PhilHealth made P936 million overpayments to health institutions in 2019 – COA

MANILA, Philippines — Philippine Health Insurance Corp. (PhilHealth) made overpayments that reached P936.653 million to various hospitals and other healthcare institutions (HCIs) in 2019, the Commission on Audit (COA) said.

In its annual audit report, COA noted that some HCIs were reimbursed with the full amount of the package rates that included the so-called All Case Rates (ACR) and Z Benefit, even though the actual hospital charges plus the maximum amount of professional fees incurred by the member-patients were lower than the full amount, resulting in the overpayment of P936.653 million.

“The existing payment scheme is detrimental to PhilHealth’s interest as the corporation incurred unnecessary expenses. The HCIs were the ones who benefited from the excess payments while the member-patients were not able to avail of the full benefits given by PhilHealth, which is not aligned with its program’s objective to increase financial risk protection for its member-patients,” 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. Hence, this practice is not in conformity with Section 2 of Presidential Decree No. 1445 (Government Auditing Code of the Philippines) to safeguard assets from wastage or loss through improper disposition.”

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

The report noted cases of overpayment to hospitals in the National Capital Region (NCR) and Rizal, Caraga, Region 1 (Ilocos), Region 8 (Eastern Visayas) and Region 9 (Zamboanga peninsula).

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

Under the ACR, 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 incurred.

The Z Benefit package is offered to PhilHealth members to address health conditions that trigger prolonged hospitalization and very expensive treatment.

The COA team noted that the highest number of paid reimbursement claims in Caraga accounted for 77,033 paid claims amounting to P568.203 million.

COA also pointed out that in Caraga, pneumonia was the medical case with the highest overpayment, amounting to P105.933 million, stating that the difference of 117.67 percent from actual charges is highly unusual.

“The risk that simple coughs could be turned into a medical case of pneumonia may happen and be possibly abused by unscrupulous individuals/institutions,” said the auditors.

State auditors said “the overpayment can be dispensed with if management considers revising the Package Case Rates System to include a policy guideline wherein claims reimbursement would depend on the member-patients’ actual hospitalization charges plus professional fee or the amount of the package, whichever is lower. Otherwise, management should consider devising a mechanism or strategy that would not necessarily put into disadvantage the resources of the government, but also benefit the members and the healthcare providers, in a win-win situation.”

At the same time, COA said PhilHealth regional office (PRO) NCR and Rizal did not immediately act on the issuance of the notice on the Temporary Suspension of Payment of Claims to a dialysis center as it only issued the notice on June 14, 2019, or after the alleged bogus/ “ghost” dialysis claims of Dialysis Laboratory Center and Corp. (DLCC) were already in the news.

This meant almost five months from Jan. 29, 2019, or the date the PRO NCR and Rizal officers were informed by the Fact-Finding, Investigation and Enforcement Department on the alleged fraudulent claims of DLCC.

“Further, PRO NCR and Rizal did not suspend the payments, but continuously processed and paid 114 dialysis claims amounting to P1.872 million despite the apparent and probable presence of irregularities and/or abuses made by the DLCC. This resulted in a detrimental loss of fund on the part of the Corporation.”

COA then directed PRO NCR and Rizal to facilitate the immediate issuance of a TSPC and suspend the processing and payment of claims of healthcare providers (HCPs) with cases of apparent and probable presence of irregularities and/or abuses of the National Health Insurance Program pending the final disposition from the accreditation fepartment on the withdrawal of accreditation.

These claims refer to those already in possession of the PRO NCR and Rizal branches and payment that has not been released, including those still for submission after the effectivity of the temporary suspension of payment.

The audit team also said the PRO NCR and Rizal should require DLCC to refund the 114 claims amounting to P1.872 million that should have been suspended for payment; provide the team with proof of cancellation of payments, if any; otherwise, a Notice of Disallowance shall be issued.

In response, the PRO NCR and Rizal monitoring committee said they already recommended several requests for issuance of TSPC of HCIs with cases of apparent and probable presence of irregularity and/or abuses of the National Health Insurance Program to the president and CEO.

“The branches have also suspended the processing and payment of claims of the said HCPs with approved TSPC. Moreover, the issue on the DLCC arose from the lack of clear and detailed policies and procedures in the issuance of notice of TSPC that define the steps to be followed by concerned offices and will serve as PRO’s guide for decision-making.”

On the claims that were not suspended but continuously processed and paid, PRO NCR and Rizal management suggested the issuance of an internal guideline, taking into consideration the deficiencies and recommendations noted in the audit team’s observation.

Further, they said “the matter is covered by the sub judice rule, since a case was already filed in court against DLCC through the Department of Justice, the refund of payment is yet to be considered awaiting the outcome of the case filed.”