COA flags PhilHealth's nearly P937-M overpayment to healthcare institutions in 2019

ABS-CBN News

Posted at Oct 11 2020 11:03 AM

A man looks at the sign of a PhilHealth local office in Quezon City, June 7, 2019. Mark Demayo, ABS-CBN News/file

MANILA — The Philippine Health Insurance Corp. (PhilHealth) made an overpayment worth nearly P937 million last year to various healthcare institutions, must refund almost P468 million in employer share, and should recover nearly P153 million in unauthorized benefits to its employees, the Commission on Audit (COA) said in a recent report.

The findings in the COA's report on PhilHealth's operations in 2018 and 2019 were officially relayed to the state health insurer's officers on Sept. 30 in the midst of legal actions being taken against the agency's former and incumbent officials over alleged corruption even as the country faces the coronavirus pandemic.

According to the COA report signed by Dir. Cleotilde Tuazon, "Full reimbursements of the package rates (All Case Rates (ACR) and Z Benefit) to various Health Care Institutions (HCIs) for 312,577 sampled claims despite the lower member-patients’ actual hospital charges plus the maximum amount of Professional Fees (PF) resulted in overpayment of P936.653 million" last year. 

"PhilHealth’s program objective of increasing financial health protection of member- patients" is not fully achieved "since the HCIs were the ones who benefited more therefrom", the COA said.

Health care service providers in the National Capital Region and Rizal, Caraga, Ilocos Region, Eastern Visayas, and Zamboanga regions were overpaid by PhilHealth, state auditors said. 

HCIs in the region of Caraga got the biggest slice of PhilHealth's overpayment through the case rate system with P375,160,840, followed by NCR and Rizal with P364,084,35, Zamboanga with P192,346,970, Ilocos with P1,430,339, and Eastern Visayas with P846,899.

HCIs in NCR and Rizal, meanwhile, received excessive benefit claims amounting to P2,783,160 million, according to the report.
 
These overpayments, COA said, is contrary to the state insurer's mandate of increasing its member-patients' financial health protection. 

"The existing payment scheme is detrimental to PhilHealth's interest as [it] incurred unnecessary expenses," it said. 

"Moreover, the excess payments being made to the HCIs constitute a loss to PhilHealth as it could have been utilized to pay other benefit claims," it added. 

The insurance agency was embroiled in controversy this year after one of its official, lawyer Thorrsson Montes Keith, resigned due to alleged widespread corruption in the agency.

Keith also questioned the alleged irregular disbursement of some P15-billion fund to hospitals for COVID-19-related expenses.

A Senate investigation found that as of June 9, 2020, PhilHealth has released P14 billion in COVID-19 funds to 632 health care institutions.

Of the said amount, P231.15 million were given to dialysis centers and maternity clinics, which were not catering to COVID-19 patients, a Senate report showed.

Recommendations

The auditing agency said PhilHealth should review how it implements the case rates and Z benefit claims package because the "issue at hand is recurring." 

"We recommended that top management strongly reconsider our previous year’s audit recommendation to re-evaluate the present guidelines on the implementation of the All Case Rates and Z Benefit Claims package rates," it said. 

PhilHealth, state auditors pointed out, should include a provision in the reimbursement based on a member-patient’s actual hospitalization charges, the professional fee or the case rate amount, "whichever is lower." 

As well, the COA flagged as irregular the "payments for the 30 percent employer share in the PhilHealth Provident Fund (PPF)" from 2015 to 2018 amounting to P467.858 million "due to lack of prior evaluation by the Department of Budget and Management (DBM).

"We recommended that Management... refund the amount of P467.898 million employer share... (and) secure the evaluation of the DBM as a requisite in granting the release of 2019 employer contribution," it said.

It seeks also for "the immediate refund from PhilHealth employees" of the Welfare Support Assistance (WeSA) amounting to P152.935 million, covering the period Feb. 2012 - Dec. 2019.

"The restoration of the grant of Welfare Support Assistance (WeSA) with retroactive effect coupled with the simultaneous payment of the existing Subsistence and Laundry Allowances is invalid and irregular," the COA said.

Those payments lack legal basis, are tantamount to double compensation, have no authority from the Health Secretary, and were sourced from savings without proper authority, the COA said.
 
The COA said it is not able to "express an opinion" on the available financial statements (FSs) of PhilHealth, saying it has "not been able to obtain sufficient appropriate audit evidence to provide basis for an audit opinion."

Among its recommendations is for PhilHealth to "design and implement a sound internal control over financial reporting that would prevent, detect and correct material misstatements on time to ensure the reliability of the FSs and avoid restating thereof annually."

It also suggested that PhilHealth "prioritize IT system procurement to fully automate its operations for efficient and effective management, monitoring, and reporting of its financial transactions."

In August, then PhilHealth) President Ricardo Morales said "corrupt officials" in the agency have been trying to cast doubt on the firm's push to automate systems and make irregularities easier to spot in the state-run insurance company.

Morales claimed that some PhilHealth officials have been trying to discredit the executive board's decision to purchase equipment by saying that the items were overpriced and were being used to mask corruption.