SPONSORSHIP SPEECH ON COMMITTEE OF THE WHOLE REPORT RE: PHILHEALTH

September 01, 2020 06:00 PM

On 27 July 2020, Senate Resolution No. 475 was filed, entitled “Resolution Calling for the Constitution of the Senate Committee of the Whole to Conduct an Inquiry, In Aid Of Legislation, on the Alleged Rampant Corruption, Incompetence and Inefficiency in the Philippine Health Insurance Corporation (PhilHealth) Amidst the COVID-19 Pandemic That May Lead to the Financial Collapse of the Institution to the Prejudice of the Filipino People.” Although initially authored by Senator Panfilo Lacson and this representation, it was later co-authored by most of our colleagues in the Senate.

I must admit that I take this task of reporting out the findings of the Committee of the Whole with some reluctance, for we are in the middle of our fight against the COVID-19 pandemic, and that we should not change horses mid-stream. It is suggested that we must let the pandemic first subside, before advocating for changes, in the areas of leadership, organization, systems and operations of PhilHealth.

However, it may be a worse course of action for this august Chamber to sit idly by knowing what it knows now how mismanaged PhilHealth is to cope with the rising cost of its health responsibilities to the Filipino people. Any reform in personnel and its organization cannot come from within its ranks when all had been tainted with suspicion, through active participation or inaction, in the conspiracy to bankrupt PhilHealth of its funds and resources.

There is a spectre that is haunting the Philippines - the spectre of SARS-CoV-2. As of latest count, this virus has slain in its path nearly three and a half thousand, rendered ill more than two hundred thousand, and still counting. COVID-19 has left many families orphaned, grieving, and suffering. It has deprived an innumerable, left with no one to support them. The human cost is immeasurable.

Compounding this despairing reality, the economy has suffered immensely: a heretofore unimaginable 45.5% adult unemployment at 27.3 million Filipinos; and a whopping Php2.2 trillion in estimated economic losses.

This virus-borne disease and the resultant suffering is more than enough to make a people fall on its knees, in prayer and abject surrender.

Alas, for us, this is not the only disaster to be. As if this cataclysm that has befallen us is not devastating enough, we are made to suffer another catastrophe, man-made this time - the endemic corruption and gross mismanagement of PhilHealth which if not corrected or eradicated will pose grave risks not only to health; but also the lives of all Filipinos.

The Committee of the Whole which was constituted last July 28, 2020 to conduct an inquiry, in aid of legislation, on the alleged rampant corruption, incompetence and inefficiency in the PHILIPPINE HEALTH INSURANCE CORPORATION (PhilHealth); conducted three (3) public hearings on Proposed Senate Resolution Nos. 461, 474 and 475 held last August 04, 11 and 18, 2020.

The nature of the three resolutions included in the agenda of the hearings hinted on the probable administrative and criminal culpability of some personalities from the PhilHealth Board, President and Chief Executive Officer, Senior Vice Presidents, Regional Vice Presidents down to numbers of ranking officials of PhilHealth. These serious allegations have put into question whether there are indeed legitimate reasons that lead to the stepping down of no less than PhilHealth’s Anti-fraud legal officer after complaining about his delayed salaries presumptively after he started investigating the probable breach of some PhilHealth’s ranking officials.

The discussions during the hearings were both investigative and inquiries in aid of legislation intended to reform the administrative operations of PhilHealth. The conducted hearings also intend to look into the proposal to come up with sound recommendations to put an end to the allegation of corruption and put into place reforms in the administration of the country’s premier health care provider through possible filing of bills to amend the PhilHealth law.

The controversies surrounding PhilHealth have long been surfaced as early as 2015 that lead to the reported loss of billions of pesos due to some unscrupulous practices like ghost dialysis, unnecessary cataract surgeries, case upscaling, questionable rise in claims, bloated budget proposals for ICT projects, just to name some.

In fact, sometime in 2018, PhilHealth employees all around the country simultaneously staged a protest to denounce the corporation’s widespread corruption and inefficient management of its operations.

It is the main concern of the committee that the duty of the government to serve, protect and promote the people’s right to health and maintain honesty and integrity in the public service as guaranteed by the constitution, shall be upheld at all times.

The principal consideration and objective of the Committee of the Whole in hearing the aforementioned resolutions is to gather sufficient data and information that will serve as indicators on the need to reshuffle or to totally reorganize the entire PhilHealth Bureaucracy, provide for stiffer penalties as a means of stopping the widespread frauds, as well as recommend to appropriate agencies in the government to investigate and ultimately file the necessary charges to whoever is involved in the alleged malversation if necessitated.

Moreover, the committee would like to determine the efficacy of the existing PhilHealth law with the hope of introducing administrative reforms on the ways and means to improve its operations and uphold its mandate in providing help to the Filipino people who are in dire need of medical assistance.

After gathering necessary information to come up with a proposed legislation, the Committee of the Whole has the honor to submit the results of the three (3) public hearings to the Senate with the following findings, conclusions, and recommendations.

The series of hearings unearthed the following grave issues:

The Interim Reimbursement Mechanism (IRM): Legal bases or lack of it, and its shoddy - or shady – implementation
The ICT project as an anatomy of corruption
The PhilHealth Financial Status, specifically

The Alleged manipulation of PhilHealth's financial statements, earlier flagged by the Commission on Audit and
Its Actuarial life: examining further the claim that “PhilHealth will die in 2021 or 2022”

Irregularities in the Legal Sector
B.Braun Avitum Dialysis Centers

INTERIM REIMBURSEMENT MECHANISM

STATEMENT OF FACTS

PhilHealth, in its effort to support government response to fight the COVID-19 threat, has instituted the Interim Reimbursement Mechanism or IRM, defined as “a special privilege for the provision of substantial aid to an eligible HCIs directly hit by a fortuitous event with clear and apparent intent to continuously operate and/or rebuild the HCI in order to provide continuous health care services to adversely affected Filipinos”. This allows PhilHealth to grant advance payment up to three months to Health Care Institutions (HCIs) to support their continuous operation.

PCEO Ricardo Morales cited paragraphs (c),(d) and (j) of Section 16 of the Republic Act 7875, As Amended, Otherwise Known As the National Health Insurance Act of 1995 as the legal basis for the implementation of the IRM.

PhilHealth Circular 0034, s. 2013, or the “Guidelines on the Provision of Special Privileges to those Affected by a Fortuitous event”, signed by then PCEO Alexander Padilla, served as the impetus of the IRM. Under the said circular, fortuitous events are described as “acts of God” like floods or typhoons; or an “act of man” such as rebellions, insurgencies and wars.

Based on the Circular 2020-0007, the rationale of the IRM is premised on Section 1 (p). Public Health Services of Republic Act 7875 as amended by RA 9241 and RA 10606, otherwise known as the National Health Insurance Act of 2013:

“The Government shall be responsible for providing public health services for all groups such as women, children, indigenous people, displaced communities and communities in environmentally endangered areas, while the Program shall focus on the provision of personal health services. Preventive and promotive public health services are essential for reducing the need and spending for personal health services;” (emphasis supplied)

As clearly seen from the statement of objectives of PhilHealth Circular 2020-0007, the same is intended to “ensure continuous access to PhilHealth benefits and be able to provide substantial aid to HCIs in rebuilding their critically damaged healthcare system in order to provide continuous provision of health care services to all Filipinos adversely affected by fortuitous event”.

During the August 11, 2020 Committee of the Whole hearing, Atty. Roberto Labe Jr., the Corporate Legal Counsel, stated that there has been a decrease in patient census and increase of cost of hospitals, hence the IRM response. This is to ensure that hospitals will be able to continue its operations during the pandemic even if these hospitals have no/ low COVID-19 cases.

The IRM has been implemented in the past to facilitate the recovery of affected HCIs to make them operational for members.

a) In 2009, the payment scheme for IRM was implemented for accredited health care providers in NCR and Rizal Province, which have incurred destruction of facilities and equipment due to Typhoon Ondoy as identified and validated by the Corporation (PC No. 36, s. 2009).

b) In 2017, IRM was used to provide substantial aid in rebuilding critically damaged healthcare systems of accredited HCIs affected by the armed conflict in Marawi (PC No. 2017-0026).

c) In January 2020, PhilHealth claimed that more than a billion pesos was made available to accredited hospitals, primary care facilities, ambulatory surgical clinics, freestanding dialysis centers, and maternity package providers in the aftermath of the Taal eruption (Press release on 29 January 2020) (PC No. 0034, s. 2013),

d) On 20 March 2020, PhilHealth released PCR No. 2020-007 on the implementation of the IRM for the COVID-19 response. Premised on the said circular, COVID19-related IRM implementation appears questionable following its stated objective “to ensure continuous access to PhilHealth benefits and be able to provide substantial aid to HCIs in rebuilding their critically damaged healthcare system in order to provide continuous provision of health care services to all Filipinos adversely affected by fortuitous event”. (PhilHealth Circular No. 2020-0007).

What is noteworthy in these previous IRM versions is the fact that HCI beneficiaries suffered serious infrastructure and recorded damages due to the occurrence of a fortuitous event. Thousands of claim records sustained flood damages that would have taken months to reconstitute. The situation demanded emergency payment arrangements to ensure the unimpeded provision of financial risk protection to members. Moreover, as differentiated from PHC 2020-0007, which authorizes PhilHealth to make advance payments to HCIs, in the three previous IRMs, PhilHealth did not advance any amount to any HCIs but only ensured “accelerated reimbursements” of HCIs claim subject to certain condition.

Confronted with a copy of an unnumbered PhilHealth Board Resolution during the second Senate Committee of the Whole hearing last 11 August 2020, PhilHealth Corporate Secretary Atty. Jonathan Mangaoang referred to it as PBR No. 2515, which he said was adopted on 31 March 2020, “Ratifying the Interim Reimbursement Mechanism (IRM) Nationwide due to Coronavirus Disease (COVID 19)”.

On 22 April 2020, disseminated through the Outlook Mail of PhilHealth, was the Standard Operating Procedures (SOP) on the releases of IRM. It must be noted that the SOP’s effectivity was dated 21 March 2020.

IRM: A CASE OF VOID AND DEFECTIVE POLICY

It must be underscored that in all of the legal basis cited by PhilHealth officials, the reference for provision of health benefits pertains to the regular benefit claims payments of PhilHealth (paragraphs c, d, j of Section 16) and displaced communities and communities in environmentally endangered areas (paragraph O of Section 1). PhilHealth Circular No. 2020-0007 also mentions substantial aid to HCIs in rebuilding their critically damaged healthcare system xxx adversely affected by a fortuitous event.

More so, in the prior implementation of IRM, corresponding circulars set the requirement for PhilHealth accreditation, sustained critical damage in infrastructure, and identification and validation of the Corporation of the magnitude of damage/destruction of the HCIs. These circumstances are lacking or absent in the implementation of the present IRM in response to the pandemic, thus rendering its implementation void from the beginning.

The Standard Operating Procedures (SOP) on the releases of IRM was only disseminated almost a month after Circular 2020-0007, or on 22 April 2020 through the Outlook Mail of PhilHealth. Notwithstanding the late dissemination of the document, the effectivity of the SOP was retroactively dated to 21 March 2020. Drawing from the late dissemination of the document, it is the Committee’s submission that the SOP was antedated to support and justify the immediate execution of MOAs (as early as March 23) and release of IRMs (on March 25) to some favored HCIs.

There were already 279 hospitals which received IRM funds as early as March 25 to April 22. If indeed the SOP, a requisite document in the implementation of the IRM, was belatedly enacted and signed on 22 April 2020 and made to apply retroactively to 21 March 2020, then we submit that the IRM releases to these 279 hospitals prior to such time, i.e. 22 April 2020 were irregularly made as they did not have the SOP on how the same will be released and processed at that time.

Another factor that contributes to our assumption of illegality in the enactment and implementation of the Interim Reimbursement Mechanism (IRM) by the PhilHealth was the belated adoption by the PhilHealth Board of PBR 2515, entitled, “Resolution Ratifying the Interim Reimbursement Mechanism (IRM) Nationwide due to CoronaVirus Disease (COVID 19)”. This Resolution was only adopted by the Board on 31 March 2020. Hence, we submit that PhilHealth does not have any legal justification when they implemented Circular 2020-0007 as early as 20 March 2020 which for all intents and purposes was considered an “ultra vires” act of the corporation.

On the effectivity of PhilHealth Circular 2020-0007, Article VII of the Circular clearly states that “This Circular shall take effect immediately from its publication in a newspaper of general circulation AND three (3) certified true copies had been furnished the Office of National Administrative Register (ONAR) of the UP Law Center.” Emphasis is made on the requirement for the certified true copies furnished to ONAR for the Circular’s effectivity. Upon the request of the Office of Senator Lacson, ONAR of the UP Law Center issued a Certification that PhilHealth Circular 2020-0007 was filed on JUNE 11, 2020. If we are to consider the effectivity date of IRM based not only from its publication in a newspaper of general circulation but also on its submission of PhilHealth Circular No. 2020-0007 to ONAR, this would mean that the IRM effectivity is deemed valid only on 11 June 2020. Thus, we submit that the total IRM releases amounting to P14,038,393,329.14 from March 25 (earliest date of fund release) until 9 June 2020 were deemed illegal and invalid.

Furthermore, SVP for Legal Sector, Atty Rodolfo “Jojo” Del Rosario, agreed that the IRM fund releases were illegal in the hearings conducted by both the Senate and House of Representatives. He stated that it would appear that the IRM funds were not released based on the prerequisite set by the circular on publication and furnishing of copies to the ONAR.

These submissions are supported by the case of Republic of the Philippines vs. Pilipinas Shell Petroleum Corporation (G.R. No. 173918) , where the Supreme Court ruled that both the requirements of publication and filing of administrative issuances intended to enforce existing laws are mandatory for the effectivity of said issuances. Failure to observe the proper requirements makes administrative issuances to HAVE NO FORCE AND EFFECT.

COVID 19 BUDGET AND RELEASES VERSUS PHILHEALTH’S OWN ESTIMATE OF COVID-19 RESPONSE COST FOR 2020

As of 09 June 2020, the total IRM RELEASES amount to 14,038,393,329.14 disaggregated as follows:

HOSPITAL CLASSIFICATION	NO. OF HCIs	TOTAL IRM RELEASED
LEVEL 1	244	2,346,521,290.22
LEVEL 2	185	4,166,735,642.48
LEVEL 3	92	7,157,075,358.24
Free-Standing Dialysis	48	226,380,912.20
Maternity Care Package	4	4,772,163.00
Infirmaries	59	136,907,963.00
		14,038,393,329.14

On another exasperating discovery: PhilHealth made a huge mistake when its planned disbursement for IRM-COVID was way higher than its assumptions of how many patients to eventually cover--

IRM allocations far exceeded the estimated cost of COVID-19 hospital admissions:

PhilHealth estimates 209,000 COVID-19 cases for 2020
About 20% of COVID cases develop difficulty breathing and require hospital care (World Health Organization)
Breakdown of COVID patients by case type (DOH):

- Mild: 90.3%

- Severe: 0.9%

- Critical: 0.6%

Total estimated cost for COVID in 2020: 3.3 billion pesos…

Case type	Estimated no. of hospital admissions	PhilHealth case rate	Estimated Cost (Php)
Critical	1,254	786,384	986,156,450
Severe	1,881	333,519	627,368,906
Mild	38,665	43,667	1,688,380,263
	41,800		3,301,905,619

PHILHEALTH estimated 3.3 Billion Pesos for the cost of COVID for the entire 2020. Pero, ang budget na nilagay nila ay P26.8 BILLION PESOS at as of June 9, 2020, 14 BILLION PESOS na ang na-release.

Why did it do so? This bolsters the argument that the 90-day historical claims of hospitals as metrics was not really based on facts; but on surmises plucked from ether.

C. QUESTIONABLE IRM FUND RELEASES TO HCIs

C.1. Invalid and Irregular IRM Fund

As of 9 June 2020, releases, there are 339 HCIs which received IRM funds amounting to more than P8.8 million in addition to several other HCIs that received various amounts under this program.

HOSPITAL CLASSIFICATION	NO. OF HCIs (with IRM funds exceeding P8.8 million)
LEVEL 1	89
LEVEL 2	154
LEVEL 3	90
Free-Standing Dialysis	5
Infirmaries	1
TOTAL	339

C.2. Releases to Non-COVID19 Facilities

Unlike previous IRM releases to recipient-HCIs with sustained damages from fortuitous events, there was no set of criteria on which HCI will receive IRM funds. Lack of such qualifiers would mean that the funds were either indiscriminately distributed or that the agency was being generous to the point of being ludicrous. The Committee is not adverse to helping these other HCIs but they should have been covered by the regular benefit packages of PhilHealth and not through this IRM.

It has also been established during the hearings that the implementation of IRM is questionable after PhilHealth extended the coverage of the IRM distribution to HCI beneficiaries which were not included in the objective set forth in the PhilHealth Circular 2020-0007. Moreover, the statement of PCEO Morales that IRM became COVID-19 specific was made only sometime in May when the continuous implementation of this IRM became untenable for lack of funds.

During the August 18, 2020 hearing, Duque averred that IRM is not specific only to COVID cases because it is based on the provisions of the National Health Insurance Act and Universal Health Care Act that gives PhilHealth the flexibility to implement financing mechanisms. This is contrary to the purpose stated in the release of funds from Bayanihan to Heal as One Act, which is specific to COVID-19 cases. If that was so relying on very same Act as basis for PhilHealth memo circulars, would have made that gargantuan amount of money disappear faster than the blink of an eye. Non-hospitals became beneficiaries likewise of PhilHealth’s largesse (lar-jes).

Such may have been PhilHealth and Duque’s intent, but as we already concluded, the IRM, was at the onset an ultra vires act; or illegal even.

To reiterate, from the record of PhilHealth IRM releases as of 9 June 2020, the total sum of P226,380,912.20 was released to 48 Freestanding Dialysis nationwide, P136,907,964 for 59 infirmaries, and P4,772,163 were released to four (4) Maternity Care Package (MCP) Providers. An official submission of the updated data on IRM releases should be provided by PhilHealth to validate the said figures.

On Free-standing Dialysis, the Committee took particular concern to B. Braun Avitum Dialysis Center. In a span of 7 days, PhilHealth released almost 15.4 million and 4.2 million to TWO (2) B. Braun Avitum Dialysis Center Branches in Tondo, Manila. Also, its 2 branches located in the 2nd District of Quezon City received the amount of P8.95 million and P5.3 M respectively. Note should also made that the date when the MOAs of these branches of B. Braun Avitum Philippines were filed on the same dates (April 15 for the 2 branches in Tondo, Manila and April 22 for the 2 branches in Quezon City) and their IRMs were released on the same dates (April 23 for the 2 branches in Tondo, Manila and May 4 for the 2 branches in Quezon City).

WHO IS B. BRAUN?

B. Braun Avitum Philippines, Inc., formerly registered as ‘Philippine Renal Care, Inc., is a PhilHealth-accredited free-standing dialysis clinic that has 25 branches in Luzon.

The following are the Corporation’s Directors and Officers based on its 2019 General Information Sheet:

NAME	POSITION
Lam Chee Hong (Malaysian)	Chairman
Eduardo L. Rodriguez (Filipino)	President/Managing Director
Lih Chyun Yeong (Malaysian)	N/A
Arsenia C. Ladores (Filipino)	Finance Director/Treasurer
Ricky A. Paglicawan (Filipino)	Sales and Managing Director
Yolanda M. Eleazar (Filipino)	Corporate Secretary
Melina Rosa Rodriguez (Filipino)	Assistant Corporate Secretary

HOW MUCH IS THE PAYMENT MADE TO B. BRAUN?

The table below shows the breakdown of IRM releases to B.Braun Avitum from April 23 to May 05, 2020 amounting P45,176,518.00:

Municipality	Institution/ Province	IRM	DATE OF MOA	Fund Release Date	Amount Released
TONDO	NCR, First District of Manila	P15,382,900	April 15	April 23	P15,382,900
BAGUIO	BENGUET	P11,375,650	March 31	May 5	P11,375,650
QUEZON CITY	NCR, Second District of QC	P8,946,168	April 22	May 4	P8,946,168
QUEZON CITY	NCR, Second District of QC	P5,302,050	April 22	May 4	P5,302,050
TONDO	NCR, First District of Manila	P4,169,750	April 15	April 23	P4,169,750

Initially, it was discovered that PhilHealth released almost 15.4 million and 4.2 million to two (2) Braun Avitum Dialysis Center Branches in Tondo, Manila. Also, its two (2) branches located in the 2nd District of Quezon City received the amount of P8.95 million and P5.3 million respectively. Noteworthy are the facts that the date when the MOAs of these branches of Braun Avitum Philippines were filed on the same dates (April 15 for the branches in Tondo, Manila and April 22 for the branches in Quezon City) and their IRMs were released on the same dates (April 23 for Tondo branches and May 4 for the Quezon City branches).

The photos that the Office of Senator Lacson have taken from the B. Braun Avitum Philippines, Inc. in Delpan Street, Tondo on 10 August showed that the center has no isolation area and only caters to out-patient services.

IS THE 45 MILLION PAID TO B. BRAUN ACCURATE AND REFLECTIVE OF THE SERVICES RENDERED TO THE PHILHEALTH MEMBERS?

Based on documents and testimonies provided during the Committee’s investigation, the same has not been established.

According to the Machine Learning Identification, Detection and Analysis System (MIDAS) Report submitted by PHILHEALTH, it was learned that, from 2015 to 2018, PhilHealth has paid a total of P811 million for hemodialysis claims from B. Braun facilities across the country:

ACCREDITATION	REGION	MUNICIPALITY	AMOUNT
D910257543	NCR-N	TONDO	P136,835,400
D13027810	CAR	BAGUIO CITY	P106,849,600
D93000846	NCR-C	QUEZON CITY	P91,923,000
D02001110	II	TUGUEGARAO	P82,953,000
D02026942	II	SANTIAGO	P72,085,000
D41001207	IV-A	IMUS	P41,004,600
D92001314	NCR-S	MUNTINLUPA CITY	P38,097,800
D91027311	NCR-N	TONDO	P37,005,800
D03001267	III-A	OLONGAPO CITY	P36,771,800
D03026971	III-B	MEYCAUAYAN CITY	P33,261,800
D03026971	IV-A	BIÑAN	P32,383,000
D93000764	NCR-C	QUEZON CITY	P23,142,600
D93029785	NCR-C	QUEZON CITY	P21,829,600
D42029021	IV-B	MAMBURAO	P16,265,600
D02029817	II	CAMALANIUGAN	P16,104,400
D03029237	III-B	BALER	P15,841,800
D92030077	NCR-S	MAKATI CITY	P9,362,600

It could easily be established based from this table that the Tondo branch, with accreditation number D91027543, has the highest amount claimed from PhilHealth amounting to P136 million from 2016 to 2018.

The regression analysis presented by MIDAS shows that the branches of Tuguegarao and Tondo appear to have outlier behavior, which means that they deviate from the expected amount of claims given the hemodialysis machine capacity as the independent variable, compared to their peers. The branch in Baguio, however, which ranked as the Top 2 in terms of amount claimed from PhilHealth, was not included in the regression study due to the zero value of hemodialysis machines in the accreditation records.

Furthermore, the analysis also revealed an inverse relationship between the number of hemodialysis sessions served and the average age of patients of free-standing dialysis clinics in Areas 1 and 2.

According to the same MIDAS report, the Philippine Society of Nephrology has suggested that the average capacity of hemodialysis machines is at 72 sessions per month. Using this value, we can compute the estimated capacity of B. Braun Avitum Philippines, Inc. branches in 2018. The table below shows that six (6) B. Braun branches exceed the 90% threshold for sessions to capacity ratio. The six (6) branches are: Tondo, Quezon City, Tuguegarao, Binan, Olongapo, and Baler.

ACCREDITATION	REGION	MUNICIPALITY	HD MACHINES	CAPACITY	SESSION	SESSION/ CAPACITY
D91027543	NCR-N	TONDO	26	22464	21536	95.07%
D93000846	NCR-C	QUEZON CITY	15	12960	17338	133.78%
D13027810	CAR	BAGUIO CITY	0	0	16075	0.00%
D02001110	II	TUGUEGARAO	15	12960	13014	100.42%
D02026942	II	SANTIAGO	0	0	10115	0.00%
D41078949	IV-A	BIÑAN	8	6912	8634	124.91%
D93029785	NCR-C	QUEZON CITY	19	16416	7735	47.12%
D02029817	II	CAMALANIUGAN	0	0	6509	0.00%
D92030077	NCR-S	MAKATI CITY	18	15552	6447	41.45%
D41001207	IV-A	IMUS	10	8640	6330	73.26%
D91027311	NCR-N	TONDO	10	8640	6110	70.72%
D03026971	III-B	MEYCAUAYAN CITY	10	8640	5147	59.57%
D92001314	NCR-S	MUNTINLUPA CITY	10	8640	5060	58.56%
D03001267	III-A	OLONGAPO CITY	3	2592	4336	167.28%
D03029237	III-B	BALER	4	3456	3484	100.81%
D42029021	IV-B	MAMBURAO	8	6912	2988	43.23%

Further, the regression analysis suggested a lower total session count for facilities catering to patients with a mean age of 52-55 years old, a cohort with increased mortality rate as compared to younger cohorts with chronic kidney disease. Given this observation, evidence for ghost patients must be sought after. The report recommended that this can be done by retroactively matching the latest death data from the Philippine Statistics Authority.

In short, B. Braun enjoys a fast and express lane in the release of PHILHEALTH payment/fund, kahit na yung ibang branch ay walang dialysis machine pero may recorded dialysis sessions!

During the 18 August 2020 hearing, Secretary Duque admitted that IRM funds released to B. Braun Avitum was illegal and they will rectify it. Given that admission, and given SVP del Rosario’s admission, who will now be held responsible, liable, and accountable for this major fiasco?

The foregoing disproves PhilHealth executives’ emotive assertions during the hearing that IRM releases also cover dialysis centers because as the document shows, B. Braun Avitum still does not grant “privileges” to dialysis patients (i.e. Exemption from the 45-day benefit limit and Single Period Confinement for admissions) who are directly or indirectly related to fortuitous events, as clearly stated in the PhilHealth Circular 2020-007 -- the very basis of B. Braun’s over 45-million IRM releases.

C.3. Preferential Treatment to HCIs

One of the contentions of IRM as a policy is that the determination of IRM amounts for HCIs and its consequent approval and fund releases are very centralized. It follows that the preference and prioritization of which hospitals will receive the IRM funds remain at the Central Office.

In fact, according to Region VIII Acting Regional Vice President Michael Jibson Hernandez during the 11 August hearing, Regional Offices are only authorized to review requisite documents such as the Letter of Intent and Memorandum of Agreement. Once complete, they will forward the said documents to the Central Office and await for the approval which will go through the office of Dr. Ish Pargas (Policy Sector) and SVP Renato Limsiaco (Fund Management Sector) to the office of HEA Laborte and finally to the desk of PCEO Morales. These are all reflected in the document called “Document Review and Approval Request Form” (DRAR). After the receipt of the letter of approval and the signed MOA from the Central Office, the RVPs will then request for fund transfer from the office of SVP Limsiaco before they can process the release of the amount to the hospitals.

A review of the documents provided by Atty. Valerie Hollero, Regional Vice President of Region VI, would show that recommendations for IRM requests were made as early as April 8 and consequently, on April 15 for a total of 16 hospitals. Subsequent follow-up letters and correspondence, notwithstanding, there was still no fund release approved by the Central Office. Local hospitals dealing with a surge in cases of new coronavirus disease (COVID-19) have yet to collect P521 million from Philippine Health Insurance Corp. (PhilHealth), according to Mayor Jerry Treñas. Treñas, in an Aug. 3 letter to PhilHealth Western Visayas vice president, Valerie Anne Hollero, called the agency’s attention regarding the claims of seven private and two government hospitals.

Meanwhile, raised during one of the hearings was the concern of Eastern Samar Governor Ben Evardone who claimed that government hospitals did not receive IRM funds from PhilHealth. IRM HCIs’ transaction history of Region 8 shows that as early as 20 March 2020, PRO 8 Office already has submissions to the Central Office of hospitals’ Letter of Intent and Memoranda of Agreement, which are requirements for IRM releases. In fact, from 20 March to April 20, 81 Hospitals with IRM requests were already submitted to the Central Office for approval.

Among the hospitals PhilHealth Regional Office (PRO) endorsed to the Central Office on March 23 were 10 government hospitals in Eastern Samar. The Central Office subsequently approved the endorsement on April 27, 2020 but has not acted upon it since then. Hence, these government hospitals have yet to receive any IRM releases as of date.

During the 11 August hearing, some members of the Committee also raised the case of Ospital ng Maynila (OSMA) which did not receive its IRM fund amounting to P19,382,108.00. During the interpellation, PCEO Morales insisted that PhilHealth already released 19.3 million to OSMA on June 23.

The assertions of Morales contradicted the letter of OSMA, through OIC-Hospital Director Karm Oliver Laqui dated 9 July 2020, inquiring for an update on the IRM application of the hospital submitted on 20 March 2020.

Contrary to the submission of PhilHealth SVP Renato Limsiaco to the Committee of a document, “Authority for Fund Transfer”, showing transfers to several hospitals including OSMA on 23 June 2020, based on the official receipt (MLA 9575808) from the Office of the City Treasurer of Manila showing that the amount of P19,382,108.00 was only paid out by PhilHealth on 11 August 2020.

C.4 HCIs with no Accreditation and with Pending Cases

Worse, the IRM was even disbursed to HCIs which are not accredited by PhilHealth, and have pending cases for violations of its warranties of accreditation:

a) Catarman Doctors Hospital in Northern Samar in the amount of P9.62 million which was released on 15 April 2020;

b) St. Benedict Hospital in Davao del Sur in the amount of P11.73 million which was released on 05 May 2020

On March 31, 2020, Acting Regional Vice President (RVP) Hernandez endorsed the IRM fund availment of Catarman Doctors Hospital amounting to P9,617.412.00, with a note purposely indicating that the hospital is currently under Temporary Suspension of Payments sanction to notify the Central Office that said HCI has a pending case with PhilHealth. Hernandez asserted that Catarman’s IRM fund release was recommended per IRM policy that includes HCIs under sanctions as qualified to avail the IRM.

Document Review and Approval Request Form (DRAR) for Catarman shows that SVPs Pargas and Limsiaco signed on April 7, 2020, while Laborte and Morales’ date of signing was only on April 13, 2020.

On 8 April 2020, PCEO Morales signed the memorandum approving the release of funds for the IRM request of Catarman Doctors Hospital.

Considering the timeline, it is highly questionable why the Memorandum on the Approval of the Release of Fund signed by PCEO Morales for Catarman Doctors Hospital Inc., was dated April 8, 2020, or 5 days earlier than his supposed document review and approval of Catarman’s request. In the course of the hearing it was established that SVP Limsiaco has a close relative in the Catarman Doctors Hospital Inc. If this is not a case of “palakasan” this Committee does not know what is. On 22 April, the fund was released to Catarman Doctors Hospital.

C.5. Hasty Payment Releases under IRM

The haste in payment releases under IRM is also noteworthy, particularly, to Level 3 hospitals in Regions V and VIII which had records of low COVID-19 cases at the time of filing for IRM. To underscore, three Level 3 hospitals (Bicol Medical Center, Bicol Regional Training, and Teaching Hospital and Universidad De Sta. Isabel De Naga Inc.) from Region V with a record of only one COVID-19 patient filed claims under IRM on 23 March 2020 and just two weeks later, the fund amounting to Php247.46 million was released to said hospitals. Meanwhile, two hospitals, Eastern Visayas Regional Medical Center and Divine Word Hospital, in Region VIII with a record of only one COVID-19 patient at that time, received an accumulated fund releases amounting to Php196.5 million in just a span of only one week from their filing of IRM claims on 23 March 2020.

Also, based on the record of PRO 8, four (4) private hospitals in Eastern Samar received IRM releases amounting to the sum of P21,504,564.50. Immaculate Concepcion Clinic and Hospital received its IRM funds on April 24 while Domingo Casano Hospital’s IRM fund amounting to P12.5 million, the highest in Eastern Samar, was released on May 5.

NON-LIQUIDATION OF IRM RELEASES

We now go to the fund’s liquidation. On 24 June 2020, President and CEO Morales signed a Memorandum on the Deferment of IRM liquidation activities. He ordered the deferment of fund liquidation in effect for the claims of HCIs originally granted with IRM from its supposed reckoning date of 16 March 2020 to a later date. Considering that PhilHealth deferred liquidation of IRM funds, while directing payment of claims covered by IRM schedules, this might invite adverse Audit Observation Memos (AOMs) or Notice of Disallowance from the COA. Paying the claims already covered by the IRM fund (advance payment) is tantamount to overlapping of payments.

In implementing this Memorandum of President Morales on the deferment of the Interim Reimbursement Mechanism (IRM) Liquidation Activities, Mr. Arnel F. De Jesus, Executive Vice President and Chief Operating Officer of PhilHealth, issued OCOO Memorandum No. 2020-032 dated 15 July 2020 stating that PhilHealth Regional Offices (PROs) were given the option on the matter of liquidation of the IRM. In other words, there were no concrete guidelines in the matter of liquidation of the IRM.

The “optional liquidation” directive stated under Memorandum Order No. 2020-032 contradicts Item 10 (g.1) of Memo Circular 2020-007 which provides that for additional IRM Fund to be requested, the previously released IRM fund has to be liquidated by at least 80% (on or prior to the 90 days after the occurrence of an event).

It would appear that PhilHealth still has no guidelines for a reconciliation program or a workable mechanism to recover the millions advanced to Health Care Institutions. PhilHealth SVP Israel Pargas confirmed that liquidation was deferred to a later date which will still be announced.

As testified by SVP Pargas during the hearing:

MR. PARGAS: As of today, sir, we do not have the exact date on when to liquidate, according to the policy or to the memo, but we were already given an instruction to have the liquidation immediately.

On the other hand, on 18 August 2020, PhilHealth SVP Renato Limsiaco reported that Php2.3 Billion has been liquidated. Assuming this to be true, this is only 15% of the Php14.96 Billion released. Now, between Mr. Pargas and Mr Limsiaco, who do we believe?

WITHHOLDING TAXES FROM IRM FUND

PhilHealth is considered a withholding tax agent on income tax payments and for withholding taxes and business taxes — value added tax and other percentage tax by the BIR. Considering that IRM releases are considered “advance payments”, the agency must withhold the tax due on HCIs and medical practitioners.

SVP Renato Limsiaco, during the 11 August 2020 hearing, responded adversely stating that:

Limsiaco: Relative to withholding tax, ang withhold natin ay private. Sa government hindi tayo nagwi-withhold. Total P14.97B lahat kalahati ang subject to withholding tax.
SENATOR LACSON: Sa private naka-withhold kayo?

Limsiaco: Sa private lang po.

SVP Limsiaco further said that they already withheld taxes amounting to P156 million and remitted the same to BIR on August 3. However, it appeared that the said amount was not automatically charged against IRM funds released to HCIs. He also insisted that they did not know that they could deduct this tax before the release of funds because IRM is in the form of “advance payments”. Hence, the BIR payments made were charged against the Corporate Operating Budget (COB) to be recouped during the liquidation of HCIs.

As SVP Limsiaco said: “Di namin alam mag-withhold kami sa umpisa.”

Hindi daw alam ni SVP Limsiaco na mag wiwithold kahit na may August 7, 2020 Memorandum from Cherie Divina, ASM of Comptrollership Department requesting for the review of a Corporate Memorandum with subject, “Withholding of 2% Expanded Withholding Tax (EWT) and Issuance of BIR 2307.” Inapprove pa ni SVP Limsiaco and SVP Santiago ito noong August 10, 2020 and was emailed to the concerened officials on the same date. Pero during the August 11, 2020 hearing, hindi daw niya alam.

Por diyos porsyento, ay por santo !

Considering that the taxes due to the IRM releases was paid to BIR by the Central Office and not the Regional Offices, it would be a form of document tampering if not outright falsification of public document, if the Regional Offices will be ordered to release BIR Form 2307 to the HCIs within their area of responsibility considering that the taxes due to the IRMs released to the HCIs have not in fact been withheld and collected by PhilHealth.

The fact that PhilHealth withheld taxes for COVID-19 IRM releases on August 3 appeared to be an after-thought following the Senate Resolution dated July 26, which raised the issue of withholding taxes as one of the matters to be discussed. In fact, Limsiaco mentioned that taxes for IRM releases in prior years were withheld not prior but during the liquidation of hospitals.

INFORMATION TECHNOLOGY ISSUES

The reliability and efficiency of a credible Information Technology system has been proven to simplify processes and to increase transparency in transactions. Example of which is the computerization of the Government Insurance System, the Bureau of Internal Revenues and other government agencies which aims to benefit from IT for a more efficient, accurate and effective delivery of public service. In PhilHealth, however, it seems that the procurement and completion of their IT System has been the cause of so many corruption issues. This is either they do not want a transparent system or the corruption issues in PhilHealth is already deeply rooted. Hence, the findings of the Committee of the Whole upon its investigation are as follows:

Statement of Facts

In the letter addressed to President Rodrigo Duterte through Secretary Harry Roque on 15 May 2020, PhilHealth Board Member (BM) Alejandro L. Cabading narrated his personal knowledge on the incidents of corruption in PhilHealth allegedly manipulated by the Corporation’s Information and Technology Department.

It started with the original P2.1 billion proposal for the IT Department which was rejected by the board for failure to provide specific details. Subsequently, the proposed budget was lowered to P1.9 billion since according to IT, there were typographical errors in its previous submission.

On 13 March 2020, the Board was constrained to approve the P328 million IT Supplemental Budget. Otherwise, they were told “the entire PhilHealth system will collapse". Board Member Susan Mercado even said that “it seems that the Board was being blackmailed in approving this amount.”

In April 2020, SVP for IT Jovita Aragona proposed P750 million for procurement of items. However, the Board insisted that the Internal Audit report on the inventory of software and hardware be presented first before they approve anything. During the first week of May 2020, the Internal Audit Report was submitted, but instead of presenting it to the Board, the proposal of SVP Aragona for the approval of P 215 million was presented.

As indicated in the Internal Audit Report, the ICT resources included in the calendar year 2020 budget proposal but do not appear in the ISSP, have a total amount of P734,014,120.58 which is 46.84% of the total amount of proposed budget of ICT for CY 2020. On top of this, there is an overpricing worth P 98,050,000.00

The report also indicated that there was intent to confuse and deceive by splitting one item into two (2) items by listing different descriptions/ specifications - this is in the amount of P132.2 million. This vague description specification will allow the same item to be bought again the following year.

A. Overpricing/ Padding

The most anomalous proposals contained in the Internal Audit Report are the following:

Item	Amount in IT Proposed for 2020 (OVERPRICED)	Amount in the Approved ISSP
1. Adobe Master Collection Software (1 unit)	P 21,000,000.00	P 168,000.00
2. Application Services and Licenses	P 40,000,000.00	P 25,000,000.00
3. Structured Cabling	P 5,000,000.00	P 500,000.00
4. Identity Management Software	P 42,000,000.00	P 20,000,000.00
5. Office Productivity Software	P 21,000,000.00	P 5,000,000.00
6. Application Server and Virtualization Licenses & Support Maintenance (Server Upgrade)	P 25,000,000.00	P 14,800,000.00

COA Audit Query Memorandum No. 2020-002 (HO) dated January 31, 2020 stated that twenty-four (24) network switches were verified as not utilized and found inside its box at the time of inspection. Non-utilization of the network switches was deemed disadvantageous to the government, since the said items were not tested for any further manufacturing defects/malfunction that may arise within the warranty period of the contract.

However, the Committee was informed by former Head Executive Assistant, Col. Laborte (AFP Ret.), resigned Head Executive Assistant of PCEO Ricardo Morales, that PhilHealth “is currently procuring 15 more of the same network switches that are unutilized. Furthermore, these network switches are outstandingly overpriced in comparison to the current market value.”

Meron na ngang 24 switches na hindi nagamit at sinayang, bibili pa sila sa additional 15 at overpriced pa!

The explanations given by PhilHealth on the alleged overpriced Cisco network switches procurement are inconsistent, confusing, and indeed questionable.

Col. Laborte is convincing being an IT and Cisco expert himself. He confidently stated that what the PhilHealth awarded was Cisco 9200, since the 2960XR model was already obsolete and no longer available in the market. Thus, the bid price should be Cisco 9200’s market price at P62,424 each and not P320,000 as asserted by PhilHealth, which they claimed was the price of Cisco 2960XR in 2016. The bid and contract price should then be the market price of Cisco 9200 which is said to be only P62,424 each.

Ipipilit talaga nila na Cisco 2960XR ang binibili nila para lang majustify ang mas mataas na presyo, kahit na ang totoo ay Cisco 9200 na mas mura ang binibili at awarded sa winning bidder.

The P258,000 difference between P62,000 and P320,000 is so huge even if you include the add-ons like warranty, VAT, and delivery fee. If that’s the case, wag na tayo mag bayad ng warranty, mas mura pa pala na bumili nalang ng bago.

The Committee now asks, how was the Approved Budget for the Contract (ABC) arrived at? Who came up with the ABC and the specific technical specifications for this procurement? It should be stressed that the bidders will only bid within the approved budget for the contract. So if the ABC by the procuring entity is bloated, the tendency is for the bidders to bloat their bid prices as well.

Section 36 of Republic Act No. 9184 or the Government Procurement Reform Act provides that: “In all instances, the Procuring Entity shall ensure that the ABC reflects the most advantageous prevailing price for the Government.”

Cardinal rule on fiscal responsibility provides: “All resources of the government shall be managed, expended, or utilized in accordance with law and regulations and safeguarded against loss or wastage through illegal or improper disposition to ensure efficiency, economy, and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned.”

It seems like PhilHealth did not properly plan its ICT procurement in this case.

During the briefing, IT Chief Aragona presented this table to disprove the alleged overpricing:

PhilHealth

Senate Committee of the Whole

Online Market Search

Approved budget for the Contract: Cisco 2960XR 24 Port with Power over Ethernet (2016) including three-year warranty, VAT, training, delivery, services among others

Cisco 9200 24 Port with Power over Ethernet (unstated year)

Cisco 2960XR Port with Power over ethernet (2016) including three-year warranty, VAT, training, delivery, services among others (as of August 5, 2020)

P348,000/unit

P62,000/unit

P419,946/unit

In her attempt to explain her point, Jovita showed that based on their online market search, as of 05 August 2020, the amount of the purchased CISCO 2960XR 24 Port including other services and charges have increased to P419,946 per unit.

However, as narrated by Col. Laborte, the network switches that she was presenting during the PhilHealth Press Conference were the network switches already procured by PhilHealth in 2016 and were delivered to the agency sometime in August or September 2017. Thus, she was not referring to the same IT Equipment. She was comparing apples and oranges.

In the 11 August 2020 Senate Committee of the Whole hearing, Atty. Robert Labe, Jr. at first controverted the statements made by Col. Laborte. He supported the statements made by SVP Aragona that the item to be procured was CISCO 2960XR. However, after comparing notes and speaking with former Head Executive Assistant, Col. Laborte, Atty. Labe discovered that the documents submitted to him were different from what were previously submitted to Col. Laborte. The following discrepancies were noted in the documents submitted to him, to wit:

Difference in the OPCEO number and dates
Absence of Reference Information in ITR Standard Specifications and no determination of compliance with the minimum requirements

The latter document did not contain any information on whether the minimum requirements have been complied with and was left blank. Most importantly, the reference information regarding the Brand Model and Name of Company was left blank as well, when in fact, it is seen in the former that it contained the following:

Brand Model: CISCO 9200 24-port PoE

Name of Company: Microgenesis Software Inc. Doing Business under the name and style of Microgenesis Business Systems

A careful look between the Standard Specifications would show that said documents in relation to the procurement of 15 additional network switches bore the same number codes, to wit: 0102-0618-0000 0000 at the left corner of the document and ITMD 2018-04-133 at the right corner of the documents.

From the look of things, these people from PhilHealth in trying to make it appear that what they procured was CISCO 2960 XR resorted to doctoring or even forging documents to make the Senate President and the members of the Committee of the Whole believe their story. What complicated the matter was the statement made by the winning bidder itself, MICROGENESIS stating that what they have quoted is for Cisco 9200 Switches.

Thus, from the foregoing, it is evident that SVP Aragona, Calixto Gabuya and the personnel of PRO NCR were colluding with one another to mislead the Committee of the Whole on the truth about the additional 15 network switches that they procured in August 2019.

In the last Committee of the Whole Hearing dated 18 August 2020, PhilHealth’s SVP and Chief Information Officer Jovita Aragona and Senior IT officer Calixto Gabuya Jr. finally made the admission that the item being procured was CISCO 9200 and not CISCO 2960 XR upon presentation of evidence that even Mircogenesis, the winning bidder, stated such in an article released by them.

Included in the 2020 Proposed IT Budget but not included in the Approved ISSP:

On the second hearing dated 11 August 2020, DICT Secretary, Gregorio Honasan, pointed out that the ISSP must be submitted for approval before the DICT. This is a requisite before a government entity may procure any IT item.

However, there are items in the IT Budget proposal that were included which were not submitted nor approved by the DICT. Furthermore, some of the proposed items in the IT Budget proposal would show that there are items without any specification and indication of number of units:

The contents of the Internal Audit Report support the COA-Audit Observation Memorandum on two items worth a total of P29,618,200.00. COA stated that the technical specifications of the items delivered by the winning bidders were non-compliant with the requirements of the Corporation.

PhilHealth was also not able to sufficiently explain how the internal audit report showing that P734 million worth of technology resources were included in the PhilHealth’s budget proposal for 2020 despite the lack of approval by the Department of Information and Communications Technology (DICT). The report also revealed P98.05 million in allegedly overpriced items and P132.2 million worth of items that had been subjected to the splitting of contracts to avoid the requirement of holding a public bidding.

Although they say it has not been spent, money has not been released, nevertheless, an attempt to defraud government and the people of the Philippines with this type of padded costs are unspeakable and unforgivable.

Awarded na yung contracts e, inabort lang nila kasi nabuking na sila!

Col. Laborte also disclosed that since he came to PhilHealth he noticed that IT projects from 2018 to 2019 were almost always awarded to a single calculated bidder, meaning, only one bidder participates in the bidding and is awarded the contract, and its bid price is always close to the Approved Budget for the Contract.

By its nature and characteristics, a competitive public bidding aims to protect public interest by giving the public the best possible advantages through open competition. Clearly, PHILHEALTH failed to uphold the best interest of the public and acted in a manner that is disadvantageous to the government.

COA OBSERVATIONS/FINANCIAL STATEMENTS

The Financial Statements prepared by PhilHealth Fund Management Sector (FMS) particularly from 2017 to 2019 revealed discrepancies and deficiencies in the presentation and disclosure of accounts.

It was asserted by Board Member Cabading that the financial statements were manipulated in order to make it appear that PhilHealth is in good standing when in truth, the corporation was overrun with debts and is already bankrupt.

In the 2017 COA Report, PhilHealth registered a negative net income of 4.75 Billion. However, the figures were later restated showing a net income of 237.17 Million (2018 COA report). This appears to be an upturn to their operations. However, it is remarkable to note that the same 2018 COA report qualifies that the correctness of the restated Financial Statement for CY 2017 with a net income of 237.167 million from Net Loss of 4.751 billion was NOT established primarily because the data source used to derive the amount of the Benefit Payments expenses is not the most accurate source of information, thereby casting doubt on the accuracy of the restated amounts in the CY 2017 financial statements, which were derived from it.

It was noted that the net income for CY 2018 was restated from P11.6 billion to P21.02 billion or an increase of P9.4 billion due to “prior year adjustment.”

The primary reason for such adjustment was the reduction in the benefit claims expenses amounting to P8.08 billion, which had no recorded basis or disclosure as to the nature and reason for such adjustments, thus hindering the COA audit team to validate the said reports.

How much is PhilHealth bleeding here?

In terms of the reported debt-to-equity ratio, it appears that PhilHealth is bleeding dry as it does not have enough money to pay its creditors in the event of liquidation. Based on the financial statement of PhilHealth in 2019, the agency has P111 billion in liabilities and P109 billion in equities, or a debt to equity ratio of 1 is to .99. Considering COA’s report, if we do not take into account the P14 billion increase in equity from “prior year adjustments” which has yet to be justified by PhilHealth, its equity will only be at P95 billion hence, a more unfavorable and dismaying 1 is to .86 liability to equity ratio.

COA Findings

The foregoing findings of the Committee can be supported by the COA Audit Memorandum Order 2029-028 (18) dated 09 July 2019. According to the said COA Memorandum there were indeed deficiencies in the presentation and disclosure of different PhilHealth accounts, including the prior year adjustments among others, which resulted in significant limitation in the scope of audit of related accounts.

It was also revealed by no less than the COA representative in PhilHealth during the hearing that PhilHealth is not giving full access to their financial documents as well as the supporting documents for all of the adjustments they made. And this is not an isolated case, it is a recurring situation – year-in and year-out PhilHealth is not giving COA an access to their documents.

If this is happening every year, I can only surmise that is being deliberately done by PhilHealth. For what purpose? Your guess is as good as mine.

Actuarial Life of PhilHealth

During the August 4, 2020 hearing, to everyone’s collective disquietude, Acting Senior Vice President and Concurrent Vice President Data Protection Officer Nerissa Santiago admitted that PhilHealth will no longer have a reserve fund by 2022. To keep it afloat, PhilHealth needs additional subsidy from the government.

PhilHealth claims that the one-year actuarial life of PhilHealth is based on Feasibility Analysis of Syndromic Surveillance Using Spatio-Temporal Epidemiological Modeler for Early Detection of Diseases (FASSTER) projections applying the worst-case scenario. FASSTER data is used as the official working projections of the Department of Health. Regardless of these projected figures, PhilHealth remains committed to ensuring the continued operation of the Corporation. How PhilHealth can commit to continuous operations despite this dire prognostication.

If SVP Santiago’s statement was meant to scare the bejesus out of our stupor, it did. Therefore, there is an extremely urgent need for an intensive and extensive review and inspection of the corporation's financial life before it is, as we all will be, gone to the dogs.

IRREGULARITIES OF PHILHEALTH LEGAL SECTOR

It is stated in Section 17 of Republic Act Number 7875, as amended, that the PhilHealth has quasi-judicial power in order to carry out its tasks more effectively by conducting investigations for the determination of a question, controversy, complaint, or unresolved grievance brought to its attention, and render decisions, orders, or resolutions thereon. As a penalty, PhilHealth may impose a suspension, revocation, or restoration of the accreditation of a health care provider or the right to benefits of a member and/or impose fines.

Prolonged Inaction on Pending Cases

Based on the submissionsof PhilHealth to the Committee, for the period of 2000-2019, there are 7,452 pending cases against healthcare institutions – which involved both fraudulent and non-fraudulent offenses. However, for the same period, only 5,327 was decided on by the agency. This means that for a span of 19 years, only 71.48% of cases was acted upon relative to cases against healthcare institutions.

As regards cases against healthcare professionals, for the period of 2000-2019, there are 4,792 pending cases in the agency – which comprises of 1,968 fraudulent offenses and 2,824 non-fraudulent offenses. However, based on the same documents submitted by the PhilHealth to the Committee, only 45.97% of the pending cases against healthcare professionals was disposed by the agency in a span of 19 years. To scrutinize it further, out of 1,968 fraudulent cases, only 745 was decided upon by PhilHealth which is equivalent to a measly 37.85% of cases disposed. While for the non-fraudulent offenses against healthcare professionals, out of the 2,824 pending cases only 1,458 cases were decided upon by the agency, which translates to 51.62% case disposal rate for a period of 19 years.

Likewise, during the 18 August 2020 hearing, the Chair of the Committee, Senate President Sotto, raised an issue on “wholesale amnesty” brought to the PhilHealth Board. It was admitted by the resource persons that, indeed, it was done by the Board; but as to the frequency, no clear answer was given.

This was how the discussion went. Allow me to read some portions of the transcript:

“THE CHAIRPERSON: … Now, I received an information that on May 14, 2020, Atty. Del Rosario, the Protest and Appeals Review Department, or PARD, under the legal sector headed by Atty. Del Rosario, presented to the PhilHealth Board the appealed claims for 2011-2019 worth P3.9 billion for wholesale amnesty. The PhilHealth Board approved the amnesty for the appealed claims with or only worth P668 million. Now, these are the questions: First, since the start of the operations of PhilHealth, how many times has the Board declared wholesale amnesty?

MR. DEL ROSARIO: x x x

THE CHAIRPERSON: Perhaps Secretary Duque can answer the original question. How many times has the Board acted on a wholesale amnesty? You were there for quite a long time, Secretary Duque, as the head, as DOH secretary. Would you know how many times they declared wholesale amnesty? You are on mute. Please unmute your computer.

MR. DUQUE: As I have said, Mr. President, I do not have a recollection of how many times we, as alleged, that there was a wholesale grant of amnesty. But I will look into it, Mr. Senate President, rest assured.

THE CHAIRPERSON: So, you are saying that this is the first time? You have been there since what, 2000? During the time of former President Macapagal-Arroyo.

MR. DUQUE: If I may, with your permission, Mr. Senate President, I would like to direct that to the corporate secretary who holds the records, Atty. Jonathan Mangaoang.

THE CHAIRPERSON: Atty. Jonathan Mangaoang, how many times have you declared a wholesale amnesty?

MR. MANGAOANG: xxx

I came in as corporate secretary only in 2017. So, from 2017 onwards, Mr. President, I can attest that this is the first time that there was such a Board decision…”

Although this representation has no issue on the fact that the Board has exercised the same, what concerns me is the fact that these cases submitted for “wholesale amnesty” have been pending with the Protest and Appeal Review Department (PARD) for nine (9) years. Such failure to act and gross neglect of duty have resulted to the financial prejudice of PhilHealth and the health care providers, as the case may be.

While SVP for Legal Sector Rodolfo Del Rosario projects that he is against fraud, it seems that the records prove otherwise considering that a lot of cases are still pending in or unacted upon by, the agency.

Another topic relative to the irregularities in PhilHealth’s Legal sector that puzzled this Committee is the agency’s “supreme” power – higher than that of the Supreme Court – to modify, if not disregard, the final decisions made by higher courts.

Unimplemented/Ignored Court Rulings

During the course of the hearing, the case of Perpetual Succour Hospital was brought up due to the irregularity done by the PhilHealth Board by not executing the Decision of the Court of Appeals, which affirmed the earlier decision of the PhilHealth Board to impose the three-month suspension of accreditation of the said hospital and for the payment of P10,000.00 to PhilHealth. The said act is a clear violation of the doctrine of immutability of judgments. Likewise, in so doing, it is as if PhilHealth tolerated the fraudulent act of Perpetual Succour Hospital. And ultimately, such action of PhilHealth further caused loses from the coffers of the agency by reason of the releases the PhilHealth made to the hospital during its supposed suspension – had PhilHealth implemented the Board’s earlier decision, which was affirmed by the Court of Appeals.

It was revealed by SVP Del Rosario during the hearing that the basis of the Board in changing the penalty to payment of fine amounting to P100,000.00, instead of the three-month suspension and a fine of P10,000.00, is a Board Resolution allowing the conversion of decision affirmed by higher courts. Thus,

MR. DEL ROSARIO: Anyways, to answer your question regarding the Perpetual Succour, it was a decision by the PhilHealth board of directors based on a policy that was decided even before I was appointed as SVP, Legal. There was a board resolution to convert decisions affirmed by higher courts, na kung mayroong suspension ay iko-convert na lang into fine considering that our people need access to health services.

Since the action of the Board in converting decisions of higher Courts was anchored on and backed by an earlier Board Resolution, the Perpetual Succour Hospital case is not the first case whose decision was converted by the Board. As narrated by Corporate Secretary Jonathan Mangaoang in the 11 August 2020 hearing of the Committee, to wit:

MR. MANGAOANG: x x x

This PhilHealth board decision of Perpetual case is not actually the first decision of the PhilHealth board where it modified a decision of Court of Appeals. Prior to this—and this was also mentioned by Dr. Leachon during the September 5 hearing last year because he was also a member of that board which modified the decision on HealthServ which involved 12 cases; 11 of these cases were decided by the Court of Appeals and the Supreme Court, affirming the suspension on HealthServ but this was again reversed by the board sometime in 2016. So this decision could have reached the medical association or hospital association, Mr. Chairman, Mr. President.

Although the PhilHealth Board has quasi-judicial powers, its powers are only exercisable in matters that are within its jurisdiction, particularly when the cases are still pending the agency’s decision. And it does not extend when a higher court has already acquired jurisdiction over these cases. It is already well-settled, as stated in the 2014 case of NHA vs Court of Appeals, that a decision that has acquired finality becomes immutable and unalterable, and may no longer be modified in any respect, even if the modification is meant to correct erroneous conclusions of fact and law, and whether it be made by the court that rendered it or by the Highest Court of the land.

Another issue related to the irregularities in the Legal Sector of PhilHealth is the diluted cases against erring PhilHealth employees.

Diluted Cases Against Erring PhilHealth Employees

In an incident involving some employees of PhilHealth Regional Office – Region II (PRO II) were involved in “inadvertently” depositing P9.7 Million in Balanga Rural Bank, which is supposedly due to B. Braun Avitum Philippines, Inc. and be deposited to its bank account (Deutsche Bank).

During the 11 August 2020 hearing, it was established that this blunder by the subject employees of PRO II was solely be blamed on human error, to wit:

MS. ARAGONA. Yes. As far as I can remember, sir, iyong Balanga, when it was reported to us, ang naging problema po yata is iyong pag-select ng bank for the transfer. So, I think there was an incident report on that, iyong doon sa mismong ano natin na region, so I had to get the details. Pero iyon po iyong natatandaan ko now. So, there were something na nagkaroon ng error sila doon sa pag-select.

SEN. LACSON. Anong klaseng error? Man-made itong error na ito. Hindi puwedeng machine ang mag-error dito kasi very strict kayo sa mga online transactions.

MS. ARAGONA. Opo.

SEN. LACSON. Hindi puwedeng mag-cross over ng regions kasi ina-apply nga iyan. (Emphasis supplied)

However, despite of the substantial amount involved in the infraction of the employees involved, only a “simple neglect of duty” was filed and meted out against them.

In the similar vein, as pointed out in the Committee hearings, the case of Pamela Del Rosario, which involved fraudulent claims amounting to P1.17 million with the indispensable participation of some PhilHealth employees.

Based on the Investigation Report of the Regional Special Investigation Team (RSIT) of PhilHealth, dated 06 May 2015, submitted to the then Regional Vice President of Region I, Dr. Leo Douglas Cardona Jr., the recommended cases to be filed against the erring employees were syndicated estafa, falsification of documents, usurpation of authority or official functions, violation of PhilHealth law, serious dishonesty, gross neglect of duty, grave misconduct, among others. Yet, what was filed against the employees involved were just for simple misconduct.

When the PhilHealth resource persons were asked regarding this, none of them denied the report.

Another case in point to prove the dilution of cases being done by PhilHealth officials is the very case of Atty. Rodolfo Del Rosario, SVP for Legal Sector. Although the case happened when he was the head of Physical Infrastructure Resource Department. As raised during the August 11, 2020 hearing, Atty. Del Rosario was charged, together with one senior vice president, with an administrative case of budget insertion relative to the construction of PhilHealth’s corporate center. While the senior vice president was relieved from his office, Atty. Del Rosario was just found guilty of simple neglect of duty and was fined amounting to his 15-day worth salary.

Eh kaya naman pala nawiwili na gumawa ng katarantaduhan ang ilang mga empleyado ng PhilHealth dahil hinayaan lang.

If the internal policy in PhilHealth is really to grant its employees impunity or impose on them penalties that are not commensurate to the violations committed, the Committee is not surprised now why the performance of the agency is very dismal and deplorable.

It could be easily deduced that there is, indeed, a systemic problem in PhilHealth that has to be immediately remedied especially that the agency plays a vital role in the delivery of healthcare services in the country.

RECOMMENDATIONS

The Committee of the Whole consolidated in this report all the inputs, particularly the recommendations submitted by the following senators:

Senator Panfilo Lacson
Senator Juan Miguel Zubiri
Senator Franklin Drilon
Senator Sonny Angara
Senator Pia Cayetano
Senator Aquilino “Koko” Pimentel III
Senator Grace Poe
Senator Francis Tolentino
Senator Cynthia Villar

Considering all the findings of the Committee of the Whole that this representation just presented, we, therefore, recommend the filing of criminal charges against the following:

ATTY. RODOLFO DEL ROSARIO JR, Senior Vice President For Legal Sector, and all other PhilHealth officials and employees who connived with and participated in the consummation of the punishment/illegal act, particularly for their failure to act upon and/or neglect of duty to cause the prosecution of cases before them.

Article 208 of the Revised Penal Code: Prosecution of Offenses; Negligence and Tolerance
Violation of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act

MS. JOVITA ARAGONA, Senior Vice President for Information Management Sector; MR. CALIXTO GABUYA JR., Acting Senior Manager, Information Technology and Management Department; and all other PhilHealth officials and employees who connived with and participated in the consummation of the punishment/illegal act, particularly for their act of overpricing IT supply and the concealment/alteration of documents pertaining thereto.

Article 171 of the Revised Penal Code: Falsification by public officer, employee or notary or ecclesiastic minister
Article 213 of the Revised Penal Code: Frauds against the public treasury and similar offenses
Article 226 of the Revised Penal Code: Removal, concealment or destruction of documents
Violation of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act
Violation of Article II of Republic Act 9184, or the Government Procurement Reform Act

SEC. FRANCISCO DUQUE III, Chairman of the Board; BGEN. RICARDO MORALES, former President and CEO; MR. ARNEL DE JESUS, Executive Vice President and Chief Operating Officer; MR. RENATO LIMSIACO JR., Senior Vice President for Fund Management Sector; MR. ISRAEL FRANCIS PARGAS, Senior Vice President for Health Finance Policy Sector; and all other PhilHealth officials and employees who connived with and participated in the consummation of the punishable/ illegal act, specifically for their improper and illegal implementation of the Interim Reimbursement Mechanism (IRM) against its duly authorized purpose under the law and for their grave abuse of discretion or gross negligence in ascertaining the IRM beneficiary without valid criteria for distribution.

Article 217 of the Revised Penal Code: Malversation of public funds or property
Article 220 of the Revised Penal Code: Illegal use of public funds or property

Violation of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act

SEC. FRANCISCO DUQUE III, Chairman of the Board; BGEN. RICARDO MORALES, former President and CEO; MR. ARNEL DE JESUS, Executive Vice President and Chief Operating Officer; MR. RENATO LIMSIACO JR., Senior Vice President for Fund Management Sector; MR. ISRAEL FRANCIS PARGAS, Senior Vice President for Health Finance Policy Sector; and all other PhilHealth officials and employees who connived with and participated in the consummation of the punishable/ illegal act, specifically for their failure to withhold tax liabilities of health care institutions to which they released IRM funds; and for their act of charging the Corporate Operating Budget for failure to withhold the taxes in the advancement of funds through the IRM

Article 217 of the Revised Penal Code: Malversation of public funds or property
Violation of the National Internal Revenue Code
Violation of Republic Act 1051
Violation of Republic Act 3019, or the Anti-Graft and Corrupt Practices Act

In addition to the criminal charges that the Committee recommends to the Department of Justice and the Ombudsman to file against PhilHealth officials and employees, this Committee likewise recommends them to:

File administrative case against BGen. Morales and SVP Dennis S. Mas, Management Service Sector for not implementing the Board Resolutions on courtesy resignations, which is clearly a neglect of duty and insubordination.
File administrative case against BGen. Morales, Executive Vice President and COO Arnel F. De Jesus, and Mr. Arnel F. De Jesus, Executive Vice President and Chief Operating Officer for violating the COA Rules on the period of liquidation in issuing Memorandum Circular 2020-032
File administrative case against Atty. Rodolfo Del Rosario, SVP for Legal Sector, and all the other officers and employees of the Protest and Appeal Review Department of PhilHealth for their failure to act and gross neglect of duties relative to the cases pending in their department.
Ensure that administrative and criminal cases are timely filed against responsible individuals, health care institutions, and corporations. Filing charges against responsible individuals, health care institutions, and corporations will prove PhilHealth’s and the government’s commitment to ensure that government funds are not mismanaged and that corruption is not tolerated. Further, cases and subsequent convictions will serve as a deterrence for others with corrupt intentions.
Given the observation on the B. Braun Avitum Philippines, Inc., evidence for ghost patients must be sought after. The report recommended that this can be done by retroactively matching the latest death data from the Philippine Statistics Authority.

For PhilHealth, here are some of the Committee’s recommendations:

Immediately require from the health care institutions which received IRM funds to liquidate the utilized IRM funds and return the unutilized amount, impose a definite deadline therefor and strictly implement the same.
For PhilHealth to immediately pay the claims of private hospitals, prioritizing those which are COVID-19 referral hospitals and those with high cases of COVID-19 admissions
Increase the involvement of Commission on Audit (COA) in every stage of operations of PhilHealth. As revealed in the hearings, COA is having a hard time in auditing PhilHealth due to the difficulty of obtaining documents from PhilHealth Central Office. COA should be allowed to pursue its mandate to conduct the necessary audits even at the Regional Level without any hindrance from PhilHealth to ensure that government funds are properly managed and spent.
Outsource the IT Services of PhilHealth. PhilHealth should simply outsource to a reputable company the provision of its IT services, which include but not limited to development and provision of a reliable electronic health records and analytics system, specifically for membership data information collection and membership services.
For PhilHealth to contract out the processing of its benefits claim to avoid backlogs and massive reimbursement delays. This would simplify the reimbursement process, remove red-tape, and address corruption.
The Senior Vice President, Legal Sector must have at least five (5) years of legal practice or have held a public office requiring admission to the practice of law as an indispensable requisite
For the high ranking officials of the Philippine Health Insurance Corporation (PhilHealth) starting from the Chief Executive Officer to the Regional Vice Presidents to file their courtesy resignations in compliance with the Board Resolution in relation thereto, and to be able to give the President of the Philippines a free hand to appoint new officials for the people to regain its trust on PhilHealth.
For PhilHealth to implement a regular reassignment of its Regional Vice Presidents (RVPs) to a different region every three (3) years. No RVP should be reassigned to the same region more than twice in his/her entire tenure in PhilHealth.

For PhilHealth to strengthen its enforcement and legal division in the various regional offices to help expedite and ensure the success in prosecuting cases – whether pending in PhilHealth or those filed in the regular courts or quasi-judicial bodies.

As for the Department of Budget and Management, the Committee is calling for the DBM, through its Procurement Service, to execute the necessary procurement in PhilHealth’s stead on the latter’s information technology needs – whether hardware or software.

Another recommendation of the Committee that will provide additional layer of protection to ensure PhilHealth will be financially-sound and solvent, and that transaction fall within acceptable parameters, is for the Insurance Commission to be involved in scrutinizing the operations of PhilHealth.

For the Governance Commission for GOCCs (GCG), as the governing body for government corporations, the Committee urges it to actively and decisively perform its mandate as a central advisory, monitoring and oversight body of PhilHealth. In particular, it should:

Identify the necessary skills and qualifications required for Appointive Directors to the PhilHealth and consider the suitability and qualifications of the candidates before submitting its recommendations to the President. The fit and proper rule should be strictly applied – the directors must be chosen based on their integrity, experience, education, training and competence, among others.

This is to ensure that only the most competent people are appointed as Directors of the national insurance agency.

Take a proactive role in evaluating the performance of PhilHealth, its directors and officers, and discipline them, if necessary.
Conduct periodic evaluation and assessment of the performance of the PhilHealth, require reports on the operations and management of the Corporation, particularly on the management of its assets and finances as provided.
Recommend appropriate measures to improve PhilHealth’s overall performance and service delivery in accordance with its mandate, based on its most recent performance scorecard.

And last for the GCG, we call on them to conduct a special audit of PhilHealth’s finances, possibly in the last 5 to 10 years.

The Committee is likewise seeking the Anti-Money Laundering Council for it to immediately investigate and determine whether the bank accounts of those PhilHealth officials and private entities that have been implicated in the malversation of PhilHealth funds, fall within the category of the so-called suspicious accounts.

For the various Senate Committees, the Committee of the Whole has provided for a number of recommendations that are contained in this Report that we expect could be timely acted upon.

In closing, our country is in dire straits. Gross domestic product shrank 16.5% from a year ago, according to the national statistics agency, the worst reading in a data series going back to 1981. That is a fact.

The pressure on government finances becomes even greater as we try to implement the Universal Health Care Act, which aims to cover all of us.

PhilHealth is in a deep hole as well. How deep we are not certain, yet. Unless we discover the real state of PhilHealth finances, we will never know. And that lack of knowledge is something all of us can ill- afford to have.

High unemployment caused primarily by the closing of businesses due to COVID-19 will result in fewer individuals from whom PhilHealth can exact premiums. That is another blow to PhilHealth. As if that is not bad enough, PhilHealth is hemorrhaging because of inefficient running of the corporation, compounded by corrupt practices inside. Fortunately for us, the latter two causes are preventable and can be solved by us. We must thus exert our utmost authority and vigilance to rid PhilHealth of undesirables and, punish to the fullest extent of the law, criminals... Less than this, we cannot allow.

Our suffering people deserve nothing less.

SPONSORSHIP SPEECH ON COMMITTEE OF THE WHOLE REPORT RE: PHILHEALTH

September 01, 2020 06:00 PM

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SPONSORSHIP SPEECH ON COMMITTEE OF THE WHOLE REPORT RE: PHILHEALTH

September 01, 2020 06:00 PM

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