Senate Resolution No.

461
- Authored by Senator Leila De Lima
- Dealt on the allegations on the failure of the PHILHEALTH to release insurance claim to its
accredited hospitals which may result into the closure of the said institutions.

Senate Resolution Nos. 474, 475

- Authored by Senators Sotto, Lacson, and Pangilinan
- Looked into the alleged widespread corruption, incompetence, and inefficiencies in
PHILHEALTH that may eventually lead to financial collapse of the corporation to prejudice the
Filipino people.

The controversies surrounding PHILHEALTH have long been surfaced as early as 2015 that lead to the
reported loss of billions of pesos due to some unscrupulous practices like ghost dialysis, unnecessary
cataract surgeries, case upscaling, unquestionable rise in claims, bloated budget proposals for ICT
projects, etc.

The principal consideration and objective of the Committee of the Whole in hearing the aforementioned
resolutions is to gather sufficient data and information that will serve as indicators on the need to reshuffle
or to totally reorganize the entire PHILHEALTH Bureaucracy, provide for stiffer penalties as a means of
stopping the widespread frauds, as well as recommend to appropriate agencies in the government to
investigate and ultimately file the necessary charges to whoever is involved in the alleged malversation if
necessitated.

Article III, Section 5 of RA 7875

PhilHealth’s Authority
One universal health insurance program for the entire population.

Section 16. Powers and Functions (Page 4)

The series of hearing unearthed the following grave issues:

I. The Interim Reimbursement Mechanism (IRM): Legal Bases or lack of it, and its shoddy - or
shady - implementation
II. The ICT Project as an Anatomy of Corruption
III. The PhilHealth Financial Status, specifically
A. The Alleged Manipulation of PhilHealth’s financial statements, earlier flagged by the
Commission on Audit, and
B. Its Actuarial Life: Examining Further the Claim that PhilHealth will die in 2021 or 2022
IV. Irregularities in the Legal Sector
V. B. Braun Avitum Dialysis Centers
 I. The Interim Reimbursement Mechanism (IRM): Legal Bases or lack of
it, and its shoddy - or shady - implementation

Interim Reimbursement Mechanism or IRM

- Defined as a special privilege for the provision of substantial aid to an eligible HCIs directly hit
by a fortuitous event to continuously operate and/or rebuild the HCI in order to provide
continuous health care services to adversely affected Filipinos.
- This allows PhilHealth to grant advance payment up to three months to Health Care Institutions
(HCIs) to support their continuous operations.

PCEO Ricardo Morales cited paragraphs c, d, and j of Section 16 of the RA 7875 (National Health
Insurance Act) as the legal basis for the implementation of IRM.

PhilHealth Circular 0034, s. 2013

- Guidelines on the Provision of Special Privileges to those Affected by a Fortuitous Event
- Signed by then PCEO Alexander Padilla
- Fortuitous events are described as acts of God like floods or typhoons; or an act of man such as
rebellions, insurgencies and wars

During the August 11, 2020 Committee of the Whole hearing, Atty. Roberto Labe Jr., the Corporate Legal
Counsel, stated that there has been a decrease in patient census and increase of cost of hospitals, hence the
IRM response to ensure continuous hospital operations.

IRM has been implemented back in 2009 in response to Typhoon Ondoy, in 2017 in response to Marawi
siege, in January 2020 in response to the aftermath of the Taal Eruption, in March 2020 for COVID-19
response.

As differentiated from PHC 2020-0007 which authorizes PhilHealth to make advance payments to HCIs,
the three previous IRMs, PhilHealth did not advance any amount to any HCIs but only ensured
“accelerated reimbursements” of HCIs claim.

PBR No. 2515

- Ratifying the IRM Nationwide due to COVID-19.

On April 22, 2020, the Standard Operation Procedures on the releases of IRM was released.

As of June 9, 2020, the total IRM releases amount to Php 14,038,393,329.14.

- From the record of PhilHealth IRM releases, Php 226,380,912.20 was released to 48 Freestanding
Dialysis nationwide, Php 136,907,963.00 was released to infirmaries, while a total of Php
4,772,163 was provided to 4 Maternity Care Package providers.

However, the Committee noted that such releases were considered illegal considering the provision on the
effectivity of PhilHealth Circular No. 2020-0007.
 A. IRM: A Case of Void and Defective Policy

In the prior implementation of IRM, corresponding circulars set the requirement for PhilHealth
accreditation, sustained critical damage in infrastructure, and identification and validation of the
Corporation of the magnitude of damage/destruction of the HCIs.
- These circumstances are lacking or absent in the implementation of the present IRM in response
to the pandemic, thus rendering its implementation void from the beginning.

The SOP on the releases of IRM was only disseminated almost a month after Circular No. 2020-0007, or
on April 22, 2020.
- It is the Committee’s submission that the SOP was antedated to support and justify the immediate
execution of MOAs (as early as March 23) and release of IRMs (on March 25) to some favored
HCIs.

There were already 279 hospitals which received the IRM funds as early as March 25 to April 22 without
the SOP, a requisite document for its implementation.
- Hence, the IRM releases to these 279 hospitals were irregularly made as they did not have the
SOP on how the same will be released and processed at that time.

Another contributory factor for the illegality of IRM was the belated adoption of PBR 2515 (Resolution
Ratifying the IRM Nationwide due to COVID-19).
- This Resolution was only adopted by the Board on March 31, 2020.
- Hence, we submit that PhilHealth does not have any legal justification when they implemented
Circular 2020-0007 as early as March 20, 2020.

Article VII of the PhilHealth Circular No. 2020-0007 states that:

“This Circular shall take effect immediately from its publication in a newspaper of general circulation
AND three (3) certified copies had been furnished the Office of National Administrative Register
(ONAR) of the UP Law Center.

Upon Senator Lacson’s request, ONAR issued a certification that PhilHealth Circular No. 2020-0007 was
filed on June 11, 2020.
- Thus, the IRM effectivity is deemed valid only on June 11, 2020.
- Thus, the total IRM releases from March 25 until June 9, 2020 were deemed illegal and invalid.

SVP for Legal Sector, Atty. Rodolfo “Jojo” Del Rosario agreed that the IRM fund releases were illegal.
- He stated that the IRM funds were not released based on the prerequisite set by the circular on
publication and furnishing of copies to the ONAR.

These submissions are supported by the case of Republic of the Philippines v Pilipinas Shell where the
SC ruled that both the requirements of publication and filing of administrative issuances intended to
enforce existing laws are mandatory for the effectivity of said issuances. Failure to observe the proper
requirements makes administrative issuance to HAVE NO FORCE AND EFFECT.
 B. Questionable IRM Fund Releases to HCIs

B.1. Invalid and Irregular IRM Fund

As of June 9, 2020, there are 339 HCIs which received IRM funds.

B.2. Releases to Non-COVID19 Facilities

Unlike previous IRM releases, there was no set of criteria on which HCI will receive IRM funds.
- Lack of such qualifiers would mean that the funds were either indiscriminately distributed or that
the agency was being generous.

It has also been established during the hearings that the implementation of IRM is questionable after
PhilHealth extended the coverage of the IRM distribution to HCI beneficiaries which were not included in
the objective set forth in the PhilHealth Circular No. 2020-0007.
- PCEO Morales released a statement in May that IRM became COVID-19 specific due to lack of
funds.

On Free-Standing Dialysis, the Committee took particular concern to B. Braun Avitum Dialysis Center.
- In a span of 7 days, PhilHealth released almost 15.4 million and 4.2 million to two B. Braun
Dialysis Center branches in Tondo, Manila - both notes were issued on April 15.
- Its 2 branches in Quezon City also received the amount of 8.95 million and 5.3 million,
respectively - both notes were issued on April 22.
- The said dialysis center has no isolation area and only caters to out-patient services.

Relative to PhilHealth Circular No. 2020-0007, B. Braun has released a Patient Announcement that the
center still requires patients who have already exhausted the 90-treatment PhilHealth benefit to pay in
cash.
- The foregoing disproves PhilHealth’s executives’ emotive assertions that IRM releases also cover
dialysis centers, because B. Braun Avitum still does not grant “privileges” to dialysis patients.

B.3. Preferential Treatment to HCIs

One of the contentions of IRM is the determination of IRM amounts for HCIs which are very centralized.

According to Region VIII Acting Regional VP Michael Jibson Hernandez, RO are only authorized to
review requisite documents. Once complete, they will forward the said documents to the Central Office
and await for the approval which will go through the office of Dr. Ish Pargas (Policy Sector) and SVP
Renato Limsiaco (Fund Management Sector) to the office of HEA Laborte and PCEO Morales.

There was an issue of non-releases of IRM funds to HCIs in Region VI and Region VIII. PCEO Morales
pointed fingers to Regional VP for Region VI, Atty. Valerie Hollero as the one to blame.
- However, Regional VP of Region VI would show that recommendations for IRM requests were
made as early as April 8; but there was still no fund release approved by the Central Office.
 - On August 3, 2020, Atty. Valerie Hollero called the agency’s attention regarding the claims of
these HCIs.
Another issue is the concern of Eastern Samar Governor Ben Evardone who claimed that government
hospitals did not receive IRM funds from PhilHealth.
- PhilHealth Regional Office endorsed to the Central Office on March 23 were 10 government
hospitals in Eastern Samar.
- The Central Office approved the endorsement on April 27, 2020, but has not acted upon it since
then.

Another issue raised is the case of Ospital ng Maynila which did not receive its IRM fund.
- However, PCEO Morales insisted that PhilHealth already released funds for them.
- Contrary to the submission of PhilHealth SVP Renato Limsiaco to the Committee of a document
“Authority for Fund Transfer”, it shows that transfers to several hospitals including OSMA on
June 23, 2020, but was only paid out by PhilHealth on August 11, 2020.

B.4. Hasty Payment Releases Under IRM

The hasty payment releases under IRM is also noteworthy, especially in Level 3 hospitals in Regions V
and VIII which had records of low COVID-19 cases.

During the August 18, 2020 hearing, Duque averred that IRM is not specific only to COVID cases,
because it is based on the provisions of the National Health Insurance ACt and Universal Health Care
Act.
- NOTE: The release of funds from Bayanihan Act 1 is specific to COVID cases.
- If PhilHealth Circular No. 2020-0007 relies on the very same act, then IRM must be specific to
COVID cases.

Non-hospitals became beneficiaries of IRM, as such in the case of B. Braun Avitum Dialysis Center.
- PhilHealth said that “COVID-19 has heavily disrupted health service delivery in the country. All
facilities were affected not only hospitals which are directly catering to COVID-19 cases, but also
primary health care facilities.”
- With the anticipated surge of COVID-19 patients, a huge shift in the provision of ther urgent
medical procedures such as maternity and dialysis care rests with the primary care facilities.

The basis for PhilHealth to release IRM to a wide range healthcare providers was the March 27, 2020
DOH Department Circular No. 2020-0167 which promotes continuous provision of essential health
services.

During the August 18, 2020 hearing, Secretary Duque admitted that IRM funds released to B. Braun
Avitum were illegal, and they will rectify it.
- Who will now be held responsible, liable, and accountable?

B.5. HCIs with No Accreditation and with Pending Cases

Worse, the IRM was even disbursed to HCIs which are not accredited by PhilHealth, and have pending
cases for violations of its warranties of accreditation.

Acting Regional VP Hernandez endorsed the IRM fund availment of Catarman Doctors Hospital despite
its Temporary Suspension of Payments sanction to notify the Central Office that said HCI has a pending
case with PhilHealth.
- The IRM fund release was recommended per IRM policy that includes HCIs under sanctions as
qualified to avail the IRM.

Document Review and Approval Request Form (DRAR) for Catarman Doctors Hospital shows that SVPs
Pargas and Limsiaco signed on April 7, 2020, while Laborte and Morales’ date of signing was only on
Aprile 13, 2020. However, on April 8, 2020, PCEO Morales already signed the approval, 5 days earlier
than his supposed document review and approval.
- In the course of the hearing, it was established that SVP Limsiaco has a close relative in the
Catarman Doctors Hospital Inc.

C. IRM Allocations Far Exceeded the Estimated Cost of COVID-19 Hospital Admissions

PhilHealth made a huge mistake when its planned disbursement for IRM-COVID was way higher than its
assumptions of how many patients to eventually cover.
- The total estimated cost for COVID in 2020 is 3.3 billion.
- But PhilHealth set aside 26.8 billion.

PhilHealth explains that its approach to IRM was a holistic response to COVID-19.
- PhilHealth explains that IRM is open to facilities who want to continue operations during the
pandemic regardless if it caters to COVID-19 cases or not. It is a privilege granted to hospitals
based on PhilHealth’s determination.

Health Secretary Duque explained that IRM is not specific only to the COVID-19 pandemic as it is based
on the provisions of the National Health Insurance Act and UHC that gives PhilHealth the flexibility to
implement financing mechanisms to ensure provisions of benefits for Filipinos.

D. Non-Liquidation of IRM Releases

On June 24, 2020, PCEO Morales signed a Memorandum on the Deferment of IRM Liquidation
Activities.
- He ordered the deferment of fund liquidation in effect for the claims of HCIs originally granted
with IRM from its supposed reckoning date of March 16, 2020 to a later date.
- Considering that IRM funds have been released, this might invite adverse Audit Observation
Memos (AOMs) or Notice of Disallowance from COA.

The Executive VP and COO of PhilHealth, Arnel F. De Jesus issued OCOO Memorandum No. 2020-032
stating that PhilHealth Regional Offices (PROs) were given the option to liquidate their IRM, especially
that there were no concrete guidelines in the matter of liquidation of the IRM.
 - It appears that PhilHealth still has no guidelines for a reconciliation program or a workable
mechanism to recover the millions advanced to HCI.
- PhilHealth SVP Israel Pargas confirmed that liquidation was deferred to a later date, reporting
that only 2.3 billion pesos has been liquidated.

Assuming this to be true, the 2.3 billion pesos is only 15% of the 14.96 billion released. Now, between
Mr. Pargas and Ms. Limsiaco, who do we believe?

E. Withholding Taxes from IRM Fund

PhilHealth is considered a withholding tax agent on income tax payments, and considering that IRM
releases are considered “advance payments,” the agency must withhold the tax due on HCIs and medical
practitioners.

SVP Renato Limsiaco stated that only in private HCIs do they have withholding tax.
- He said that they already withheld taxes amounting to 156 million and remitted the same to BIR
on August 3.
- However, it appeared that the said amount was not charged against IRM funds released to HCIs.
- It was deducted and charged against the Corporate Operating Budget (COB).

On August 7, 2020, Cherie Carmen Divina, ASM of Comptrollership Department, requested for the
review of a Corporate Memorandum with subject “Withholding of 2% Expanded Withholding Tax
(EWT) and Issuance of BIR 2307.”
- Considering that the taxes due to the IRM releases were paid to BIR by the Central office and not
the Regional Offices, it would be a form of document tampering if not outright falsification of
public document, if the Regional Offices will be ordered to release BIR Form 2307 to the HCIs
within their area of responsibility considering that the taxes due to the IRMs released to the HCIs
have not in fact been withheld and collected by PhilHealth.

Considering the existence of the said memo prior to the August 11 hearing, the response of SVP Limsiaco
stating that “Di namin alam mag-withhold kami sa umpisa” appeared unintelligible and negligent.
- Limsiaco even mentioned that taxes for IRM releases in prior years were withheld not prior, but
during the liquidation of hospitals.

For their failure to withhold the tax due on the IRM releases, the responsible official of PhilHealth
particularly SVP Renato Limsiaco should be charged for violation of Sections 251, 255, and 272 of the
NIRC Code of 1997.
II. Information Technology Issues

In PhilHealth, however, it seems that the procurement and completion of their IT system has been the
cause of so many corruption issues.

PhilHealth Board Member Alejandro L. Cabading narrated his personal knowledge on the incidents of
corruption in PhilHealth allegedly manipulated by the Corporation’s IT Department.

By March 13, 2020, the Board was constrained to approve the 328 million IT Supplemental Budget which
was first proposed at 2.1 billion, for they were told that the entire PhilHealth system will collapse.
- Board Member Susan Mercado even said that “it seems that the Board was being blackmailed in
approving this amount.”

In April 2020, SVP for IT Jovita Aragona proposed a 750 million for procurement of items.
- However, the Board was informed that there was a requirement that an Information Systems
Strategic Plan (ISSP) be submitted and approved by DICT before a government entity can
procure IT items.

SVP Aragona wrote a letter to DICT stating that the budget in the ISSP submitted by them will come
from the Corporate Operating Budget of PhilHealth.
- The DICT responded that whenever there are updates or amendments in the planned ICT
procurement, then ISSP needs to be revised or amended.

The report indicated that there was intent to confuse and deceive by splitting one item into two items by
listing different descriptions/specifications - amounting all to 132.2 million.

A. Overpricing / Padding

*Refer to page 32

COA Audit Query Memorandum No. 2020-002 stated that 24 network switches were verified as not
utilized and found inside its box at the time of inspection.
- Non-utilization was deemed disadvantageous to the government, since the said items were not
tested for any further manufacturing defects.

However, former Head Executive Assistant, Col. Laborte, resigned Head Executive Assistant of PCEO
Ricardo Morales, that PhilHealth “is currently procuring 15 more of the same network switches that are
not utilized.”

The explanations given by PhilHealth on the overpriced Cisco network switches procurement are
inconsistent, confusing, and questionable.
- Col. Laborte, being an IT and Cisco expert himself, stated that the bid price should be Cisco
9200’s market price at Php 62,424 and not Php 320,000, which they claimed was the price of
 Cisco 2960XR in 2016. The bid and contract price should then be the market price of Cisco 9200
which is said to be only Php 62,424 each.

The Committee now asks how the Approved Budget for the Contract (ABC) was approved.
- It should be stressed that the bidders will only bid within the approved budget for the contract.
- If the ABS is bloated, the tendency is for the bidders to bloat their bid prices as well.

Section 36 of Republic Act No. 9184 or the Government Procurement Reform Act.

It seems like PhilHealth did not properly plan its ICT procurement in this case.
- Section 7 of the IRR of RA 9184 provides the legal reference for procurement planning and
budget linkage.
- It was discovered that not only they were procuring something which was different from the
specification mentioned in the approved Terms of Reference, the price of the IT equipment what
they were procuring was lower than that stated in the Bid Document.

SVP Aragona explained that the approved budget amounting to 348,000 per unit for the Cisco 2960XR
included other services and charges, whereas the 62,000 amount presented during hearing only pertained
to the unit of Cisco 9200 24 Port.

After comparing notes and speaking with former HEA, Col. laborte, Atty. Labe discovered that the
document submitted to him were different from what were previously submitted to Col. Laborte.
- Difference in the OPCEO Number and Dates
- Absence of Reference Information in ITR Standard Specifications and no determination of
compliance with the minimum requirements.
- The people from PhilHealth in trying to make it appear that what they procured was
CISCO 2960 XR resorted to doctoring or even forgin documents to make the Senate
believe their story.
- This has been confirmed by the bidder Microgenesis that what has been procured was
Cisco 9200, not 2960 XR.

It is evident that SVP Aragona, Calixto Gabuya and the personnel of PRO NCR were colluding with one
another to mislead the Committee on the truth about the additional 15 network switches they procured in
August 2019.

In the last Committee of the Whole hearing dated August 18, 2020, PhilHealth’s SVP and CIO Jovita
Aragona and Senior IT Officer Calixto Gabuya Jr. made the admission that the item being procured was
Cisco 9200, not Cisco 2960 XR.

B. Included in the 2020 Proposed IT Budget, but not Included in the Approved ISSP

DICT Secretary Gregorio Honasan pointed out that the ISSP must be submitted for approval before the
DICT, as a requisite before a government entity may procure any IT item.
However, there are items in the IT Budget Proposal that were included which where not submitted nor
approved by the DICT.
- There were ICT resource items, but did not exist in the Approved ISSP.
- There were 44 ICT resources that were included in the IT Budget Proposal; however, said items
did not exist in the Approved ISSP.
- This has a total amount of 734,014,120.58 million, which is 46.84% of the total amount of
proposed budget of ICT.

*Refer to page 42

Furthermore, some of the proposed items in the IT Budget Proposal would show that there items without
any specification and indication of number of units.

PhilHealth was not able to explain how the internal audit report showing that 734 million worth of
technology resources were included in the IT Budget Proposal, despite the lack of approval of DICT.
- The report also revealed 98.05 million in overpriced items, and 132.2 million worth of items that
had been subjected to the splitting of contracts.

Col. Laborte also disclosed that since he came to PhilHealth, he noticed that IT projects were almost
awarded to a single calculated bidder,

Although they say it has not been spent, money has not been released, nevertheless, an attempt to defraud
government and the people of the Philipiines with this type of padded costs are unspeakable and
unforgivable.
III. COA Observations / Financial Statements

The Financial Statements prepared by PhilHealth Fund Management Sector (FMS) particularly from 2017
to 2019 revealed discrepancies and deficiencies in the presentation and disclosure of accounts.

Board Member Cabading asserted that financial statements were manipulated in order to make it appear
that PhilHealth is in good standing when in truth, the corporation was overrun with debts and is already
bankrupt.

A. 2017 Financial Statement

In the 2017 COA Report, PhilHealth registered a negative net income of 4.75 billion. However, the
figures were later restated showing a net income of 237.17 million (2018 COA Report).

It is remarkable to note that the same 2018 COA report qualifies that the correctness of the restated
Financial Statement for 2017 with a net income of 237.17 million from Net Loss of 4.75 billion was NOT
established primarily because the data source to derive the amount of the Benefit Payment is not the most
accurate source of information.

B. 2018 Financial Statement

The net income for 2018 was restated from 11.6 billion to 21.02 billion or an increase of 9.4 billion due to
“prior year adjustment”.
- The primary reason for such adjustment was the reduction in the benefit claims amount to 8.08
billion, which had no recorded basis or disclosure as to the nature and reason for such
adjustments.

PhilHealth explains that there was no manipulation of financial statements, but that there were necessary
adjustments as a result of accruals and write off, and that both adjustment follow the existing accounting
and auditing rules and regulations.

C. Observations on 2019 Financial Report

COA asserts that cumulative effect of prior year adjustments amounting to 14.396 billion account to the
overstatement of the 2019 income.

Based on analysis, the prior year adjustment must be carefully looked at, as 2019 Financial Statement
carries the effect of the 2017 Adjustment.
- If this is not corrected, chances are there will also be disclaimer of opinion on the 2019 Financial
Statements.
- The Corportaion cannot afford a discalimer of opinion on its financial statements for two
consecutive years as this poses reputational risk which is very unfavorable especially that we are
embarking on the implement of the Universal Health Care Act.
COA notes that the benefit claims payment and premium collection should be truly verified because there
are noted discrepancies.

In terms of the reported debt-to-equity ratio, it appears that PhilHealth is bleeding dry as it does not have
enough money to pay its creditors in the event of liquidation.

D. COA Audit Memorandum Order 2019-028(18)

This observation was also raised by COA in its COA Audit Memorandum Order 2019-028(18) that the
restated financial statements did not include the minimum requirements stated in the Philippin Accounting
Standards.
- According to the audit team, Philhealth submitted restated financial statement without disclosing
the nature, amount, and the reason for such restatement.

The COA Memo revealed that there were deficiencies in the presentation and disclosure of different
PhilHealth accounts, including the prior year adjustment, which resulted in significant limitaion in the
scope of audit of related accounts.
- It pointed out that there was a non-disclosure of the risks associated with the financial assets and
liabilities of PhilHealth and how these risks are managed by the agency as required in the
Philippine Financial Reporting Standard.
- It also pointed out the non-disclosure of Key Management Personnel Compensation and
Minimum Lease Payments affecting the sound assessment and reporting transparency of the
agency.

COA observed PhilHealth’s disclosure of inapplicable PFRS and non-disclosure of new accounting
standards, which casr doubt on the faithful representation of the Corporation’s financial statements.

On January 21, 2020, COA Audit Observation Memorandum No. 2020-003 reported PhilHealth’s
overstaement of assets and income for 2019 due to an improper recording of procurement of antivirus
software as a tangible asset amounting to Php 17,938,124.84 which is inconsistent with PFRS.
- According to COA, such procurement is a form of subscription paid in one accounting period, but
it will not be recognized until a later accounting period.
- For Software with a subscription covering a year, the initial recording should have been classified
as “Computer Software with Indefinite Life.”

The COA has determined that the procurement of Anti-Virus software as a tangible asset overstate both
assets and income for the 2019 Financial Statements.

E. Actuarial Life of PhilHealth

According to Acting Senior VP and Concurrent VP Data Protection Officer Nerissa Santiago, PhilHealth
will no longer have a reserve fund by 2022, that’s why it needs additional subsidy from the government.
IV. Irregularities of PhilHealth Legal Sector

It is stated in Section 17 of RA 7875 that PhilHealth has quasi-judicial power in order to carry out its
tasks more effectively.
- As a penalty, PhilHealth may impose a suspension, revocation, or restoration of the accrediation
of a health care provider.

A. Prolonged Inaction on Pending Cases

For the period of 2000-2019, there are 7,452 pending cases against HCI which involved both fraudulent
and non-fraudulent offenses.
- However, for the same year period, only 5,3277 was decided on by the agency.
- This means that for a span of 19 years, only 71.48% cases was acted upon.

As regards cases against healthcare professionals, for the period of 2000-2019, there are 4,792 pending
cases in the agency.
- However, based on the same document PhilHealth submitted, only 45.97% of the pending cases
against Healthcare professionals was acted upon by the agency in a span of 19 years.

Senate President Sotto raised an issue on “wholesale amnesty” and how frequent do they do that.
- From 2017, this is the first time that there was such a Board Decision.

Although the Committe Chair has no issue on the fact that the Board has exercised the same, what
concerns him is the fact that these cases submitted for “wholesale amnesty” have been pending with the
Protest and Appeal Review Department (PARD) for 9 years.
- Such failure to act and gross neglect of duty have resulted to the financial prejudice of PhilHealth
and the healthcare providers, as the case may be.

While SVP for Legal Sector Del Rosario projects that he is against fraud, it seems that the records prove
otherwise consdirering that a lot of cases are still pending.

B. Unimplemented / Ignored Court Rulings

The case of Perpetual Succour Hospital was brought up due to the irregularity done by the PhilHealth
Board by not executing the Decision of the CA.
- The said act is a clear violation of doctrine of immutability of judgments, and in so doing, it is as
if PhilHealth tolerated the fraudulent act of Perpetual Succour Hospital that could further cause
loses from the coffers of the agency.

SVP Del Rosario revealed that the basis of the Board in changing the penalty to payment to Php 100,000,
instead of the three-month suspension and a fine of Php 10,000, is a Board Resolution allowing the
conversion of decision affirmed by higher courts.
Corporate Secretary Jonathan Mangaoang revealed that the Perpetual Case is not actually the first
decision of the PhilHealth board where it modified a decision of the Court of Appeals.
- PhilHealth modified the decision on HealthServ which involved 12 cases, 11 of these cases were
decided by CA and one by the Suprement Court, affirming the suspension on HealthServ, but this
was again reversed by the Board in 2016.

Although the PhilHealth board has quasi-judicial powers, its powers are only exercisable in matters that
are within its jurisdiction.
- It does not extend when a higher court has already acquired jurisdiction over these cases.
- It is well-settled that a decision that has acquired finality becomes immutable and unalterable, and
may no longer be modified in any respect.

C. Diluted Cases Against Erring PhilHealth Employees

Some employees of PhilHealth Regional Office - Region II (PRO II) were involved in depositing 9.7
million in Balanga Rural Bank, which is supposedly due to B. Braun Avitum Philippines, Inc.

Despite the substantial amount of infraction involved, only a “simple neglect of duty” was filed and meted
out against them.

The case of Pamela Del Rosario which involved fraudulent claims amounting to 1.7 million with the
indispensable participation of some PhilHealth employees.
- The recommended cases syndicated estafa, falsification of documents, usurpation of authority or
official functions, violation of Philhealth Law, serious dishonesty, gross neglect of duty, grave
misconduct.
- Yet what was filed against the employees involved were just for simple misconduct.

Another case that was raised was the case of Atty. Rodolfo Del Rosario, SVP for Legal Sector.
- He was charged with an administrative case of budget insertion relative to the constrtuction of
Philhealth’s corporation center.
- Although he was relieved from his office as the head of Physical Infrastructure Resource
Department, he was just found guilty of simple neglect of duty, and was fined amounting to his
15-day worth salary.

If the internal policy in PhilHealth is really to grant its employees impunity or impose on them penalties
that are not commensurate to the violations committed, the Committee is not surprised now why the
performance of the agency is very dismal and deplorable.
- It could be easily deduced that there is a systemic problem in PhilHealth that has to be
immediately remedied especially that the agency plays a vital role in the delivery of healthcare
services.
V. B. Braun Avitum, Philippines, Inc.

A. Background

B. Braun Avitum Philippines, Inc., (aka Philippine Renal Care, Inc.) is a PhilHealth-accredited
free-standing dialysis clinic that has 25 branches in Luzon.

B. IRM Payments Made to B. Braun Avitum Philippines, Inc.

The IRM releases to B. Braun from April 23 to May 5, 2020 amounted to Php 45,176,518.00 already.

It was discovered that PhilHealth released almost 15.4 million, 4.2 million, 8.95 million, and 5.3 million
to its branches in Tondo, Manila and QC.
- The MOAs for the first two branches and the MOAs for the last 2 branches were filed on the
same day.
- The IRMs were released on the same date for the first 2 branches and same date on the last 2
branches.

B. Braun has no isolation area and only caters to out-patient services.

- Suspected or confirmed COVID-19 patients are referred to the nearby Gat Andres Memorial
Hospital.

B. Braun still requires patients who have already exhausted the 90-treatment PhilHealth benefit to pay in
cash.
- B. braun still does not grant “privileges” to dialysis patients, contrary to the very basis of B.
Braun’s over 45-million IRM releases.

C. The Stranger than Fiction Balanga Rural Bank Case

In May 2019, a total amount of Php 9,705,332.00 which was supposed to be deposited to the bank
account of B. Braun in Deutsche Bank in PRO II was wrongly deposited to Balanga Rural Bank in Bataan
(Region III).

According to Col. Laborte, there was no way PRO II could transfer payment to any bank situated in
Region III.
- Also, Philhealth Regional Office’s Electronic Payment System is only allowed to transfer
payment to accredited hospitals located within the same region.

The total amount of 9.7 million was deposited to Balanga Rural bank in twelve transactions from May 2
to May 22.

B. Braun complained that it did not receive its IRM for the month of May 2019, thus on June 6, 2019, the
Accrediation and Quality Assurance Section was informed of the 9.7 million that was erroneously
credited to Balanga Rural Bank.
Formal charges of “Simple Neglect of Duty” against Editha Conel and jerome Follante were filed and
signed by Atty. Pocallan.

During the hearing on August 18, 2020, SVP Limsiaco was asked about the circumstances of this
incident.
- He did send a memo letter on June 28, 2019 indicating his recommendations on the matter.

It is worthy to note that, although the mistake happened in PRO II, the one requesting the return of the
deposit was the Land Bank branch in Pasig City, where PhilHealth Central Office was located.

D. Machine Learning, Identification, Detection and Analysis System (MIDAS) Report

Based from the MIDAS report, it was learned that from 2015 to 2018, Philhealth has paid a total of 811
million for hemodialysis claims from B. Braun facilities.

According to the same MIDAS report, the Philippine Society of Nephrology has suggested that the
average capacity of hemodialysis is at 72 sessions per month.
- However, using the values in the data of B. Braun, it exceeds the 90% threshold for sessions to
capacity ratio.
- Given this observation, evidence for ghost patients must be sought after.

The actual numbers of hemodialysis machines and maintenance schedules should be checked if they
adhere to quality standards specifically for the six branches with greated than 90% sessions to capacity
ratios.
- Non-adherence to this is considered breach of performance commitment set by the accreditation
standards.