State think-tank scores PhilHealth for inefficient payment scheme

MANILA, Philippines – A government think-tank is urging the Philippine Health Insurance Corp. (PhilHealth) to replace its inefficient and outmoded case-based payment (CBP) scheme.

In a study, the Philippine Institute for Development Studies (PIDS) said the CBP works as a retrospective payment mechanism where hospitals are reimbursed a given amount after filing a claim for a given case, with reimbursement time spanning within four to five months.

Hilton Lam, author of the study, noted that the CBP scheme resulted in an increase of out-of-pocket expense for the members.

“As CBP replaced the fee-for-service, it was found out that the amount reimbursed by PhilHealth from the case rates was not sufficient to cover hospital expenses. Majority of the admissions in which patients shoulder the remaining expenses not covered by the CBP scheme goes to balance billing,” Lam explained.

Lam cited the additional drawbacks of the CBP scheme which include high administrative cost of screening cases and potential decrease in quality of care due to providers avoiding complex cases or not giving the appropriate level of care. 

Instead, the study urged PhilHealth to consider the GBP as an alternative payment mechanism for improving efficiency and decreasing transaction costs. This should be implemented together with an efficient and improved CBP and strict implementation of the no balance billing (NBB).

Conceived in 2012, the GBP system covers all PhilHealth members in non-private accommodations. 

However,  it was not implemented due to lack of hospital capacity particularly on information systems. 

The PIDS consultant believes GBP is a potential cost-containment mechanism that can be used to support the Department of Health’s Universal Health Care program, which aims to ensure that all Filipinos, especially the poor, receive the benefits of health reform.

Under the GBP scheme, government hospitals should submit their applications to be considered under the program with priority given to facilities that meet certain criteria, such as those with at least 90 percent bed capacity dedicated to non-private accommodations, centers of quality and referral hospitals, hospitals connected to e-claims facility, and local government unit  hospitals implementing province-wide programs to ensure high PhilHealth enrolment.

Unlike the CBP, GBP is a prospective payment mechanism in which hospitals will be given funds to cover future claims, thereby cutting administrative costs.  This also makes payment to providers more efficient as funds are provided in advance to avoid reimbursement delays.