‘PhilHealth mafia pocketed P15 billion ’

Life of ‘bankrupt’ agency may end next year

MANILA, Philippines — Officials of the Philippine Health Insurance Corp. have allegedly pocketed some P15 billion in funds through anomalous transactions, a resigned PhilHealth officer disclosed during a Senate hearing yesterday.

Thorrsson Montes Keith, who had resigned as anti-fraud legal officer of PhilHealth due to what he described as widespread corruption in the agency, alleged that a “mafia” was behind what he branded as the “crime of the year” due to fraudulent schemes.

“Naniniwala po ako na ang perang winaldas at ninakaw ay humigit kumulang P15 billion (I believe that the money spent and stolen amounted to more or less P15 billion),” Keith testified online before the Senate committee of the whole.

Amid the discovery of alleged anomalies in PhilHealth, acting senior vice president Nerissa Santiago said the insurance agency could go bankrupt next year.

Santiago told the Senate committee of the whole that the agency, which has about P221 billion in funds, may no longer be able to sustain operations due to the decreased collections and increased payouts for the health expenses of members due to COVID-19.

On questioning from Senate Minority Leader Franklin Drilon, Santiago said prior to the COVID-19 crisis, the actuarial life of PhilHealth fund was 10 years, but when the pandemic struck, its lifespan drastically shortened to just one year.

“Because of the decreased contributions and increased COVID-19 payouts, we are expecting by 2021, we will be in the red... We can only survive with additional contribution coming from the government,” Santiago said.

Visibly shocked, Drilon asked, “Are you saying in 2022, there will be no PhilHealth?”

Santiago answered in the affirmative, saying the agency projects net operating losses at P90 billion for this year and if the pandemic persists until 2021, operating losses will total P147 billion. She said the PhilHealth system would “collapse” by then.

She said if the pandemic continues to spread and no vaccine will be developed soon, the agency can no longer operate unless all its obligations will be shouldered by the national government.

Part of the issue being investigated is the alleged favoritism of PhilHealth in implementing its Interim Reimbursement Mechanism (IRM) to hospitals supposedly to help them cope with COVID-19 cases.

Drilon noted the agency released about P15 billion to the hospitals from its IRM even if only P1 billion was liquidated by healthcare institutions.

PhilHealth collects over P70 billion from contributions of members and employers and obtained an infusion of P71 billion from this year’s General Appropriations Act derived from sin taxes to implement the Universal Health Care (UHC) Law.

Expenses for the UHC is expected to increase to over P184 billion next year.

Citing official documents, Drilon noted that the agency incurred a net operating loss of P3.5 billion in 2019 but in the first quarter of the year, it reported a net operating loss of P2 billion.

“We are in this mess because of PhilHealth’s non-compliance with rules, including a simple COA (Commission on Audit) rule. That is why we have all these problems because you disregard all the rules designed to protect public funds,” Drilon told PhilHealth president Ricardo Morales.

He was referring to a COA rule that no additional cash advances should be given to any official or employee unless the previous cash advance is first settled or a proper accounting thereof is made.

Drilon lamented how nothing has changed in PhilHealth since the Senate conducted an investigation on the allegations of fraudulent claims, overpayments and ghost dialysis last year.

“We are at war, yet it seems that the plague of PhilHealth corruption could be more fatal than any other virus… How can you sleep well at night?” he said.

Sen. Grace Poe questioned why some hospitals in Bicol and the Visayas region were granted hundreds of millions of pesos under the IRM when some of them were not accredited and had zero COVID-19 cases.

She lamented that PhilHealth officials appeared to have turned a blind eye on the corruption and mismanagement happening in the agency, which led to a staggering P102 billion in overpayments to some hospitals and P154-billion loss to fraud.

Senate President Pro Tempore Ralph Recto disputed Santiago’s warning, saying PhilHealth has P110 billion in contingency funds from retained earnings or equity on top of the premium contributions and subsidies.

Recto said PhilHealth’s projected expenditures to implement the UHC should not be withdrawn from its contingency fund as the disbursements had been drawn up as its regular obligations with or without COVID-19.

He said what can be charged to the contingency fund would be the P22.5 billion for COVID-19 patients and P28 billion for testing that still leaves P60 billion with agency.

The probe was initiated by Senate President Vicente Sotto III and Sen. Panfilo Lacson in a resolution that convened the committee.

Overpriced ICT

Keith and Alejandro Cabading, a member of the PhilHealth board, also blew the whistle on the alleged P2.2-billion overpriced acquisition of information and communications technology (ICT) equipment and fake cases of coronavirus disease.

Cabading alleged that Morales approved the purchases of the ICT equipment and software, which were not yet cleared by the Department of Information of Communications Technology, and were the same devices purchased by PhilHealth in 2018 and 2019.

Cabading said he raised the matter before the board but he was frustrated as “the management seemed to be tolerating fraudulent acts.”

Keith accused Morales of instructing him to amend a pending case involving the agency’s supposedly overpriced COVID-19 testing kits.

Keith also testified that Augustus De Villa, a ranking PhilHealth officer, tore in front of him documents pertaining to the alleged anomalous ICT purchases when he raised the matter with him.

De Villa, however, told the Senate committee that he did not tear the documents but was trying to recall where they are, prompting Sotto to subpoena them.

Morales and other PhilHealth officials turned the tables on Keith and Cabading, saying they have axes to grind.

They said Keith, who reportedly has sexual harassment complaints against him and was removed from the Philippine Military Academy several years ago, was only sore for not being accepted to the post as head executive assistant to Morales.

Morales said Cabading was trying to get back at him as PhilHealth did not buy a property in Zamboanga that he was selling to the agency.

Fake COVID cases

Sen. Francis Tolentino revealed that some hospitals have made claims to PhilHealth that were approved for expenses for COVID-19 when the patients were not initially confined or treated for the disease.

“These are called ‘fake COVIDs’. The PhilHealth system is in disarray because those not COVID-related are paid, so your expenses ballooned,” Tolentino said in Filipino.

Tolentino grilled Morales for not implementing President Duterte’s order last year calling for the resignation of PhilHealth’s senior vice president and board members to pave the way for the agency’s cleansing.

“There was a directive from President Duterte (to all) PhilHealth vice presidents to tender their courtesy resignation, was there a consequential action from the PhilHealth board requiring the VPs to quit?” he asked Morales.

Morales said there was a board resolution regarding the resignation of key officials, but it only reached the board members and not the vice presidents.

He said he exercised discretion because the agency could not function if all vice presidents would resign, adding that no cases have been filed against them.

Tolentino said Morales must clarify matters as those supposed to be axed were actually promoted, adding that the non-implementation of a board resolution is a clear legal violation.

He said the resignation of key officials could have paved the way for needed reforms in the corporation amid allegations of corruption.

Tolentino also questioned the promotion of four PhilHealth officers allegedly involved in the Wellmed dialysis scam last year. They were Cheryl Peña, Rizza Majella Herrera, Bernadette Lico and lawyer Recto Panti, who were promoted to department manager III on May 18.

‘Mismanagement’

PhilHealth has no one but itself to blame for its financial woes, according to House ways and means committee chairman Joey Salceda.

Salceda said PhilHealth’s fear of running out of funds by 2022 is a result of “mismanagement.”

“To say that PhilHealth is now struggling with sustainability is to suggest that during these years when PhilHealth premiums exceeded claims, not enough was done to strengthen the agency’s financial position,” he said.

Salceda said premiums collected by PhilHealth have always exceeded claims over the past few years, with some sectors bearing the brunt of premiums paid without having benefited proportionally from health insurance coverage.

In 2018 alone, the Albay congressman said the formal sector paid P65 billion in premiums but only received around P26 billion in claims.

“While we understand the extraordinary burden that COVID-19 has placed on the insurance system, and we in Congress have expressed willingness to infuse capitalization to cover the COVID-attributable upsurge in claims, PhilHealth should be held accountable for its apparent mismanagement of public finances,” Salceda pointed out.

He said PhilHealth needs to shape up and prepare for times of pandemic.

“I am frustrated to see PhilHealth not doing enough of its share of the work in delivering universal healthcare. We’ve been doing our jobs and have handed them almost every legislative reform they requested. It’s time they do their jobs well,” Salceda said.  — Edu Punay, Delon Porcalla