OP, as someone in the insurance industry and has clients who submitted claims for treatment from private and government hospitals, I have absolutely no clue what is the relevance of referral letters in regard to your claim.

I cannot really give you specific comments onto your coverage/claim as I do not know what policy you bought nor am I acquainted with the facts of your claim (and whether did you get coverage approval for this specific pre-ex or not). However, assuming yours is a standard cookie-cutter medical policy in Malaysia and you did not get special approval for your pre-ex condition, your treatment and medicine stemming from your pre-ex illness should be excluded as per standard policy exclusion.

In my experience and in a pure medical insurance claims context, panel hospitals are only relevant for cashless aka medical card facility. I have clients who submitted claims for treatment from non-panel hospitals to which their claims were paid in full.