unbundled charges to medical bills.

ENSURING ACCOUNTABILITY

The PAC has also outlined how it intends to monitor progress after tabling its report in Parliament.

" The ministries and agencies involved, specifically the MoF, MoH and BNM, are statutorily required to submit formal feedback and present progress updates on the implementation of these recommendations within two months of the tabling of the PAC Report in the Dewan

KEEPING WATCH: The PAC has reaffirmed its commitment to tracking the implementation of healthcare reforms and ensuring greater accountability in addressing rising private healthcare costs

Rakyat.”

She said the PAC would then convene follow-up proceedings with the relevant ministries and agencies before tabling a Follow-up Action Report in Parliament " to ensure absolute transparency and public accountability ".

In parallel, reforms under the government ' s RESET strategy are being coordinated through the Joint Ministerial Committee on Private Healthcare Costs, which is co-chaired by the Minister of Finance II and the Minister of Health. The committee oversees implementation of the 11 RESET initiatives in collaboration with BNM and industry stakeholders.

The PAC has also indicated that it stands ready to hold further hearings should implementation stall.

" The PAC reaffirms its commitment to recall key witnesses from the MOH, BNM and industry representatives should the implementation timeline of the RESET initiatives face delays.”

SUPPORTING CONSUMERS

While institutional reforms remain a priority, the committee has also encouraged consumers to make informed decisions when selecting medical insurance.

She advised policyholders to " make informed, strategic decisions to keep their premiums manageable ", including considering plans with deductible or cost-sharing features, reviewing optional riders that may increase premiums unnecessarily, making use of preventive health screenings and exploring suitable public-private healthcare options.

Looking ahead, she said successful implementation of the PAC ' s recommendations could reshape Malaysia ' s private healthcare landscape.

" Successful implementation of the 17 recommendations will systematically transform Malaysia ' s private healthcare into a highly integrated, value-based system," Mas Ermieyati said, adding that the reforms aim to strengthen long-term sustainability while helping Malaysians maintain access to private healthcare without facing sudden financial shocks.- The HEALTH