COA reports

COA scores PhilHealth over P14.97-B advances to hospitals under IRM
COA scores PhilHealth over P14.97-B advances to hospitals under IRM
PhilHealth says 95% of these funds have already been liquidated. But COA says the agency 'could have at least exercised the required diligence' and followed the rules set by law.

MANILA, Philippines – The Commission on Audit (COA) scored the Philippine Health Insurance Corporation (PhilHealth) over the nearly P15 billion in advances to various hospitals nationwide in 2020 under the Interim Reimbursement Mechanism (IRM) to fight COVID-19.

COA said in its 2020 audit report for PhilHealth that the disbursement of P14.971 billion to healthcare institutions had no legal basis because it constituted “advanced payments,” which are prohibited under Section 88(1) of Presidential Decree (PD) No. 1445 or the Government Auditing Code of the Philippines.

That provision of PD 1445 states that “advance payment for services not yet rendered or for supplies and materials not yet delivered under any contract” should have prior approval of the president.

PhilHealth released the funds to 711 government and private hospitals around the country to enable the continuous delivery of healthcare services to Filipinos during the pandemic. These were granted via PhilHealth Circular No. 2020-0007 issued on March 20, 2020.

Still, COA said that, given the huge amount of money distributed under the IRM, PhilHealth “could have at least exercised the required diligence.” At the very least, COA added, “PhilHealth could have secured the prior approval of the President of the Philippines, which the latter might approve given the circumstances faced by the country brought about by the COVID-19 pandemic.”

Without this proof, continued COA, “the disbursements made under the IRM scheme were without legal authority and could be considered illegal expenditures.”

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In its reply to COA, PhilHealth said the recipient hospitals have liquidated 95% of the IRM funds, and the IRM itself has already been suspended.

The state health insurer has also belatedly requested the Office of the President for post-facto approval of the advanced payments.

Non-withholding of taxes, excessive releases

COA then flagged P7.642 billion from the total amount which were released to 503 hospitals without deducting a 2% creditable income tax, contrary to Bureau of Internal Revenue regulations.

This tax should have been withheld before the funds were transferred, said COA. The total amounted to P152.83 million.

Because PhilHealth failed to withhold appropriate income taxes and remit them on time, COA said the agency did not follow provisions of the National Internal Revenue Code. Concerned officials may face “possible prosecution and imposition of penalties, interest, and criminal liabilities” pursuant to the NIRC, added COA.

PhilHealth then reported to COA that it has recouped P137.502 million from the hospitals as of June 11, 2021.

COA also pointed out that PhilHealth released IRM funds to 488 hospitals that “were more than what was allowed” under the insurer’s own rules.

This “resulted in overpayments ranging from a total of P81.507 million to P2.208 billion,” based on the commission’s computations.

This deprived other qualified hospitals of the chance to secure IRM funds, and showed that the funds “were not managed properly and efficiently,” said COA.

The commission then recommended that PhilHealth clarify the inconsistencies in the computation of the amount given to hospitals, and review and recompute the allowable IRM funds for each hospital. –

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