COA flags PhilHealth for nearly P1B in overpayments, P6.9B in disallowances

The Philippine Health Insurance Corporation (PhilHealth) made overpayments of P936.653 million to health care institutions (HCIs) in 2019, the Commission on Audit (COA) said in its annual audit report.

For the same year, the state health insurer also incurred a total of P6.967 billion in unsettled audit suspensions (P84.36 million), disallowances (P6.88 billion) and charges (P2.41 million), COA also reported.

“Full reimbursement of the package rates (All Case Rates or ARC and Z Benefit) to various health care institutions for 312,577 sampled claims despite the lower member-patients’ hospital charges plus the maximum amount of professional fees resulted in overpayment of P936.653 million,” the state auditor said.

It pointed out that this deprived the people and the government of “fully achieving PhilHealth’s program objective of increasing financial health protection of member-patients since the HCIs were the ones who benefited more therefrom.”

The cases of overpayments to hospitals were noted in the National Capital Region and Rizal, CARAGA, Region 1, Region 8 and Region 9.

COA reviewed a total of 312,577 sample claims, comparing the package rate amounts of hospitals and the actual hospital charges plus profession fees.

Under the  case rate system, PhilHealth pays for the entire cost of treatment package that it has fixed, even if such cost is much lower than the expenses a patient-member incurs.

The Z Benefit Package is being offered to PhilHealth members to address health conditions that trigger prolonged hospitalization and very expensive treatments.

Among the illnesses covered under this package are acute lymphocytic leukemia, early breast cancer, prostate cancer, kidney transplant for end stage kidney disease, coronary artery bypass graft surgery and cervical cancer.

PhilHealth deputy spokesperson Rey Balena told GMA News Online on Saturday they will have to study the report first.

"We will have to look into the COA report first," Balena said.

The report of the state audit agency came as PhilHealth undergoes an overhaul amid corruption controversies.

On Friday, more than 40 senior officers heeded the call of its new chief to step down as part of a reorganization initiative amid allegations of corruption hounding the state insurer.

Earlier, PhilHealth chief Dante Gierran issued a memo implementing a 2019 Board Resolution directing all senior officers from Salary Grade 26 and above to tender their courtesy resignation.

Detrimental

In its report, COA said the overpayments were computed based on the actual hospital charges indicated in the state of accounts or Claim Form 2, plus the professional fees, against the full amount of the package rates.

“The existing payment scheme is detrimental to PhilHealth’s interest as the Corporation incurred unnecessary expenses. The HCIs were the ones who benefitted from the excess payments while the member-patients were not able to avail the full benefits given by PhilHealth, which is not aligned with its program’s objective to increase financial risk protection for its member-patients,” COA said.

It added that “excess payments being made to HCIs constitute a loss to PhilHealth as it could have been utilized to pay other benefit claims.”

The overpayment was also a violation of Presidential Decree 1445 or the Government Auditing Code of the Philippines to “safeguard assets from wastage or loss through improper disposition.”

CARAGA

Citing the cases in CARAGA, the audit team noted that the top 10 highest number of paid reimbursement claims in the region accounted for 77,033 paid claims amounting to P568.203 million.

In the region, pneumonia was the medical case with the highest overpayment amounting to P105.93 million, representing a “highly unusual” difference of 117.67 percent from the actual charges, COA said.

“The risk that simple coughs could be turned into a medical case of pneumonia may happen and be possibly abused by unscrupulous individuals or institutions,” COA added.

COA reiterated its earlier recommendation to "re-evaluate the present guidelines on the implementation of the All Case Rates and Z Benefit Claims package rates and revise the same accordingly by including a provision that reimbursements should be based on the member-patient's actual hospitalization charges plus professional fee or the case rate amount, whichever is lower."—With a report from Ted Cordero/LDF/KG, GMA News