Malaysia Transforms Digital Healthcare with E-Invoicing
The Malaysian healthcare industry is ready for a massive change as the government is ready to set mandatory e-invoices for all businesses from August 1, 2024. This decision to embrace digital billing will potentially transform financial management in the healthcare sector. It comes with numerous benefits including efficiency and compliance with tax laws.
A National Shift to E-Invoicing
This change towards digitization is being spearheaded in Malaysia by the Inland Revenue Board of Malaysia (IRBM) or Lembaga Hasil Dalam Negeri (LHDN) through the e-invoicing initiative under the Ministry of Finance. The aim has been set for simplification and optimization of the taxation scheme through the introduction of a single and unified electronic invoicing system – MyInvois. This system is used to validate all the e-invoices in real time before they are forwarded to their users. This model, known as Continuous Transaction Control (CTC), guarantees that all transactions are under strict control and recorded with negligible margin of error.
Timeline for E-Invoice Adoption
Malaysia is rolling out e-invoicing in stages, starting with larger companies. The timeline is based on businesses' annual turnover in 2022:
Big companies making over 100 million MYR yearly must start on August 1, 2024
Mid-sized businesses earning between 25 to 100 million MYR must begin on January 1, 2025
All other companies must join in on July 1, 2025
If a company changed its accounting year in 2022, their turnover will be adjusted to cover 12 months. New businesses that started in 2023 or later will start e-invoicing on July 1, 2025.
Any business can choose to start e-invoicing earlier if they want to, no matter how much money they make. This gives companies a chance to get ready and adapt to the new system at their own pace.
Impact on Healthcare Providers
Although the first phase of the e-invoice mandate is directed at businesses with an annual turnover of RM 100 million and above, the healthcare sector has not been excluded. This new set of rules will require healthcare entities like hospitals, clinics, and other similar institutions to change their billing processes, and it will have a direct effect on their revenues. The implementation of e-invoices will have an impact on various areas of their billing functions, even for patient invoices and insurance claims, making it important for them to adopt a whole-system approach.
LHDN Guidelines for E-Invoicing
This therefore means that the healthcare industry has unique circumstances that come to play when it comes to the use of e-invoicing solutions. To tackle such issues, Lembaga Hasil Dalam Negeri (LHDN) has come up with the following guidelines.
Dual Billing: Hospitals will be required to generate the e-invoice for the insurance/TPA amount and for the balance amount separately. This eliminates the paperwork system, replacing it with proper digital documentation of the transaction by each party.
Proforma Bills and FGL Requests: Hospitals will carry on performing proforma billing to request Final Guarantee Letters (FGLs) from insurers. These have to be brought down to e-invoices at the end of the process but the documentation has to remain efficient.
Consultant Billing: The current process remains unchanged. Hospitals will continue to receive invoices from consultants for their professional fees, which are then integrated into patient invoices.
Service Contracts: Individual doctors or companies representing doctors must issue e-invoices directly to hospitals for their services. This ensures transparency and proper documentation of professional fees.
Referred Patients: The invoicing process for patients transferred between facilities remains the same but will now be done through e-invoices.
Consolidated Invoices: Hospitals can continue to group multiple transactions into a single e-invoice for efficiency, particularly useful for self-paying patients or minor variations in services.
Admission Deposits: E-invoices are required only for non-refundable admission deposits. Refundable deposits can still be collected without the need for e-invoices, simplifying the process for temporary charges.
Recognizing the unique challenges facing healthcare providers, the IRBM has proactively released FAQs and detailed guidelines to aid in the smooth implementation of e-invoicing.
These resources address a wide range of billing scenarios, providing comprehensive information on invoicing processes for medical expenses, third-party claims, consultants, rental arrangements, admission deposits, and requirements for submitting detailed bills for validation to the IRBM.
E-Invoice Implementation: A Step-by-Step Guide for Healthcare Providers
For hospitals and other healthcare providers, the transition to e-invoicing requires a systematic approach, ensuring smooth integration into their existing systems and workflows:
Assess Current Systems: Hospitals must first analyze their existing billing processes and determine if there are any deficiencies or issues that must be addressed in order to implement e-invoice solutions.
Choose an Implementation Strategy: Choose an appropriate implementation plan depending on aspects like organization size, intensity of billing processes, and available resources.
Select Technology Solutions: Select the right technologies such as software, hardware, and digital certificates for implementing e-invoicing.
Train Staff: Ensure that staff members receive adequate training on how to employ the new e-invoicing systems and processes.
Test and Pilot: First, introduce the new e-invoice system on a small scale to observe and solve drawbacks and glitches that may hinder its full implementation.
Seek Support: Seek help from technology consultants, industry groups, and the IRBM throughout the implementation phase.
The Benefits of E-Invoicing in Healthcare
Streamlined Processes: Compared to paper invoices, e-invoices reduce paper usage, avoid data input and transcription errors, and reduce the time spent on billing issues, which is essential for healthcare providers.
Enhanced Transparency: In using digital records, it is easier to keep track of all financial transactions thereby increasing accountability within the health care facilities.
Increased Accuracy: Some of the features that reduce the risk of errors include automated data entry and validation procedures, which guarantee precise financial data.
Real-Time Monitoring: The CTC system of the IRBM allows the monitoring of transactions in real-time to enhance efficient tax compliance; real-time reactions to possible problems arising in the future may also be implemented.
Reduced Costs: E-invoices do not require the use of papers, stamps, and other resources for the preparation and sending of invoices and receipts, which significantly cuts expenses.
While e-invoices are becoming mandatory in many countries, a good e-invoice tool like Invoicera can make the process easier. It is designed to adapt to global e-invoicing changes. That means you can rely on Invoicera to keep your invoicing organized and compliant wherever you are in the world.
The Future of Healthcare Billing
The current move to adopt e-invoicing is a significant watershed in the development of the healthcare industry in Malaysia as it seeks to embrace change toward the use of electronic solutions. Although the problems arise at the beginning, the advantages are apparent in the long term.
With this shift towards the digital age in the functioning of a healthcare facility, these providers will benefit from improved and more efficient, transparent, and compliant processes. It will free up more time for the healthcare providers to get back to doing what they do best.
It’s not just about compliance with the regulation; it’s about a shift in organizational culture in the healthcare sector. Thus, the future of Malaysia’s healthcare system looks promising, as through the use of technologies, the country aims to establish a new, more efficient, and patient-centered healthcare system for reference for other countries.
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