Medical Repricing Explained: Key Factors Driving Changes in Cost of Healthcare Service

Medical repricing is a term that has gained considerable attention in recent years—particularly in the context of healthcare and health insurance. It is a process that affects not only healthcare providers and insurance companies but also policyholders and their medical expenses.

As medical costs continue to rise globally, understanding the concept of medical repricing is vital. This insistence is for good reason!

In Malaysia, the growing and ageing population, medical technology advancements, prevalence of chronic diseases, and demands on the healthcare system are constantly changing and increasing. Medical repricing is one key component in managing these evolving demands. We discuss factors that affect medical repricing and how to reduce its impact.

What is medical repricing?

Medical repricing refers to the process of reviewing and adjusting the premiums charged for insurance policies. This adjustment is often necessary due to various factors contributing to changes in the cost of insurance and healthcare delivery.

Based on the terms iteratively negotiated between healthcare providers and insurers, this mechanism ensures that the costs of medical services reflect their true value— as well as the value of the human resources required to deliver them.

Medical repricing is related to medical inflation in several ways. For example, when healthcare providers and insurance companies negotiate new rates, these agreements may affect overall healthcare costs. Thereby potentially leading to higher or lower medical inflation.

Medical repricing factors

Understanding the key factors that drive medical repricing is crucial to managing healthcare costs and ensuring the sustainability of the healthcare system.

People are living longer

A notable factor driving medical repricing is the ageing population. As people live longer, they often require more medical care— particularly for chronic conditions and diseases that are more common in older people.

This increased demand for medical services can result in higher costs, which are then reflected in medical repricing.

Increase in chronic illnesses and non-communicable diseases

The prevalence of chronic illnesses and non-communicable diseases (NCDs) presents another key driver of medical repricing.

Conditions such as diabetes, cardiovascular diseases, and cancer require ongoing management and treatment. This places a considerable strain on healthcare resources.

Consequently, healthcare providers may adjust pricing to meet the growing demand for NCD-related services.

Advances in medical technology

Technological advancements in healthcare contribute to improved diagnosis, treatment, and patient outcomes. However, these innovations often come at a cost.

Investments in state-of-the-art medical equipment, advanced procedures, and R&D efforts influence the pricing of healthcare services. Thereby necessitating periodic repricing to reflect these technological advancements.

Increased demand for healthcare services

Rising healthcare utilisation rates, coupled with growing patient expectations, drive an increased demand for healthcare services.

Factors such as population growth, urbanisation, and improved access to healthcare contribute to this trend.

As healthcare facilities strive to meet the escalating demand, adjustments in pricing may be required to align with the costs associated with expanding service capacity.

Unregulated medical charges

In some instances, the absence of strict regulations governing medical charges allows healthcare providers to set prices based on market forces.

This lack of price controls often leads to variability in healthcare costs, potentially resulting in disparities in access to affordable care.

How to reduce the impact of medical repricing on insurance premiums

Medical repricing initiatives aim to promote transparency and fairness in the pricing of insurance premiums. However, policyholders can adopt several strategies to minimise the financial impact of such adjustments.

Choosing the right plan

Selecting an insurance plan that matches one’s healthcare needs and financial capability is crucial.

Look for plans that offer active premium pricing option, whereby premiums are adjusted based on your claims history. Under such plans, if you make no claims over a designated period, you may be eligible for significant discounts on your premium charges.

This type of pricing model rewards policyholders who maintain their health and utilise healthcare services sparingly. By incentivising lower usage, these plans can help keep your premiums more affordable, especially if you're healthy and do not require frequent medical care. This can be particularly advantageous for those looking to manage their healthcare expenses proactively while still enjoying comprehensive coverage.

Read ‘What to Consider Before Choosing a Medical Insurance Plan in Malaysia?’.

Utilising cost-effective treatment options

Policyholders can reduce their healthcare costs—and consequently the impact of repricing—by opting for generic medications and choosing outpatient care when appropriate. This not only lowers immediate healthcare expenses but also contributes to more stable premium costs over time.

Maximising preventative care & no claims benefit

One of the best ways policyholders can reduce the impact of medical insurance repricing is by practising preventative healthcare to utilise their insurance’s ‘no claims benefit’.,

Active pricing medical insurance

Insurance companies such as Prudential now reward policyholders with smaller premiums if they maintain their health by living a healthy lifestyle. For example, PRUMillion Med Active is an active pricing insurance model that gives policyholders an instant 15% discount on their medical insurance from the very first year onwards if no claims are made.

If claims are made, the premiums may increase by a certain percentage for the year after. However, if the policyholder is able to recover and once again makes no claims, he or she will soon return to enjoying the discounted premiums.

No Claims Benefit

Besides active pricing, Prudential’s No Claims Benefit offers policyholders rewards up to RM1000 yearly. Policyholders will also have access to over 2000 healthcare services that will help them stay in top health. These services include a range of medical checkup packages, diagnostic tests, vaccinations, and health programs.

By staying healthy and making fewer claims, policyholders get to enjoy the rewards while reducing the risk of illnesses and the impact of medical repricing.

The importance of considering a good medical insurance provider

Choosing the right medical insurance provider is crucial in managing the impact of medical repricing.

A good provider not only offers comprehensive coverage but also works with healthcare providers to negotiate reasonable prices for medical services.

Prudential, for example, is renowned for its commitment to providing high-quality coverage at affordable rates, making it a top choice for medical insurance in Malaysia. Some comprehensive medical insurance plans from Prudential include PRUMillion Med 2.0 and PRUValue Med. Both plans cover hospitalisation room and board with comprehensive coverage so that you can concentrate on recovering without having to worry about medical costs and personal finances.

Conclusion

Medical repricing is a complex process influenced by numerous factors. While it is necessary to reflect the true costs of medical services, their impact can be mitigated through the strategies mentioned above.

For example, obtaining comprehensive medical insurance, focusing on value-based care, enhancing the productivity and efficiency of healthcare services, diversifying revenue streams, and educating patients.

By understanding and proactively managing these factors, it is possible to ensure that healthcare remains accessible and affordable for all.