With only 7.7 million of Malaysia's 34 million population covered by health insurance, rising medical costs remain a concern for millions of Malaysians.

The upcoming Medical and Health Insurance and Takaful (MHIT) standard product, MediAsas, aims to bridge this coverage gap by offering more accessible and sustainable medical protection through a centralised risk-pooling mechanism.

MediAsas complements broader efforts to curb medical inflation

Beyond expanding coverage, MediAsas also seeks to optimise private healthcare spending while preserving access to the public healthcare system. This is particularly important as out-of-pocket payments account for 39% of total healthcare expenditure, compared with just 8% from private insurance.

The initiative aims to promote value-based healthcare by aligning the financial incentives of insurers and hospitals, improving cost management and supporting digital health reforms. These measures are intended to enhance healthcare efficiency, encourage sustainable spending and improve patient outcomes.

However, MediAsas is not designed to eliminate medical inflation, which is driven by factors such as rising disease burdens, demographic changes, wage inflation and medical advancements.

Instead, broader initiatives under the RESET Strategy will address the underlying drivers of medical inflation, while MediAsas focuses on improving access to essential medical coverage.

MediAsas to introduce DRG pricing to standardise hospital payments

Speaking at the MediAsas MHIT plan media briefing, the spokesperson said the plan would standardise benefits, pricing and underwriting requirements across participating insurers and takaful operators (ITOs).

ProtectHealth Corporation Sdn Bhd CEO Wan Mohd Hazwan Wan Mohd Najib said MediAsas would introduce Diagnosis-Related Group (DRG) pricing, shifting hospital reimbursement from itemised fee-for-service billing to fixed, whole-case payments based on factors such as diagnosis, procedure and severity.

The framework was developed through consultations with ITOs, private hospitals, health authorities, medical specialists and professional associations. Its implementation will adopt a phased and hybrid approach, combining DRG with elements of fee-for-service billing to minimise disruption to existing hospital revenue structures.

"DRG does not change clinical decision-making or the patient journey. It only changes how hospitals are paid at the end of treatment," Wan Mohd Hazwan said during the media briefing.

More than 150 private hospitals and 2,500 healthcare professionals have undergone training in clinical coding and data standards, which are essential for accurate patient classification and reimbursement under the DRG system, he said.

ProtectHealth, the non-profit healthcare implementation arm under MOH, will facilitate MediAsas and serve as a neutral governance entity between private hospitals and ITOs.

Hazwan said the government-linked entity would help balance the interests of hospitals and insurers, ensuring that efforts to control healthcare costs remain focused on protecting patients.

Is RM100,000 enough for medical coverage?

MediAsas sets its annual coverage limit at RM100,000, based on claims data from Insurance Services Malaysia (2024), which shows that 99% of claims paid were below RM60,000.

The limit is designed to cover most common treatment episodes, including multiple hospital admissions. For policyholders aged 60 and above, the annual limit automatically increases to RM150,000 to account for higher treatment costs.

The limit will also be reviewed annually to ensure coverage remains adequate amid changing healthcare costs and treatment needs.

For those who require additional protection, policyholders can consider MediAsas Fleksi, employer-provided medical benefits, other insurance or takaful plans, MediAsas top-ups for specific conditions, or personal savings.

How does the no-look-back provision protect policyholders?

MediAsas will introduce a "no-look-back" provision to protect policyholders from claim rejections due to unintentional non-disclosure of past medical conditions after seven years of continuous coverage.

During the first seven years, ITOs may investigate suspected non-disclosure when assessing claims and decide whether to approve, reject, or adjust coverage.

After seven years, claims can no longer be rejected for unintentional non-disclosure. However, investigations may still be conducted in cases involving deliberate, reckless or fraudulent non-disclosure, as well as claims involving five specified high-complexity conditions: cancer, end-stage organ failure, major cardiovascular conditions, major neurological disorders, and systemic autoimmune and inflammatory disorders.

Direct claims and treatments arising from these specified pre-existing conditions will remain excluded from coverage.

The provision is intended to offer greater certainty and protection to long-term policyholders, while retaining safeguards against fraudulent or deliberate misrepresentation.

Co-payments to encourage prudent healthcare utilisation

MediAsas will introduce co-payments to encourage policyholders to take a more active role in their healthcare decisions, while helping manage claims costs and support long-term affordability.

Although deductibles and co-payments are not new to medical insurance and takaful plans, these cost-sharing mechanisms allow policyholders and insurers to share medical expenses, encouraging more prudent use of healthcare services.

Rather than placing an additional financial burden on policyholders, co-payments are intended to balance appropriate healthcare utilisation with sustainable claims costs.

By moderating overall claims expenditure, the approach aims to help manage premium increases while maintaining access to necessary medical treatment.

The government’s pilot of MediAsas is expected to be completed by the end of September 2026, ahead of its nationwide rollout in January 2027.