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Fixing PhilHealth

fixing philhealth - Fixing PhilHealth

PhilHealth is in a deep mess and it needs all the help it can get.

It is in the midst of a crisis and it calls for crisis management.

More worrisome is the growing consensus that the institution is afflicted with corruption which must be addressed urgently.

For a better perspective, it would serve us well to look back at the evolution of PhilHealth.

HISTORY
PhilHealth’s precursor, the Medicare Program, was established under the Philippine Medical Care Act of 1969 consisting of two programs: Program 1 for Social Security System (SSS) and Government Service Insurance System (GSIS) members, and Program 2 for those not covered by Program 1.

SSS and GSIS members contributed 2.5% of Monthly Salary Credit for Medicare (50% from employees, 50% from employers) that would go to Health Insurance Funds managed by SSS and GSIS to cover member Medicare claims. A Philippine Medical Care Commission had oversight of the program.

I was the CEO of SSS from 1990 to 1998 and fraudulent Medicare claims were practically non-existent then or even before, thanks to the SSS’ tight controls, careful processing and strict audit. The Health Insurance Fund of the SSS grew to over P16 billion, a testimony to the actuarial viability of the program, although the contribution was low, and benefits modest.

In 1998, the Health Insurance Funds and membership contribution collection were transferred from SSS and GSIS to PhilHealth, in accordance with Republic Act 7875.

Besides managing SSS for eight years, I also had the opportunity to turn around a distressed financial institution and a failing manufacturing firm. Drawing from my experience as a former management and social security practitioner, I wish to take the opportunity to offer my unsolicited advice on PhilHealth.

DIAGNOSIS
The Senate, which did a thorough investigation of PhilHealth, is apparently dismayed with its state of affairs, and may soon complete its findings and recommendations.

Senator Panfilo “Ping” Lacson commented that corruption in PhilHealth may be systemic and may have been going on for years, if not decades, with losses probably running in the billions of pesos.

A prior full-blown investigation of PhilHealth, principally on fake dialysis treatment claims in the billions of pesos, may have triggered a management change, with President Rodrigo R. Duterte designating Brigadier General Ricardo Morales as PhilHealth President a year ago.

With the recent pandemic, Congress allocated to PhilHealth tens of billions of pesos for COVID-19 patients, which may have escalated into huge fake COVID-19 claims. “Ang malas naman natin.” (We are so unlucky.)

The investigation exposed some favored hospitals and clinics which received significant reimbursements from PhilHealth immediately and regularly, while others starved for working capital because of delayed reimbursements. “Kawawa naman sila.” (How pitiful they are.)

It also exposed thousands of ghost patients, 135-year-old patients, young persons posing as seniors for medical benefits, extended treatment, and other tricks of the trade.

Worse, PhilHealth reportedly advanced hundreds of millions of pesos intended for COVID-19 patients to dialysis centers which, no doubt, are not equipped to treat COVID-19 patients now, or in the future. So guess what? Per the Senate investigation, a dialysis center reportedly outsourced its COVID-19 patients to a nearby tertiary hospital, probably for a handsome commission with no risks at all. “Ang swerte naman nila!” (They are so lucky!)

To add insult to injury, PhilHealth reportedly issued an internal memorandum giving hospitals and clinics, including these dialysis centers, more time to liquidate their COVID-19 advances. Then, “voila,” another memorandum reportedly followed informing them there is no need to liquidate said advances anymore. “Libre na ba?” (Is it free now?)

Then, there is this allegation of an “overpriced” IT system worth over P2 billion. In their report, Commission on Audit (CoA) auditors discovered that the budget for five ICT (Information and Communications Technology) resources were overpriced by P98 million. It also noted that an Adobe software, costing P168,000 per unit, was listed at P21 million each. Moreover, the price of application servers and licenses was increased from P25 Million to P40 Million.

During the hearing, President Morales revealed the existence in PhilHealth of a “mafia” involved in corrupt practices. In a radio interview, he said, “Kahit si Superman ay hindi kayang talunin ang korupsiyon sa Philhealth (Even Superman is not capable of beating the corruption in PhilHealth).” Senate President Vicente “Tito” Sotto III rejected this in a Tweet, “Tanggalin mo lahat ng corrupt, hindi kailangan si Superman! (Take out all the corrupt, you do not need Superman.”

There were also questions whether the financial statements reflect the true financial state of PhilHealth, with overtones that significant figures are changed from time to time making one wonder whether the books are being “window-dressed.”

It was also reported that the way things are going, Philhealth will run out of funds by next year.

MY TAKE
First, there appears to be failure in governance and management in PhilHealth. Hence, a board and management revamp is called for. If I were in PhilHealth, I would probably resign before the axe falls, as some officers did.

All those involved in the end-to-end reimbursement process must go. Also, those who keep the books must be replaced.

An independent management and full blown audit must be done by a reputable private audit firm, not by CoA which may have exposed some shenanigans but failed to stop the continuing operation of the “mafia.”

Second, PhilHealth does not have a regulatory or supervisory oversight, unlike banks which are supervised by Bangko Sentral ng Pilipinas (BSP).

Philhealth should have regulatory or supervisory oversight as an additional line of defense against fraud. An alternative is to return the oversight of PhilHealth to SSS under the able leadership of Chairman Carlos Dominguez III and President Aurora Ignacio.

SSS has a solid reputation for prudential management, effective controls, a robust IT infrastructure, and excellent ID system with biometrics. PhilHealth can ride on the SSS IT and ID infrastructure to reduce fraud and stop corruption.

Another option is to put it under the Office of the Insurance Commissioner, PhilHealth being a Health Insurance Program.

Third, the report that PhilHealth will run out of funds next year indicates a flawed business model. Clearly, PhilHealth badly needs an actuarial study to determine its long term viability. Otherwise, the government will just have to continue subsidizing the Medicare program.

Fourth, the case of “overpriced IT system” appears to have been properly documented at the Senate investigation.

When asked why he did not raise the red flag right away when he was advised about the overprice, President Morales claimed he is not an IT expert. Well, in any proper bidding, whether on IT systems or others, resources are classified and priced according to specifications, so one does not have to be an expert to see any overprice.

Fifth, the existence of a “mafia” inside the organization means that the structures, policies and procedures, systems, and controls allow and encourage corruption. Obviously, these structures, policies and procedures, systems, and controls must be demolished and replaced.

For example, erring hospitals and clinics should not only be suspended; they should be closed.

A PhilHealth member should have a reliable EMV ID card or mobile virtual ID with biometrics and a digital wallet. The biometrics will eliminate ghost patients and identify erring ones, while the digital wallet will enable the member to directly pay the hospital for services without going through bureaucratic layers, while providing an audit trail.

For example, a member taps in with his EMV (Europay, Mastercard, Visa) ID card or mobile virtual ID card on a hospital Point-Of-Service (POS) or mobile device to check in; a camera can record the procedure; the PhilHealth allowance can be loaded in the member’s digital wallet; and the member can pay for treatment directly by tapping out with his EMV ID card or mobile virtual ID on the same hospital mobile or POS device.

CONCLUSION
Diagnosis and possible prescriptions for treatment have been given. Of course, the patient may opt for a second opinion.

Now, it is the government’s move.

This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.

 

Renato “Rene” C. Valencia is the Chair of the OmniPay, Inc., a graduate of the Philippine Military Academy, and was formerly the President and CEO of the Social Security System (SSS).

map@map.org.ph

rcv3313@gmail.com

http://map.org.ph

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