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Republic of the Philippines
HOUSE OF REPRESENTATIVES RECE! ve
Quezon City, Metro Manila pat

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NINETEENTH CONGRESS THAR “ sae
First Regular Session , BY: - a OF

House BILLNG.__ 489 enor! Exe:

6

Introduced by Representative Stella Luz A. Quimbo

AN ACT TO ADDRESS THE SOCIAL HEALTH INSURANCE CRISIS
AND FOR OTHER PURPOSES.

EXPLANATORY NOTE

in 1995, Republic Act No. 7875 was passed, establishing the National Health
Insurance Program (NHIP) to provide health insurance coverage and ensure
affordable and accessible health care services for all citizens of the Philippines. The
NHIP is mandated to include a sustainable system of fund collection, management,
and disbursement for financing the availment of health insurance benefits. The same
Act also established the Philippine Health Insurance Corporation (PhilHealth) to
manage and administer the NHIP. With the passage of the Universal Health Care Act
(Republic Act No. 11223) in 2019, every Filipino shall now be automatically included
in the NHIP, thereby institutionalizing its crucial role as our people's universal payor
for health care.

Despite legislative support, the NHIP has failed to provide sufficient financial risk
protection for Filipinos. PhiHealth coverage continues to be less than universal, as
willingness-to-pay for health insurance is relatively low among the informal sector
Utilization of PhilHealth benefits by sick Filipinos needing hospital care is below target,
with an average PhilHealth claim rate of 78 percent.’ Support value is also low, with
78 percent of case rate payments classified by PhilHealth as "underpayments."?

PhilHealth continues to be mired in controversies on fraudulent claims and other
questionable transactions. In August 2020, the Senate and the House of
Representatives launched a series of hearings to investigate the corruption allegations
against PhilHealth. Among the issues that these inquiries tackled are the alleged
overpriced information technology equipment procured by the corporation, the alleged
manipulation of its financial statements, the implementation of its case rate system,
and the implementation of its interim reimbursement mechanism (IRM), all of which
are likely mechanisms for fraud and/or corruption.

* National Demographic Health Survey, 2017
2 Joint Hearing of the Committee on Public Accounts and Committee on Good Government and Public
Accountability, 12 August 2020.

1



The findings from these discussions point to the gross mismanagement of public funds
and pervasive systemic fraud within the corporation. This has cost our people billions
of pesos in losses — funds that are even more crucial today, as COVID-19 continues
to spread with no end yet in sight. Indeed, we are in the midst of a social health
insurance crisis.

PhilHealth has been suffering from a failure of leadership, due to a lack of technical
expertise at the helm. Frequent changes in top management have been insufficient to
resolve this, and unsuccessful in curbing corruption. Indeed, certain PhilHealth officials
have been promoted within the organization despite being charged in court.> This
underscores the need for a massive overhaul of the current system, through the
reorganization of PhilHealth.

This measure proposes to grant power to the President to outsource any or all
segments of PhilHealth, in order to make these segments more effective, efficient, and
innovative in the provision of social health insurance. To carry out this purpose, the
President may abolish or create offices, transfer functions, institute drastic cost-
cutting, and take other related measures to carry out the given objectives.

Other measures that this bill introduces include the creation of an Executive-
Legislative Commission to design the policy framework and carry out all necessary
steps to reorganize the PhilHealth. The Commission shall also designate a Transition
Management Team, to be chosen through competitive selection, to assume the
management of the corporation until its reorganization, which will be completed within
two (2) years. In this time, the Transition Management Team is tasked to improve the
management of PhilHealth and the NHIP and help transition the corporation towards
effective outsourcing. The Team itself will be contracted from senior management
within the private sector who possess the necessary technical expertise to ensure the
proper management of the NHIP

Only when brave Steps such as this are taken can we ensure genuine universal
access to quality health care. In view of the ongoing COVID-19 pandemic and the
urgent need to resolve the current social health insurance crisis, the passage of this
bill is earnestly sought.

STELLA ZUz A. QUIMBO, PhD
Representative
Second District, Marikina City

3 Hearing of Senate Committee of the Whole, 4 August 2020
2


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

NINETEENTH CONGRESS
First Regular Session

House BiLLNo. 489

Introduced by Representative Stella Luz A. Quimbo

AN ACT TO ADDRESS THE SOCIAL HEALTH INSURANCE CRISIS
AND FOR OTHER PURPOSES.

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the “Social Health
insurance Crisis Act of 2020."

SECTION 2. Declaration of Policy. — It is hereby declared the policy of the State
to adopt urgent and effective measures to address the ineffective provision of social
health insurance pursuant to the Universal Health Care Act, resulting in the lack of
financial risk protection for sick Filipinos and lack of access to quality health care.

Pursuant thereto the government shall address the issues relevant to the social
health insurance crisis, including the serious matter of graft and corruption in all
agencies involved in the implementation of the National Health Insurance Program
(“NHIP").

SECTION 3. Organization of Joint Executive-Legislative Social Health
Insurance Crisis Commission. - Within thirty (30) days after the effectivity of this Act,
there shall be organized a Joint Executive-Legislative Social Health Insurance Crisis
Commission ("Commission"). The Commission shall be chaired by the Executive
Secretary, with the secretaries of the Department of Health, Department of Finance,
Department of Labor and Employment, Department of Social Welfare and
Development, the chairman of the Governance Commission for GOCCs, and the
chairmen of the appropriate Senate and House committees as designated by the
leaders of both Houses of Congress, as well as a representative of the minority from
each House, to serve as members.

The primary responsibility of the Commission is to carry out all steps necessary
towards the reorganization of the Philippine Health Insurance Corporation (“PHIC"),
pursuant to Section 8 of this Act

SECTION 4. Powers and Functions. - To carry out the purposes and objectives
of this Act, the Commission is hereby authorized:


1 a. To designate, through a competitive selection process pursuant to Republic Act

2 No. 9184 or the Government Procurement Reform Act, a Transition

3 Management Team following the qualifications under Section 5 of this Act to

4 manage the PHIC for the next two (2) years from the effectivity of this Act, or

5 until such time that the reorganization of the PHIC is completed, whichever is

6 sooner;

7 b. To prepare the framework, policies, and guidelines necessary for the

8 reorganization of the PHIC;

9 c. To secure from any department bureau, office, agency or instrumentality of the
10 government such assistance as may be needed, such as technical information,
i the preparation and production of reports, and the submission of
2 recommendations or plans, as it may require;

B d. To contact research, conduct consultations, and gather information from key
14 stakeholders to support its plans and policies for reorganization;

15 e. Generally, to exercise all the powers necessary, relevant and incidental to attain
16 the purposes and objectives for which it is organized.

7 SECTION 5. Qualifications of the Transition Management Team. — The

18 Transition Management Team ("Team") shall be contracted from the senior
19 management of a private corporation or management consultancy firm based on the
20 following qualifications:

a a. Established competence in business management, operations, and finance,
2 with at least 10 years of individual experience in health insurance;

23 b. Proven company record in agency coordination for development contracts,
24 intergovernmental agreements, and project management plan and design;

25 c. Previously developed and executed transition plans and executed phased
26 implementation of the transition plan; and

27 d. Has been previously engaged to build transition plans with timelines, resource
28 requirements, and risks and mitigation strategy.

29 SECTION 6. Duties and Responsibilities of the Transition Management Team.

30 —To carry out the objectives of the NHIP and the objectives of this Act, the Transition
31 Management Team shall have the following duties and responsibilities

32 a. Assume the management of the PHIC and implementation of the NHIP in fine
33 with the Universal Health Care Act, for the period specified in Section 4 of this.
34 Act:

35 b. Undertake all necessary planning and procedures, including the crafting of
36 technical specifications, for any procurement required for the reorganization of
37 the PHIC;

38 c. Directly coordinate all activities of the Commission in the planning and

39 implementation of projects towards the reorganization of the PHIC;


d. Promulgate the necessary rules, procedures, and guidelines, and undertake
policy reforms to ensure the improved management of the PHIC and
implementation of the NHIP;

e. Ensure improved collection, analysis, and storage of data to improve the
implementation of the NHIP and to aid the Commission in its formation of
policies for reorganization;

f. Conduct the necessary reviews, audits, and research, including actuarial
studies, to improve the implementation of the NHIP and to aid the Commission
in its formation of policies for reorganization;

g. Enter into contracts with private or public entities, in line with its duties and
functions of the Commission;

h. Call upon any department, bureau, office, agency, instrumentality or any
political subdivision of the Government to assist in the research and planning
of policies of the Commission;

i. Execute and administer policies and decisions of the Commission; and

j. Other duties and responsibilities as assigned by the Commission which may be
necessary to achieve the objectives of this Act

SECTION 7. Compensation of the Transition Management Team. — The funds
necessary for the just compensation of the Transition Management Team shall be
taken from the funds allotted for administrative expenses of the NHIP, as provided in
Section 12 of the Universal Health Care Act.

SECTION 8. Reorganization of the Philippine Health Insurance Corporation
(PHIC). = Within twenty-four (24) months from the approval of this Act, the President
of the Republic is hereby empowered to revamp the executive leadership and
reorganize the PHIC, including the outsourcing of any or all segments of these
agencies, operations or facilities if necessary, to make them more effective and
innovative to address the social health insurance crisis. For this purpose, the President
may abolish or create offices, transfer functions, equipment, properties, records and
personnel: institute drastic cost-cutting and other related measures to carry out the
said objectives. Nothing in this section shall result in the diminution of the present
salaries and benefits of the personnel of the PHIC: Provided, That any official or
employee of the said agencies occupying positions which may be phased out by
reason of the reorganization authorized herein shall be entitled to such benefits as
may be determined by existing laws.

The President may upgrade the compensation of the personnel of the PHIC at
rates commensurate to the improved and efficient revenue collection of the agency as
determined by the Board of Trustees and the same shall be exempt from the provisions
of Republic Act No. 6750, otherwise known as the “Salary Standardization Law.”

SECTION 9. Commission’s Report. - The Commission shall submit a quarterly
report to the President and to Congress on the implementation of this Act.

SECTION 10. Sunset Clause. — The Joint Executive-Legislative Social Health
Insurance Crisis Commission shall complete its report and submit its recommendation


to the President and to Congress within a period of twenty-four (24) months after its
formal organization. After such period, it shall cease functus officio.

SECTION 11. Separability Clause. — If any provision of this Act is declared
unconstitutional or invalid, the remainder of the provision thereof not affected shall
remain in force and effect

SECTION 12. Repealing Clause. ~ All laws, executive orders, administrative
ules and regulations or parts thereof which are inconsistent with the provisions of this,
Act are hereby amended, or repealed accordingly.

SECTION 13. Effectivity Clause. - This Act shall take effect immediately upon
its publication in a newspaper of general circulation or in the Official Gazette.

Approved,