PhilHealth bleeding; reserves may go dry by 2022 – Senate

MANILA, Philippines — The Senate has found that Philippine Health Insurance Corp. (PhilHealth) is financially “hemorrhaging” due to poor management that has been exacerbated by corruption.

In his report on the Senate Committee of the Whole’s investigation of corruption in the state insurer, Senate President Vicente Sotto III on Tuesday called for a thorough review of PhilHealth’s financial life after one of its officials said it would no longer have a reserve fund by 2022.

“PhilHealth is hemorrhaging because of inefficient running of the corporation, compounded by corrupt practices inside,” Sotto said.

“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,” he said in the 88-page committee report.

Based on PhilHealth’s 2019 financial statement, it has P111 billion in liabilities and P109 billion in equities, which is a debt to equity ratio of 1 is to .99, Sotto said.

This could be lower if the Senate does not take into account the P14 billion increase in equity based on “prior year adjustments” that the agency has yet to justify, he said.

He noted an allegation by PhilHealth board member Alejandro Cabading that financial statements were manipulated to make it appear that the state insurance company was in good standing when it was actually overrun with debt and was bankrupt.

SVP’s dire forecast

The Senate also took seriously the statement of PhilHealth Senior Vice President Nerissa Santiago that the company would no longer have a reserve fund by 2022 and would need an additional subsidy from the government to stay afloat.

“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,” Sotto said.

He said PhilHealth was in a “deep hole.”

“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,” he said.

Sotto also questioned PhilHealth’s inaction on administrative and criminal cases and the dilution of charges against its erring employees.

He cited the case of recently resigned Senior Vice President Rodolfo del Rosario, who was administratively charged with budget insertion in connection with the construction of PhilHealth’s corporate center when he headed the Physical Infrastructure Resource Department.

Impunity

Del Rosario’s fellow respondent was dismissed but he was found guilty of only simple neglect of duty and fined an amount equivalent to 15 days of his salary, Sotto said.

“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 [of the whole] is not surprised now why the performance of the agency is very dismal and deplorable,” he said.

He also cited Region II employees who had deposited P9.7 million in funds for B. Braun Avitum Philippines, a dialysis clinic, to the Balanga Rural Bank instead of the Deutsche Bank. These employees were charged with simple neglect of duty despite the substantial amount involved, he said.

The employees implicated in another case involving P1.17 million in fraudulent claims for cancer treatment were just charged with simple misconduct despite an investigation report recommending much graver charges, including syndicated estafa, he added.

IRM ‘huge mistake’

The PhilHealth also “made a huge mistake” when its planned payouts for the interim reimbursement mechanism (IRM) were “way higher than its assumptions” on the number of COVID-19 patients this year, Sotto said.

The IRM is an emergency fund to be used to help medical establishments in dealing with “fortuitous events” such as the current pandemic.

He said its officials estimated that PhilHealth would spend P3.3 billion in treating 209,000 COVID-19 patients in 2020 but it allocated a total of P26.8 billion for the IRM, a whopping allocation of more than 700 percent than what was supposed to be spent.

More than half of the fund had already been distributed, including to some hospital that did not even treat COVID-19 patients or those that were unaccredited by PhilHealth and those with pending cases.

The Senate report, signed by 22 of the 24 senators, endorsed the criminal indictment of Health Secretary Francisco Duque III, resigned PhilHealth chief Ricardo Morales and several others over irregular expenses and projects.

Sotto said they had already furnished the Department of Justice with documents and other evidence for the filing of appropriate charges against Duque, who chairs the PhilHealth board, and the others.

The Senate report also recommended charges of malversation of public funds, illegal use of public funds and violation of the antigraft law against PhilHealth Executive

Vice President and COO Arnel de Jesus and Senior Vice Presidents Renato Limsiaco Jr. and Israel Francis Pargas for “improper and illegal implementation” of the IRM and for “grave abuse of discretion or gross negligence in ascertaining the IRM beneficiary without valid criteria for distribution,” Sotto said.

Overpricing

He said Del Rosario should face charges for his failure to pursue the cases brought against errant PhilHealth personnel and hospitals.

Sotto also pushed criminal cases against PhilHealth Senior Vice President Jovita Aragon and acting senior manager Calixto Gabuya for “their act of overpricing” the foiled IT project and for the “concealment/alteration of documents.”

He said the PhilHealth officials should also be slapped with administrative cases for neglect of duty, insubordination and violation of Commission on Audit rules.

Duque said the criminal charges would give “a chance for me to clear myself,” insisting that he had no role in the two programs of the PhilHealth that were allegedly fraught with irregularities — the IT project and the IRM.

“I was not a signatory to the board resolution. Those who signed were the board members who were present. I was out for almost four months because of the IATF (Inter-Agency Task Force for the Management of Emerging Infectious Diseases) chairmanship,” Duque told the Inquirer.

He said the IT project wasn’t approved because it was “still up for deliberations” and he supported the creation of a fact-finding committee to investigate the IT proposal. —With a report from Jovic Yee