Medical fee guidelines anti-competitive

• Abstract
• Characteristics of this policy
• Purpose and process analysis
• Expected outcome
• References

Featured in half-yearly report: Health Policy Developments 13

Abstract

After an 18-month review, the Competition Commission of Singapore decided that the Singapore Medical Association?s fees guidelines are, after all, anti-competitive.

Recent developments

The guidelines were introduced in 1987 by the Singapore Medical Association (SMA) to provide a guide to its members (not all doctors are members of the SMA) on what might be considered as "reasonable" fees for a wide range of medical services. This was partly in response to the Ministry of Health´s (MoH) calls for a guide on medical charges as the MoH was concerned with the possibility of overcharging by doctors in the private sector. These guidelines were non-binding and no penalties for deviation were implied.

In April 2007, however, the SMA abruptly and unilaterally scrapped its pricing guidelines after merely receiving legal advice from its own lawyers that the guidelines could possibly be a contravention with the Competition Act. The Competition Commission of Singapore (CCS) publicly welcomed the move, saying this would lead to greater flexibility, as medical practitioners can set the fees according to the true business costs. The fact that the SMA had scrapped its 20 year old guidelines on its own without even exploring the possibility of applying for exemption, which was provided for in the act, prompted criticism that its acquiescence appeared rushed and premature.

In February 2009, the SMA announced that CCS had indicated its willingness "to study any proposal SMA may wish to make in connection with fees", whereupon it finally filed notification with the CCS to find out if its fees guidelines actually infringed the Competition Act. CCS responded by commissioning a six-month study that would examine the local market for medical services, to see if there were special circumstances that justified any form of fee guidelines. It would then decide if fee guidelines should be reinstated or newly set.

In June 2010, the Commission issued a provisional statement saying the guidelines were anti-competitive, thereby infringing Section 34 of the Competition Act.

In August 2010, the Commission finally concluded that the Guidelines on Fees set by the SMA were indeed anti-competitive.

Degree of Innovation	traditional		innovative
Degree of Controversy	consensual		highly controversial
Structural or Systemic Impact	marginal		fundamental
Public Visibility	very low		very high
Transferability	strongly system-dependent		system-neutral
current    previous

Purpose and process analysis

Current Process Stages

	Idea	Pilot	Policy Paper	Legislation	Implementation	Evaluation	Change
Implemented in this survey?

Initiators of idea/main actors

• Government

• Providers

• Patients, Consumers

• Media

Stakeholder positions

This ruling brings the three-year tussle between the SMA and the CCS over the issue of whether the SMA's 20 year-old guidelines on doctors' fees infringe Singapore's Competition Act to an end.

The CCS's decision comes as no surprise since the government had thrown out the SMA's request for its Guidelines on Fees to be excluded from the Competition Act in June 2010.

After consulting the MoH, the Ministry of Trade and Industry (MTI) determined that the guidelines would create anti-competitive behaviour and could not be excluded from the Competition Act.

In giving the grounds for its final decision to not have such guidelines, the Commission said that, apart from the fact that about 80% of care is provided by public sector hospitals, where SMA's fee guidelines do not apply, the guidelines tended to create a clustering effect. When, for example, setting a fixed fee, doctors who might be able to charge less would have no incentive to do so. It was pointed out that in a competitive market prices are determined by demand and supply. Minimum or maximum pricing recommendations discourage competition, so the "Commission urges all businesses to set their prices independently and to not rely on guidelines issued by trade and professional associations."

The SMA appears to have thrown in its towel, although it could have contested the ruling if it wanted to do so. Its President publicly conceded that the guidelines "have outlived their usefulness."

The decision by CCS received mixed reviews in the online chatter, with some warnings of the danger of overcharging by doctors, and others defending differential pricing acccording to market forces.  

Actors and positions

Government
Ministry of Health	very supportive		strongly opposed
Ministry of Trade and Industry	very supportive		strongly opposed
Competition Commission of Singapore	very supportive		strongly opposed
Providers
Singapore Medical Association	very supportive		strongly opposed
Patients, Consumers
Patients, Public	very supportive		strongly opposed
Media
Media	very supportive		strongly opposed
current    previous

Actors and influence

Government
Ministry of Health	very strong		none
Ministry of Trade and Industry	very strong		none
Competition Commission of Singapore	very strong		none
Providers
Singapore Medical Association	very strong		none
Patients, Consumers
Patients, Public	very strong		none
Media
Media	very strong		none
current    previous

Positions and Influences at a glance

Monitoring and evaluation

According to the CCS, there was no increase in complaints of overcharging to the SMA after the guidelines were removed in 2007. In fact, numbers had gone down from 26 in 2006/2007 to 14 in 2008/2009.

The market study that the CCS had commissioned, which was conducted from second quarter of 2009 till the first quarter of 2010, also found that after accounting for medical inflation, professional fees charged by private doctors actually dropped by 2.6 per cent after the guidelines were removed. This, it said, showed that the guidelines, which were not binding in the first place, had no impact on private doctors' fees.

Expected outcome

The government is pushing for more transparency in hospital charges. It has announced that from early 2011, all hospitals making Medisave claims (including private hospitals) will have to submit basic billing information, and this information will be posted on the Health Ministry's website. Hospitals and doctors are also required to provide financial advice.

References

Sources of Information

• Claire Huang. It's final - SMA's medical fee guidelines ruled anti-competitive 19 August  2010 http://www.channelnewsasia.com/stories/singaporelocalnews/view/1075966/1/.html
• Wong CY. Could SMA Have Not Withdrawn the Guidelines on Fees (GOF)?http://www.sma.org.sg/position/Withdrawal_SMA_Guideline_on_Fees_Presidents ForumApr07.pdf

Author/s and/or contributors to this survey

Lim Meng Kin

National University of Singapore

Suggested citation for this online article

Lim Meng Kin. "Medical fee guidelines anti-competitive". Health Policy Monitor, October 2010. Available at http://www.hpm.org/survey/sg/a16/2