MMA says doctors and patients are losing out as insurers, TPAs and hospitals continue imposing controversial fee deductions despite years of warnings.
MMA welcomes the MMC’s ruling on fee-splitting and discounting. We call on MOH, Bank Negara, employers and the Malaysia Competition Commission to now move from circulars to enforcement.
When you use your company’s medical benefit to see a doctor, you probably assume your employer is paying for your care. You are right. What you may not know is what happened before your appointment, and who took a cut along the way.
How the system actually works:
Large employers, GLCs, GLICs, MNCs and major corporations manage their staff health benefits through Third Party Administrators. TPAs build networks of panel doctors and hospitals, process claims and manage costs on behalf of employers.
To be on a TPA’s panel, a GP or clinic must agree to the TPA’s contract terms. Those terms often include deducting 10 to 15% from the doctor’s professional fee, plus registration and annual renewal fees, as the price of receiving patient referrals.
For private hospitals, the arrangement works differently, but the outcome is the same. Insurers and TPAs negotiate contracts directly with private hospitals, which are regulated under the Private Healthcare Facilities and Services Act 1998. As part of those contracts, hospitals are asked to provide discounts on their charges. The hospital, now squeezed from above, passes that pressure downward. Private specialists working in those hospitals then face their own contractual demands from the hospital for discounts on their professional fees.
The specialist never signed with the insurer. The specialist never signed with the TPA. But they absorb the discount at the end of a chain that starts with a commercial negotiation they had no part in.
This is the reality of private specialist practice in Malaysia today.
What the law says, and has said for years:
Fee-splitting
Any arrangement where a portion of a doctor’s professional fee is extracted as an inducement for referrals or patient assignment is illegal under Act 586 and unethical under the Malaysian Medical Council’s Code of Professional Conduct.
The MMC stated this in 2017. The Minister of Health chaired a meeting that same year and ruled on the record that a percentage deduction from professional fees constitutes fee-splitting. A DG circular followed in 2018. The MMC has now issued a comprehensive advisory in May 2026 — its clearest and most detailed statement yet.
Regrettably, the practice has continued through all of it.
The employer’s responsibility
TPAs work for employers. The terms they impose on doctors and hospitals reflect what their employer clients are willing to fund and willing to overlook.
GLCs, GLICs and large corporations have procurement standards and governance obligations. When a TPA they hire builds its panel network by extracting fees from doctors — fees that the law calls Fee-splitting, that employer carries responsibility for the arrangement.
We are asking employers to look at what they are actually buying. Ask your TPA whether panel doctors and hospitals are asked to discount or give up part of their professional fees. If they are, your health benefit programme may be built on a practice that is both illegal and unethical. No responsible employer, least of all one accountable to the public, should be comfortable with that.
The collaborative work already underway.
In 2019, MMA proposed a formal grievance mechanism to address systemic issues between doctors, hospitals and payors. That proposal evolved into what is today the Healthcare Partners Protocol and Solutions Committee — the HPPSC bringing together doctors, hospitals, insurers, takaful operators and TPAs, with MOH and Bank Negara as observers. It is a good start. It has begun to address the administrative burdens that private specialists face daily such as claims processing, guarantee letter delays, and communication breakdowns between providers and payors. That work must continue and its mandate must expand to address the structural and contractual issues that sit at the root of this problem.
What we are asking for:
From MOH: enforce what Act 586 already provides. Contracts between insurers, TPAs and private hospitals that demand discounts beyond what the law permits are actionable now. The power exists. Use it.
From Bank Negara: the TPAs your regulated insurers deploy are part of the healthcare financing chain. Their contract terms affect clinical care and professional ethics. That is within your consumer protection mandate. Do not leave it at observation.
From the Malaysia Competition Commission: MMA filed a formal complaint in 2024. Three years without a formal response is not acceptable. When an intermediary controls patient access and uses that control to extract fees from doctors and hospitals, the Competition Act 2010 is directly relevant.
From employers: audit your TPA arrangements. The savings in your health benefit costs must not come from what is being taken, illegally, from the doctors treating your people.
From the private hospitals: You are regulated. You have standing to push back on contractual demands that breach Act 586. Your specialists are absorbing a discount cascade that began with your commercial negotiation. That is a shared problem that needs a shared response.
No more circulars, we want enforcement and we want it now.
Since 2008, the position has been stated and restated. The Ministry of Health said it in 2008. The Director General reaffirmed it in 2010. The Minister of Health ruled it in a formal meeting in 2017. A circular followed in 2018. The MMC has now issued its most comprehensive statement yet in 2026.
Every time, the response has been a circular. Every time, the practice has continued.
Malaysia does not need another circular. The law is clear. The rulings are on record. What is missing is enforcement. MOH must act on what Act 586 already empowers it to do. Bank Negara must look beyond insurance products and focus on ensuring ethical managed care and healthcare financing practices that place patients’ interests first. The Malaysia Competition Commission must respond to MMA’s formal complaint, filed in 2023 and unanswered for three years.
Doctors have been patient. Patients have been paying the price. That must end now.
Datuk Dr Thirunavukarasu Rajoo
Malaysian Medical Association President
