PhilHealth lost P153B to fraud in 5 years

CITING rates system being seen as the source of graft and corruption,  the chairman of the House committee on public accounts said on  Wednesday that the Philippine Health Insurance Corp. (PhilHealth)  allegedly lost some P153 billion to overpayments to hospitals and  fraud in just five years.

During Wednesday’s hybrid hearing, Anakalusugan party-list Rep. Michael Defensor, the panel chairman, said at least P150 billion were  lost to overpayments and more than P50 billion to fraud between 2013  to 2018 based on the reports of the Commission on Audit (COA).

Under the all case rates system, Defensor explained that PhilHealth  pays hospitals based on fixed package rates even if the patient has  incurred a lower hospitalization bill.

“Believe me, you will have problem with the all case rates program,” Defensor told PhilHealth president and CEO Ricardo Morales during the committee’s hearing held at the Session Hall of the House of  Representatives that was physically attended by few lawmakers and  others via Zoom.

“All of it will go to corruption for as long as there is an all case  rates (system),” Defensor lamented

During last Tuesday’s Senate hearing, Atty. Thorrsson Montes Keith, a  former PhilHealth anti-fraud legal officer, told senators that all  members of PhilHealth’s executive committee composed the “mafia” which has siphoned off some P15 billion in the agency’s funds in 2019 alone.

While all case rates system is not Morales’ “fault” since it started  in 2011, Defensor said the system should be stopped now.

Defensor recalled that another circular regarding the adoption of the  all case rates system was released in 2013, prompting the agency to do  away with its fee for service system, under which, Philhealth only  pays for the exact amount of the bill that a patient incurs from a  hospital.

Based on 2017 COA report, Defensor said a pneumonia case is charged  15,000, noting that the it has 700,000 claims every year; acute gastroenteritis, P6,600 and urinary tract infection, P7,000.

“What is fee for service? If you get sick and spend P5,000, for  example, pneumonia, you only spent P5,000 but because of the case rate  or case-based payment, the hospital will be paid P15,000 (by  PhilHealth),” Defensor said.

Morales said adopting a new information technology system, which some  lawmakers believe is also overpriced at a cost of P2.1 billion over  three years, is a solution.

He also said that another answer can be found under the Universal  Health Care System using a global budgeting system wherein the funds  will be advanced to healthcare provider networks and local government  units.

“That will be the long-term answer to the problem of case rate, under which the amount being paid is not the same as the actual amount  incurred [by a patient],” said Morales.

However, Defensor said computerization will not solve the problem because corruption will only be “computerized” in the agency for as  long as the all case rates system remains.

“You won’t be able to fix PhilHealth if you won’t stop this. Don’t  listen to those who are pushing for care rate, that’s wrong,” Defensor  told Morales.

“It cannot be a package, even if you go on a global budget, the same  thing will not happen as long as we have case rate set-up,” said  Defensor.

Defensor also warned Morales that the coronavirus disease-19  (COVID-19) cases worth P14 billion will also be ridden with corruption  because of the same system.


Defensor asked Morales to cease from defending a flawed system and  should instead file charges against the culprits behind it.

“It’s set-up by a Mafia. It started in 2013 through a connivance between (PhilHealth officials) and hospitals),” Defensor said, adding that the billions paid for pneumonia claims makes it appear that  “there is a pandemic yearly.”

Morales explained that the all case rates system was adopted to find  an average cost because patients sometimes exceed the package rates  but

Agusan del Norte Rep. Lawrence Fortun also asked Morales what  PhilHealth is doing to recover excess payments to hospitals.

According to Morales, sanctions are imposed to force hospitals to  follow the no-balance billing policy, which is meant to ensure that  patients will not pay anything.

Morales told House Deputy Majority Leader and Quezon City Rep.  Bernadette Herrera that hospitals get to keep excess amounts paid by PhilHealth, insisting that this prompts hospitals to give quality care  to patients and be efficient.

“If the hospital knows the case rate for a particular disease, it  will be forced to be efficient and give its full service and medicines  to a patient under that case rate,” Morales said.

But Herrera raised possibility that hospitals may spend less on  patients just so they could keep the excess payments.

Earlier, PhilHealth board member Alejandro Cabading accused the  agency’s management, including Morales, of turning a blind eye to  alleged questionable transactions flagged by “vigilant” officers of  the corporation.


House Assistant Minority Leader and Marikina City Rep. Stella Quimbo,  PhD and an economist, questioned the P45-billion projection for  COVID-19 claims made PhilHealth acting Senior Vice President Nerissa  Santiago based on an estimated 209,000 COVID-19 cases in the country  by the end of the year.

Santiago said only around P1 billion has so far been paid for COVID  cases. The projection was made now that PhilHealth believes that its  actuarial life is down to a year from 10 years in 2019.

“It won’t reach P45 billion. I’m worried that such huge projection  might be used to create a leeway for fraud,” Quimbo said.

Under global data, Quimbo said only 20 percent of COVID cases are hospitalized.

Quimbo said even presidential spokesperson Harry Roque has said most  of the COVID-19 cases in the Philippines are either mild or  asymptomatic.