Plunder at PhilHealth

Published September 17, 2020, 7:00 AM

by Edwin V. Fernandez

The recent scandals plaguing the state health agency have assumed pandemic proportions. Fraud, embezzlement, mismanagement, and out and out theft of state funds have been uncovered by the Senate investigative committees. It is a tragedy that the state’s premiere health agency is itself, as a corporate organism, in a very sick state.

Despite the damning findings by the Senate committee, it is not clear whether any of the personnel involved have been the subject of criminal indictments. From the PhilHealth’s own Human Resources department, it was explained that offenses of a serious nature such as depositing significant amounts of money in non-PhilHealth accredited financial institutions were simply glossed over with letters of reprimand. In other private institutions, especially in listed companies, this would be prima facie evidence of malversation, whether or not the amounts were recovered or not and would be sanctioned with at least major suspensions, or more likely with outright dismissal.

Even before these outrageous scandals began, PhilHealth already had a very weak fraud detection system. There have been many cases that have slipped through undetected of fraudulent claims from hospitals and other PhilHealth accredited health institutions and these were like termites that undermined the contributions of millions of Philhealth members who had contributed to the System through mandatory salary deductions. There is reason to suspect  that the absence of a strong claims fraud detection and management function was because of the involvement of insiders, a fact which has been strengthened by the recent Senate investigations.

The decay was further exacerbated during the presidential campaign of Gloria Arroyo. The then head of PhilHealth, no other than the now Secretary of Health Francisco Duque, started distributing free health cards, entitling the holders, who had not made any single contribution to the System, to benefits of regular PhilHealth members. By 2003, the free PhilHealth cards had ballooned to 8 million. Understand that the cards were distributed for free and the beneficiaries had not paid a single cent for membership unlike the millions who paid through salary deductions. The costs of treatment by these freeloaders was supposed to have been paid by a nebulous arrangement between local governments and through budget allocations from the national government. Again, it is unlikely that the costs of treatment for these free cards was ever reimbursed to PhilHealth, given the notoriety of national and local governments for paying their bills.

Then in 2019, the Duterte administration proudly announced the passage into law of the Universal Health Care Act, essentially guaranteeing every Filipino access to subsidized health care. We all know that probably at least 50% will not be able to afford the monthly contributions to the System. On this aspect, the law provides that annual budget allocations of PhilHealth will take care of the deficit.  Again, it would imply that the annual budget of PhilHealth should cover both its deficits plus the expected expenditures for the coming fiscal year.  In the meantime, to cover the unfunded treatments from beneficiaries who have no contributions, the finance people are forced to “borrow” from the cash contributions of the employees who contribute to the System by salary deductions.

Then came the Covid Pandemic. In the initial stages of the pandemic, the Administration declared that the initial victims would be fully subsidized by PhilHealth. This ultimately proved to be unsustainable, as for the most basic of cases, the cost per patient was at least P250,000 and for the more serious cases, up to P2,000,000. If on average each of the initial 5,000 cases cost P300,000 then the cost to PhilHealth was P1.5 billion, which was clearly unsustainable if we now count more than 200,000 cases.

Then PhilHealth was exposed to have been defrauded of billions through the supposed unchecked disbursement of government funding to arrest the pandemic through PhilHealth.

The piles of anomalies have as its main victims the hospitals who faithfully implement the PhilHealth programs and who have remained un-reimbursed for legitimate claims for almost 6 months now and whose doctors have remained unreimbursed for services all the while putting their safety and health at risk. At its worst, the ultimate victim may be the hapless employee who has no choice but to have his contributions deducted monthly and when he falls ill, will find the hospital will return his Philhealth claims when it collects from PhilHealth.

Placing an accountant and NBI person in charge of PhilHealth to replace its disgraced former head may not be entirely a bad thing. It will take an auditor’s eye to look for loopholes and weaknesses in PhilHealth’s systems that lend it to fraud, mismanagement and collusion. He appointment must be succeeded by a thorough replacement of the senior staff who must be complicit in some form or fashion for the looting at PhilHealth. Then they must conduct an actuarial examination of the System and rush the national government to cover any deficits.

Any other measure will assure the quick demise of PhilHealth.

Edwin V. Fernandez is a past President of FINEX, he is the Chairman of Armada Rescue and Safety Equipment Corp.

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