IC wants hands off on HMOs

MANILA, Philippines — The health maintenance organization (HMO) sector may have to be passed around again as the Insurance Commission (IC) is seeking other agencies to handle the sector nearly 10 years after it was placed under its jurisdiction.

On the sidelines of the Pru Life UK Takaful launch late Monday night, IC commissioner Reynaldo Regaldo said the agency is working with Congress particularly Rep. Anthony Golez on how to go about the HMO sector.

Regalado said the IC is still having difficulties in handling the industry given its complexities unlike the overall insurance sector.

HMOs are entities legally organized to provide or arrange for the provision of pre-agreed or designated health care services to its enrolled members for a fixed pre-paid fee for a specified period of time.

“It’s not very clear on how we’re supposed to be handling them. It’s also unfair for the HMOs when they were placed under us because there are so many requirements that we ask of them because they are covered by the anti-money laundering rules,” Regalado told reporters.

“They are regulated entities and yet there’s no chance of money laundering in HMO products,” he said.

It was in November 2015 when then president Benigno Aquino III transferred the jurisdiction of HMOs from the Department of Health (DOH) to the IC.

At the time, the Aquino administration saw the need to streamline and consolidate functions related to the regulation of HMOs to eliminate redundancy, simplify the organizational structure, improve accessibility and accountability, provide efficient use of specialized expertise and realize savings in administrative costs.

Even after the transfer, all issues relating to medical matters including, but not limited to, practice of the medical profession, medical procedures and standards and health programs, policies, services, and facilities were still referred to the DOH.

“If I were to choose, I’m willing to let go as long as it will be transferred to a better agency,” Regalado said.

“For me, if there would be better people or a better organization to handle it, I’ll be more than happy to transition,” he said.

As such, Regalado noted that there is a need to get the wisdom of legislators and ensure that any move will be covered by law for a clearer mandate.

Regalado, however, cannot say which agency would be competent to handle the sector.

In a related development, the IC is still reviewing the plan of increasing the minimum paid-up capital of HMOs. Regalado said the original target of the end-2024 deadline will likely be delayed.

“It’s a moving target. We are still reviewing,” he said.

Last July, the IC issued a draft circular calling for an increase in the prevailing minimum paid-up capital requirement to P50 million for existing HMOs and P100 million for new ones by year-end.

Currently, existing domestic HMOs must have a minimum paid-up capital of at least P10 million.

A quick look at IC data showed that these eight firms include Wellcare Health Maintenance Inc. (P33 million), Asian Care Health Systems Inc. (25 million), IMS Wealth Care Inc. (P20.6 million), Carewell Health Systems Inc. (P17.5 million), Health Plan Philippines Inc. (P17 million) Dynamic Care Corp., MetroCare Health Systems Inc. and Optimum Medical and Health Care (P10 million each).

Among the HMOs, Medicard Philippines Inc. has the highest capital base at P3.45 billion followed by Maxicare Healthcare Corp. at P1.85 billion.

Based on the IC circular, the capital will be raised again to P100 million for existing and new HMOs by end-2025.

After that, further hikes will be done every three years which means that minimum paid-up capital should be P200 million by 2028, P350 million by 2031 and P500 million by 2034.

Community-based and cooperative HMOs will maintain a paid-up capital equivalent to 50 percent of what is prescribed for a regular HMO.

The HMO industry suffered an unprecedented net loss of P1.44 billion in 2022 and reeled from the continued increases in healthcare costs and utilization rates last year that resulted in P4.27 billion in losses.

The HMO industry is just starting to bounce back after it reverted to profitability in the January to June period, with net income reaching P636.6 million as against a net loss of P1.19 billion in the same period last year.

Total assets handled by HMOs went up by 12 percent to P69.27 billion while total invested assets inched up six percent to P21.31 billion. Liabilities, however, also increased by 13 percent to P58.32 billion.