THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session. 
INTRODUCED BY HON. MANUEL B. VILEAR, JR. 
EXPLANATORY NOTE 
The Constitution guarantees the protection of people’s health by the State. 
Due to insufficient budget and the unabated population growth in our country, 
existing government hospitals often cannot accommodate the increasing 
number of indigent patients. 
Aware of the plight of our poor brethren who cannot afford the soaring rates of 
hospital rates and medical treatment, this bill seeks to establish a “Medical 
Service Contracting Program” which will require government subsidy to 
participating private hospitals which shall admit for confinement and treatment 
indigent patients who cannot be accommodated in government hospitals due to 
lack of vacancy. 
Hence, the approval of this bill is earnestly sought. 
MANUEL B. VI LAR, JR. 
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THIRTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session 
INTRODUCED BY HON. MANUEL B. VILLAR, JR. 
AN ACT 
ESTABLISHING A MEDICAL SERVICE CONTRACTING PROGRAM UNDER WHICH 
THE GOVERNMENT WILL SUBSIDIZE PARTICIPATING HOSPITALS IN ORDER TO 
ACCOMMODATE INDIGENT PATIENTS WHO CANNOT BE ADMITTED IN 
GOVERNMENT HOSPITALS 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
SECTION 1. Title. - This Act shall be known as the Medical Service Contracting 
Act of 2004. 
SECTION 2. Objective. - A Medical Service Contracting Program is hereby 
established in order that indigent patients who cannot be accommodated in time in 
government hospitals shall be afforded free hospitalization in any participating private 
hospitals. 
SECTION 3. Definition. - For purposes of this Act, the following terrns shall 
mean: 
a. 
Indigent patient - refers to any Filipino citizen afflicted with any serious 
illness and/ or injury needing immediate confinement and treatment in a 
hospital and whose income is below the subsistence level as determined 
by the National Economic and Development Authority and those who are 
not covered by the existing PhilHealth Care program of the government 
or its equivalent. If the amount of the hospital expenses is more than 
that legally due from PhiIHealth Care or the medical or hospitalization 
plan, the balance shall be chargeable to the government. The subsistence 
level is hereby initially fixed at Two thousand five hundred pesos (P2, 
500.00) a month, subject to adjustment by the National Economic and 
Development Authority (NEDA) every two (2) years. 
b. 
Serious illness or injury - refers to cases characterized by profuse 
bleeding, shock, loss of consciousness, physical paralysis or severe 
distress. 
Hospitalization expenses - include all expenses for the use of hospital 
rooms and facilities, nursing care, laboratory services, food, medicines, 
professional fees, and all other auxiliary services needed by the patient. 
Secretary -refers to the Secretary of Health 
c. 
d. 


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Department - refers to the Department of Health 
Participating private hospital - refers to any private hospital which is 
included in the list of hospitals qualified to participate in the Medical 
Service Contracting Program as determined by the Department. 
Program - refers to the Medical Service Contracting Program 
Government hospital - refers to hospitals owned and run by the National, 
Provincial, City or Municipal Governments. 
Primary hospital - refers to a hospital equipped with the service 
capabilities needed to support licensed physicians rendering services in 
medicine, pediatrics, obstetrics, and minor surgery. 
Secondary hospital- refers to a hospital equipped with the service 
capabilities needed to support licensed physicians rendering services in 
the field of medicine, pediatrics, obstetrics and gynecology, general 
surgery and other ancillary services. 
Tertiary hospital - refers to a hospital which is fully departmentalized 
and equipped with the service capabilities needed to support certified 
medical specialists and other licensed physicians rendering services in 
the field of medicine, pediatrics, obstetrics and gynecology, surgery, their 
sub -specialties, and ancillary services. 
SECTION 4. Duty ofthe Government Hospital. - It shall be the duty of the 
Administrator of every government hospital to refer an indigent patient immediately to 
the nearest participating private hospital whenever he or she cannot be accommodated 
in said hospital. However, in cases of emergency, the provisions on Republic Act 8644 
shall apply. 
SECTION 5. Hospital Admission and Expenses. - All participating private 
hospitals shall admit indigent patients referred to them by any government hospital. 
All necessary expenses for the treatment of the indigent patient shall be advanced by 
the participating hospital concerned, which shall, however, be reimbursed with 
reasonable or legal interest, by the Department, in accordance with government 
hospital rates, within four (4) weeks after notification of the discharge of the indigent 
patient. Failure by the Department to reimburse a participating hospital for a period of 
six (6) months shall be a sufficient cause for a participating private hospital to 
withdraw from this Program. However, if funds are available, the Department may 
agree to advance to the participating private hospital such m o u n t  necessary to cover 
the services to be rendered to the indigent patient: Provided, however, That the 
participating private hospital shall submit quarterly accounting of the expenses 
previously incurred in the treatment of the patient. 


SECTION 
6. Phases of Implementation. - This Program shall consist of two 
phases: 
Phase I. The Program shall initially be implemented in the provinces where 
there is lack of government hospitals and where secondary private hospitals are found. 
The criteria for selecting these provinces shall be determined by the Secretary in 
accordance with 
the population-hospital bed 
ratio, morbidity status and 
socioeconomic condition. 
Phase 11. Within three (3) years from the start of the Program, all provinces shall 
be covered by the program. 
SECTION 7. Funding. - The President is hereby authorized to realign or transfer 
any item of appropriation within the Department and/or utilize any savings therein to 
carry out the provisions of this Act. Whatever additional m o u n t  as may be needed for 
the implementation of this Act shall be included and given priority in the 
appropriation of the Department in the General Appropriations Act for the ensuing 
fiscal years. Provided, That the Philippine Charity Sweepstakes Office shall allocate the 
income of two (2) lotteries or sweepstakes draws for the Program. 
SECTION 8. Administration. - The Secretary shall administer the proper 
execution and implementation of this Program, draw such list of participating 
hospitals, submit to the Office of the President such necessary budgetary expenses, 
appoint such necessary personnel and create such committees to assist him in the 
proper implementation of this Act. 
During the first phase of this program, the Secretary shall submit an annual 
progress report to the Congress on the implementation and administration of this 
Program. 
SECTION 9. Sanctions. - The Secretary shall have the power to impose 
administrative sanctions such as warning, reprimand, withdrawal of accreditation or 
censure on any individual or participating private hospital which violates any 
provision of this Act. The appropriate court, in cases of repeated and willful violation, 
shall have the power to impose fine and suspension or cancellation and permit to 
operate of the erring private hospital. 
In cases of fraudulent or collusive claims the Secretary shall endorse said 
claims to the Department of Justice for appropriate investigation, prosecution and 
action. 
SECTION 10. Rules and Regulations. - The Secretary shall promulgate such 
rules and regulations as may be necessary to implement the provisions of this Act. 


SECTION 11. Repealing Clause. - All laws or parts thereof which are 
inconsistent with any provision of this Act shall be deemed repealed, amended, or 
modified accordingly. 
SECTION 12. Effectivity. - This Act shall take effect fifteen (15) days after 
publication in the Official Gazette or in any newspaper of general circulation. 
Approved,