PhilHealth scheme lacked mechanisms to detect, prevent fraudulent payments

MANILA, Philippines — Although the PhilHealth All Case Rate reimbursement scheme expedited the reimbursement process, it lacked mechanisms to identify and deter unauthorized payments, the COA said Wednesday.

COA discovered this after it audited the ACR scheme’s implementation from 2022 until June 30, 2020.

The ACR scheme operates as follows: Claimants are paid by applying a case rate or a fixed rate to each covered case or disease. This was intended to promote healthcare facilities to be more cost-effective.

“If the case rate for a specific treatment is lower than the actual cost, the HCI will try to be more efficient in the costing of the treatment,” COA said in a statement.

“On the other hand, if the case rate is higher than the actual cost, the HCI gets to keep the difference as a form of ‘efficiency gains,’” it added.

The ACR system reduced turnaround time from 55 days in 2020 to 19 days in 2019, according to COA.

Additionally, the introduction of the electronic claims system in 2018 led to this progress, COA said.

However, PhilHealth was “remiss” in conducting annual or even periodic reviews of the system to determine whether the case rates reflect the actual costs.

“This was not done, and any savings from such adjustments could have been used to augment the Reserve Fund,” COA said.

In addition, the Commission also discovered that PhilHealth’s current control systems were found to be “deficient and underperforming” due to design and performance inadequacies, inadequate human resources, and the consequences of the first two issues, the state auditing agency stated.

An example of this is the Medical Prepayment Review (MPR) established by PhilHealth in 2019 to monitor four illnesses vulnerable to fraud.

COA said from March 1, 2019 to June 30, 2020, a total of 878,876 claims should have undergone MPR but only 252,408 claims were reviewed.

Of the remaining 626,648 claims, 443,162 claims were paid by PhilHealth despite not undergoing MPR.

Further, PhilHealth’s Medical Post-Audit (MPA) mechanism, which is intended to detect improper payments after HCIs have received reimbursements, only managed to post-audit 3.20 million of the 16.48 million claims from 2014 to June 30, 2020.

“If only to highlight the importance of the control mechanisms, from 2011 to 2020, PhilHealth paid P665.28 billion to HCIs representing reimbursement of 67.95 million claims,” COA said.

COA recommended that PhilHealth conduct an “extensive review” of case rates to include the Case Type Z Benefit and COVID-19 packages to provide reasonable rates that would minimize efficiency gains and address deficiencies in the control design and ensure controls are working effectively.

“In the event PhilHealth proceeds with the shift from the ACR to the Diagnosis Related Group – Global Budget system, then the same observations and recommendations should be considered in the system and the implementation thereof,” they urged.

COA also recommended that PhilHealth develop a mechanism to empower its members to detect improper payments by increasing their level of awareness about ACR as well as their engagement and provision of feedback.

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