The Commission on Audti found that in 2020 PhilHealth paid 649,893 claims amounting to P6.53 billion beyond the allowed 60 days as mandated by law. (File photo from Philippine Daily Inquirer)
MANILA, Philippines — Despite the digitalization of the payment system of the Philippine Health Insurance Corp. (PhilHealth), the Commission on Audit (COA) has called out the agency for the delayed payment of more than half a million claims worth more than P6 billion in 2020.
The COA said the ultimate objectives of PhilHealth’s electronic claims, or eClaims, were to reduce turnaround time (TAT) and improve the operational efficiency in the processing and payment of claims.
However, it said in its 2020 audit report on PhilHealth released on Friday that payment of claims was delayed in the National Capital Region (NCR) and Rizal province.
The auditing body found that in 2020, 649,893 claims amounting to P6.53 billion were paid beyond the allowed 60 days as mandated by law in claims processing.
State auditors pointed out that this was eight times higher than the 81,250 claims involving P786.75 million in 2019.
“With the implementation of eClaims, it presents opportunities for fraud detection, monitoring and prevention,” the COA said.
“In other words, the benefit claims processing under eClaims will enable the validation of the information quickly, adjudicate the claims against a schedule of benefits and pay the correct health provider with the end view of reducing the TAT,” it added.
In response to the COA’s audit observation, personnel from the concerned PhilHealth regional offices said the claims in question might have referred to “crude claims.”
“These refer to processed, reviewed, and evaluated claims but were put on hold or had undergone interruptions or delays due to system and policy issues,” the COA said, citing PhilHealth’s response.
The COA told PhilHealth to require its regional offices in NCR and Rizal to submit to the audit team proof that the claims processed or paid beyond 60 days in 2020 were crude claims.
The COA said the delayed payments of benefit claims due to nonobservance of the TAT on processing “would adversely affect the timely delivery of the necessary health services” by the concerned healthcare institutions because of funding issues, thus defeating the state insurer’s commitment to providing quality health-care services to its members.
In its response, PhilHealth also told the COA that the delayed payments were caused by multiple factors such as crude claims, the adverse impact of the COVID-19 pandemic on the branch’s daily operation, isolation of staff, intermittent to no internet service, and lack of human resources.
State auditors recommended to PhilHealth to consider establishing a policy to lower or reduce the 60 days TAT on claims processing and payments given the integration and full implementation of eClaims.
Another violation
The COA earlier called out PhilHealth for payments totaling P14.97 billion under its interim reimbursement mechanism (IRM) without legal basis, releasing the money to 711 healthcare institutions (HCIs) before these have completed rendering the services.
In its 2020 report, the COA said such fund release was contrary to Presidential Decree No. 1445, or the Government Auditing Code, which prohibited advance payments for services, supplies, and materials not yet delivered under government contracts, “except with the prior approval of the President.”
“Absence of proof showing that IRM fund releases have legal bases or prior approval of the President of the Philippines justifying exemption from the prohibition against advance payments, the disbursements made under the IRM scheme were without legal authority and could be considered illegal expenditures,” the COA said.
In March last year, PhilHealth issued Circular No. 2020-0007 granting IRM funds as “advance payments for the provision of substantial aid to eligible/qualified HCIs directly hit” by the COVID-19 pandemic.
The IRM is a program that PhilHealth uses to pay healthcare services to its beneficiaries by accredited healthcare institutions in areas directly affected by a natural disaster or unexpected events, including health emergencies.
It was intended to help hospitals continuously operate and give healthcare services to affected Filipinos. It was first used in the aftermath of Supertyphoon “Yolanda” (international name: Haiyan) in 2014, then in 2017 following the siege of Marawi and for the pandemic in 2020.
Aboveboard
PhilHealth maintained that payments it made under IRM were legally allowed.
PhilHealth invoked Republic Act No. 7875 that established the corporation in 1995, and Republic Act No. 10606, or the National Health Insurance Act of 2013, that gave the agency the mandate to provide health insurance coverage to all Filipinos.
“We have given or commented on this to the COA. We believe the release of IRM has a legal basis in RA 7875 as amended by RA 10606 allowing the corporation to implement other provider payment mechanisms,” PhilHealth spokesperson Shirley Domingo said on Sunday when asked for comment.
She also invoked the Universal Health Care (UHC) Act, or Republic Act No. 11223, that was signed in 2019.
“The UHC law likewise allows us to implement prospective and prepayment mechanisms,” she said.
When COVID-19 hit in March last year, PhilHealth began granting IRM funds as “advance payments for the provision of substantial aid to eligible/qualified HCIs directly hit” by the pandemic.
Congressional hearings last year found that hospitals could use the IRM funds like a “blank check,” or for purchasing supplies and paying staff salaries, instead of treating COVID-19 patients.