Republic of the Philippines
HOUSE OF REPRESENTATIV}
Quezon City
Nineteenth Congress {7
First Regular Session

HOUSE BILL NO.

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
INTRODUCING REFORMS TO THE NATIONAL HEALTH INSURANCE SYSTEM,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 11223 OR THE
UNIVERSAL HEALTH CARE ACT, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Our health insurance system is sick. The national health insurer is ill with mismanagement
and corruption. In a report this representation submitted to Congressional leadership, we have
outlined how mismanagement and corruption were exacerbated by design flaws in the health
insurance system, and how these flaws can be remedied by structural reforms. This bill
proposes systemic reforms in the management of the reserve fund, the collection system, the
distribution and verification of claims and benefits, and the governance of the agency.

This bill mainly:

© Makes the contribution scheme more progressive, potentially saving working

minimum-wage families thousands of pesos annually, and effectively exempting
OFWs from paying premiums;

« Reforms the PhilHealth governance structure and makes the Secretary of Finance
Chair of the Board;

* Reforms reserve fund management, making the Bureau of Treasury the fund manager
of the investment reserve fund, accumulating net income into the reserve fund, and
removing the two-year ceiling in fund life, to ensure that the health insurance system
can withstand demand shocks such as pandemics;

* Mandates the creation of the national health database of all claims and benefits
requested from and granted by the PhilHealth. This will also follow the one-patient,
one-record principle; and

Requires independent audit of the PhilHealth, apart from those conducted by the
Commission on Audit, and mandates the PhilHealth Presidemt to report to the
President of the Philippines and to Congress measures taken to address adverse audit
findings.

Page |1


These provisions respond to the following findings:

Much of PhilHealth’s financial troubles arise out of its design. While claims that it will
face a shortfall of P90 billion in 2020 are largely unfounded, there are legitimate threats to
the solvency of the national health insurance, arising out of flaws in the insurer’s design.
PhilHealth is not a medical institution. It is not an administrative agency. It
company, with government subsidy, a collection aspect, a claims and benefits distribution
operation, and a reserve fund to administer. These are specialties that all ought to be
optimized, or they will systemically affect each other negatively

Because PhilHealth’s diverse functions are all currently administered together, they do
not benefit from the gifts of specialization. Another problem is that the company
perceived as a “health institution,” when most of its operations have very little to do with
medical science.

To clean PhilHealth up, we will have to set up systems where PhilHealth’s general
operations, its reserve fund, its claims and benefits distribution, and its collection
activities are optimized. Where administration is tainted, faultily commingled operations
can yield to diseconomies of scope.

RESERVE FUND MANAGEMEN

‘The reserve fund was put in place to ensure that shortfalls during bad years ean be
covered. Part of the issue with PhilHealth’s reserve fund mismanagement, however,
stems from design. While most corporations would fill their “reserves” with accumulated
equity, PhilHealth’s reserve fund comes from funds set aside from current-year revenues.

Taking current-year revenues to set aside as reserves places operations in the financially
awkward position of drawing from reserves (part of which has probably already been
invested) if current-year claims are actuarially underestimated. This exposes operations
to actuarial miscalculation, and, given the inaccuracies of PhilHealth’s actuarial projections,
such miscalculations are very probable risks.

This is why this bill proposes amendments to the reserve fund provisions of the UHC
law. Under current provisions, PhilHealth sets aside “a portion of its accumulated revenues
not needed to meet the cost of the current year’s expenditures as reserve funds.” This is prone
to several layers of risks: actuarial miscalculation for current-year expenses, the moral
hazards of having a fund that can be used for expenditures, the risks of unfavorably
influencing market prices, downward, when PhilHealth sells its equity holdings (which
should be the most liquid among the investment reserve fund), among others,

A simpler, more rational approach, to ensure that profits during good years are used to
cover losses in bad years is to simply accumulate all net income in the investment
reserve fund, to be managed by the Bureau of Treasury, to ensure that the best
macroprudential standards are upheld. This would also ensure that regular operations and
reserve fund operations are not unduly commingled.

Page |2


QUESTIONS OF FAIRNESS IN PAYMENTS,

Current payment contributions reflect a probably necessarily discriminatory regime, where
the poor do not pay any direct premiums, and are instead covered by government subsidy,
there are self-employed voluntary contributors, and there are formal sector contributors, who
pay the bulk of PhilHealth’s non-subsidy revenue.

Increase in PhilHealth contributions. Republic Act No. 11223, or the Universal Health

ct, increased PhilHealth contributions. Section 10 of the law states that Premium
For direct contributors, premium rates shall be in accordance with the
following schedule, and monthly income floor and ceiling:

Schedule of formal sector monthly contribution scheme

Year | Premium Rate | Income Floor_| Income Ceiling |
2019 2.15% P10,000 P50,000 |
2020 3.00% P10,000 60,000
2021 3.50% P10,000 70,000
2022 4.00% P10,000 80,000
2023 4.50% P10,000 90,000
2024 5.00% P10,000 P100,000
2025 5.00% P10,000 100,000

‘Source: Universal Health Care Act

‘The law defines “Direct contributors” as “those who have the capacity to pay premiums, are
gainfully employed and are bound by an employer-employee relationship, or are self-eamning,
professional practitioners, migrant workers, including their qualified dependents, and lifetime
members.”

This income scheme effectively means that, those earning an annual income of P120,000 a
year will, by 2025, already be paying 5% of their income for PhilHealth benefits, when the
Same income segment is exempt from personal income taxes (PIT) for the simple reason that,
the country considers them too poor to pay these taxes.

This premium scbeme is extremely unfavorable to working families. The capped
contribution scheme means that those earning more than P1,200,000 a year are effectively
paying less and less premiums as a share of their income. This makes for a bizarre health
premium regime where the very poor pay effectively no direct premiums (but pay indirectly
through their consumption of excised products), the poor and middle working class pay the
same percentage on premiums, and the rich and very rich pay less and less as a share of their
income, the richer they get.

A simpler fix would have been to just tie the Premium contributions to the PIT. In 2018,
the formal sector paid P65.9
employee share. A simpler collection scheme that matches the progressivity of the recently
reformed personal income tax scheme, and would have yielded the same revenues would
simply have been a 3% levy on individual tax dues and a minimum P100/month employee
share. This would have saved the minimum wage earner at least P4,800 a year in premiums,
and would also have made the premium structure more attuned to changes in income.

Page | 3


‘A 5% levy on individual taxes, which this bill proposes, plus the minimum premium would
have yielded around P46 billion in employee share, or around P92 billion in formal sector
premiums. Considering the same expenses in 2018, this scheme would have also made
enough surpluses to cover almost 60% of the government subsidy to PhilHealth

Premiums more closely tied to income are also more sustainable than the floor-and-ceiling
approach in the UHC, as health expenditures tend to rise with national income'. Tying
premiums with income taxes withheld also means that PhilHealth can significantly
outsource its collection function to the Bureau of Internal Revenue, which can simply
charge a collection fee from PhilHealth, instead of PhilHealth having to maintain full
collection operations,

Finally, as this bill requires only residents to pay the premium, Overseas Filipino Workers.
who do not benefit from PhilHealth services, will not have to pay premiums

ISSUES ON CLAIMS AND BENEFITS

The most glaring cases of fraud in PhilHealth appear to be in the management of claims
and benefits. As with any insurance operation, the risk of insurance fraud is real and must be
proactively managed by designing transparent and accountable systems. According to the
Presidential Anti-Corruption Commission Commissioner Greco Belgica, around P153 billion.
or almost a third of PhilHealth claims, since 2013, have been lost due to fraud.

If this is true, PhilHealth’s losses due to fraud are around 5 to 6 times the global
average. According to a 2015 study by PKF Littlejohn LLP and the University of Portsmouth.
the global average loss rate due to fraud is around 6.19% as a proportion of global healthcare
expenditure.

According to the same study, the sources of fraud are as follows:
Patients Medical professionals Contractors

¢ Fraudulent provision | Prescription fraud by Fraud and error related
of sickness pharmacists to long-term care,
certificates * Fraud and error home, and

* Prescription fraud concerning payments community-based

Evasion of medical for medical tests, services, foster and
charges facility services, and childcare

_ consultations ¢ Insurance fraud

To address these issues. our office has begun consultations and studies. The immediate
rollout of the National Identification System, coupled with a national health database. with a
one-patient. one-record system. would make it easier to spot cases of false identity. and

fraudulent sickness declarations. Linking this with a national prescription database would
also help identify and prevent over-prescription

This bill requires the creation of the National Health Database that will follow the one-patient.
‘one-record principle.

1 Moore, W. J., Newman, R. J., & Fheili, M. (1992), Measuring the relationship between income and NHEs
(national health expenditures). Health care financing review, 14(1), 133-139.

Page | 4


To develop the infrastructure necessary for these databases, and to strengthen our
primary care system, we also have proposed House Bill No. 7422 or the Philippine E-
Health and Telemedicine Development Act of 2020, This would extend primary care to the
remotest regions (preventing the higher costs of overspecialized care), and, if used to develop
a national health database, would help prevent cases of fraud. Those who would organize
fraud, whether inside or outside PhilHealth, need to connive with more people, in an easily
verifiable system, where anom can be identified with data analytics. If ever fraud
happens in the telehealth system, we can more easily catch them

GOVERNANCE REFORM FOR PHILHEALTH

Considering that PhilHealth has significant fiscal implications and is more an insurance
agency with a massive investment operation than a health agency, we propose a greater role
for and oversight by the Secretary of Finance. The board structure of the Centers for
Medicare and Medicaid Services, the US counterpart of PhilHealth, is simpler: Four members
serve by virtue of their positions in the Federal Government: the Secretary of the Treasury,
who is the Managing Trustee; the Secretary of Labor; the Secretary of Health and Human
Services; and the Commissioner of Social Security. Two other members are public
representatives whom the President appoints, and the Senate confirms.

The managing trustee is essentially the Chair of the Board. Considering the size of its
insurance and investment operations, and considering the potential convergences with the
Secretary of Finance's oversight of the Insurance Commission for the insurance operations.
and the Bureau of Treasury and the Securities and Exchange Commission for the investment
operations, we propose that the Secretary of Finance also be designated as Chair of
PhilHealth under a reformed governance model.

As for transparency and audit, this bill requires independent external audits be mandates for
PhilHealth, on top of audits by Commission on Audit. PhilHealth has a history of being
flagged by the COA (we have annexed audit findings from 2008 to 2017 herewith), but many
of these issues remain unresolved. This bill also requires the PhilHealth President to report to
Congress and the President of the Republic on measures taken to address audit findings.

In summary, this bill mainly

© Makes the contribution scheme more progressive, potentially saving working
minimum-wage families thousands of pesos annually, and effectively exempting
OFWs from paying premiums;

© Reforms the PhilHealth governance structure and makes the Secretary of Finance
Chair of the Board;

‘© Reforms reserve fund management, making the Bureau of Treasury the fund manager
of the investment reserve fund, accumulating net income into the reserve fund, and
removing the two-year ceiling in fund life, to ensure that the health insurance system
can withstand demand shocks such as pandemics;

* Mandates the creation of the national health database of all claims and benefits
requested from and granted by the PhilHealth. This will also follow the one-patient,
one-record principle: and

© Requires independent audit of the PhilHealth, apart from those conducted by the
Commission on Audit, and mandates the PhilHealth President to report to the

Page |S


President of the Philippines and to Congress measures taken to address adverse audit
findings.

In view of the foregoing, the approval of this bill is urgently sought,

E SALCEDA

Page | 6


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
Nineteenth Congress
First Regular Session

HOUSE BILL NO.

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
INTRODUCING REFORMS TO THE NATIONAL HEALTH INSURANCE SYSTEM,
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 11223 OR THE
UNIVERSAL HEALTH CARE ACT, AND FOR OTHER PURPOSES

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

CHAPTERI
GENERAL PROVISIONS

SECTION 1. Short Title. - This Act shal} be known as the “PhilHealth Reform Act of
2022.”

Sec. 2. Declaration of Policy.— The State shall protect and promote the universal and
inalienable right to quality and accessible health services of the people. Towards this end, the
State shall ensure that public resources devoted to the provision of access to universal health
care shall be optimally managed and utilized for the benefit of all Filipinos.

Sec. 3. Objectives. — The PhilHealth Reform Act of 2020 aims to make fundamental
improvements to the four main areas of the national health insurance system, namely,
collection of premiums, reserve fund management, claims and benefits verification and
payment, and governance as a state agency. The objectives of these improvements are:

a) Ensure the continued financial sustainability of the national health insurance
program;

b) Make the incidence of costs of premiums fairer and more aligned with the
financial capability of contributors to pay;

c) Make the premium contribution scheme more progressive:

4) Prolong the fund life of the national health insurance program and prepare it for

demand shocks such as pandemics;

Prevent fraud in claims and benefits:

1) Improve records management and detection of fraud; and

e

Page |1


2) Improve governance and accountability mechanisms in the health insurance
system.

CHAPTER II
NATIONAL HEALTH INSURANCE PROGRAM

Sec. 4. PhilHealth premiums reform. - Section 10 of Republic Act No. 11223 is
hereby amended to read as follows:

Section 10, Premium Contributions, - [For direct contributors. premium
rates shall be in accordance with the following schedule. and monthly
income floor and ceiling:

Year “Premium Rate | Income Floor | Income Ceiling
2019 2.75% P10,000.00 'P50.000.00
2020 3.00 % P10,000.00 60,000.00

| 2021 a 3.50% P10.000.00 P70.000.00

| 2022 4.00 % P10,000.00 80,000.00 |
2023 4.50% P 10,000.00 90,000.00
2024 5.00 % P 10,000.00 P 100,000.00
2025 5.00 % P 10,000.00 P100,000.00]

(A) FOR DIRECT CONTRIBUTORS WHO ARE RESIDENTS OF
THE PHILIPPINES, THE PREMIUM RATES SHALL BE A
MINIMUM MONTHLY CONTRIBUTION OF ONE HUNDRED
PESOS (P100.00) AND AN ADDITIONAL PREMIUM
EQUIVALENT TO FIVE (5) PERCENT OF THEIR INDIVIDUAL
INCOME TAX DUE UNDER SECTION 24 (A) OF THE NATIONAL
INTERNAL REVENUE CODE (NIRC), AS AMENDED.

PROVIDED, THAT FOR DIRECT CONTRIBUTORS WHO ARE
EXEMPT FROM FILING OR PAYING INCOME TAXES UNDER
SECTION 24(A) OF THE NIRC, THE PREMIUM RATE SHALL BE
THE MINIMUM MONTHLY CONTRIBUTION, AS REQUIRED
UNDER THIS SECTION.

PROVIDED FURTHER, THAT THE MINIMUM MONTHLY
CONTRIBUTION UNDER THIS SECTION SHALL BE
INCREASED BY THREE (3) PERCENT AT THE START OF
EVERY YEAR, TO ACCOUNT FOR INFLATIO!

THE DEPARTMENT OF HEALTH, THE DEPARTMENT OF
FINANCE, PHILHEALTH, AND THE BUREAU OF INTERNAL
REVENUE SHALL ISSUE THE RULES AND REGULATIONS

Page |2


NECESSARY FOR THE IMPLEMENTATION OF THIS
PARAGRAPH, IN CONSULTATION WITH RELEVANT
AGENCIES AND STAKEHOLDERS.

(B) NOTWITHSTANDING THE PROVISIONS IN SECTION 4,
PARAGRAPH (A) OF THIS ACT, [Provided, That] for indirect
contributors, premium subsidy shall be gradually adjusted and included
annually in the General Appropriations Act (GAA): Provided, further, That
the funds shall be released to PhilHealth: Provided, furthermore; That the
DOH, in coordination with PhilHealth, may request Congress to appropriate
supplemental funding to meet targeted milestones of this Act: Provided,
finally, That for every increase in the rate of contribution of direct
contributors and premium subsidy of indirect contributors, PhilHealth shall
provide for a corresponding increase in benefits.

Sec. 5. Reserve funds management reform. ~ Section 11 of Republic Act No.
11223 is hereby amended to read as follows:

Section 11. Program Reserve Funds, - ASIDE FROM EXISTING
FUNDS SET ASIDE AS RESERVE FUNDS, PHILHEALTH SHALL
ACCUMULATE ALL NET INCOME AS RESERVE FUNDS.
ADDITIONALLY, PhilHealth shall set aside a portion of its accumulated
revenues not needed to meet the cost of the current year’s expenditures as
reserve funds. [Provided, That the total amount of reserves shall not exceed
a ceiling equivalent to the amount actuarially estimated for two (2) yeats’
projected Program expenditures: Provided, further, That whenever actual
reserves exceed the required ceiling at the end of the fiscal year, the excess
of the PhilHealth reserve fund shall be used to increase the Program’s
benefits and to decrease the amount of members” contributions.}

‘Any unused portion of the reserve fund that is not needed to meet the
current expenditure obligations [or support the abovementioned programs]
shall be placed in investments to earn an average annual income at
prevailing rates of interest and shall be referred to as the Investment
Reserve Fund. The Investment Reserve Fund shall be invested in any or all
of the following:

(a) In interest-bearing bonds, securities or other evidences of indebtedness
of the Government of the Philippines: Provided, That such investment shall
be at least fifty percent (50%) of the reserve fund;

(b) In debt securities and corporate bonds of prime or solvent corporations
created or existing under the laws of the Philippines: Provided, That the
issuing or its predecessor entity shall not have defaulted in the payment of
interest on any of its securities: Provided, further, That the securities are
issued by companies with high growth opportunities and earnings
potentials: Provided, finally, That such investment shall not exceed thirty
percent (30%) of the reserve fund:

(©) In interest-bearing deposi loans to or securities in any domestic
bank doing business in the Philippines: Provided, That in the case of such
deposits, this shall not exceed at any time the unimpaired capital and
surplus or total private deposits of the depository bank, whichever is
smaller: Provided, further, That the bank shall have been designated as a

a

Page | 3


depository for this purpose by the Monetary Board of the Bangko Sentral
ng Pilipinas:

(d) In preferred stocks of any solvent corporation or institution created or
existing under the laws of the Philippines listed in the stock exchange with
proven track record or profitability over the last three (3) years and payment
of dividends for a period of at least three (3) years immediately preceding
the date of investment in such preferred stocks;

(e) In common stocks of any solvent corporation or institution created or
existing under the laws of the Philippines listed in the stock exchange with
high growth opportunities and earnings potentials:
(f) In bonds, securities. promissory notes. or other evidences of
indebtedness of accredited and financially sound medical institutions
exclusively to finance the construction, improvement and maintenance of
hospitals and other medical facilities: Provided, That such securities and
instruments shall be guaranteed by the Republic of the Philippines or the
issuing medical institution and the issued securities are both rated triple ‘A
by authorized accredited domestic rating agencies: Provided, further, That
said investments shall not exceed ten percent (10%) of the total reserve
fund: and

(g) In debt instruments and other securities traded in the secondary markets
with the same intrinsic quality as those enumerated in paragraphs (a) to (e)
hereof, subject to the approval of the PhilHealth Board.

No portion of the reserve fund or income thereof shall accrue to the general
fund of the National Government or to any of its agencies or
instrumentalities, including government-owned or -controlled corporations.

THE BUREAU OF TREASURY SHALL MANAGE THE
INVESTMENT RESERE FUND. THE BUREAU OF TREASURY
MAY DESIGNATE INSTITUTIONS WITH VALID TRUST
LICENSES AS ITS EXTERNAL LOCAL FUND MANAGERS TO
MANAGE THE RESERVE FUND, AS IT MAY DEEM
APPROPRIATE. PROVIDED, THAT IN CASE THE PHILHEALTH
NEEDS TO UTILIZE ANY PART OF THE INVESTMENT
RESERVE FUND FOR ITS OPERATIONS, IT MAY ONLY DO SO
WITH THE APPROVAL OF THE PHILHEALTH BOARD.

PROVIDED FURTHER, THAT AT THE END OF EVERY YEAR,
THE PHILHEALTH BOARD SHALL DETERMINE WHETHER
ACCUMULATED INCOME FROM THE INVESTMENT RESERVE
FUND SHALL BE REINVESTED.

PROVIDED FINALLY, THE COMMISSION ON AUDIT SHALL
UNDERTAKE A SEPARATE AUDIT OF THE MANAGEMENT OF
PHILHEALTH RESERVE FUNDS.

[As part of its investments operations, PhilHealth may hire institutions with
valid trust licenses as its extemal local fund managers to manage the
reserve fund, as it may deem appropriate, through public bidding. The fund
manager shall submit an annual report on investment performance to
PhilHealth.]

The PhilHealth shall set up the following funds:

Page |4


(1) A fund to secure benefit payouts to members prior to their becoming
lifetime members;

(2) A fund to secure payouts to lifetime members: and

(3) A fund for optional supplemental benefits that are subject to additional
contributions.

‘A portion of each of the above funds shall be identified as current and kept
in liquid instruments. In no case shall said portion be considered part of
invested assets.

The PhilHealth shall allocate a portion of all contributions to the fund for
lifetime members based on an allocation to be determined by the PhilHealth
actuary based on a pre-determined percentage using the current average age
of members and the current life expectancy and morbidity curve of
Filipinos.

‘The PhilHealth shall manage the supplemental benefits and the lifetime
members’ fund in an actuarially sound manner.
The PhilHealth shall manage the supplemental benefits fund to the
minimum required to ensure that the supplemental benefit payments are
secure.

Sec. 6. Section 13 of Republic Act No. 11223 is hereby amended to read as
follows:

Seetion 13. PhilHealth Board of Directors. -

(a) The PhilHealth Board of Directors, hereinafter referred to as the Board, is
hereby reconstituted to have a maximum of thirteen (13) members, consisting
of the following: (1) five (5) ex officio members, namely: the Secretary of
Health, Secretary of Social Welfare and Development, Secretary of Budget
and Management, Secretary of Finance. Secretary of Labor and Employme:
(2) three (3) expert panel members with expertise in public health.
management, finance, and health economics: and (3) five (5) sectoral panel
members. representing the direct contributors. indirect contributors. employers
group. health care providers to be endorsed by their national associations of
health care institutions and health care professionals, and representative of the
elected local chief executives to be endorsed by the League of Provinces of the
Philippines, League of Cities of the Philippines and League of Municipalities
of the Philippines: Provided. That at least one (1) of the expert pane] members
and at least two (2) of the sectoral panel members are women.

The sectoral and expert pane] members must be Filipino citizens and of good
moral character.

The expert panel members must: (i) be of recognized probity and
independence and must have distinguished themselves professionally in
public, civic or academic service; (ii) be in the active practice of their
professions for at least seven (7) years; and (iii) not be appointed within one
(1) year after losing in the immediately preceding elections, whether regular or
special

(b) THE SECRETARY OF FINANCE SHALL BE THE CHAIRPERSON
OF THE BOARD, AND The Secretary of Health shall be CO-
CHAIRPERSON OF THE BOARD. [an ex officio nonvoting Chairperson of
the Board.]

Page |5


AS CHAIRPERSON OF THE BOARD, THE SECRETARY OF
FINANCE SHALL ENSURE THAT THE FINANCIAL OPERATIONS
OF PHILHEALTH ARE MANAGED EFFICIENTLY AT ALL TIMES.
(c) All appointive members of the Board shall be required to undergo training
in health care financing. health systems, costing health services and HTA prior
to the start of their term. Noncompliance shall be a ground for dismis
Within thirty (30) days following the effectivity of this Act, the Governance
Commission for Government-Owned or -Controlled Corporations (GCG)
shall, in accordance with the provisions of Republic Act No. 10149.
promulgate the nomination and selection process for appointive members of
the Board with a clear set of qualifications, credentials, and recommendation
from the concerned sectors.

Sec. 7. Section 18 of Republic Act No. 11223 is hereby amended to read as follows:

Section 18. Individual-based Health Services. -
(a) PhilHealth shall endeavor to contract public. private, or mixed health care
provider networks for the delivery of individual-based health
services: Provided, That member access 0 services shall not be
rrovided, further, That these networks agree to service quality.
co-payment/co-insurance. and data submission
standards: Provided, furthermore. That during the transition. PhilHealth and
DOH shall incentivize health care providers that form networks: Provided.
finally, That apex or end-referral hospitals, as determined by the DOH, may be
contracted as stand-alone health care providers by PhilHealth

(b) PhilHealth shall endeavor to shift to paying providers using performance-
driven, close-end, prospective payments based on disease or diagnosis related
groupings and validated costing methodologies and without differentiating
facility and professional fees: develop differential payment schemes that give
due consideration to service quality, efficiency and equity; and institute strong
surveillance and audit mechanisms to ensure networks’ compliance to
contractual obligations.

(©) PHILHEALTH SHALL MAINTAIN AN ELECTRONIC
NATIONAL HEALTH RECORDS SYSTEM WHERE PATIENT DATA,
INCLUDING ALL REQUESTED AND ACTUALLY GRANTED AND
PAID CLAIMS AND BENEFITS SHALL BE STORED, AND MAY BE
OBTAINED UPON REQUEST BY THE PATIENT. THE
DEPARTMENT OF INFORMATION ND COMMUNICATION
TECHNOLOGY (DICT) SHALL PROVIDE SUPPORT IN DESIGNING
A SECURE DATABASE WITH MECHANISMS FOR DETECTING
PROBABLE FRAUD. PROVIDED, THAT THE DATABASE SHALL
ABIDE BY THE PATIENT, ONE-RECORD’ PRINCIPLE.

CHAPTER III
GOVERNANCE AND ACCOUNTABILITY

Sec. 8. Section 32 of Republic Act No. 11223 is hereby amended to read as follows:

Section 32. Monitoring [and,] Evaluation, AND ACCOUNTABILITY. -

Page |6


(a) The Philippine Statistics Authority (PSA) shall conduct the relevant
modules of household surveys annually during the first ten (J0) years of the
implementation, and thereafter follow its regular schedule.

(b) The DOH shall publish annual provincial burden of disease estimates
using internationally validated estimation methods and biennially using
actual public and private sector data from electronic records and disease
registries, to support LGUs in tracking progress of health outcomes.

(C) IN ADDITION TO AUDITS BY THE COMMISSION ON AUDIT
AS MANDATE BY LAW AND RELEVANT REGULATIONS,
PHILHEALTH SHALL BE SUBJECT TO EXTERNAL AUDIT BY
AN ACCREDITED PRIVATE-SECTOR AUDITING FIRM, AT
LEAST ONCE EVERY FISCAL YEAR.

(D) THE PHILHEALTH PRESIDENT AND CEO SHALL SUBMIT
TO THE PHILHEALTH BOARD, THE PRESIDENT OF THE
REPUBLIC OF THE PHILIPPINES, AND CONGRESS, A REPORT
ON THE MEASURES TAKEN BY THE CORPORATION TO
ADDRESS ISSUES RAISED IN AUDIT REPORTS BY THE
COMMISSION ON AUDIT AND IN THE THIRD-PARTY AUDIT.

CHAPTER IV
MISCELLANEOUS PROVISIONS

Sec. 9. Interpretation. — All doubts in the implementation and interpretation of this
Act, including its IRR, shall be resolved in favor of upholding the rights and interests of
every Filipino to quality, accessible and affordable health care.

Nothing in this Act shall be construed to eliminate or in any way diminish Program
benefits being enjoyed at the time of promulgation of this Act.

Sec. 10. Implementing Rules and Regulations (IRR). ~ Unless otherwise specified, the
DOH, DOF, and the PhilHealth, in consultation and coordination with appropriate national
government agencies, civil society organizations, nongovernment organizations, private
sector representatives, and other stakeholders, shall promulgate the necessary rules and
regulations for the effective implementation of this Act no later than ninety (90) days upon
the effectivity of this Act.

Sec. 11. Separability Clause. ~ If any part or provision of this Act is held invalid or
unconstitutional, the remaining parts or provisions not affected shall remain in full force and
effect.

Sec. 12. Repealing Clause. — All other laws, decrees, executive orders and rules and
regulations contrary to or inconsistent with the provisions of this Act are hereby repealed or
amended accordingly.

Sec. 13. Effectivity. — This Act shall take effect fifieen (15) days after its publication
in the Official Gazette or in any newspaper of general circulation.

Approved,

Page | 7