Anthony C.

Leachon, MD, FPCP, FACP

Independent Director
Representative of the Monetary Board
 Flow
1. Background
2. Actuarial Valuation Report- VP Neri Santiago
3. Financial Report: P&L- OIC, SVP Gregorio
Rulloda
4. PhilHealth benefit payment: challenges
5. Review of Senate hearing on cataract cases
6. CAAC and audit findings
7. Recommendations
 Strategic Questions
How Doctors Think

1.Where are we now

? Diagnosis ?
PhilHealth in crisis
2. Where do we want
to go ? Towards UHC
3. How do you get
there ? Urgent plan of
action
 Universal Health Care(UHC)
Inaugural Address 2010
• “Provision to every Filipino • It is also known as Kalusugan
Pangkalahatan, which the Aquino
of the highest possible administration describes as the
quality of health care that "availability and accessibility of
is accessible, efficient, health services and necessities for
all Filipinos."
distributed adequately
funding, fairly financed,
and appropriately used by
an informed and
empowered public."
 Universal Health Care(UHC)
Republic Act 10606

• A government mandate aiming to ensure

that every Filipino shall receive affordable
and quality health benefits and services
such as :
– Human resources
– Health facilities
– Health financing
 Why tax sin products ?
Health and Revenue Goals
Sin Tax on tobacco & alcohol Approval at Malacañan
Dec 20, 2012
 What the Sin Tax Law has already
achieved
• Revenue
Sin Tax generation
Revenues, 1998-2013 (in PhP billions)
80.0
70.4

60.0

40.0
31.7 32.9 33.0
26.8 27.6 26.0
23.1 23.7 23.2 24.2 22.9 23.9
21.8
17.4 19.4 20.1 20.0 18.8 19.8 20.6
20.0 16.8 16.5 16.0 17.0 16.1
12.4 12.5 13.0 12.5 12.9 13.9
Tobacco Alcohol
 2003 2013
PhilHealth PhilHealth
Income Utilization Income Utilization
Poorest 18% Poorest 33%
Poor 23% Poor 71%
High Middle 48%
Middle 24%
Low Middle 54%
Rich 28% Rich 70%
Richest 33% Richest 88%
NDHS 2003 Faraon et al, 2013
 DOH Sec Janette L Garin:
Maximize Utilization of Sin tax funds
 Sin Tax Update
• In 2015, excise tax collections rose to P
141.8 billion from P 112.8 billion in 2014.
• This is the highest take since the
implementation of the Sin Tax Reform Law.
• The collection also exceeded by 19.1% the
P 119.1 billion target for 2015.

Source: http://business.inquirer.net/206536/sin-tax-take-hit-record-p141-8b-in-15. Accessed

on February 8, 2016
Fund Balance Projection
2012 YE Valuation

12
Fund Balance Projection
2013 YE Valuation

13
 Fund Balance (5-yr snapshot)
(IN BILLION PESOS) 2014 2015 2016 2017 2018 2019
BENEFITS 88 99 119 131 144 160
INPATIENT + Ambulatory+
MDG 80 90 101 104 107 121
CASE TYPE Y/Z
(CATASTROPHIC) 0.2 1 1 2 2 3
PRIMARY CARE 8 9 17 26 35 36
BENEFIT
IMPLEMENTATION 5 9 10 11 11 12
EXPENSES
FINANCING SOURCES
PREMIUM COLLECTIONS 81 89 92 94 97 100
INVESTMENT INCOME 6 6 4 2 0 0
CHARGE FROM RESERVE
FUND -6 -12 -33 -46 -59 -72
14
Reserve Fund 121 109 76 30 -29 -101
Fund Balance Projection
2014 YE Valuation

15
 Recommended Strategies
1. Adoption of SSL4 for the government employees
2. Improve collection efficiency for both Private and
Government sectors
3. Ensure GAA appropriation for the arrears on the following:
• 2015 SC contribution
• Difference in 2016 SC contribution
• Premium differential for the government as employer
4. Removal of salary ceiling
5. Contribution to be based on exact salary
6. IPP contribution to increase based on salary floor and
applicable rate
7. NHTS contribution to increase to P3,600 by 2018
8. Increase the contribution rate from 2.5% to 3%, 3.5% and
increasing by 0.25% every year thereafter
9. Expanding the Enhanced PCB to sectors other than the
Indigents
16
Corporate Strategic Plan Projection
2014 YE Valuation

17
 Challenges
1. Adoption of SSL4 for the government employees
 Pres Aquino had not yet signed the approval on this
2. Improve collection efficiency for both Private and
Government sectors
 Reconciliation of eligible members vs those who are
paying contributions
3. Ensure GAA appropriation for the arrears on the following:
• 2015 SC contribution
• Difference in 2016 SC contribution
• Premium differential for the government as employer
 To convince DBM on the need to include this in the 2017
GAA
4. Removal of salary ceiling
 How to get the exact salary information
5. Contribution to be based on exact salary

18
 Challenges
6. IPP contribution to increase based on salary floor and
applicable rate
7. NHTS contribution to increase to P3,600 by 2018
8. Increase the contribution rate from 2.5% to 3%, 3.5% and
increasing by 0.25% every year thereafter.
 Political will
 Convincing stakeholders on the need for this
9. Expanding the Enhanced PCB to sectors other than the
Indigents
 Ensure that the Enhanced PCB is operational by the time
we increase the rate for less resistance
 Accrediting private providers
 EMR ready providers
 Resolve issue on the medicines provision

19
 Statement of Income
As at December 31 of Each Year
 Statement of Income
As at December 31 of Each Year
 Top 10 Causes of Mortality, Philippines 2010
Number Rate per
Cause of Death affected 100,000

1. Diseases of the Heart 102,936 109.5

2. Diseases of the Vascular System 68,553 72.9

3. Malignant Neoplasms 49,817 53.0

4. Pneumonia 45,591 48.5

5. Accidents 36,329 38.6

6. Tuberculosis, all forms 24,714 26.3

7. Chronic Lung Disease 22,877 24.3

8. Diabetes Mellitus 21,512 22.9

9. Nephritis/nephrotic syndrome/nephrosis 14,048 14.9

10. Perinatal disease 12,086 12.9

Philippine Health Statistics, 2010
 Benefit Payments
• Top conditions and procedures paid for by
PhilHealth in 2014
– Pneumonia - 7.6 Billion
– Hemodialysis - 4.6 Billion
– Cesarian delivery - 4.2 Billion
– Cataract removal - 2 Billion
– Maternity Care Package - 1.5 Billion

Source: Task Force Informatics

 Benefit Payments
• PhilHealth benefit payments have
substantially increased through the years
from P 12.9 billion in 2004 to more than P
78 billion in 2014.
• PhilHealth paid more than P 78 billion as
benefit payment in 2014, which is 41%
more than what was paid from the previous
year.
Source: 2014 PhilHealth Annual Report, PhilHealth Stats and Charts, 2007-2014
 Premium Collection
• PhilHealth premium collections have increased steadily
through the years from P 17.6 billion in 2004 to more than
P 81.4 billion in 2014.
• PhilHealth collected more than P 81.4 billion in 2014,
which is 43% more than what was collected from the
previous year.
• The increase was mainly due to the amount collected
from the national government as a result of the 14.7
million NHTS-PR families covered in 2014.
Source: 2014 PhilHealth Annual Report, PhilHealth Stats and Charts 2007-2015
 Annual Premium Collections vs.
Benefit Payments 2004-2014

Premium Collection
90. Benefit Payment
81.4
78.1

67.5
billion pesos

55.5
55.4
47.3
47.2
45.
34.9
34.8
30.5
29.1
24.7 25.6 26.24.3
23.1
22.5 17.6 18.7
17.5 17.1 17.4 18.2
12.9

Source: 2014 PhilHealth Annual Report; PhilHealth Stats and Charts, 2007-
2014
0.
 Internal Audit Findings on Cataract
Cases
1. Highlights
a. Breach of performance commitment by
facilities and physicians
b. Abuse in filing of claims
c. Breakdown in controls within Philhealth as
the cases were not detected at once
d. These cases may be happening in other
benefit payments
 Internal Audit Findings on Cataract
Cases
2. what additional controls were instituted or
planned to be instituted to prevent similar cases
a. Ensure strict compliance with performance
commitment
b. Financial controls to prevent submission and/or
processing of fraudulent, spurious or excessive
claims (preventive controls) and to detect or identify
at once said fraudulent claims, in case these claims
were processed (detective controls).
Sen TG Guingona : CAAC cases
unacceptable delay
Slow Wheel of Justice for 80
cases since 2000s
Senate Hearing:
Eye of the storm
When eye MDs Turn a blind
eye
Preventive Measures to Curb
Fraudulent Cases
 Strategic Measures for Curbing Fraud

1. Hiring of consultant
with audit, risk
management, and
actuarial skills sets
2. Ideally hire a risk
management/
auditing private firm
URGENT
 Strategic Measures for Curbing
Fraud

3. Patient education
and empowerment
 Strategic Measures for Curbing Fraud

4. Coordination and collaboration with the

presidents of the Philippine Medical Association,
specialty societies, and other medical
organizations
5. Coordination and collaboration with the
Philippine Hospitals Association and the Private
Hospitals Association of the Philippines, Inc.
6. Work with the Professional Regulation
Commission-Board of Medicine for improved
implementation of the physicians’ Code of Conduct
 REBUILD

1. Vision and strategic plan for the next 5 to

10 years
2. Strong governance system with great
external audit and internal control system

STRONG GOVERNANCE
 REBUILD

3. Comprehensive
computerization and
information technology
infrastructure to monitor
the benefits
REBUILD

• 4. Address the erring

doctors issues
ASAP.
• File cases at PRC
and revoke their
licenses if deemed
necessary in
coordination with the
different medical
organizations
 REBUILD
• 5. More customer oriented approach to enroll
Filipino poor patients and utilize the benefits to the
hilt
 REBUILD

6. Address primary 7. Allocate funds to

care issues by improve public
pouring resources on hospitals to serve
human resources the patients better

Photo: https://www.longwoods.com/content/23318
PHOTO:https://www.google.com.ph/search?q=human+resources&e
spv=2&biw=1600&bih=775&source=lnms&tbm=isch&sa=X&ved=0C
AYQ_AUoAWoVChMI2oqG2aTzxgIVQRemCh062AFB#tbm=isch&q=h
ealthcare+facility&imgrc=_
 REBUILD
8. Oversight audit by government agencies

A. PhilHealth is supervised by GCG on performance

oversight

B. It is also subject to COA audit.

– Irregularities or anomalies
– should have been detected by COA and suspended
or disallowed
9. External Audit
✓ First big step
✓ what lacks in the govt is a program
management role
✓ oversee systems, process and controls
✓ to "prevent" any problems
✓ after the fact and are interventional
✓ Damocles sword
 #CultureChange
10. Foster a culture of healing and leading
with integrity, agility and patriotism.
Plugging the holes would lift this boat…

It is our duty to keep the boat afloat…

Our duty to keep PhilHealth afloat…

 Summary
Strategies to Prevent PHIC Crisis

1.Increase the contributions – may be the best

way particularly in the employed sector (this is
difficult given the sin tax windfall)
2.Reduce expenses of PhilHealth, e.g.,
fraudulent claims, abuse (wrong incentives)
3.Increase efficiency of collection (efficiency is
low at 20 to 30%)
4.Reduce benefit coverage
Why Change Hurts ?
Ketan Lakhani, South Africa