PhilHealth collapse feared

Agency exec warns shutter by 2022, but Palace assures funding for it

An official of the Philippine Health Insurance Corp. (PhilHealth) warned Tuesday that the state-run medical insurer could reach the end of its actuarial life next year and colllapse in 2022 because member contributions have dropped as a result of the COVID-19 pandemic, while benefit payouts are increasing for the same reason.

’DEFEATIST ATTITUDE.’ Philippine Health Insurance Corp. president and CEO Ricardo Morales (inset) testifies at the start of the Senate Committee of the Whole inquiry into the alleged failure of PhilHealth to release insurance claims to its accredited hospitals as well as alleged widespread corruption in the agency on Tuesday.  Sen. Joel Villanueva, seated beside Sen. Panfilo Lacson and Senate President Vicente Sotto III, expressed sadness over Morales' apparent 'defeatist attitude' in stamping out corruption within the government firm. Senate PRIB
Testifying before the Senate, which is investigating alleged anomalies at the agency, PhilHealth Senior Vice President Nerissa Santiago said the agency would incur P90 billion and P147 billion in operating losses in 2020 and 2021, respectively due to the “double impact” of the COVID-19 pandemic.

Senate President Pro Tempore Ralph Recto, however, disputed this claim, citing reserve funds at PhilHealth’s disposal.

Santiago’s testimony about the agency’s financial woes came after resigned anti-fraud officer Thorrsson Montes Keith said the government was losing about P15 billion due to corruption at PhilHealth, which he described as “the crime of the year.”

He pointed to the “syndicate-like” implementation of the interim reimbursement mechanism and the procurement of overpriced information and communication technology equipment as avenues for corruption.

Keith had resigned and raised the alarm over corruption at the state-run agency.

"I believe that the reason why corruption doesn’t end in PhilHealth, which has become a culture already, is due to the appointment, or the syndicate or mafia that has been put in place, of their peers, cohorts or fellow syndicate members in the executive department, which helps them in their illegal operations," he told the Senate Committee Of The Whole.

He also said he believes the syndicate in PhilHealth planned to take money from overseas Filipino workers to replace the money they have already spent or stolen.

READ: Senator: Mafia in Philhealth mess

Senate Minority Leader Franklin Drilon said controversies continue to haunt PhilHealth because it does not follow simple auditing rules.

“We are in this mess because of Philhealht’s non-compliance with rules, including a simple COA rule.

That is why we have all these problems because you disregard all the rules designed to protect public funds,” Drilon told PhilHealth president and chief operating officer Ricardo Morales.

Drilon was referring to the Commission on Audit rule that no additional cash advances shall be allowed to any official or employee unless the previous cash advances given to him are first settled or a proper accounting has been made.

At the start of the hearing, Drilon lamented how nothing has changed in PhilHealth since the Senate conducted a thorough investigation on the allegations of fraudulent claims, overpayments, and ghost dialysis payments last year.

In May this year the minority leader bared the overpricing of PhilHealth COVID-19 testing kits, which forced the health insurance agency to bring down the cost from P8,150 to P3,409. This saved the government over P9 billion, on the basis of a projected 2 million tests.

READ: PACC: PhilHealth ‘systemic flaw’ uncovered

Senator Panfilo Lacson said the story of corruption at Philhealth only revolves around the same cast of characters – a circle of high-ranking officials who manage to hog their seats despite the change of leadershi--and detailed anomalies that were already unearthed in the past.

He identified them as Rodolfo del Rosario, now senior vice president of legal sector, Israel Fargas, the SVP for health finance policy sector; corporate secretary Jonathan Mangaoang; and Dennis Mas, SVP for management services sector.

Lacson said Del Rosario had been the signatory on a lease contract for a building indirectly owned by Health Secretary Francisco Duque III, who is also chairman of PhilHealth.

Fargas stirred allegations of a grave abuse of discretion by reversing the Court of Appeals’ final and executory judgment of Perpetual Succour Hospital’s three-month suspension and P10,000 fine.

Lacson also accused Fargas of turning a blind eye to the notorious and untenable policy called All Case Rate or ACR Payment Scheme of PhilHealth which cost PhilHealth massive losses to overpayment and fraud.

On the otherhand, Mas was SVP charged by the Ombudsman for his involvement in the POEA fake receipt scam. Mas also deliberately failed to disclose the undesirable record of the five recently promoted PhilHealth personnel despite their involvement in big-time scams.

Lacson also revealed the following Commission on Audit disallowances for Philhealth:

• As of Dec. 31, 2018 – P6.64 billion

• As of Dec. 31, 2017 – P6.12 billion

• As of Dec. 31, 2016 – P5.08 billion

• As of Dec. 31, 2015 – P5.02 billion

• As of Dec. 31, 2014 - P3.98 billion

He pointed out PhilHealth’s recurring pattern of violations of auditing rules in terms of suspensions, disallowances and charges.

“Today, even in the middle of a global pandemic, PhilHealth continues to face a train of anomalies, this time involving three major issues we are tackling today: overpriced ICT equipment, manipulation of PhilHealth’s financial statements and the highly irregular implementation of advanced payments to health care institutions through the interim reimbursement mechanism policy, among other corrupt practices.

"We dare ask: Why would maternity care package providers and freestanding dialysis centers which do not even cater to COVID-19 patients receive COVID-19 advance payments from PhilHealth? You can see P226 million released to freestanding dialysis centers and P4.7 million released package providers,” Lacson said.

To cite an example, five branches of a private freestanding dialysis center, Braun Avitum Dialysis Center Manila, recently received a total of P45.18 million in only a few days, while the Ospital ng Maynila, a public hospital, has yet to receive its PhilHealth fund reimbursement of P19 million despite multiple appeals.

Recto, on the other hand, contradicted Santiago’s warning that PhilHealth had only a one-year actuarial life because of the COVID-19 pandemic.

On grilling by Drilon, Santiago said Philhelath will have no more reserve funds by 2021.

Before the pandemic, Santiago said the actuarial life of PhilHealth was more than 10 years. However, she said the pandemic had a “double impact” on the agency’s program because of the decreased collections and expected increase in benefit payouts.

READ: Rody sets PhilHealth graft probe

But Recto said PhilHealth has reserved funds or equity of P110 billion, of which P77 billion came from premium paid by direct contributors. He said the remaining balance came from sin taxes, PAGCOR and other government sources.

With the current health crisis, Recto said it’s the contributions coming from members that will be affected due to job losses. But he said the funds from sin taxes would be go on for two years. He estimated that Philhealth will still have P60 billion in reserved funds.

The Senate leader also raised the possibility that the hospital expenses of Philhealth might be reduced as many people do not go to hospitals for fear of getting infected by COVID-19.

Malacañang on Tuesday said the government will provide funding to PhilHealth if its dire warnings prove true.

“The government may provide funds to PhilHealth once its reserve funds are depleted,” Roque said in a televised public press briefing.

Roque said the survival of PhilHealth does not depend solely on its collections.

"As author of the Universal Health Care [law], we never, even for one minute, considered that the survival of PhilHealth will solely be by reason of premiums," Roque said.

“We know that we could not provide free medicine and treatment if PhilHealth will only depend on premiums,” he added.

“By and large, the government is aware of its responsibilities to support PhilHealth financially for the implementation of the Universal Health Care Law. If PhilHealth runs out of money, the government will provide funds because it's called Universal Health Care, not medical insurance,” he added.

Morales on Tuesday said the agency’s alleged “overpriced” information and communications technology system is aimed at a solution in dealing with the systemic fraud that is causing the agency to lose billions of pesos a year.

“The problem of fraud and inefficiencies in PhilHealth are here before, long before I got here and will continue to be here long after I am gone if the right things are not done… And right now, at this moment, the right thing to do for PhilHealth is to get the integrated and harmonized information system, and to clean up its membership database,” Morales said.

READ: Solons to start Philhealth investigation on Wednesday

Morales said a study conducted last year estimated that PhilHealth’s fraud index was 7.5 percent, as compared with the global average for health care fraud of 10 to 20 percent.

Nevertheless, at that rate, he said that of the P136 billion it spent last year on benefit payments, P10.2 billion was potentially lost to fraud.

He maintained that the solution to the systematic fraud problem “lies in the robust, integrated and harmonized information management system running a clean, complete and updated membership database.”

“Only such a system can keep track of the 109 million members, the 40,000 accredited health care professionals, the 8,500 health care facilities filing 35,000 claims a day and paying P2 billion a week,” he added.

Currently, he said what PhilHealth has is a “fragmented, aging and over-extended” information system running a hundred applications, a database that handles 370 transactions per second, catering to 4,000 internal and 20,000 external users distributed among its 130 offices and branches nationwide.

“If a corporation stands to lose tens of billions a year through fraud which can be avoided by information technology, then the alleged overpriced P2.1 billion IT program over three years appears paltry indeed,” Morales said.

Morales also said he and the management team he created are not yet ready to “throw in the towel.”

“Reform does not happen overnight and some stability is required for it to take root,” he said.

At the same hearing, Senator Francis Tolentino asked Morales why he defied President Duterte’s order to call for the resignation of the corporation’s vice presidents and board members to pave the way for its cleansing.

“There was a directive coming from President Duterte for all PhilHealth vice presidents to tender their courtesy resignation. Was there a consequential action from the PhilHealth board requiring the VPs to quit?” Tolentino asked Morales.

Admitting there was a Board resolution on the resignation of key officials, Morales howeversaid it only reached the board members and not the vice presidents.

The Philhealth CEO added he exercised discretion because the agency couldn't function if all vice presidents will resign. He added no cases have been filed against them.

Senator Juan Miguel Zubiri, meanwhile, said there is a “special place in hell” for people who take advantage of the misery of others, apparently referring to the “mafia members” involved in the corruption at PhilHealth. With PNA

Topics: PhilHealth , Rodrigo Duterte , Ricardo Morales , Thorrsson Montes Keith , Corruption
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