By Ben Rosario
The Commission on Audit (COA) has aired serious concern over the state of financial health of the Philippine Health Insurance Corporation (Philhealth) as it revealed that the state-run firm incurred a net loss of P4.750 million last year.
Commission on Audit
(MANILA BULLETIN FILE PHOTO) In its 2017 annual audit report for PhilHealth, the COA aired fears that its financial condition could adversely affect the “efficient and effective implementation” of projects. The COA also noted that negative effects will pose risk on the actuarial life of the agency “consistent with the vision” provided under the National Health Insurance Act of 2013 which calls for a “sustainable system of fund management.” The audit report disclosed that in its statement of income as of December 31, 2017, Philhealth registered a negative P3.905 million gross margin from operations, thus, indicating losses in the total amount of P10.489 billion. “The yearly source of buffer income to provide a positive result of the statement of income is the interest and other income which in 2017 closed at P5,738 million, an amount insufficient to cover the net loss from operations result in the 2017 net loss of P4.750 billion,” auditors stated. Auditors said annual increase in the Benefit Claims and Operating Expenses averaging 20 percent and ten percent, respectively, “outpaced the increase in the Premium Contributions with 19 percent average increase from CYs 2013-2017.” Thus, the premium contributions will not be sufficient to cover all current and future Philhealth claims. With this condition, the “reduction of the actuarial life of the agency is imminent,” state audit examiners warned. “Adding to Philhealth’s woes was it inability to avail of the government’s P37.06 billion 2017 allocation for indigents premium contributions, which was targeted as the agency’s third major source of income for CY 2017,” the COA revealed. As a result, Philhealth incurred foregone income of P3.2 billion because the agency failed to enroll targeted “indigents/beneficiaries” who were included in the National Household Targeting System identified by the Department of Social Welfare andDevelopment. COA blamed PhilHealth for this problem, noting that it failed to submit billing statement which is one of the conditions before the Department of Budget and Management could release funds. Further, at the end of 2017, Benefit Payments registered an increase of nine percent compared to the 2016 releases. In 2017, ₧110.490 billion was paid compared to the 2016 payment of ₧102.103 billion. Another factor that led to PhilHealth’s losses are the high all case rates (ACR) payment scheme that provided reimbursement to health care providers and health care institutions for amounts that exceeded the actual hospitalization cost of members “at the expense of Philhealth.” PhilHealthalso failed to collect the ₧10.6 billion allocation from the General Appropriations Act’s unprogrammed fund that was intended to finance the premium contributions of senior citizens. To stop the bleeding, COA asked Philhealth to improve the rate in Electronic Payment and Remittance System and formulate a system of regular updating of members’ records. Auditors also recommended that Philhealth must collaborate with the Philippine Overseas Employment Agency to address the problem of mandatory payment of OFW’s Philhealth premiums and the review of the All Case Rates policy. According to COA,PhilHealth must immediately seek an increase in the government premium contributions for indigents and senior citizens. The PhilHealth management said it has continuously appealed for funding from Congress as it sought premium adjustments for indigents and senior citizens.
Commission on Audit(MANILA BULLETIN FILE PHOTO) In its 2017 annual audit report for PhilHealth, the COA aired fears that its financial condition could adversely affect the “efficient and effective implementation” of projects. The COA also noted that negative effects will pose risk on the actuarial life of the agency “consistent with the vision” provided under the National Health Insurance Act of 2013 which calls for a “sustainable system of fund management.” The audit report disclosed that in its statement of income as of December 31, 2017, Philhealth registered a negative P3.905 million gross margin from operations, thus, indicating losses in the total amount of P10.489 billion. “The yearly source of buffer income to provide a positive result of the statement of income is the interest and other income which in 2017 closed at P5,738 million, an amount insufficient to cover the net loss from operations result in the 2017 net loss of P4.750 billion,” auditors stated. Auditors said annual increase in the Benefit Claims and Operating Expenses averaging 20 percent and ten percent, respectively, “outpaced the increase in the Premium Contributions with 19 percent average increase from CYs 2013-2017.” Thus, the premium contributions will not be sufficient to cover all current and future Philhealth claims. With this condition, the “reduction of the actuarial life of the agency is imminent,” state audit examiners warned. “Adding to Philhealth’s woes was it inability to avail of the government’s P37.06 billion 2017 allocation for indigents premium contributions, which was targeted as the agency’s third major source of income for CY 2017,” the COA revealed. As a result, Philhealth incurred foregone income of P3.2 billion because the agency failed to enroll targeted “indigents/beneficiaries” who were included in the National Household Targeting System identified by the Department of Social Welfare andDevelopment. COA blamed PhilHealth for this problem, noting that it failed to submit billing statement which is one of the conditions before the Department of Budget and Management could release funds. Further, at the end of 2017, Benefit Payments registered an increase of nine percent compared to the 2016 releases. In 2017, ₧110.490 billion was paid compared to the 2016 payment of ₧102.103 billion. Another factor that led to PhilHealth’s losses are the high all case rates (ACR) payment scheme that provided reimbursement to health care providers and health care institutions for amounts that exceeded the actual hospitalization cost of members “at the expense of Philhealth.” PhilHealthalso failed to collect the ₧10.6 billion allocation from the General Appropriations Act’s unprogrammed fund that was intended to finance the premium contributions of senior citizens. To stop the bleeding, COA asked Philhealth to improve the rate in Electronic Payment and Remittance System and formulate a system of regular updating of members’ records. Auditors also recommended that Philhealth must collaborate with the Philippine Overseas Employment Agency to address the problem of mandatory payment of OFW’s Philhealth premiums and the review of the All Case Rates policy. According to COA,PhilHealth must immediately seek an increase in the government premium contributions for indigents and senior citizens. The PhilHealth management said it has continuously appealed for funding from Congress as it sought premium adjustments for indigents and senior citizens.