The Commission on Audit (COA) has called out the Philippine Health Insurance Corp. (PhilHealth) over its PHP 14.97 billion worth of payment under its interim reimbursement mechanism (IRM) without legal basis.
In its report, the COA said PhilHealth released the funds to various healthcare institutions nationwide under the IRM scheme for services not yet rendered, which was contrary to Presidential Decree No. 1445, or the Government Auditing Code, which prohibited advance payments for services, supplies, and materials not yet delivered under government contracts, “except with the prior approval of the President.”
The IRM is a system where PhilHealth pays hospitals and healthcare facilities in advance for insurance claims, to ensure that they could function in crises.
It was intended to help hospitals continuously operate and give healthcare services to affected Filipinos. It was first used in the aftermath of Supertyphoon “Yolanda” (international name: Haiyan) in 2014, then in 2017 following the siege of Marawi and for the pandemic in 2020.
"Absence of proof showing that IRM fund releases have legal bases or prior approval of the President of the Philippines justifying exemption from the prohibition against advance payments, the disbursements made under the IRM scheme were without legal authority and could be considered illegal expenditures," the COA stated
The COA added that Philhealth did not establish "definite guidelines and criteria or organize an evaluation team" for the healthcare institutions applying for the IRM grant, contrary to the provisions of PhilHealth Circular No. 2020-0007.
"As a result, HCIs that are not directly involved in facilitating/providing COVID-19 related health care services and those with alleged violations with PhilHealth policies were granted IRM funds totaling P783.734 million and P3.115 billion, respectively," COA said.
However, PhilHealth maintained that payments it made under IRM were legally allowed.
“We have given or commented on this to the COA. We believe the release of IRM has a legal basis in RA 7875 as amended by RA 10606 allowing the corporation to implement other provider payment mechanisms,” PhilHealth spokesperson Shirley Domingo said in a statement on Sunday.
She also mentioned the Universal Health Care (UHC) Act, or Republic Act No. 11223, that was signed in 2019.
“The UHC law likewise allows us to implement prospective and prepayment mechanisms,” she said.
