Malaysia healthcare financing system

and payment methods to healthcare

providers in Malaysia

Dr Amirah Azzeri
24th October 2022
 • Concerned with the mobilization or how the health system
Healthcare finance generates and collects revenue, on accumulation or pooling
which is on combining financial resources from multiple sources
to share the financial risk of paying for healthcare, and the
allocation to provide or purchase healthcare services

• WHO: MOBILIZATION, ACCUMULATION and ALLOCATION of

money to cover the needs of the people, individually and
collectively, in the health system

Aims:
• Make funding available
• Set the right financial incentives for providers
• To ensure that all individuals have access to effective PH and
personal healthcare
Healthcare finance
 Healthcare
finance
Stewardship
 PROVIDER
PAYMENT
MECHANISMS
• The provider payment mechanism (PPM) >> form that payment takes

when funds are transferred from a healthcare purchaser to a provider

• Changing and refining provider payment mechanisms >> to encourage

more efficient and responsive service delivery >> Universal Health

Coverage (UHC)
• Providers can be paid using line-item budgets, fee-for-service (FFS),

capitation or case-based payments such as diagnosis-related groups

• In practice, healthcare providers are often required to manage multiple

sources of funds and different PPM concurrently, for example, one

hospital may receive capitation payment for out-patient services, case-
based payments for specialized services and line-item budgets for salary
and overheads.
Healthcare financing
and PPM in Malaysia

• Malaysia has a two-tier health care system consisting of the

public and private sectors.
• The Ministry of Health is the main provider of health care
services in the country
• Health care services are also provided by other ministries in
the country that includes Ministry of Higher Education,
Ministry of Defense, Department of Aboriginal (Orang Asli)
Affairs, Department of Social Welfare, Ministry of Home
Affairs and Ministry of Housing
Healthcare financing and PPM in
Malaysia
• The public health care system >> largely funded by the
government and financed mainly from public tax revenue
• The private health care sector >> provides services on a
nonsubsidized, fee-for-service basis, and mainly serves for those
who can afford to pay
• Health care services by private sectors are funded mainly by private
health insurance, consumers’ out-of-pocket payment, and nonprofit
institution
• The two types of health insurances are available currently:
• Private and employee based (aka SOCSO). SOCSO and Employee
Provident Fund (EPF) provide some coverage to private-sector
employees
 Healthcare financing and PPM in Malaysia
Monitoring:
1. Quality of Care monitoring is not linked to provider payment
2. FPP monitoring not standardized across facilities. Monitoring is done by some facilities to avoid abuse e.g. by
monitoring the proportion of public and FPP cases that any individual specialist is allowed to treat. Some have
instituted additional quality checks and safeguards
Challenges for UHC:
• Increasing burden of non-communicable
diseases: >> 61.3% of adults have one or more
chronic diseases and 44.2% are overweight
• Health expenditure is increasing at a faster rate
than GDP, raising concerns on the
sustainability of the system
• Limited resources in the public sector
overstretched compared to the private sector
NEXT?
• Next Steps National purchaser:
As part of its health transformation plan, the MOH has set up a not-for-
profit company that will serve the function of a strategic purchaser of any
national health care plans or programs.
• B40:
This is a healthcare program for citizens earning the bottom 40% of the
nation’s income. >> The program promotes preventive healthcare and
early treatment as well as addressing some of the common barriers to
seek care among the poor, such as transportation.
• Design PPM for B40:
The main aim of the PPM design is to boost health screening uptake
among this population while ensuring quality care from the provider.
>> Plan to contract private and public clinics. >> Need to incentivize
both private & public facilities, but the mechanism may be different
between the two
 Body

https://protecthealth.com.my/ms/peka-b40/
https://protecthealth.com.my/vaksin-covid/
Lessons Learned

• Incremental changes to PPMs: Use innovative ways to

supplement the existing PPMs or make incremental
changes rather than a complete overhaul of the system
• Strategic communications is important to ensure the right
message to stakeholders. The implementers must also
listen and prioritize concerns to address from the different
quarters
• Monitoring and evaluation is important in determining
whether the implemented PPM has served its intended
purpose and if there are unintended consequences
CASE- MIX, Healthcare financing and PPM in Malaysia
T h a n k
y o u!