Solon calls for abolition of PhilHealth’s all-case rate scheme

Solon calls for abolition of PhilHealth’s all-case rate scheme

Anakalusugan Party-list Rep. Michael Defensor. (File photo)

MANILA – The chairman of the House of Representatives Committee on Public Accounts on Wednesday called for the abolition of the contentious “all-case rates” (ACR) payment scheme of the Philippine Health Insurance Corp. (PhilHealth) due to massive losses to overpayment and fraud.

During the committee hearing on the alleged corruption in the state health insurance firm, Anakalusugan Party-list Rep. Michael Defensor said the case rate system, under which there is a fixed cost for the treatment of certain diseases and procedures, resulted in billions of losses on the part of the agency.

“You will have (a) continuous problem with the all-case rate program. Sa panahon ni Presidente ‘Noynoy’ Aquino yan. Ngayon dapat sa panahon ni Pangulong Duterte ay itigil na yan. Ihinto na yan para hindi magpatuloy ang ganitong problema (It started during the term of President [Benigno] ‘Noynoy’ Aquino [III]. It should end during President [Rodrigo] Duterte’s term so that such problem would not persist),” Defensor said.

He said the system allows PhilHealth to pay the hospital the case rate even if the cost incurred by a member is much less.

Defensor noted that the state-owned firm has lost an estimated PHP153.7 billion from 2013 to 2018 due to overpayment and fraud.

“Yan pong all-case rate policy na binabanggit ko sa inyo, kahit na anong gawin niyong computerization, mako-computerize lang po ang corruption dyan sa loob ng PhilHealth dahil binabayaran ng buo based on a case rate imbis na doon sa actual na ginastos ng pasyente (Regarding the all-case rate policy that I’ve mentioned, no matter how much computerization effort you put [into the agency], it will only ‘computerize’ the corruption inside PhilHealth because it pays in full based on a case rate instead of the actual cost incurred by the patient),” he said.

Defensor said the new case rate package for coronavirus disease 2019 (Covid-19) patients could also suffer similar irregularities, wherein a PHP30-billion budget has been set aside for accredited hospitals for the pandemic response.

“Dito po sa Covid-19, nag-case rate na naman kayo (You have also imposed a case rate system for Covid-19). I can assure you. There will be corruption there of the PHP30 billion,” he said. “‘Yun lang po sa mild pneumonia, PHP43,000. Marami po dyan ang mas mababa ang gastos na babayaran ng PhilHealth (The [rate] for mild pneumonia is PHP43,000. A lot of cases have lower actual costs than what the PhilHealth is set to pay).”

PhilHealth president Morales

PhilHealth President Ricardo Morales, meanwhile, said the alleged losses of PHP154 billion did not appear in the published annual reports of the Commission on Audit.

As for the case rate policy, Morales said the agency is transitioning from ACR to a global budget payment system.

“Sa ilalim po ng Universal Health Care Law, papunta po tayo sa global budget na kung saan ang pondo ay ina-advance sa health care provider network, sa LGU (local government unit), sa probinsya para sila na po ang magma-manage ng pondo (Under the Universal Health Care Law, we are transitioning to a global budget wherein the funds shall be forwarded to the health care provider network, LGUs, provinces, so that they will be the ones managing the budget),” he said. “So yun ho ang long-term na sagot doon sa problema ng case rate na hindi naaangkop sa tunay na gastos (That will be the long-term solution to the problem of case rate that is ill-matched with the actual expenses).”

PhilHealth to collapse in 2022

During a Senate hearing on Tuesday, PhilHealth data protection officer Nerissa Santiago said PhilHealth could collapse in 2022 without additional subsidy from the government.

Santiago bared that PhilHealth is set to incur net operating losses of PHP90 billion this year and PHP140 billion in 2021 if the Covid-19 pandemic persists.

Senator Ralph Recto is not sold to the idea that PhilHealth will go bankrupt by 2022 because he said the state-run health insurance agency has P110-billion contingency fund.

Recto further said that PhilHealth’s projected P184-billion expense for the Universal Health Care program should not be taken from the contingency fund as this is usually included in the agency’s regular expenses with or without a global pandemic.

The only items that should be charged from the P110-billion standby fund is the P28 billion for COVID-19 testing, and another P22.5 billion for the reimbursement of coronavirus-related expenses of members, the senator said.

Santiago was among several top PhilHealth officials called in for the Senate’s legislative investigation of alleged widespread corruption in the state health insurer.

In the hearing, Senate Minority Leader Franklin Drilon asked the PhilHealth officials for the corporation’s actuarial life – or the expected longevity of the insurance scheme.

PhilHealth had an actuarial life of more than 10 years before the coronavirus pandemic took hold.

Now, decreased collections from PhilHealth members and the expected increase in benefit payouts have had a “double impact” on the program, Santiago said.

“We expect that by 2021, we will be in the red already, so it’s only one year…in terms of the actuarial life,” she added.

PhilHealth expected a net operating loss of P90 billion in 2020 and, if the pandemic persisted, P147 billion in 2021, Santiago said.

Citing the government-owned and controlled corporation’s financial statements, Drilon said PhilHealth already incurred a net operating loss of P3.5 billion in 2019. In the first quarter of 2020, it already reported P2 billion in net operating loss.

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