Net loss of P4.75B for PhilHealth in 2017 — COA report

The Philippine Health Insurance Corporation (PhilHealth) incurred a net loss of P4.75 billion in 2017, negatively affecting the efficient implementation of its programs, the Commission on Audit (COA) reported on Thursday.

According to state auditors, PhilHealth's statement of income as of December 31, 2017 showed that the gross margin from operations registered a negative P3.905 million, resulting in operating losses worth P10.489 billion.

"The yearly main source of buffer income to provide a positive result of the statement of income is the interest and other income which in CY 2017 closed at P5.738 million, an amount sufficient to cover the net loss from operations resulting in the CY 2017 net loss of P4.750 billion," COA explained.

PhilHealth's net operating income would have continued to be at the negative level in the past four years had it not generated income from other sources, the COA pointed out.

However, COA said, interests and other sources of income—such as interests from investments, accreditation fees from hospitals and other health providers, and fines charged to Accredited Collecting Banks for late or non-submission of records—were not enough to cover PhilHealth's net operating loss in 2017.

The COA cited the following factors as contributing to PhilHealth's loss:

• High All Case Rates (ACR) payment scheme providing reimbursement to health care providers as the reimbursed amounts exceeded the actual hospitalization cost of members favoring the health institutions at the expense of PhilHealth;
• Continuous implementation of Point of Care program, automatic membership of indigents and availment of PhilHealth benefits upon payment of premium contribution of P2,400 for one year. The program immediately entitles indigent member to avail of PhilHealth benefits up to maximum amount of benefit, if all eligible or if all conditions are met; and
• Inability to collect P10.6 billion allocation out of the General Appropriations Act (GAA) unprogrammed fund intended to finance the contributions of senior citizens as partial payment of the P15,619,067,400 total receivables from Department of Budget and Management (DBM) for the last quarter of CY 2014 and the entire CY 2015.

Aside from the huge loss, PhilHealth was also unable to avail of the government's P37.06 billion allocation for indigents premium contribution, which was targeted to be the agency's third major source of income in 2017.

State auditors said this resulted in foregone income of P3.2 billion brought about by PhilHealth's failure to enroll targeted indigents/beneficiaries included in the National Household Targeting System (NHTS) identified by the Department of Social Welfare and Development (DSWD) since the agency failed to submit the billing statement, one of the conditions for DBM to release the fund.

The COA suggested some measures in order for PhilHealth to attain financial sustainability:

• Aim for improved rate in electronic payment and remittance system (EPRS);
• Formulate a system for the regular updating of members' records especially information on salary and dependents;
• Reconcile collection database with treasury database to ensure only active and paying members are provided with health benefits;
• Issue billing statements to employers and reconcile differences between billing and remitted amount;
• Enforce the regular premium payment to replace the three out of six rule; and
• Strategize plans and actions to ensure GAA allocation for the PhilHealth premium arrearages of the government as employer and for funding of senior citizens premium contribution.

For its part, PhilHealth said continuous billings and letters to Congress and Senate have been sent for funding.

It also said that beginning October 2018, the agency will implement 9/12 contribution requirement, which will be applicable to employed and informal sector except indigents and senior citizens, for eligibility to avail of PhilHealth's benefits.

The agency will also implement monthly premium contributions of 2.5 percent to 2.75 percent on those who have monthly salaries ranging from P10,000 to P40,000. — BM, GMA News