11 PhilHealth2020 Part2B Observations and Recomm Non Financial

B.
NON-FINANCIAL
INTERIM REIMBURSEMENT MECHANISM (IRM)
CORONA VIRUS DISEASE 2019 (COVID-19)
13. The PhilHealth released funds in the total amount of P14.971 billion to
various Health Care Institutions (HCIs) nationwide under the IRM scheme
for services not yet rendered, contrary to the prohibition against advance
payments on government contracts under Section 88(1) of Presidential
Decree (PD) No. 1445.
13.1. Section 2 of PD No. 1445 provides that: “It is the declared policy of the
State, that all resources of the government shall be managed, expended,
or utilized in accordance with law and regulations and safeguarded
against loss or wastage through illegal or improper disposition, with a
view to ensuring efficiency, economy, and effectiveness in the operations
of government.” The same Section also provides that the responsibility to
ensure that such policy is faithfully adhered to rests directly with the chief
or head of the government agency concerned.
13.2. Likewise, Section 88(1) of the same PD provides for the prohibition
against advance payments on services not yet rendered or supplies and
materials not yet delivered, except with the prior approval of the President
of the Philippines. Specific provision reads as follows:
Except with the prior approval of the President (Prime

Minister) the government shall not be obliged to make an
advance payment for services not yet rendered or for
supplies and materials not yet delivered under any contract
therefor. No payment, partial or final, shall be made on any
such contract except upon a certification by the head of the
agency concerned to the effect that the services or supplies
and materials have been rendered or delivered in
accordance with the terms of the contract and have been
duly inspected and accepted.
13.3. The prohibition on advance payments on government contracts is

categorical and explicit as for transactions that are not compliant thereto
can be considered as illegal expenditures under Item 3.3 of COA Circular
No. 2012-003 dated October 29, 2012, which refers to cases of violations
of laws in the use of government funds and property.
13.4. In its efforts to help the government in containing the unprecedented

impact of the crisis brought about by the COVID-19 pandemic, PhilHealth,
through its Board Resolution No. 2496, s. 2020, issued PhilHealth Circular
No. 2020-0007 dated March 20, 2020, granting IRM funds in the context
of advance payments for the provision of substantial aid to
eligible/qualified HCIs directly hit by the fortuitous event (COVID-19), with
clear and apparent intent to continuously operate and/or rebuild the HCI
to provide continuous health care services to adversely affected Filipinos.
135
13.5. For those eligible/qualified HCIs, contracts, in the form of a Memorandum
of Agreement (MOA), were executed, allowing the releases of IRM funds
to these HCIs. The said IRM funds are to be applied against the valid
claims of IRM-recipient HCIs from PhilHealth, which justify the IRM funds'
nature as advance payments for future services yet to be rendered by the
HCIs. As of December 31, 2020, PhilHealth released IRM funds to eligible
HCIs nationwide in the total amount of P14.971 billion. Out of the said
amount, P7.680 billion or 51.30 per cent was granted to private HCIs,
while P7.291 billion or 48.70 per cent was released to government HCIs,
as summarized in Table 26.
Table 26 – Summary of IRM Fund Releases to HCIs
No. of HCIs IRM Funds Released

PRO Private Government Total Private Government Total
CAR 16 3 19 P 185,083,477 P 299,054,392 P 484,137,869
I 29 20 49 305,407,653 477,069,264 782,476,917
II 9 4 13 124,307,653 214,257,213 338,564,866
III-A 25 17 42 473,268,494 606,119,630 1,079,388,124
III-B 44 19 63 568,701,769 308,298,953 877,000,722
IV-A 62 27 89 1,042,780,045 205,268,460 1,248,048,505
IV-B 25 16 41 478,032,241 212,043,259 690,075,500
NCR-C 60 21 81 979,285,432 950,967,010 1,930,252,442
NCR-N 35 7 42 662,091,653 718,893,844 1,380,985,497
NCR-S 28 11 39 786,441,022 255,731,588 1,042,172,610
V 40 21 61 276,184,976 448,431,550 724,616,526
VI - 1 1 - 121,372,688 121,372,688
VII 30 20 50 554,650,910 547,173,132 1,101,824,042
VIII 32 4 36 178,110,409 327,423,792 505,534,201
IX 13 - 13 170,642,279 208,111,668 378,753,947
X 15 3 18 265,063,859 472,760,784 737,824,643
XI 23 5 28 275,184,992 615,055,867 890,240,859
XII 13 4 17 297,337,684 186,230,150 483,567,834
BARMM 2 - 2 - 84,524,850 84,524,850
CARAGA 4 3 7 57,630,920 31,856,529 89,487,449
Total 505 206 711 P7,680,205,468 P7,290,644,623 P14,970,850,091
13.6. PhilHealth has been consistent in its stance that funds released to various
HCIs under the IRM scheme are considered cash advances/advance
payments. PhilHealth, thru its then President and Chief Executive Officer
(PCEO), even issued an official statement on May 27, 2020, categorically
stating that “IRM is an emergency cash advance measure applied by
PhilHealth to provide hospitals with an emergency to respond to
unanticipated events like natural disasters and calamities.”
13.7. However, the Audit Team opined that while PhilHealth intended for an
unhampered delivery of healthcare services which is in line with its
mandate as the State’s health insurer, IRM funds released as advance
payments to HCIs for services not yet rendered are prohibited, except
with the prior approval of the President of the Philippines, as provided
under Section 88(1) of PD No. 1445.
136
13.8. In Audit Query Memorandum (AQM) No. 21-002 HO dated February 10,
2021, the Audit Team sought clarification from Management as to the
nature of the release of funds by the PhilHealth HO to HCIs under the
IRM through its submission of all applicable legal bases, e.g., enacted
laws, approval from the Office of the President, authorizing the advance
payments made to various HCIs. PhilHealth, in its response dated
February 18, 2021, claimed that IRM fund releases have legal bases and
posited the following arguments:
a. The IRM fund releases are with the legal contemplation of "other
provider payment mechanism" allowed under Republic Act (RA) No.
7875, as amended by RA No. 10606, and "prospective payment"
and "prepayment" provisions of the Universal Health Care (UHC)
Act and its Implementing Rules and Regulations (IRR); hence, PD
No. 1445 prohibition on advance payment should not apply.
b. The IRR of the UHC Act allows "other appropriate mechanisms”.
c. The Health Care Providers (HCPs) have pending claims for

reimbursement with PhilHealth at the time of IRM releases to them,
hence IRM cannot be completely considered as advance payment.
d. The prohibition on advance payment is not absolute as there are

recognized exceptions.
13.9. Nonetheless, the Audit Team is not convinced that PhilHealth has legal
bases in the implementation of the IRM scheme or is exempted from the
proscription against advance payments. Nowhere in the submitted
information on PhilHealth's legal bases could the Team find express
provisions that PhilHealth is allowed to make advance payments for
services not yet rendered. While the Team recognizes PhilHealth's
authority to adopt other prospective payments in the scheme of IRM,
which is considered an advance payment, if it chooses such, the same
should be consistent with existing laws, rules and regulations. One of
which is the prohibition against advance payments on government
contracts as provided under Section 88(1) of PD No. 1445.
13.10. Considering the enormous sum of P14.971 billion of funds released by

PhilHealth to the HCIs through the IRM scheme, it could have at least
exercised the required diligence of a good father of a family to check
whether or not advance payments can be made without any legal
impediment or requirement to be met. At the very least, 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 that greatly affected the health
care services sector.
13.11. Thus, absence of proof showing that IRM fund releases have legal bases
or prior approval of the President of the Philippines justifying exemption
from the prohibition against advance payments, the disbursements made
137
under the IRM scheme were without legal authority and could be
considered illegal expenditures as defined under Item 3.3 of COA Circular
No. 2012-003 dated October 29, 2012.
13.12. We recommended that top Management:
a. Submit specific statutory authority or prior approval from the

Office of the President, authorizing the advance payments
made through the IRM to various HCIs nationwide; and
b. Henceforth, ensure strict compliance with Section 88(1) of PD

No. 1445 on the prohibition against advance payments for
subsequent IRM fund releases, if necessary.
13.13. PhilHealth Management claimed that the IRM implementation had already
been suspended and 95 per cent of the IRM funds have been liquidated
by the HCIs. Management also furnished the Audit Team a copy of its
letter requesting from the Office of the President the required post-facto
approval of the advance payments amounting to P14.971 billion.
13.14. As a rejoinder, the Audit Team took note of the formal request for post-
facto approval submitted by PhilHealth Management to the Office of the
President. However, it is requested that the Audit Team be provided a
copy of the approval thereof.
14. Seven hundred eleven (711) MOAs together with their respective
supporting documents, relative to the grant of IRM funds in the total
amount of P14.971 billion by the PhilHealth HO and PROs to HCIs, were
not submitted to the Office of the Auditor within five (5) days from the
execution thereof, contrary to Item 3.1.1 of COA Circular No. 2009-001
dated February 12, 2009, thus, precluded the Audit Teams from timely,
systematic and effective evaluation of the reasonableness of the terms and
conditions stipulated in the MOAs and communicating the results thereof
to Management for appropriate action.
14.1. Item 3.1.1 of COA Circular No. 2009-001 dated February 12, 2009,
provides that:
Within five (5) working days from the execution of a contract

by the government or any of its subdivisions, agencies or
instrumentalities, including government-owned and
controlled corporations and their subsidiaries, a copy of said
contract and each of all the documents forming part thereof
by reference or incorporation shall be furnished to the
Auditor of the agency concerned. In case of agencies
audited on an engagement basis, submission of a copy of
the contract and its supporting documents shall be to the
Auditor of the mother agency or parent company, as the
case may be.
138
14.2. Likewise, Item 4.1 of the same COA Circular provides that:
Any unjustified failure of the officials and employees

concerned to comply with the requirements herein imposed
shall be subject to the administrative disciplinary action
provided in (a) Section 127 of Presidential Decree No. 1445;
(b) Section 55, Title I-B, Book V of the Revised
Administrative Code of 1987; and (c) Section 11 of Republic
Act No. 6713.
14.3. On January 30, 2020, PhilHealth’s Board of Directors (BOD) issued

PhilHealth Board Resolution (PBR) No. 2496, s. 2020, approving the
inclusion of IRM among the special privileges that may be conferred
during fortuitous events and emergencies. Through the said PBR,
PhilHealth Circular No. 2020-0007 was issued on March 20, 2020,
prescribing the guidelines on the provisions of special privileges to those
affected by a fortuitous event. With the unprecedented crisis brought
about by the COVID-19 pandemic, the BOD subsequently issued PBR
No. 2515, s. 2020 on March 31, 2020, ratifying the implementation of IRM
nationwide for the COVID-19 pandemic. Under the context of IRM, the
COVID-19 pandemic is considered a fortuitous event.
14.4. During the CY 2020, PhilHealth granted/approved various applications for

the IRM fund of eligible/qualified HCIs. For every approved application, a
MOA is executed between the PhilHealth and the applicant HCI, thereby
authorizing the release of IRM fund.
14.5. Records showed that as of December 31, 2020, 711 applications from
various HCIs were processed and approved, and consequently, the
releases of IRM funds pertaining thereto had already been made in the
total amount of P14.971 billion. However, the Audit Teams in PhilHealth
HO and in the PROs observed that the subject MOAs were not submitted
to the Office of the Auditor within five (5) working days from the execution
thereof, contrary to Item 3.1.1 of COA Circular No. 2009-001 dated
February 12, 2009.
14.6. The Audit Teams recognized the difficulty in complying with the five
working-day reglementary period as personnel movements were limited
during the lockdown or during the ECQ and Modified ECQ (MECQ) with
strict quarantine protocols, which lasted until June 1, 2020 in the NCR.
However, for example in the NCR, even if the Teams allowed the
relaxation of the period and considered the submission of the MOAs and
their supporting documents within five (5) working days from June 1,
2020, the start of the less strict General Community Quarantine (GCQ),
PhilHealth still was unable to submit the same.
14.7. Using the dates of transmittal to the Audit Teams of the Disbursement
Vouchers (DVs) as reckoning dates, records showed that in PhilHealth
HO and PRO CARAGA alone, the submission of MOAs and their
139
supporting documents to the Office of the Auditor was delayed, ranging
from 29 to 125 days. Interview with the Comptrollership Department
(ComDep) personnel revealed that all the copies of MOAs processed in
the HO and in their respective PROs were only endorsed to them for the
preparation of DVs. Thus, the MOAs and their supporting documents
were only provided to the Audit Teams as attachments to the DVs from
August 18 to December 31, 2020.
14.8. The non-submission of the MOAs and their supporting documents within
five (5) working days from execution thereof is contrary to Item 3.1.1 of
COA Circular No. 2009-001 dated February 12, 2009. As a result, the
Audit Teams were precluded from the systematic and effective review of
the MOAs that could have generated timely and relevant results and
immediately communicated to Management for appropriate action.
14.9. We recommended that top Management require the concerned

Department to submit written justification as to why the MOAs for
the grant of IRM funds and their supporting documents were not
submitted to the Office of the Auditor within the prescribed period or
at least the start of the implementation of the GCQ on June 1, 2020.
14.10. In its reply, Management explained that PhilHealth has been confronted
by various situations/events in CY 2020 that impeded the submission of
the MOAs and their supporting documents within the five (5) working-day
reglementary period, such as, the lockdown and limited workforce during
the pandemic, senate and congressional hearings and various requests
from other government agencies for documents/reports needed in the
investigations on alleged PhilHealth anomalies. Further, Management
already issued Financial Management Sector (FMSr) Memo No. 2021-008
dated March 24, 2021 to PROs requiring the submission of copies of the
subject MOAs.
14.11. During the Exit Conference, we further recommended and top

Management agreed to strictly comply with the provisions of COA
Circular No. 2009-001 dated February 12, 2009, prescribing the
submission of copies of contracts and all the documents forming
part thereof, to facilitate timely review and communicating the
results to Management for appropriate action.
15. PhilHealth released IRM funds amounting to P7.642 billion or 51.04 per cent
of the total releases of P14.971 billion to 503 HCIs for COVID-19 without
deducting/applying the corresponding two per cent (2%) creditable income
tax upon release of the IRM funds, contrary to Bureau of Internal Revenue
(BIR) Revenue Regulation (RR) No. 2-98 dated April 17, 1998, as amended
by RR No. 11-2018 dated January 31, 2018, Revenue Memorandum Circular
(RMC) No. 16-2013 dated February 8, 2013, and pertinent provisions of RA
No. 8424, otherwise known as the National Internal Revenue Code (NIRC),
as amended by RA No. 10963; thus, PhilHealth did not fully comply with
relevant tax laws, rules and regulations. Likewise, the subsequent
remittance of required creditable income taxes of P156.739 million to BIR
140
by PhilHealth HO on the grossed-up total IRM fund releases, resulted in:
(a) excess of IRM funds for COVID-19 by the same amount released to 505
private HCIs nationwide, contrary to PhilHealth Circular No. 2020-0007
dated March 20, 2020; and (b) over-remittance to the BIR amounting
P10.062 million, contrary to RR No. 2-98, as amended by RR No. 11-2018.
The resulting excess IRM funds releases and over-remittance could be
considered irregular expenditures as defined under Item 3.1 of COA
Circular No. 2012-003 dated October 29, 2012.
15.1. Based on PhilHealth Update No. 1 dated September 28, 2020, PhilHealth
had released a total of P14.971 billion IRM funds to 711 HCIs nationwide
to help augment their liquidity needs as they prepare for the surge of
COVID-19 patients, while ensuring that the healthcare needs of the other
patients indirectly affected by the pandemic will continue to be taken care
of. Details of the total releases by PhilHealth, summarized per PRO are
presented in Table 26.
15.2. The amount received by an HCI under the IRM is supposed to be

"liquidated" or, more appropriately, applied against the benefit claims from
PhilHealth of the HCI concerned. As stipulated in PhilHealth Circular No.
2020-0007, specifically Part V.G.10.f, the following are the guidelines for
the deduction of reimbursement for all valid claims from the IRM fund:
f.1 Claims filed by the IRM HCI shall be processed

following the applicable policies and guidelines on
claims reimbursement.
f.2 All reimbursements for valid claims filed from the

occurrence of an event onwards by the IRM HCI shall
be deducted from the IRM fund until such time that the
IRM fund has been fully liquidated; xxx.
15.3. For taxation purposes, IRM funds released by PhilHealth HO and PROs
to private HCIs in the total amount of P7.642 billion, as shown in Table 27,
are subject to two per cent (2%) creditable income tax. The MMGHM
Cooperative and ASMH Cooperative were issued by the BIR with
Certificate of Tax Exemption by virtue of RA No. 9520 dated February 17,
2019, entitled the Philippine Cooperative Code of 2008, thus the IRM
funds released to these HCIs are not subject to creditable income tax.
Table 27 – Taxable IRM funds Released to Private HCIs
Particulars Amount
Total IRM funds released to 505 Private HCIs P7,680,205,470
Less: IRM funds released to HCIs with Certificate of Tax Exemption
MMGHM Cooperative 20,070,000
ASMH Cooperative 18,519,918
Net Taxable IRM funds (503 Private HCIs) P7,641,615,552
141
15.4. However, the Audit Teams noted that the said IRM fund releases to
private HCIs were not subjected to deduction/withholding of the
corresponding creditable income taxes, which is contrary to pertinent
provisions of NIRC, as amended, and existing BIR rules and regulations.
15.5. The non-withholding of the required creditable income taxes upon release
of IRM funds to private HCIs is inconsistent with the express provisions of
RR No. 2-98, as amended by RR No. 2018-011 dated January 31, 2018,
particularly Sections 2.57.2(J), 2.57.3 and 2.57.4, and RMC No. 16-2013
dated February 8, 2013.
15.6. Sections 2.57.2(J), 2.57.3 and 2.57.4 of RR No. 2-98, as amended by RR

No. 2018-011, read as follows:
Section 2.57.2. Income Payments Subject to Creditable

Withholding Tax and Rates Prescribed Thereon.
(J) Income Payments made by a government office, national

or local, including barangays, or their attached agencies or
bodies, and government-owned or controlled corporations to
its local/resident supplier of goods/services, other than those
covered by other rates of withholding tax. [formerly under
letter (N)] – Income payments, except any single purchase
which is P10,000 and below, which are made by a
government office, national or local, including barangays, or
their attached agencies or bodies, and government-owned or
controlled corporations, on their purchases of goods and
purchases of services from local/resident suppliers: Supplier
of goods – One percent (1%) Supplier of services – Two
percent (2%). A government-owned or controlled corporation
shall withhold the tax in its capacity as a government-owned
or controlled corporation rather than as a corporation stated
in Subsection (I) hereof.
Section 2.57.3. Persons Required to Deduct and Withhold.

— The following persons are hereby constituted as
withholding agents for purposes of the creditable tax required
to be withheld on income payments enumerated in Section
2.57.2:
Xxxx
(C) All government offices including government-owned or

controlled corporations, as well as provincial, city and
municipal governments.
Section 2.57.4. Time of Withholding. — The obligation of the

payor to deduct and withhold the tax under Section 2.57 of
these regulations arises at the time an income is paid or
payable, whichever comes first, the term "payable" refers to
142
the date the obligation become due, demandable or legally
enforceable xxx
15.7. On the other hand, RMC No. 16-2013, which prescribes the guidelines on
the accounting and recording as well as the tax implications on advance
payments, also states that:
All Client/Customer shall, upon payment of deposits/

advances, withhold tax at the rate prescribed in Revenue
Regulation No. (RR) 2-98, as amended, which shall be
remitted/paid on or before the 10th day of the following month
using the Monthly Remittance Return of Creditable Income
Taxes Withheld (Expanded) [BIR Form No. 1610E] except
for taxes withheld for the month of December of each year,
which shall be filed on or before January 15 of the following
year pursuant to RR 2-98, as amended xxx.
15.8. Moreover, perusal of the provisions of the relevant PhilHealth issuances,

as well as the pro-forma MOA, required in PhilHealth Circular No. 2020-
0007, revealed that there was neither a provision regarding repayment or
return to PhilHealth by the HCIs of the excess IRM fund, nor that the fund
released was either a loan or a deposit that essentially must be returned
at a specified time. The issued PhilHealth Circular and MOA merely
discussed the provisions on special privileges, including the procedures in
the IRM's availment, computation of the IRM fund, deduction of
reimbursement for valid claims, and request for the additional fund.
15.9. The IRM funds are to be applied against the valid claims of IRM-recipient
HCI, hence said funds are considered advance payments for future
services yet to be rendered by the HCIs. Accordingly, obligation arises on
PhilHealth's part to deduct and withhold taxes on the IRM funds released
to private HCIs.
15.10. The non-withholding of the required creditable income taxes of two

per cent (2%) on the IRM funds released by PhilHealth to private HCIs
resulted in the non-remittance of the said total amount due within the time
prescribed by BIR RR No. 2-98, as amended, particularly in Section
2.58(A) thereof, which provides that:
Section 2.58. Returns and Payment of Taxes Withheld at

Source.
(A) Manner, Venue and Time of Filing of Withholding Tax

Returns and Payment of Taxes Withheld at Source -
Taxpayers mandated to electronically file and pay shall use
the BIR’s electronic system, xxx and payment of the taxes
withheld at source shall be made not later than the last day
of the month following the close of the quarter during which
the withholding was made.
143
Xxx withholding agents shall file BIR Monthly Remittance
Form (BIR Form No. 0619E and/or 0619F) every tenth (10th)
day of the following month when the withholding is made,
regardless of the amount withheld. For withholding agents
using EFPS Facility, the due date is on the fifteen (15 th) day
of the following month xxx.
15.11. It was also noted that to rectify the non-withholding of tax, PhilHealth
made a late remittance to the BIR of P156.739 million representing
creditable income taxes for the released IRM funds to private HCIs
nationwide in the total amount of P7.680 billion on August 3, 2020, as per
DV No. 2020-07-9082 dated July 30, 2020. A journal entry was drawn to
recognize a receivable to HCI by debiting Other Receivables–Others-
Interim Reimbursement Mechanism account, which was later on
reclassified to Due from PROs - Private account for the transfer of
recognition and monitoring of the said receivable from private HCIs on
remitted taxes due on IRM fund releases for COVID-19.
15.12. Further verification of IRM fund releases for COVID-19 to private HCIs
disclosed that a total of 182 days had elapsed before the remittance of
creditable income taxes imposed on IRM releases on August 3, 2020, as
shown in Table 28, which is a clear violation of the BIR RR No. 2-98.
Table 28 – Computation of Number of Days Delayed on the Remittance to BIR of

Creditable Income Tax on IRM Fund Releases to Private HCIs
Month of Amount Amount Total IRM Creditable

Release of Released by Released by Releases to Income Tax Deadline of Date Days
IRM Funds PROs HO Private HCIs paid by HO Remittance1 Remitted Delayed
Mar-20 P 797,152,099 P - P 797,152,099 P 16,268,410 06/14/2020 08/03/2020 50
Apr-20 5,212,496,435 - 5,212,496,435 106,377,478 05/15/2020 08/03/2020 80
May-20 905,590,568 389,481,660 1,295,072,228 26,430,045 06/15/2020 08/03/2020 49
Jun-20 - 322,081,834 322,081,834 6,573,099 07/31/2020 08/03/2020 3
Jul-20 - 53,402,874 53,402,874 1,089,855 08/15/2020 08/03/2020 -
Total P6,915,239,102 P764,966,368 P7,680,205,470 P156,738,887 182
15.13. It is worth mentioning that failure to withhold the appropriate income taxes
and/or to make timely remittance thereof would expose the officers of
PhilHealth charged with the duty to deduct, withhold and remit the
required taxes to possible prosecution and imposition of penalties, interest
1
For the quarter ending March 2020, Remittance of Creditable Income Tax (expanded) was extended until June 14, 2020 per BIR
RR No. 11-2020 dated April 29, 2020
144
and criminal liabilities pursuant to Sections 248 2, 2493, 2514, 2555, 2566,
2727 and 2758 of the NIRC, as amplified under RMC No. 23-2012 dated
February 14, 2012.
15.14. However, subsequent remittance of P156.739 million was made by
PhilHealth HO on the grossed-up amount of IRM funds released to private
HCIs. Accordingly, the remittance was made to remedy for the supposed
taxes that PhilHealth should have withheld and remitted at the onset. The
computation of PhilHealth of creditable income tax remittance is
presented below with summaries per PRO shown in Table 29.
IRM Funds Released to Private HCIs (505 HCIs) P7,680,205,470

2
“SEC. 248. Civil Penalties. -
(A) There shall be imposed, in addition to the tax required to be paid, a penalty equivalent to twenty-five percent (25%) of the
amount due, in the following cases:
(1) Failure to file any return and pay the tax due thereon as required under the provisions of this Code or rules and regulations on
the date prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a return with an internal revenue officer other than those with whom the
return is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on any return required to be filed under the provisions of this Code or
rules and regulations, or the full amount of tax due for which no return is required to be filed, on or before the date prescribed for its
payment.
(B) In case of willful neglect to file the return within the period prescribed by this Code or by rules and regulations, or in case a false
or fraudulent return is willfully made, the penalty to be imposed shall be fifty percent (50%) of the tax or of the deficiency tax, in
case, any payment has been made on the basis of such return before the discovery of the falsity or fraud: Provided, That a
substantial under-declaration of taxable sales, receipts or income, or a substantial overstatement of deductions, as determined by
the Commissioner pursuant to the rules and regulations to be promulgated by the Secretary of Finance, shall constitute prima facie
evidence of a false or fraudulent return: Provided, further, That failure to report sales, receipts or income in an amount exceeding
thirty percent (30%) of that declared per return, and a claim of deductions in an amount exceeding (30%) of actual deductions, shall
render the taxpayer liable for substantial under-declaration of sales, receipts or income or for overstatement of deductions, as
mentioned herein.”
3
“SEC. 249. Interest-
(A) In General. - There shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the legal interest
for loans or forbearance of any money in the absence of an express stipulation as set by the Bangko Sentral ng Pilipinas from date
prescribed for payment until the amount is fully paid: Provided, That in no case shall the deficiency and delinquency interest
prescribed under Sections (B) and (C) hereof, be imposed simultaneously.
(B) Deficiency Interest. - Any deficiency in the tax due, as the term is defined in this Code, shall be subject to the interest prescribed
in Subsection (A) hereof, which interest shall be assessed and collected from the date prescribed for its payment until the full
payment thereof, or upon issuance of a notice and demand by the Commissioner of Internal Revenue, whichever comes earlier.
(C) Delinquency Interest. - In case of failure to pay:
(1) The amount of the tax due on any return to be filed, or
(2) The amount of the tax due for which no return is required, or
(3) A deficiency tax, or any surcharge or interest thereon on the due date appearing in the notice and demand of the Commissioner,
there shall be assessed and collected on the unpaid amount, interest at the rate prescribed in Subsection (A) hereof until the
amount is fully paid, which interest shall form part of the tax.
(D) Interest on Extended Payment. - If any person required to pay the tax is qualified and elects to pay the tax on installment under
the provisions of this Code, but fails to pay the tax or any installment hereof, or any part of such amount or installment on or before
the date prescribed for its payment, or where the Commissioner has authorized an extension of time within which to pay a tax or a
deficiency tax or any part thereof, there shall be assessed and collected interest at the rate hereinabove prescribed on the tax or
deficiency tax or any part thereof unpaid from the date of notice and demand until it is paid.
4
“SEC. 251. Failure of a Withholding Agent to Collect and Remit Tax. - Any person required to withhold, account for, and remit any
tax imposed by this Code or who willfully fails to withhold such tax, or account for and remit such tax, or aids or abets in any manner
to evade any such tax or the payment thereof, shall, in addition to other penalties provided for under this Chapter, be liable upon
conviction to a penalty equal to the total amount of the tax not withheld, or not accounted for and remitted.”
5
“SEC. 255. Failure to File Return, Supply Correct and Accurate Information, Pay Tax Withhold and Remit Tax and Refund Excess
Taxes Withheld on Compensation. - Any person required under this Code or by rules and regulations promulgated thereunder
to pay any tax make a return, keep any record, or supply correct the accurate information, who willfully fails to pay such tax, make
such return, keep such record, or supply correct and accurate information, or withhold or remit taxes withheld, or refund excess
taxes withheld on compensation, at the time or times required by law or rules and regulations shall, in addition to other penalties
145
Grossed-up IRM Funds Released to Private HCIs 7,836,944,357
Multiply: 2% Creditable Income Tax Rate 2%
Total Creditable Income Tax Remitted by PhilHealth HO P156,738,887
Table 29 – Schedule of Tax Remittance on IRM Fund Releases to Private HCIs
PRO Amount Released to HCIs Grossed-up Amount Tax

CAR P 185,083,477 P 188,860,691 P 3,777,214
CARAGA 57,630,920 58,807,061 1,176,141
I 305,407,653 311,640,462 6,232,809
II 124,307,653 126,844,544 2,536,891
III-A 473,268,494 482,927,035 9,658,541
III-B 568,701,769 580,307,927 11,606,158
IV-A 1,042,780,045 1,064,061,270 21,281,225
IV-B 478,032,241 487,788,001 9,755,760
NCR-C 979,285,432 999,270,849 19,985,417
NCR-N 662,091,652 675,603,727 13,512,075
NCR-S 786,441,022 802,490,838 16,049,816
IX 170,642,279 174,124,774 3,482,495
provided by law, upon conviction thereof, be punished by a fine of not less than Ten thousand pesos (P10,000) and suffer
imprisonment of not less than one (1) year but not more than ten (10) years.
Any person who attempts to make it appear for any reason that he or another has in fact filed a return or statement, or actually files
a return or statement and subsequently withdraws the same return or statement after securing the official receiving seal or stamp of
receipt of internal revenue office wherein the same was actually filed shall, upon conviction therefore, be punished by a fine of not
less than Ten thousand pesos (P10,000) but not more than Twenty thousand pesos (P20,000) and suffer imprisonment of not less
than one (1) year but not more than three (3) years.”
6
“SEC. 256. Penal Liability of Corporations. - Any corporation, association or general co-partnership liable for any of the acts or
omissions penalized under this Code, in addition to the penalties imposed herein upon the responsible corporate officers, partners,
or employees shall, upon conviction for each act or omission, be punished by a fine of not less than Fifty thousand pesos (P50,000)
but not more than One hundred thousand pesos (P100,000)”
7
SEC. 272. Violation of Withholding Tax Provision. - Every officer or employee of the Government of the Republic of the Philippines
or any of its agencies and instrumentalities, its political subdivisions, as well as government-owned or-controlled corporations,
including the Bangko Sentral ng Pilipinas (BSP), who, under the provisions of this Code or rules and regulations promulgated
thereunder, is charged with the duty to deduct and withhold any internal revenue tax and to remit the same in accordance with the
provisions of this Code and other laws is guilty of any offense herein below specified shall, upon conviction for each act or omission
be punished by a fine of not less than Five thousand pesos (P5,000) but not more than Fifty thousand pesos (P50,000) or suffer
imprisonment of not less than six (6) months and one (1) day but not more than two (2) years, or both:
(a) Failing or causing the failure to deduct and withhold any internal revenue tax under any of the withholding tax laws and
implementing rules and regulations;
(b) Failing or causing the failure to remit taxes deducted and withheld within the time prescribed by law, and implementing rules and
regulations; and
(c) Failing or causing the failure to file return or statement within the time prescribed, or rendering or furnishing a false or fraudulent
return or statement required under the withholding tax laws and rules and regulations
8
SEC. 275. Violation of Other Provisions of this Code or Rules and Regulations in General. - Any person who violates any
provision of this Code or any rule or regulation promulgated by the Department of Finance, for which no specific penalty is provided
by law, shall, upon conviction for each act or omission, be punished by a fine of not more than One thousand pesos (P1,000) or
suffer imprisonment of not more than six (6) months, or both.
146
PRO Amount Released to HCIs Grossed-up Amount Tax
V 276,184,977 281,821,405 5,636,428
VII 554,650,910 565,970,317 11,319,407
VIII 178,110,410 181,745,317 3,634,907
X 265,063,860 270,473,327 5,409,467
XI 275,184,992 280,801,012 5,616,020
XII 297,337,684 303,405,800 6,068,116
Grand Total P7,680,205,470 P7,836,944,357 P156,738,887
15.15. Based on Table 29, the remittance of P156.739 million representing two
per cent (2%) creditable income tax on grossed-up IRM fund releases
automatically exceeded by the same amount the allowable IRM fund limit
to every private IRM recipient-HCI, computed pursuant to Item V.G.10.c 9
of PhilHealth Circular No. 2020-0007.
15.16. Further, it was noted that the said remittance to BIR included the
creditable income taxes applied to grossed-up IRM fund released to two
(2) tax exempt private HCIs namely, the MMGMH Cooperative and ASMH
Cooperative amounting to P0.377 million [P18.897 million x 2%] and
P0.409 million [P20.479 million x 2%], respectively, contrary to Article 60
of RA No. 9520, which states that:
Tax Treatment of Cooperative - Duly registered cooperatives

under this Code which do not transact any business with
nonmembers or the general public shall not be subject to any
taxes and fees imposed under the internal revenue laws and
other tax laws.
15.17. Moreover, apart from said remittance made by PhilHealth HO, the PROs
I, II and XII made remittances to BIR totaling P6.155 million as shown in
Table 30 representing two per cent (2%) creditable income tax applied to
the liquidations of IRM fund releases.
Table 30 – Creditable Income Tax Remittance of PROs
PRO Tax Remitted by PROs

I P3,411,549
II 1,754,416
XII 989,120
Total P6,155,085
15.18. Correspondingly, the grossing up of IRM fund releases as basis of

computing the required withholding tax, the imposition of creditable
income tax to tax exempt HCIs, and the remittance of taxes applied on the
liquidation of IRM funds released by PROs I, II, and XII resulted in over-
9
“c. Computation of the IRM Fund.
The following formula shall be used in the computation of the IRM fund:
IRM Fund= Average Reimbursement Per Day (ARPD)* X No. of days covered**
* Average Reimbursement Per Day (ARPD) = Total amount of paid claims for admissions in the fiscal year before the adverse
event, to be divided by 365 days
** Number of days covered shall be 90 days from date of event.”
147
remittance to BIR amounting to P10.062 million, shown in Table 31 (next
page).
15.19. Therefore, the resulting excess IRM fund releases of P156.739 million as
well as over-remittance to BIR of P10.062 million, can be considered
irregular expenditures as defined in Item 3.1 of COA Circular No. 2012-
003 dated October 29, 2012, to wit:
Xxx an expenditure incurred without adhering to established

rules, regulations, procedural guidelines, policies, principles
or practices that have gained recognition in laws. Irregular
expenditures are incurred if funds are disbursed without
conforming with prescribed usages and rules of discipline.
There is no observance of an established pattern, course,
mode of action, behavior, or conduct in the incurrence of an
irregular expenditure. A transaction conducted in a manner
that deviates or departs from, or which does not comply with
standards set is deemed irregular. A transaction which fails
to follow or violate appropriate rules of procedures is
likewise, irregular.
Table 31 – Over-Remittance of 2% Creditable Income Tax to BIR on

IRM Funds Released to Private HCIs
Total IRM Fund Tax remitted Total tax Should be tax

Releases to Private based on Tax remitted remittance on based on IRM Over-
PRO HCIs grossed up IRM by PROs IRM funds fund releases Remittance
NCR P2,427,818,106 P 49,547,308 P - P 49,547,308 P 48,556,362 P 990,946
CAR 185,083,477 3,777,214 - 3,777,214 3,701,670 75,544
I 305,407,653 6,232,809 3,411,549 9,644,358 6,108,153 3,536,205
II 124,307,653 2,536,891 1,754,416 4,291,307 2,486,153 1,805,154
III-A 473,268,494 9,658,541 - 9,658,541 9,465,370 193,171
III-B 568,701,769 11,606,158 - 11,606,158 11,374,035 232,123
IV-A 1,042,780,045 21,281,225 - 21,281,225 20,855,601 425,624
IV-B 478,032,241 9,755,760 - 9,755,760 9,190,246 565,514
IX 170,642,279 3,482,495 - 3,482,495 3,412,846 69,649
V 276,184,977 5,636,428 - 5,636,428 5,523,700 112,728
VII 554,650,910 11,319,407 - 11,319,407 11,093,018 226,389
VIII 178,110,410 3,634,907 - 3,634,907 3,562,208 72,699
X 265,063,860 5,409,467 - 5,409,467 5,301,277 108,190
XI 275,184,992 5,616,020 - 5,616,020 5,503,700 112,320
XII 297,337,684 6,068,116 989,120 7,057,236 5,946,754 1,110,482
CARAGA 57,630,920 1,176,141 - 1,176,141 751,218 424,923
Grand Total P7,680,205,470 P156,738,887 P6,155,085 P162,893,972 P152,832,311 P10,061,661
15.20. We recommended that top Management direct the concerned

Department/s to:
a. Submit written justifications on: (i) inability to withhold taxes

on IRM funds released to private HCIs and remit the same
within the prescribed period, contrary to the provisions of BIR
RR No. 2-98, as amended by RR No. 11-2018 and RMC No. 16-
2013; (ii) withholding and remittance of taxes to tax exempt
HCIs; and (iii) over-remittance of taxes to the BIR;
148
b. Provide basis of grossing up the IRM fund releases in the
computation of the two per cent (2%) creditable income tax;
and
c. Henceforth, strictly comply with BIR RR No. 2-98, as amended

by RR No. 11-2018, and RMC No. 16-2013, to avoid the
imposition of fines and penalties by the BIR and to ensure that
IRM fund releases to HCIs should not exceed the established
allowable fund limits.
15.21. During the Exit Conference on March 11, 2021, PhilHealth Management
admitted that it was not able to withhold the required two per cent (2%)
creditable income tax for the IRM funds released to private HCIs.
Accordingly, the basis of grossing up the IRM fund releases for the
computation of two per cent (2%) creditable income tax was on the
presumption that the released IRM funds to private HCIs were supposed
to be net of tax. To resolve the erroneous remittance to the BIR,
PhilHealth Management issued a Memorandum directing the PROs to
recoup the said remittance to the concerned HCIs. It also informed during
the Exit that the PROs already issued a Memorandum to the private HCIs
on the recoupment of the said creditable income taxes with option of
deduction to future claims or payment directly by cash. As of June 11,
2021, PhilHealth was able to recoup a total of P137.502 million of the total
tax under consideration.
15.22. As rejoinders, the Audit Team recognized the actions taken by

Management as regards the recoupment of the remittances to the BIR.
However, it is to be emphasized that the recoupment from the HCIs
should be limited only to P152,832,311 [P7,641,615,552 (Table 27) x 2%].
Thus, it is further recommended that Management consider applying
for a tax credit from the BIR for the over-remittance of P10,061,661, if
warranted. The Audit Team also suggested to provide a timeline on the
recoupment of the remaining creditable income tax due from the HCIs,
otherwise a Notice of Disallowance (ND) shall be issued accordingly.
Further, the Audit Team emphasized the possibility of the imposition of
interest, penalties and surcharges by the BIR due to the late remittance of
the required taxes to the Bureau.
16. IRM funds amounting to P10.020 billion or 66.93% of the total releases of
P14.971 billion were released to 515 HCIs by the PhilHealth HO and PROs
NCR & Rizal, I, IV-A, IV-B, V, XI, XII, and CARAGA despite lacking of
supporting documents, thus, the validity and propriety of the IRM fund
releases could not be established and contrary to Item V of PhilHealth
Circular No. 2020-0007, Item IV of PhilHealth Corporate Order (PCO) No.
2020-0033 and Section 4(6) of PD No. 1445.
16.1. Based on Items V.B and V.C of PhilHealth Circular No. 2020-0007, the
documentary requirements for the availment of IRM funds are as follows:
149
a. Letter of Intent (LOI) signed by Medical Director/Head of Hospital or
authorized representative;
b. Post-validation Report, containing recommendation, duly signed by

all members of the organized validation team;
c. Approval by Regional Vice President (RVP) of validation team's

recommendation;
d. Recommendation of the Area Vice President (AVP) containing the

recommendation of the PRO to the PCEO for approval; and
e. Written approval by the PhilHealth PCEO.
16.2. Likewise, Item IV.3 of PCO No. 2020-0033 provides that upon receipt of
the approved MOAs, LOIs/Letters of Request (LORs) and the
Memorandum of Approval from the PhilHealth PCEO, the PRO-Health
Care Delivery Management Division (HCDMD)/Branch/Health Finance
Policy Sector (HFPS)-Project Management Team (PMT) for Claims, as
applicable, shall prepare the corresponding voucher for payment with the
following supporting documents:
a. Approval of PCEO on the applied IRM;
b. MOA/Contract between the Hospital/HCI and PhilHealth together

with LOIs/LORs;
c. Certificate of Availability of Funds (CAF) issued by the PRO; and
d. PhilHealth Circular and Advisories/Memoranda, if applicable.
16.3. Moreover, it is emphasized that under Section 4(6) of PD No. 1445,

claims against government funds shall be supported with complete
documentation. Section 39(1) of the same PD provides that the COA shall
have the power, for purposes of inspection, to require the submission of
the original copy of any order, deed, contract, or other documents under
which any collection of, or payment from, government funds may be
made, together with any certificate, receipt or other evidence in
connection therewith. If an authenticated copy is needed for record
purposes, the copy upon demand be furnished. Moreover, Item P of COA
Circular No. 92 -38910 specifically prescribes that the original supporting
documents, bills, invoices, purchase orders, etc., shall be attached to the
voucher.
16.4. As of December 31, 2020, PhilHealth had released a total of P14.971

billion IRM funds to 711 HCIs nationwide.
10
Restating with modifications COA Circular No. 81-155, dated February 23, 1981, and prescribing the use of the Disbursement
Voucher, General Form No. 5 (A).
150
16.5. Verification disclosed that requests of 515 HCIs for the grant of IRM funds
totaling P10.020 billion were processed by PhilHealth HO, PROs NCR &
Rizal, I, IV-A, IV-B, V, XI, XII, and CARAGA despite incomplete
supporting documents, contrary to Section 4(6) of PD No. 1445. It was
noted that the documents/reports that should have been attached as
required under PhilHealth Circular No. 2020-0007 and PCO No. 2020-
0033 were either incomplete, not submitted, or not in original copies. The
deficiencies noted on the supporting documents relative to the granting of
IRM funds to HCIs by PhilHealth HO and the eight (8) PROs are
summarized in Table 32.
Table 32 - Deficiencies on the Supporting Documents of IRM Fund Releases

to 515 HCIs
Frequency/No.
Documentary Requirements of HCIs
LOI / LOR
Neither original nor certified true copy of the original 199
Not submitted 63
Post-Validation Report
Not submitted 497
Recommending Approval by the RVP to PCEO
Not submitted 300
Recommendation of the AVP containing the recommendation of the PRO to the PCEO
Not submitted 122
MOA
Not Notarized 196
Not signed 1
Not submitted 1
Memorandum of Approval by the PCEO
Not submitted 76
Certificate of Availability of Funds
Not submitted 40
DVs (for IRM releases thru Checks)
Not submitted -
Incomplete signatories 6
Benefit DV Summary (for IRM releases thru ACPS*)
Not submitted 14
Official Receipts (ORs) not submitted
Government HCIs 14
Private HCI 1
*ACPS – Auto Credit Payment System
151
16.6. Relative to the IRM fund releases by PhilHealth HO to 14 government
HCIs which were not supported by ORs, in lieu of ORs, Journal Entry
Vouchers (JEVs) were accepted by PhilHealth as proof of receipt of the
IRM funds following the Advisory dated March 23, 2018, issued by then
PhilHealth PCEO Celestina De La Serna, stating that “with clearance
from Commission on Audit (COA) and to facilitate the release of Auto
Credit Payment to Government HCIs, the approved JEV, with bank-
validated tickets, shall be an acceptable alternative proof of receipt of
payment for all Government HCIs.” However, the PhilHealth HO Audit
Team would like to stress that aside from the fact that Management could
not provide evidence showing clearance from COA, JEV is not among the
acceptable proof of receipt of payment enumerated under Item 3.3.1 of
COA Circular No. 2004-006 dated September 9, 200411. Hence, the JEVs
drawn by the 14 government HCIs could not be considered as acceptable
proof of payment for the release of IRM funds.
16.7. Moreover, in AQM No. 21-001 HO dated February 8, 2021, the Audit
Team sought clarifications from PhilHealth HO Management on the
following issues surrounding the grant of IRM funds:
a. Releases of IRM funds without the required post validation reports;
b. The parameters/criteria employed in the validation on the eligibility

of each requesting HCI; and
c. The parameters/criteria as well as the processes by which the Office

of the PCEO verifies the track record of each applicant HCI prior to
the approval of the grant of IRM funds.
16.8. In its reply, Management informed that there was no validation team
organized as required under Part V.C of PhilHealth Circular No. 2020-
0007. It further maintained that there is no need for validation reports
pursuant to Item V.C of the same Circular, which states that “In cases of
proclamation of state of calamity throughout the country, the President
and CEO can grant the provisions on special privileges from Section G,
items 1-9”.
16.9. However, the Audit Teams in HO and PROs noted that out of the 515
HCIs’ applications/requests for IRM funds processed in the HO and the
eight concerned PROs, the granting of IRM funds to 18 HCIs was
supported by post-validation reports. As the validation required by
PhilHealth Circular No. 2020-0007 was conducted on the said 18
applicant-HCIs, accordingly the same validation should have been
undertaken on the remaining 497 HCIs [515 HCIs – 18 HCIs].
16.10. Likewise, it was noted that the RVPs recommended some applications for
the grant of IRM funds for approval of the Office of the PCEO. However,
due to the said absence of post-validation reports, such recommendations
11
Guidelines and Principles on the Acceptability of the Evidence of Receipt of Payment for Disbursements
152
have no basis, thereby casting doubt on the validity of the approval by the
PCEO. While the Audit Teams recognized that the country is in the midst
of a pandemic crisis, nevertheless Item V.C.1 of the same PhilHealth
Circular states that validation can be done through document/news review
or survey; thus, validation could have been conducted thru these means
to establish the eligibility/qualification of the applicant-HCIs.
16.11. Aside from the noted lack of post validation reports, required checking of
track record was not conducted prior to the approval/disapproval of the
request of IRM funds by the PCEO, contrary to Item V.G.10.b of
PhilHealth Circular No. 2020-0007, which states, “The Office of PCEO
shall check the track record of the applicant in terms of rendering health
care services to PhilHealth members and their dependents prior to the
approval of the application.” In the same AQM No. 21-001 HO,
Management commented that the PCEO relied on the Completed Staff
Work (CSW) from the PROs and Local Health Insurance Office (LHIO) on
the processing of IRM application of HCI, as his basis for the approval on
the request for IRM funds.

16.12. Additionally, under Item IV A. 2 of PCO No. 2020-0033, electronic copies
of the MOA and other supporting documents may be accepted to facilitate
the IRM fund's immediate release. However, it was further stated in the
same PCO that the original copies of LOI/LOR, signed MOA/Contract,
and the Memo Recommendation of the RVP through the AVP must be
submitted to the PRO FMSr-Comptrollership Unit/Benefit Administration
Section (BAS) Accounting or the ComDep as applicable once the situation
normalizes. Given the implementation of the GCQ in majority of the cities,
municipalities and provinces, which started on June 1, 2020 for example
in NCR, with less strict quarantine protocols as the country gradually
shifted to a new normal brought about by the COVID-19 pandemic, the
Audit Teams believe that PhilHealth Management should have already
complied with all other documentary requirements by this time particularly
on the submission of the original copies of the requisite documents to
COA, for post audit purposes.
16.13. It is worth mentioning that the Audit Team in the HO required the
submission of written justifications as to the legal basis of accepting JEVs
in lieu of ORs from HCIs as proofs of receipt of the subject IRM funds and
as to why the required validation team was not organized/constituted that
could have performed the validation activities and prepared the post-
validation reports. As of audit date, the said written justifications have not
been submitted yet by Management.
16.14. In view of the foregoing deficiencies, the validity and propriety of the IRM
funds released to 515 HCIs could not be established. The Audit Teams in
HO and PROs NCR & Rizal, I, IV-A, IV-B, V, XI, XII, and CARAGA are
inclined to issue corresponding NS.
16.15. We recommended and PhilHealth Management in the HO and PROs

NCR & Rizal, I, IV-A, IV-B, V, XI, XII, and CARAGA agreed to submit to
the concerned Audit Teams all original and duly signed copies of
153
LOIs, MOAs, and DVs together with the other requisite supporting
documents, for verification.
16.16. Further, we recommended and PhilHealth top Management agreed to

ensure that all subsequent IRM grants shall be properly supported
with Post Validation Report, Recommendation for Approval, and
other documentary requirements pursuant to PhilHealth Circular No.
2020-0007 and PCO No. 2020-0033 to avoid similar audit issues and
issuance of NS.
16.17. As of June 24, 2021, PhilHealth submitted various documents in response

to this observation, subject to the respective Audit Teams’ verification.
17. PhilHealth granted IRM funds in the total amount of P10.651 billion or 71.15
per cent of the total releases to 488 HCIs; however, the amounts
released/granted to these HCIs were more than what was allowed under
PhilHealth Circular No. 2020-0007 and its corresponding PhilHealth
Standard Operating Procedure (SOP) Nos. 2020-02-02-007 and 2020-02-02-
008, resulting in excessive releases by a total of P81.507 million to P2.208
billion based on the Audit Team’s recalculated IRM Allowable Amount
using five sets of data in the computation of Average Reimbursements Per
Day (ARPD), thus depriving other qualified/eligible HCIs of the availment of
IRM funds critical in the immediate provision of health care services to
PhilHealth members and their dependents.
17.1. Section 2 of PD No. 1445 states that: "It is the declared policy of the State
that all resources of the government shall be managed, expended or
utilized in accordance with law and regulations, and safeguarded against
loss or wastage through illegal or improper disposition, with a view to
ensuring efficiency, economy and effectiveness in the operations of
government. The responsibility to take care that such policy is faithfully
adhered to rests directly with the chief or head of the government agency
concerned."
17.2. Likewise, Item 3.1 of COA Circular No. 2012-003 dated October 29, 2012,
defines irregular expenditure as “an expenditure incurred without
adhering to established rules, regulations, procedural guidelines, policies,
principles or practices that have gained recognition in laws. Irregular
expenditures are incurred if funds are disbursed without conforming with
prescribed usages and rules of discipline. There is no observance of an
established pattern, course, mode of action, behavior, or conduct in the
incurrence of an irregular expenditure. A transaction conducted in a
manner that deviates or departs from, or which does not comply with
standards set is deemed irregular. A transaction which fails to follow or
violate appropriate rules of procedures is likewise, irregular.”
17.3. The grants/releases of IRM funds to HCIs are based on hospitals'

historical claims and undergo the following processes: application,
evaluation, validation, and recommendation at the level of the PROs and
approval at the HO. An HCI that signifies to apply for the IRM grant shall
submit an LOI and accomplish the downloadable MOA. Upon approval,
154
the said MOA shall also be signed by PhilHealth, which will then be the
basis of the concerned PRO to release the IRM fund to the HCI. However,
in PRO NCR & Rizal, effective May 6, 2020 and thereafter, all payments
and releases were lodged temporarily with the PhilHealth HO due to the
restriction brought about by COVID-19.
17.4. Verification disclosed that from March 23 to July 21, 2020, IRM funds
totaling P14.971 billion were released to various HCIs nationwide. Of the
total amount, P7.680 billion or 51.30 per cent was given to 505 private
HCIs, while the remaining P7.291 billion or 48.70 per cent was granted to
206 government HCIs. Also, of the total amount of P14.971 billion IRM
funds released, 548 checks/ACPS in the total amount of P13.197 billion or
88.15 per cent were paid and released at the level of PROs, while 163
checks/ACPS in the total amount of P1.774 billion or 11.85 per cent were
paid and released at the PhilHealth HO.
17.5. As to the computation of the IRM fund to be released/granted to each of

the qualified HCI, Item V.G.10.c of PhilHealth Circular No. 2020-0007
provides the following guidelines:
c. Computation of the IRM Fund.
The following formula shall be used in the computation of the

IRM fund:
IRM Fund = Average Reimbursement Per Day (ARPD)* X

No. of days covered**
*Average Reimbursement Per Day (ARPD) = Total amount

of paid claims for admissions in the fiscal year before the
adverse event, to be divided by 365 days
**Number of days covered shall be 90 days from date of

event.
17.6. Also, Item V.G.10.e.1 of the same PhilHealth Circular provides that the
HCI may opt to avail the full IRM fund or only a specified percentage
thereof.
17.7. To carry out the provisions of the same Circular, PhilHealth then issued
SOP Nos. 2020-02-02-007 and 2020-02-02-008 both with effectivity date
of March 21, 2020, but were released on March 30, 2020 and April 22,
2020, respectively, as per the dates stamped in the master copies thereof.
Review of the PhilHealth Circular No. 2020-0007 and its two (2)
corresponding SOPs revealed inconsistencies in the computation of
ARDP, details shown in Table 33.
Table 33 – Inconsistencies in the Computation of ARDP
Item PhilHealth Circular No. 2020-0007 SOP No. 2020-02-02-007 SOP No. 2020-02-02-008
Title Guidelines on the Provisions of Processing of Interim Processing of Interim
155
Item PhilHealth Circular No. 2020-0007 SOP No. 2020-02-02-007 SOP No. 2020-02-02-008
Special Privileges to those Affected Reimbursement Mechanism Reimbursement
by Fortuitous Event (Revision I) Fund to Eligible Health Care Mechanism Fund to Eligible
Institutions Adversely Affected Health Care Institutions
by Fortuitous Event Adversely Affected by
Fortuitous Event under a
Centralized Mode of
Payment and Release
Definition of Total amount of paid claims for Total amount of paid claims per Total amount of paid claims
ARDP admissions in the fiscal year before admissions in the fiscal year for the fiscal year prior to
the adverse event, to be divided by before the adverse event, the adverse event, divided
365 days divided by 365 days by 365 days
17.8. The Audit Team opines that the “Fiscal Year (FY)” before or prior to the
adverse event specified in PhilHealth Circular and SOPs covered the
period March 15, 2019 to March 15, 2020, with consideration of March 16,
2020, as the date of the adverse event or the date of declaration of State
of National Calamity due to COVID-19. It is also the Audit Team's
understanding that per PhilHealth Circular No. 2020-0007 and SOP No.
02-02-007, only those paid claims with admission dates in the FY before
the adverse event should be included in the computation of ARPD.
Therefore, those paid claims with admission dates prior to March 15, 2019
or “March 14, 2019 and earlier” should be excluded. On the other hand,
under SOP No. 02-02-008, all paid claims regardless of admission dates
as long as paid in the FY before the adverse event should be included in
the computation of ARPD since the word "admissions" was already
deleted in the later SOP.
17.9. In view of the unclear and inconsistent guidelines in the computation of

ARPD, particularly the basis of paid amount and the reckoning date, and
consequently of the allowable IRM fund to be granted to qualified HCI, the
Audit Teams in the PROs could not determine the exact excess amount of
IRM funds granted to the HCIs. However, for purposes of presentation
and recalculation, the Audit Teams used the following five sets of data in
the computation of ARDP, as follows:
Data 1 - Based on Paid Amount only as indicated in the PhilHealth Data

Warehouse Master List divided by 365 days. The amounts for
Accounts Payable (AP), In-process (IP) and Returned to
Hospital (RTH) were not included in the computation.
Data 2 - Based on PhilHealth Circular No. 20-0007 and SOP No. 02-02-
007 where ARPD refers to total amount of paid claims for
admissions in the FY before the adverse event divided by 365
days using the extracted file submitted by the Information
Technology Management Unit (ITMU), PRO NCR & Rizal. Paid
claims with admission dates from March 14, 2019 and earlier
were excluded in the computation.
Data 3 - Based on SOP No. 02-02-008 where ARPD refers to the total
amount of paid claims in the FY prior to the adverse event
156
divided by 365 days regardless of admission dates using the
extracted file submitted by the ITMU, PRO NCR & Rizal. All
paid claims within the FY were all included.
Data 4 - Based on total amount of paid claims for admissions in the

Calendar Year before the adverse event divided by 365 days
using the extracted file. Paid claims with admission dates from
December 31, 2018 and earlier were excluded in the
computation.
Data 5 - Based on the total amount of paid claims in the Calendar Year
prior to the adverse event divided by 365 days regardless of
admission dates using the extracted file.
17.10. The computed excess amounts of IRM funds granted to HCIs vis-a-vis the
allowable amount using the afore-mentioned five sets of data are
Table 34 – Summary of Excess IRM Funds Granted vs. Allowed Amount
Recomputed Recomputed based Recomputed based Recomputed Recomputed

PRO based on Data 1 on Data 2 on Data 3 based on Data 4 based on Data 5
NCR P823,181,317 P1,802,005,025 P1,026,944,696 P - P -
I - - - - 34,500,240
II - 60,232,287 - - -
III - 162,283,383 - - -
IV-B - 133,934,659 - - -
V - 31,556,249 56,034,755 54,945,929 47,652,351
VII 59,412,652 - - - -
VIII - - - - 78,189,770
IX 12,694,464 - - - -
XI - - - - 231,969,923
XII 44,750,690 - - - -
CARAGA - 17,726,800 - 26,560,635 -
Total P940,039,123 P2,207,738,403 P1,082,979,451 P81,506,564 P392,312,284
17.11. The releases to HCIs which did not exceed the allowable amount were no
longer included in Table 34, consistent with Item V.G.10.e.1 of PhilHealth
Circular No. 2020-0007, which states that "the IRM fund may be availed
full or to only a specified percentage but should not be more than the
computed amount, however, additional IRM fund can be requested."
17.12. As can be gleaned from Table 34, IRM fund releases to HCIs resulted in
overpayments ranging from a total of P81.507 million to P2.208 billion;
thus depriving other HCIs of the availment of IRM fund critical in the
immediate provision of health care services to PhilHealth members and
their dependents and denoting that the resources of the Agency were not
managed properly and efficiently. The excessive granting to HCIs of IRM
funds could also be considered irregular expenditures as defined under
Item 3.1 of COA Circular No. 2012-003 dated October 29, 2012.
157
a. Require the authorized official or concerned Office in
PhilHealth HO, in-charge of the preparation and development of
the policy guidelines to clarify the noted inconsistencies in the
computation of the maximum IRM amount that could be
granted to qualified HCI, particularly on the amount of paid
claims that should be included and the actual reckoning period
for the computation of the ARPD as specified in PhilHealth
Circular No. 2020-0007 and SOP No. 02-02-008, particularly the
"total amount of paid claims for admissions in the FY before
the adverse event, to be divided by 365 days" and "total
amount of paid claims for the FY prior to the adverse event,
divided by 365 days", respectively; and
b. Cause the review and re-computation of allowable IRM fund to

each qualified/eligible HCIs as basis in determining the
appropriate action to be taken as regards the granting of
excessive IRM funds to HCIs.
17.14. PROs Management commented that:
a. They endorsed the noted observation and recommendation to the

PhilHealth HO, for appropriate action. It was the PhilHealth HO Task
Force Informatics (TFI) that provided the computed IRM amounts,
using the databases' information from previous year's claims.
Meanwhile, the lists of HCIs entitled to the IRM funds with the
corresponding IRM fund limits were provided by PhilHealth HO
HFPS to the PROs and Branches.
b. They have no participation in the determination of IRM fund limits.

However, they admitted that as accountable officers, they should
have conducted validation of the HO's computation if in
conformance with the existing policy before processing and
releasing the payments to HCIs. Moving forward, they assured that
they would strictly follow the procedures in PhilHealth Circular No.
2020-0007 in granting future IRM funds.
17.15. In addition, PhilHealth HO Management commented that per directives in

the Executive Committee on June 16, 2021, an investigation/inquiry on
the discrepancy in the computation between IRM releases and PhilHealth
Circular No. 2020-0007 and its corresponding SOP Nos. 2020-02-02-007
and 2020-02-02-008 was conducted. It must be noted that whatever funds
released to HCIs are being monitored towards complete liquidation. To
date, 99.37% were fully liquidated. Rest assured that Management is
doing continuous monitoring of liquidation to ensure that funds are
properly accounted.
17.16. As a rejoinder, we further recommended that PhilHealth Management

inform in writing the Audit Teams in the HO and PROs of the updates
on the action(s) taken on the matter and provide specific timeline on
how the issue on excessive granting of IRM funds to HCIs be
resolved.
158
18. PhilHealth Circular No. 2020-0007 was not meticulously devised and
reviewed before its implementation as some of its provisions were not
applicable to the existing fortuitous event or the COVID-19 pandemic,
prompting the need for IRM fund releases to affected HCIs. PhilHealth
Management neither made revisions nor amendments to the said Circular
to specifically address the issue on the existing fortuitous event, thus,
resulted in non-compliance with some of the guidelines in the processing
and releasing of IRM funds totaling P14.971 billion to 711 HCIs nationwide
during CY 2020.
18.1. PhilHealth, pursuant to Board Resolution No. 2496, s. 2020, a resolution

approving the inclusion of IRM among the special privileges that may be
conferred during fortuitous events and emergencies, issued Circular No.
2020-0007 dated March 20, 2020, which provides for the guidelines on
the provisions of special privileges to those affected by a fortuitous event
(Revision 1). The objective of the Circular is to ensure continuous access
to PhilHealth benefits and provide substantial aid, through IRM, to HCIs in
rebuilding their critically damaged healthcare system to provide
continuous health care services to Filipinos adversely affected by the
COVID-19 pandemic. Accordingly, PhilHealth released IRM funds totaling
P14.971 billion to 711 HCIs nationwide during CY 2020.
18.2. Meanwhile, Item V.B, Policy Statements/General Guidelines, of PhilHealth

Circular No. 2020-0007 provides that:
Health care institutions affected by the fortuitous event shall

send a letter request for application of this Circular duly
signed by the Medical Director/Chief of Hospital or any
authorized representative to the concerned PRO. As much
as possible included in the letter:
1. Description (or photos) of the effects of the fortuitous

event.
2. Explicitly mention if majority of the claims under the

HCIs’ custody were totally destroyed and can no longer
be recovered or reconstructed for the same to be able
to avail of the reimbursement option stipulated in
Special Privilege No. 8 contained in this circular.
18.3. Likewise, Item V.G.8 of the same Circular states that:
Reimbursement for the destroyed claims.
a. HCIs with destroyed claims that are due for submission

to PhilHealth shall have the option to choose the mode
of payment of such claims to be stated in the written
request letter. The option could be any of the following:
159
a.1. Recovery or reconstruction of claims applications
for submission/filing to PhilHealth or
a.2. Payment of claims based on the average

reimbursement per day of the concerned HCI
multiplied by the number of days covering the
period from the last submission/filing date up to
the date specified by the Corporation. Claims
filed by HCIs on or before the date specified by
the Corporation which were included in the
computation for the payment of claims shall not
be processed.
b. HCIs shall not be allowed to change option since it has

been approved by the Corporation.
18.4. However, perusal of PhilHealth Circular No. 2020-0007 disclosed that

there are provisions, particularly Item V.B thereof, not applicable to the
processing and releasing of the IRM funds for the COVID-19 pandemic.
This was corroborated by the Audit Team's verification of relevant
documents such as DVs and JEVs and their supporting documents which
showed that the required description or photos of the effects of the
fortuitous event were not attached. Inquiry with Management disclosed
that HCIs did not submit such documents as the same being impractical
to do so. It was also confirmed that no destroyed claims were reimbursed
by HCIs as provided under Items V.B.2 and V.G.8 of the Circular.
18.5. Moreover, during the Audit Team's conduct of internal control processes
walkthrough on IRM fund transactions on December 15, 2020,
Management mentioned that the guidelines provided under the subject
PhilHealth Circular were not necessarily intended for calamities that may
result in the physical destruction of properties. Instead, the intent was to
aid the healthcare industry to continue its operation brought about by
fortuitous events, including the COVID-19 pandemic. However,
Management also admitted that the subject Circular was not meticulously
devised and reviewed before its implementation due to the urgent
processing and releasing of the IRM fund, and that there are provisions
which are only applicable to fortuitous events with visible effects such as
physical devastation. It can be recalled in PhilHealth's official statement
on April 14, 2020, that the reason for the suspension of IRM was to give
way for its review. However, it was noted that no revisions or
amendments of the Circular were made to address this issue up to the
writing of this report.
18.6. Based on the foregoing discussions, the Audit Team opines that
Management should have carefully reviewed PhilHealth Circular No.
2020-0007 to ensure that the guidelines are applicable to the COVID-19
pandemic, as the existing fortuitous event, and that the processing and
releasing of IRM funds to HCIs are in accordance with the provisions
thereof.
160
18.7. We recommended that top Management revisit PhilHealth Circular
No. 2020-0007 on IRM and related issuances to address the noted
inapplicability of certain provisions on the existing fortuitous event,
specifically the COVID-19 pandemic.
18.8. The PRO NCR & Rizal Management commented that the issue was
endorsed to PhilHealth HO for resolution.
18.9. During the Exit Conference at PhilHealth HO, Management averred that
PhilHealth Circular No. 2020-0007 was not exclusively intended for the
COVID-19 pandemic, as it was also designed to address other fortuitous
events such as, typhoons, volcanic eruption, and the like. It was claimed
that it would take PhilHealth three to six months to formulate a specific
Circular, making it impractical to devise a Circular intended for a particular
fortuitous event. Accordingly, the Executive Committee of PhilHealth, with
the concurrence of the BOD, decided to create PhilHealth Circular No.
2020-0007 that would address all the fortuitous events. It also cited that
the applicability of the provisions of the said Circular will depend on the
nature of the fortuitous event being addressed. Nevertheless, it was
committed to improve PhilHealth’s internal controls on the formulation and
implementation of the Circular on IRM.
18.10. Subsequently, Management commented that:
a. Although the initial formulation of PhilHealth Circular No. 2020-0007

was prior to the COVID 19 pandemic, during its formulation until its
publication, the Corporation was already cognizant of the need to
respond to the pandemic. The HFPS was proactive in coming up
with COVID-related policies from the time the first case of COVID-
19 was detected, to the confirmation of sustained community
transmission, until the declaration of the pandemic situation in the
country. It could be recalled that PhilHealth Circular No. 2020-0004,
re: Enhancement of packages in relation to Coronavirus infection,
was published on February 21, 2020. This was eventually repealed
and replaced by a broader spectrum of benefit packages to cover
testing, community-based isolation, inpatient packages, and full
financial protection (for health workers) for COVID probable or
confirmed patients.
b. With regard to the supposed inaction after the suspension of IRM

provision in PhilHealth Circular No. 2020-0007, the indefinite
suspension of IRM implementation was by itself a response to the
policy review. In lieu of the IRM, PhilHealth Circular No. 2021- 0006,
re: Application of Debit-Credit Payment Method (DCPM) to facilitate
the settlement of Accounts Payable to Health Care Facilities (HCFs)
during the State of Public Health Emergency due to the COVID-19
Pandemic (revision 1), was issued to assist health care facilities in
the fight against COVID-19 pandemic.
18.11. As rejoinders, the Audit Team would like to emphasize that PhilHealth
Circular No. 2020-0007 was formulated months before the declaration of
161
the COVID-19 pandemic, revising an existing Circular, PhilHealth Circular
No. 34, s. 200312, with the same subject matter. Therefore, PhilHealth
could have readily devised a new Circular, in line with the provisions of
PhilHealth Circular No. 2020-0007, specifically intended for the COVID-19
pandemic, and avoided non-compliance with certain provisions of the said
Circular. As to the issuance of PhilHealth Circular No. 2021-0006, Item
VIII thereof states that the same shall apply to payments to health care
facilities starting April 8, 2021; hence, evaluation of the implementation
thereof shall form part of the COA PhilHealth Audit Teams’ CY 2021 audit.
19. PhilHealth did not establish definite guidelines and criteria or organize an
evaluation team for the selection and validation of the requesting HCIs
applying for the grant of the IRM fund, contrary to the provisions of
PhilHealth Circular No. 2020-0007. As a result, HCIs that are not directly
involved in facilitating/providing COVID-19 related health care services and
those with alleged violations with PhilHealth policies were granted IRM
funds totaling P783.734 million and P3.115 billion, respectively.
19.1. Relevant provisions of PhilHealth Circular No. 2020-0007 dated March 20,
2020, are provided as follows:
Part III. SCOPE
This Circular shall cover PhilHealth claims of those affected

by a fortuitous event that covers any of the following
conditions:
A. xxxx
B. PhilHealth accredited or non-PhilHealth Accredited

Health Care Institutions (HCIs) either privately-owned
or government-owned. For non-PhilHealth accredited
HCIs, it must be DOH licensed or certified by a
certifying body recognized by PhilHealth.
xxx.
Part V. POLICY STATEMENTS/GENERAL GUIDELINES
A. xxxx
B. Health Care Institutions affected by the fortuitous event

shall send a letter request for application of this
Circular duly signed by the Medical Director/Chief of
Hospital or any authorized representative to the
concerned PRO. xxx.
12
Guidelines on the Provision of Special Privileges to those Affected by a Fortuitous Event
162
C. The PRO shall undertake the following actions upon
receipt of the request(s):
1. Organize a validation team either composed of

staff from the concerned LHIO or from the PRO or
both to validate the basis of such request.
Validation can be through document/news review
or survey. The survey shall be conducted only if
the current situation posts no danger to the
PhilHealth personnel.
2. Send the written request letter of the HCI along

with the post validation report, with
recommendation, duly signed by all members of
the validation team, and the Regional Vice
President and Area Vice President containing the
recommendation of the PRO to the President and
CEO for approval. The recommendation shall
include the effectivity date of application of this
Circular and special privileges deemed fit for the
situation.
3. The PRO and the HCI shall be informed of the

decision of the President and CEO through a
written communication.
19.2. During CY 2020, out of the total IRM funds of P14.971 billion granted to
711 HCIs, P783.734 million or 5.24 per cent were released by PhilHealth
to 118 HCIs which were not directly involved in COVID-19 related health
care services, as summarized in Table 35.
Table 35 – No. of HCIs Not Directly Catering to COVID-19 Related Health

Services (per Region)
Region No. of HCIs Amount of IRM funds released

NCR & Rizal 47 P228,820,176
V 44 222,098,279
XI 23 275,184,992
CARAGA 4 57,630,920
Total 118 P783,734,367
19.3. As shown in Table 35, 47 HCIs from NCR & Rizal, 44 HCIs from Region
V, 23 HCIs from Region XI and 4 HCIs from CARAGA Region have
received IRM funds totaling P783.734 million. Included in the NCR & Rizal
were IRM fund releases to 47 HCIs amounting to P228.820 million which
were classified as Free Standing Dialysis (FSD) Clinic; Maternity Case
Package (MCP) Provider; and Mental Health Institution, details shown in
Table 36.
Table 36 – No. of HCIs in PRO NCR & Rizal Not Directly Catering to COVID-19
related health services (per Classification)
163
Classification of HCIs No. of HCIs Amount of IRM funds released
FSD Clinic 41 P132,935,402
MCP Provider 5 69,646,507
Mental Health Institution 1 26,238,267
Total 47 P228,820,176
19.4. As can be gleaned from Table 36, PhilHealth provided IRM funds to 41
FSD clinics, 5 MCP providers, and 1 Mental Health Institution in NCR &
Rizal. Review of pertinent documents such as, MOAs and Memorandum
for Approval, disclosed that the former PhilHealth PCEO approved the
fund releases to these HCIs.
19.5. Accordingly, the Audit Team checked the number of tested COVID-19
cases in the New Corona Virus (NCOV) Tracker accessible via the DOH
official website, and it was noted that there were no COVID-19 cases data
on these HCIs. Likewise, review of the reimbursements and liquidations of
benefit claims made by the HCIs enumerated in Table 36 during CY 2020
based on the extracted files provided by the PhilHealth Information
Technology (IT) Department disclosed information as shown in Table 37.
Table 37 - Amount of Actual processed claims for CY 2020 of HCIs not directly
catering to COVID-19 related health services
Reimbursements/liquidations CY 2020
Classification of HCIs and cases descriptions
COVID-19 related Non-COVID-19 related Total
FSD Clinics P540,653,278 P540,653,278
 Hemodialysis procedures 0
 Other cases related to dialysis procedures
MCP Providers 0 27,302,228 27,302,228
 Expanded newborn care package
 Cesarian delivery
 Other cases related to maternity care
Mental Health Institution 0 1,747,200 1,747,200
 Mental and behavioral disorders due to
use of other stimulants, including caffeine:
psychotic disorder
 Other specified mental disorders due to
brain damage and dysfunction and to
physical disease; epileptic psychosis
 Other cases related to mental and
behavioral disorders
Total 0 P569,702,706 P569,702,706
19.6. As shown in Table 37, 47 HCIs from NCR & Rizal which were not directly
affected by the COVID-19 pandemic or have no COVID-19 cases data
with DOH, had reimbursed or liquidated benefit claims totaling P569.703
million during CY 2020. As noted, no COVID-19 related liquidations and
reimbursements were made by these HCIs in the same year. COVID-19
related cases were coded by PhilHealth as follows13:
13
PhilHealth Circulars Nos. 2020-0009, 2020-0011, 2020-0017, and 2020-0018
164
a. Inpatient care management for confirmed COVID-19 developing
severe illness or outcomes
Package Code Description

C19IP1 Mild Pneumonia in the elderly or with co-morbidities
C19IP2 Moderate Pneumonia
C19IP3 Severe Pneumonia
C19IP4 Critical Pneumonia
b. Inpatient care management for confirmed COVID-19 developing

severe illness or outcomes – full financial

C19FRP Full financial risk protection for Filipino health workers and
patients against corona virus disease
c. Packages for SARS-CoV-2 testing

C19T1 All services for the testing are produced and provided by the
testing laboratory
C19T2 Test Kits are donated to the testing laboratory
C19T2 Test Kits are donated to the testing laboratory; cost of running
the laboratory and the RT-PCR machine for the testing
laboratory is included in the facility budget
d. COVID-19 Community Isolation Package

Z03.8 with additional Patient observed without confirmation or with negative test
code Z20.8
U07.1 COVID-19 confirmed
19.7. None of the case descriptions enumerated in Table 37 and those

indicated in the extracted files of the 47 HCIs in NCR & Rizal were coded
as such. This simply showed that the P228.820 million of the total IRM
funds were released to these HCIs which are not directly involved in
facilitating COVID-19 related health care services, contrary to the
provisions of Part V.B of PhilHealth Circular No. 2020-0007 and the main
purpose of the IRM, which is to provide substantial aid to HCIs directly
affected by COVID-19 pandemic.
19.8. Likewise, the Audit Team sent a letter to the DOH Region XI to confirm
the extent of involvement of the IRM-recipient hospitals to the provision of
COVID-19 related health care services. In its reply dated December 22,
2020, DOH Region XI provided information as presented in Table 38.
Table 38 - HCIs with No. of COVID Patients Reported/Referred

to the COVID Facilities
No. of COVID Patients Reported/

Referred to the COVID Facilities
No. Name of HCI Critical Severe Moderate Mild
1 Southern Philippines Medical Center (SPMC) 13 51 127 237
165
No. of COVID Patients Reported/
Referred to the COVID Facilities
No. Name of HCI Critical Severe Moderate Mild
2 Davao Doctors Hospital No Data No Data No Data No Data
3 Viacrucis Medical Hospital No Data No Data No Data No Data
4 Davao Regional Medical Center (DRMC) 2 4 10 6
5 Cure Philippines, Inc. No Data No Data No Data No Data
6 Medical Mission Group Hospital and Health Services
Cooperative of Tagum No Data No Data No Data No Data
7 Rivera Medical Center, Inc. No Data No Data No Data No Data
8 RMCI Satellite Primary Clinic No Data No Data No Data No Data
9 Tagum Doctors Hospital, Inc. No Data No Data No Data No Data
10 Bishop Joseph Regan Memorial Hospital No Data No Data No Data No Data
11 Bungabong-Sanico Medical Clinic & Maternity Hospital No Data No Data No Data No Data
12 Davao Oriental Provincial Medical Center (DOPMC) No Data No Data No Data No Data
13 St. Benedict Hospital of Davao Del Sur, Inc. No Data No Data No Data No Data
14 Cainglet Medical Hospital, Inc. No Data No Data No Data No Data
15 Carmen Medical Clinic & Hospital No Data No Data No Data No Data
16 Compostela Valley Provincial Hospital - Montevista 0 0 0 8
17 Compostela Valley Provincial Hospital - Pantukan 0 0 0 7
18 Doctors Community Hospital No Data No Data No Data No Data
19 Flordeliz Medical Clinic and Hospital No Data No Data No Data No Data
20 Jose J. Golingay General Hospital, Inc. No Data No Data No Data No Data
21 Medcore Hospital, Inc. No Data No Data No Data No Data
22 Miguel O. Cabrera Sr. Memorial Hospital Corporation No Data No Data No Data No Data
23 Nephrology Center of Buhangin Davao, Inc. No Data No Data No Data No Data
24 Nephrology Center of Davao, Inc. No Data No Data No Data No Data
25 Nephrology Center of Panabo City, Inc. No Data No Data No Data No Data
26 Nephrology Center of St. Alexius, Inc. No Data No Data No Data No Data
27 Nephrology Center of Tagum City, Inc. No Data No Data No Data No Data
28 Ricardo Limso Medical Center, Inc. No Data No Data No Data No Data
19.9. As shown in Table 38, there are 24 recipient-HCIs under PRO Region XI
that had no reported COVID-19 positive patients, suspect cases, and
probable cases. It was also noted that only three (3) of the 28 HCIs,
namely: SPMC, DRMC and DOPMC, were able to submit claims related
to COVID-19 cases as of November 20, 2020 based on the data
submitted by the PhilHealth BAS. Hence, another indication that the
remaining 24 HCIs in Region XI, as presented in Table 38, were not
directly affected by the COVID-19 pandemic or have no COVID-19 cases
data with DOH and yet they were granted with IRM funds by PhilHealth.
19.10. Similar cases were also noted in Region V where 43 HCIs, and in
CARAGA Region where 4 HCIs had received IRM funds in the amounts of
P222.098 million and P57.902 million, respectively, even if they did not
provide COVID-19 related health care services.
19.11. It is also worth mentioning that in a Senate hearing on August 11, 2020,
disparities in the IRM fund releases had been discussed, and it was even
disclosed that a particular dialysis clinic was provided with an IRM fund
even if it does not handle COVID-19 patients. After two subsequent
hearings, the IRM fund releases had been suspended.
19.12. In response, PhilHealth issued an official statement on August 14, 2020,

reaffirming strict compliance with PhilHealth Circular No. 2020-0007
166
specifically on the IRM fund releases. Nevertheless, the Audit Team is not
inclined to agree with PhilHealth's position and deems that the IRM funds
should have been granted to qualified HCIs, specifically to those which
cater to COVID-19 related health care services.
19.13. Further, examination of the list of HCIs with pending legal cases as of
December 31, 2020, provided by the PRO NCR & Rizal Legal Office in
response to the Audit Team’s letter-request dated January 15, 2021,
disclosed that IRM funds in the total amount of P3.115 billion were
granted/released to 89 HCIs that allegedly committed violations with
PhilHealth policies, such as, but not limited to:
a. Misrepresentation by up-casing;
b. Non-compliance with No Balance Billing (NBB) policy;
c. Filing of multiple claims;
d. Non-admitted patients;
e. Erasures in Claim Signature Form (CSF);
f. Misrepresentation by furnishing false or incorrect information; and
g. Breach of warranties of accreditation.
19.14. The PhilHealth NCR & Rizal Audit Team opines those internal controls for
the safeguarding of PhilHealth funds were compromised since HCIs with
alleged violations with PhilHealth policies were still allowed to receive IRM
funds. The pending cases of concerned HCIs with PhilHealth could have
been considered as grounds for disqualification in the selection criteria in
evaluating IRM fund applications.
19.15. Moreover, it was observed that in PRO VI, PhilHealth received 33

applications from various HCIs, both private and public. However, only 14
applications were endorsed to PhilHealth HO, and only one (1) was
approved due to absence of clear and specific criteria of who are entitled
for IRM grant. The Western Visayas Medical Center (WVMC) was the
sole recipient of IRM fund in the amount of P121.372 million. The other 13
HCIs that applied and were endorsed by the PRO Region VI to PhilHealth
HO, had filed their applications for the grant of IRM earlier than the
WVMC that received such fund.
19.16. Furthermore, as confirmed in its reply to the Audit Team’s Memorandum

dated January 14, 2021, PhilHealth was not able to organize validation
teams that will be in-charge of validating the basis of the requests of HCIs
for the grant of IRM funds, which validation can be through
document/news review or survey, contrary to the provisions of Part V.C of
PhilHealth Circular No. 2020-0007. This may simply denote that there
were no particular guidelines or criteria crafted by PhilHealth as guide of
the “supposed validation teams” in screening the applications of
requesting HCI for the grant of IRM fund.
19.17. The Audit Team deems that had PhilHealth organized validation teams
and crafted definite guidelines and criteria to be used as basis in
evaluating the requests/applications of the HCIs for the grant of IRM
167
funds, only those HCIs that are directly involved in facilitating COVID-19
related health care services could have been selected and granted IRM
funds, and thus safeguarding and efficiently utilizing PhilHealth funds for
the purpose.
a. Revisit and diligently review the existing PhilHealth Circular on

IRM and related issuances and consider amendments/
revisions by providing therein definite guidelines/criteria/
parameters as basis of the validation teams in the selection/
approval of the applications of the requesting HCIs for the
grant of IRM fund;
b. Organize validation teams composed of staff from the
concerned LHIO or from the PRO or both to perform the
required validation activities to ensure that only qualified/
eligible HCIs are granted with IRM fund; and
c. Require the PRO VI Management and the concerned official(s)

in PhilHealth HO to: (i) submit written justification(s) on why
out of the total 33 applications for the grant of IRM, only 14
were endorsed and recommended to PhilHealth HO for
approval of the PCEO and, only one was approved; and (ii)
provide the Audit Teams clarifications/basis in the selection of
the HCIs entitled to receive IRM fund.
19.19. PhilHealth HO Management commented that:
a. A validation team was not organized due to the implementation of

the ECQ in Metro Manila, imposing stringent limitations on the
movement and transport of people and the health risk involved
brought about by the COVID-19 pandemic.
b. The IRM fund is not only for HCIs directly involved in the facilitation
of COVID-19 services, but for all accredited and non-accredited
HCIs to enable hospitals, primary care facilities, ambulatory surgical
clinics, freestanding dialysis centers, and maternity care providers to
continuously provide health care services to affected Filipinos.
c. There is no policy in RA No. 7875, as amended, and Internal Rules

and Regulations or PhilHealth Circular No. 2020-0007 stating that
once a facility has a pending case, it will not be paid nor be given an
IRM fund for it is still accredited and therefore entitled to the
privileges and programs to be offered by PhilHealth.
d. Unlike other fortuitous events in the past, such as after an

earthquake, typhoon armed conflict, a field visit will not gather
evidence of actual physical damage to the facility. The COVID-19
pandemic was unlike other disasters, and a national declaration of a
state of calamity was in fact declared in the country.
168
e. As to document review instead of post-validation, at the level of the
Central Office, the Office of the Senior Vice President (OSVP)-
HFPS checks whether the accreditation of an IRM applicant is
active at the time of application and takes note of pending
issues/concerns. The Office of the PCEO then conducts the final
review and approval or denial of the IRM application.
f. PhilHealth commits to improve its internal controls on the

formulation and implementation of Circulars on IRM.
19.20. PRO VI Management commented that the approval of the distribution of

IRM rests solely on the PCEO of the Corporation in accordance with
PhilHealth Circular No. 2020-0007; therefore, the non-attainment of the
guarantee for the equitable distribution of health services and benefits
was beyond the control of the PRO.
19.21. The following are the Audit Teams’ rejoinders:
a. We maintain our position that PhilHealth should have

created/organized the required validation teams in compliance with
PhilHealth Circular No. 2020-0007. Despite strict community
quarantine implementation, validation activities could still have been
conducted through documents or news reviews where no physical
presence in the HCIs is required. It is also worth mentioning that
post validation reports were prepared for 18 applicant-HCIs, which
proved that the conduct of validation activities is also possible for
other applicant-HCIs.
b. The validation activities could have facilitated PhilHealth in

determining which among the applicant-HCIs are qualified to receive
IRM funds, taking into consideration their extent of involvement with
COVID-19 related services and their pending legal cases or alleged
violations of PhilHealth policies.
20. Due to late system update in time for the IRM fund releases, lack of definite
guidelines, and conflicting PhilHealth Memoranda as to how the IRM funds
are to be liquidated, benefit claims in the total amount of P405.528 million
were applied as regular reimbursements thru the Auto Credit Payment
System (ACPS) instead of deducting the same against the IRM fund
balances of 119 HCIs under PRO NCR & Rizal and PRO V, contrary to the
provisions of Item VI.G.10.f of PhilHealth Circular No. 2020-0007, thereby
resulting in significant unliquidated IRM fund balances of HCIs as of
December 31, 2020, and unnecessary cash outlays on the part of
PhilHealth. Likewise, due to system error, two IRM recipient-HCIs under
PRO NCR & Rizal showed over-liquidation in the total amount of P1.383
million, which remained unadjusted as of December 31, 2020.
20.1. Item V.G.10.f, Deduction of Reimbursements for All Valid Claims from the
IRM Fund, of PhilHealth Circular No. 2020-0007 dated March 20, 2020,
provides, viz.:
169
claims reimbursement:

IRM fund has been fully liquidated;
f.3 xxx.
20.2. Based on Item V.G.10.f of PhilHealth Circular No. 2020-0007, the amount
received under the IRM is supposed to be liquidated or applied against
the valid benefit claims filed from March 16, 2020 onwards by the HCI
concerned.
20.3. Relative thereto, the then Executive Vice President (EVP) & Chief
Operating Officer (COO) of PhilHealth issued a Memorandum No. 2020-
023 dated April 23, 2020, reminding all concerned that deduction of all
valid claims from the released IRM fund shall include all claims received
starting March 16, 2020, the date of declaration of State of National
Calamity in the country due to COVID-19. The same Memorandum further
states that until no system for the accounting of the IRM fund has been
deployed, the PROs will process the covered claims manually via excel.
20.4. On June 16, 2020, a separate Memorandum from the then PhilHealth
PCEO was issued deferring the reckoning dates of IRM fund liquidation
currently in effect from the incoming claims relative to the provisions of
special privileges under PhilHealth Circular No. 2020-0007, which shall be
moved from March 16, 2020 to an appropriate date that will be announced
later. It further declared that for those claims already tagged as deducted
from the HCI’s Subsidiary Ledger (SL), the same will be un-tag as "IRM
liquidated" and will be reprocessed and credited to HCI’s auto credit
account accordingly. Additionally, it was mentioned that a PhilHealth
Circular shall be issued on this matter.
20.5. The then EVP & COO again issued Memorandum No. 2020-032 dated
July 15, 2020, which requires the following:
a. PROs are given the option on the matter of liquidation of the IRM.
b. Proper coordination with the HCIs to ensure the continuous

processing, reconciliation and reimbursement of claims.
c. To effect necessary information system enhancement by the

Information Management Sector and the HFPS.
d. To identify specific HCIs within their region claiming delayed benefit

claims as reported by media by the Operations Sector, the Area
Offices, and particularly the PROs.
170
e. A report from the Operations Sector is expected every Monday on
the benefit claims reconciling status, claims processing such as the
number and amount of claims paid and outstanding, and the Turn-
Around-Time (TAT) in Claims Processing.
f. The Office of the SVP is expected to issue detailed guidelines.
20.6. However, as of the writing of this Report, the supposed PhilHealth

Circular mentioned in the Memorandum dated June 16, 2020 of the
PCEO and the detailed guidelines specified in the Memorandum No.
2020-032 dated July 15, 2020 of the EVP & COO, were not yet issued by
PhilHealth Management.
20.7. It was also noted during the Audit Team’s systems walkthrough on the
processing, monitoring and liquidation of IRM funds released to HCIs that
the PRO NCR & Rizal had neither been provided nor aware of any
definite and uniform guidelines for the liquidation of the IRM funds.
20.8. Review of the Liquidation Reports (LRs) and SLs of the IRM recipient-
HCIs submitted by the two (2) PROs revealed that out of the IRM fund
releases to 205 HCIs in PRO NCR & Rizal and PRO V totaling P5.078
billion, 88 per cent or P4.469 billion had been liquidated, while 12 per
cent or P610.621 million remained unliquidated as of December 31, 2020,
as summarized in Table 39.
Table 39 - IRM Fund Releases and Liquidation as of December 31, 2020
No. of IRM % of
PRO Recipient HCIs IRM Releases Liquidations Balance Liquidation
NCR & Rizal 162 P4,353,410,549 P3,816,001,636 P538,792,929* 88%
V 43 724,616,526 652,788,143 71,828,383 90%
Total 205 P5,078,027,075 P4,468,789,779 P610,621,312 88%
*Excludes P1.383 million over-liquidation of one (1) HCI already referred to IT, awaiting system updates
20.9. In PRO NCR & Rizal, further analysis and review of the LRs and SLs of
the IRM-recipient HCIs disclosed that the liquidation or application of
claims, as deduction to the IRM fund releases, only started from April 27
to June 10, 2020 and August 17 to November 27, 2020 for 14 HCIs and
148 HCIs, respectively. This matter was also mentioned during the Audit
Team’s consultative meeting on June 11, 2020 with then VP, Area II-
South Luzon and NCR and Concurrent VP-PRO NCR & Rizal, informing
the Audit Team of the recent installation of improvement to include IRM
monitoring in the NClaims System of PRO NCR & Rizal, while orientation
to end-users has yet to be conducted. Hence, it was the understanding of
the Audit Team that those IRM liquidations prior to the System’s
enhancements had been processed manually via excel as directed under
Memorandum No. 2020-023 dated April 23, 2020.
171
20.10. Meanwhile, scrutiny of the data from the extracted files for CY 2020
provided by the ITMU, PRO NCR & Rizal and PRO V disclosed that
several claims of IRM recipient-HCIs were applied as regular
reimbursements, instead of deductions from or liquidations of the IRM
funds, as summarized in Table 40.
Table 40 – IRM Fund Balances with HCIs per Records of PRO NCR & Rizal and
PRO V vis-à-vis per Audit (Applying PhilHealth Circular No. 2020-0007)
Unliquidated Claims received/filed from Claims that should Unliquidated IRM

Balances as of March 16, 2020 to December have been balance as of
December 31, 2020 31, 2020 that were paid thru charged to IRM December 31, 2020
(Unaudited) ACPS (per Audit) (per Audit)
PRO (a) (b) (c) (d = a-c)
NCR & Rizal P538,792,929 P809,142,010 P382,851,426 P155,941,503
V 71,828,383 85,894,704 22,676,302 49,152,081
Total P610,621,312 P895,036,714 P405,527,728 P205,093,584
20.11. Pursuant to Item VI.G.10.f of PhilHealth Circular No. 2020-0007, the Audit
Teams verified from the extracted file provided by ITMU all claims
received/filed by the 76 HCIs in PRO NCR & Rizal and 43 HCIs in PRO V
starting March 16, 2020 onwards that were charged as regular
reimbursement through the ACPS which eventually totaled to P895.037
million as presented in “column b” of Table 40. Since the composition of
the calculated amount in “column b” comprised claims processed and
paid up to the end of CY 2020, the Audit Team summed up claims that
should not exceed the remaining unliquidated balance per each HCI to
arrive at the amount of P405.528 million that should have been applied as
liquidation of or charged as deduction from IRM funds and not as
reimbursements of claims through ACPS.
20.12. Interview with the Head of ITMU, PRO NCR & Rizal disclosed that claims
of concerned HCIs applied as reimbursements were due to the un-tagging
of claims based on the Memoranda dated June 16, 2020 and July 15,
2020 of the PCEO and the EVP & COO, respectively.
20.13. Meanwhile, the PRO V Audit Team reviewed payments made to HCIs
through ACPS from June to July 2020. Review revealed that some HCIs
were paid in the total amount of P273.588 million even if they are IRM-
recipients and their IRM funds were not yet fully liquidated at that time.
Inquiry with PRO V Management disclosed that these payments might be
for claims filed prior to March 16, 2020 and were processed for payment
after said date. However, considering the 60 days turnaround time (TAT)
in processing of claims as alleged by PRO V Management [although the
Team believed that TAT should be 30 days], those claims received prior
to March 16, 2020 should have been paid already by May 15, 2020.
172
20.14. Consequently, on inquiry made by PRO V, the Fund Management Section
(FMSec) Head said that while there were some HCIs that are willing to
refund, the System is not yet updated to take-up or record such refund.
Thus, even if the HCI already refunded the balance, the System would still
tag/apply the succeeding claims against IRM, thereby resulting in non-
payment through ADA/ACPS. To avoid more complications, PRO V
Management deemed it proper and prudent not to accept the refunds.
20.15. Further, the PRO NCR & Rizal Audit Team noted that based on the LRs
and SLs submitted by the PRO, there were two (2) IRM recipient-HCIs
with recorded over-liquidation of the fund as shown in the Table 41.
Table 41 – HCIs with Recorded Over-Liquidation
HCI Name IRM Released Total Amount Liquidated Over-liquidation

1. TMC P141,124,509 P142,508,033 P(1,383,524)
2. MLLI 170,012 170,275 (263)
Total P141,294,521 P142,678,308 P(1,383,787)
20.16. Per verbal inquiry, the Audit Team was informed by PRO NCR & Rizal
personnel in charge of the IRM LRs that the over-liquidation was due to
System error and was already endorsed to the Information Technology
Management Department (ITMD) PhilHealth HO for its disposition.
However, as of this writing, there is no feedback or System update from
the ITMD PhilHealth HO yet, which only shows that the necessary
information System enhancement for IRM monitoring is not yet fully in
place.
20.17. In addition, the PRO NCR & Rizal Management confirmed that it does not
have a hand in determining what claims are to be tagged as IRM
liquidation and what claims are to be reimbursed thru ACPS. Accordingly,
it is the System that tags claims as IRM or non-IRM.
20.18. The Audit Team would like to emphasize that had the: (a) pertinent
provisions of PhilHealth Circular No. 2020-0007 on liquidation of the fund
been strictly followed; (b) conflicting Memorandum Orders on how the
IRM funds are to be liquidated not been issued; and (c) System been
immediately enhanced and updated to record liquidations of the IRM
funds on time, the unliquidated IRM balances with HCIs as of December
31, 2020 should have been only P205.094 million instead of P610.621
million; and the unnecessary cash outlays of P405.528 million (Table
40) and the over-liquidation of IRM funds amounting to P1.384 million
(Table 41) could have been avoided.
a. Require the PROs NCR & Rizal and V to comply strictly with the
guidelines on the liquidation or application of benefit payments
against the IRM funds as provided under PhilHealth Circular
No. 2020-0007;
173
b. Instruct the PRO NCR & Rizal to follow up/coordinate with the
IT HO on the status of the PRO’s endorsement relative to the
recorded over-liquidation of the two IRM recipient-HCIs due to
System error and update the Audit Team on the matter for
validation purposes; and
c. Direct the PRO V to communicate with the concerned HO

official(s) the noted observations pertaining to PhilHealth’s
system on tagging of IRM liquidations, as well as the recording
of refunds so that these will be addressed appropriately.
20.20. The PRO NCR & Rizal Management informed that the noted audit
observations have been referred to the HO, for policy enhancement and
improvement of work processes.
20.21. According to HO Management, the system was not in place yet at the
time of processing these claims. Even the Standard Operating Procedure
(SOP) on IRM liquidation was released late. In addition, the following
Memoranda were also issued pertaining to the liquidation of IRM: (a)
Memorandum from the former PCEO dated June 16, 2020, on the
Deferment of IRM Liquidation Activities; and (b) OCOO Memorandum No.
2020-032 dated July 15, 2020, on the Liquidation of IRM, wherein the
PROs are given the option on the matter of liquidation of IRM. Moreover,
the last transactions of these hospitals for IRM liquidation were already
deleted in the system. The branch will be reprocessing the claims
included in the said transaction to reconcile the records for the IRM
liquidation.
20.22. As a rejoinder, the Audit Team appreciates the immediate action made by
PRO NCR & Rizal. As to the updates provided by the PhilHealth HO
Management, the Audit Team shall evaluate the implementation thereof
and determine whether the same addressed the observation on recorded
over-liquidation of IRM funds.
21. Several deficiencies were noted on the continuing validation of sampled

benefit COVID-19 package rates applied as liquidations by the HCIs of the
IRM funds released by PRO NCR & Rizal during CY 2020, as follows:
a. The policy guidelines on the no co-payment for the implementation

of the COVID-19 benefit package for Inpatient Care Hospitalization
(ICH) and Full Financial Risk Protection (FFRP) were not complied
with in 47 claims in the total amount of P9.917 million as HCIs
required co-pay/out-of-pocket expenses from the PhilHealth
member-patients, contrary to pertinent provisions of PhilHealth
Circular Nos. 2020-0009 and 2020-0011 and, resulted in additional
financial burden to qualified member-patients;
b. Six (6) manual sampled claims for FFRP amounting to P8.176 million
were processed despite the inclusion of testing/swabbing fees in the
total amount of P0.086 million, which should have been filed
174
separately and applied for the SARS-CoV-2 benefit package; thus,
the amount was not reimbursed to the concerned HCIs, contrary to
PhilHealth Circular No. 2020-0011;
c. Claim Form 4 (CF4) was not explicitly indicated/provided under

PhilHealth Circular Nos. 2020-0009 and 2020-0011 as one of the
mandatory documentary requirements for liquidation/
reimbursement of COVID-19 benefit claims, which is inconsistent
with Item V.A of PhilHealth Circular No. 2019-0002, thus may
unfavorably affect the assessment of the quality of care rendered by
the HCIs to PhilHealth member-patients;
d. Ten (10) manual sampled claims totaling P0.028 million for SARs-
CoV-2 Testing in which the individuals appeared in the Extracted File
Report as "contract traced individuals" but the same were neither
identified in the certified true copy of Case Investigation Form (CIF)
prescribed by the DOH as such nor specified in the Claim Form 2
(CF2), thus casting doubt as to the validity of these claims and
contrary to Item VI.A of PhilHealth Circular No. 2020-0017; and
e. One hundred fifteen (115) claims for Testing for SARS-CoV-2 and
one (1) claim for Community Isolation, in the total amount of P0.716
million, applied as liquidation of IRM funds were not adequately
supported with requisite documents; hence, not compliant with the
pertinent provisions of various PhilHealth Circulars and casting
doubt on the validity and propriety of the subject claims as well as
the entitlement of the concerned member-patients to the benefits.
Policy guidelines on the no co-payment for the

implementation of the COVID-19 benefit package
for ICH and FFRP were not complied with in 47
claims in the total amount of P9.917 million as
HCIs required co-pay/out-of-pocket expenses from
the PhilHealth member-patients, contrary to
pertinent provisions of PhilHealth Circular Nos.
2020-0009 and 2020-0011 and, resulted in
additional financial burden to qualified member-
patients
21.1. Item V.C of PhilHealth Circular No. 2020-000914 states that, “All COVID-
19 benefits for inpatient care shall have no co-payment from the patient
for direct healthcare services, both in private and public healthcare
providers. Patient can have co-payments for amenities such as suite
room accommodation.”
21.2. Likewise, Item V.A of PhilHealth Circular No. 2020-011 provides that, “All
Filipinos confined for COVID-19 from the period of 1 February 2020 to 14
April 2020 shall be deemed eligible for any of the benefits for inpatient
care with no co-payment, whether in public or private facility. Filipinos
14
Benefit packages for inpatient care of probable and confirmed COVID-19 developing severe illness/outcomes
175
who are not registered in PhilHealth shall be automatically covered,
provided that they complete member registration prior to discharge from
facility.” Item V.B of the same Circular further states that, “Health workers
regardless of employment status, confined for COVID-19, beginning 1
February 2020 shall be eligible for the COVID-19 benefits for inpatient
case management with no co-payments, whether in public or private
facility.”
21.3. Notwithstanding the foregoing provisions, it was observed during

validation and post-audit of 240 manual sampled claims for ICH and
FFRP package rates, applied as liquidations of IRM funds released to
various HCIs in the total amount of P93.748 million, that 47 claims had co-
pay/out-of-pocket expenses from the member-patients totaling P9.917
million, as summarized in Table 42.
Table 42 – Claims with Co-pay/Out-of-Pocket Expenses from PhilHealth

Member-Patients
CENTRAL NORTH SOUTH TOTAL

No. of No. of No. of No. of
COVID-19 PACKAGES Claims Amount Claims Amount Claims Amount Claims Amount
a. Full financial risk protection for
Filipino health workers and patients
0 - 12 P2,491,121 6 P1,400,635 18 P3,891,755
against COVID-19 package with co-
payment
b. Inpatient case management for
probable and confirmed COVID-19 8 P2,825,006 4 1,820,612 17 1,379,517 29 6,025,135
developing severe illness/outcome
P2,825,00
Grand Total 8 6 16 P4,311,733 23 P2,780,152 47 P9,916,890
21.4. The co-pay/out-of-pocket expenses from the member-patients (amount

paid by the member-patient after PhilHealth deductions) are indicated in
Part III.A, Certification of Consumption of Benefits, of CF2. It is
emphasized that in the computation by the Audit Team, the amount of co-
payment was not included when the excess after PhilHealth deductions
was assumed by Health Maintenance Organization (HMO) and other
providers, i.e., Philippine Charity Sweepstakes Office (PCSO), Promissory
Note.
21.5. The HCIs’ non-application of "no co-payment" on member-patients

concerned runs counter to pertinent provisions of PhilHealth Circular Nos.
2020-0009 and 2020-0011, thus to the disadvantage, by way of additional
financial burden, of qualified PhilHealth member-patients.
21.6. We recommended that top Management direct the PRO NCR & Rizal
to monitor the strict compliance of HCIs with the pertinent
provisions of PhilHealth Circular Nos. 2020-0009 and 2020-0011
regarding the policy and minimum requirements on claims
reimbursement for ICH and FFRP with out-of-pocket expenses and
coordinate with the concerned HCIs for the possible refund of
P9.917 million to the concerned member-patients.
21.7. PRO NCR & Rizal Management commented that:
176
a. Upon the revalidation of the noted claims with deficiencies, it was
observed that most of the payments were made prior to the release
of PhilHealth Circular No. 2020-0011 on April 14, 2020.
b. It has no control over real-time transactions of patient-members at

the time of confinement, payments of out-of-pocket expenses are
only discovered once the claims are received. The issue could also
be attributed to some costs that could not be reimbursed, such as
the Remdesivir drug, which HCIs are widely using to treat COVID-
19, which will be shouldered by the member-patient.
c. There was a Reach-out and Round Table Discussions (RTD)

conducted informing the HCIs on the issued policies relative to
COVID-19 packages. Accordingly, HCIs were also reminded
through a letter of strict compliance with the policies, rules, and
regulations of the Corporation.
d. It committed to coordinate with HCIs concerned on the possible

refund of P9.917 million to the concerned member-patients.
e. There are cases already endorsed to the Monitoring Committee of

the PRO regarding this. Since this is a policy issue, it endorsed the
same to the HO for resolution.
21.8. During the Exit Conference, top Management agreed to monitor PRO
NCR & Rizal Management’s compliance with noted observation and
instructed the HFPS to consider the re-evaluation of the existing policy
regarding the out-of-pocket expenses incurred by the member-patients for
ICH and FFRP packages.
21.9. Further, PhilHealth HO Management submitted updated report on the: (a)

information on the status and timeline of the reconsiderations to be made
by HFPS; (b) letter issued to HCIs; (c) written report on the result of RTD
conducted.
21.10. As a rejoinder, the Audit Team will evaluate the submitted reports and
documents. However, it is requested that PRO NCR & Rizal Management
also present the result of revalidation of the claims with deficiencies, as
well as the copy of the letter issued to the HCIs for reference of and
complete verification by the Audit Team.
Six (6) manual sampled claims for FFRP

amounting to P8.176 million were processed
despite the inclusion of testing/swabbing fees in the
total amount of P0.086 million, which should have
been filed separately and applied for the SARS-
CoV-2 benefit package; thus, the amount was not
177
reimbursed to the concerned HCIs, contrary to
PhilHealth Circular No. 2020-0011
21.11. Item VI.B of PhilHealth Circular No. 2020-001115 states that “claims for
testing for SARS-CoV-2 shall be filed separately”. However, post-audit of
157 manual sampled claims filed for FFRP benefit package disclosed that
six (6) claims totaling P8.176 million were processed with
testing/swabbing fees amounting to P0.086 million, as presented in
Table 43.
Table 43 – Claims for FFRP Package Rates which included Testing/Swabbing Fees
No HCI Amount of Testing/

. Claim Series Code HCI Name CR1 Amount Number Date Number Date Amount Swabbing Fees
P03-
1 2006180301207 300429 FYMMFI P 228,658 2008- 08/26/20 AC 08/26/20 P 228,658 P 9,800
02448
P03-
2 2006180301211 300429 FYMMFI 208,825 2008- 08/26/20 AC 08/26/20 208,825 12,000
02448
P03-
3 2006160300166 300832 SLMC 912,165 2009- 09/01/20 AC 09/02/20 912,165 13,600
00001
SLMC P03-
4 2006160300187 300832 2,792,388 2009- 09/02/20 AC 09/05/20 2,792,388 14,489
00102
SLMC P03-
5 2006160300193 300832 3,377,968 2009- 09/02/20 AC 09/05/20 3,377,968 12,089
00102
SLMC P03-
6 2006160300214 300832 655,630 2008- 08/29/20 AC 09/02/20 655,630 24,450
03242
Grand Total (Central Branch) P8,175,634 P 8,175,634 P86,428
21.12. The testing/swabbing fees were included as a line item in the Statements
of Accounts/Billing Statements of the above six (6) claims filed for the
FFRP benefit package, and therefore, the COVID-19 case rate of FFPR
was only applied, resulting in the non-reimbursement of the
testing/swabbing fees to the concerned HCIs.
21.13. Review of CF2 also showed that there were no co-pay/out-of-pocket

expenses from the member-patients. Had the testing/swabbing fees been
filed separately, the required COVID-19 benefit package for testing
SARS-CoV-2 could have been availed of by the concerned HCIs.
21.14. We recommended that top Management direct the PRO NCR & Rizal
to keep track HCIs’ compliance with PhilHealth Circular No. 2020-
0011 on the policy and minimum requirements on claims
reimbursement for FFRP benefit package, particularly on the
separate filing of the claim for reimbursement of the
testing/swabbing fees as provided under Item VI.B thereof.
15
Full financial risk protection for Filipino health workers and patients against Coronavirus Disease (COVID -19)
178
21.15. PRO NCR & Rizal Management commented that HCIs were informed on
this issue during the RTD. Meanwhile, during the Exit Conference,
PhilHealth top Management agreed that the testing/swabbing fees should
have been filed separately by the HCIs, as noted by the Audit Team.
CF4 was not explicitly indicated/provided under

PhilHealth Circular Nos. 2020-0009 and 2020-0011
as one of the mandatory documentary
requirements for liquidation/reimbursement of
COVID-19 benefit claims, which is inconsistent with
Item V.A of PhilHealth Circular No. 2019-0002, thus
may unfavorably affect the assessment of the
quality of care rendered by the HCIs to PhilHealth
member-patients
21.16. As defined in PhilHealth Circular No. 2019-000216, CF4 shows the

summary of pertinent clinical information of a patient/member during their
hospitalization/episode of care that shall be utilized by PhilHealth to
conduct evaluation and review of claims. Likewise, Item V.A of the same
Circular, which applies for admissions starting March 1, 2019, provides
that all claims for reimbursement, with exceptions enumerated in Item
V.D, should be accompanied by the CF4 and photocopies of the
corresponding laboratory and imaging results. The following are the
PhilHealth benefit packages that do not require the submission of CF4:
 Z-Benefit Packages
 Outpatient HIV/AIDS Treatments
 Outpatient Malaria Package
 Animal Bite Treatment
 TB-DOTS
 Antenatal Care Package
 Normal Spontaneous Delivery
 Maternity Care Package
 Newborn Care Package
 Subdermal Contraceptive Insertion Package
 Intrauterine Device Insertion Package
 No-scalpel Vasectomy
 Resuscitation Package
 Referral Package
21.17. Also, PhilHealth Circular No. 2020-0009 provides, viz.:
VII. CLAIMS FILING AND REIMBURSEMENT
A. xxxx
16
Documentary Requirements for Claims Reimbursements and Medical Pre-payment Review of Claims (Revision 2)
179
H. To file a claim for reimbursement, the accredited
healthcare provider shall submit the following
documents to PhilHealth:
1. Properly accomplished CF2.

2. Itemized billing statement, including
professional/reader’s fees. The process flow
for submission of itemized billing statements is
described in Annex “A”.
3. Properly accomplished PhilHealth Member
Registration Form (PMRF) for unregistered
PhilHealth members, or updated PMRF, as
needed.
21.18. Likewise, pertinent provisions of PhilHealth Circular No. 2020-0011,

effective for all hospital admission dates starting February 1, 2020, are as
follows:
VI. CLAIMS FILING AND REIMBURSEMENT
A. xxxx
H. To file for reimbursement, the accredited

1. Properly accomplished Claim Form 2 (CF2).

professional/reader’s fees. The process flow for
submission of itemized billing statements is
3. Official Receipts are required for directly filed
claims with admission dates beginning 1
February 2020 until 14 April 2020.
needed.
5. Certificate of employment, regardless of
employment status, or certificate of
appointment of personnel working in health
facility, or certification from the health facility for
security and utility personnel working in their
hospital.
6. Certification as health volunteer deployed in a
health facility from the appropriate authority,
such as provincial health officer, municipal
health officer, city health officer, chief of
hospital or head of agency or authorized
representative.
180
21.19. Based on the foregoing provisions, CF4 was not specifically provided as
one of the mandatory documentary requirements in the liquidation/
reimbursement of claims to be submitted by HCIs to PhilHealth. In an
AQM No. 21-001 NCR & Rizal, issued on February 11, 2021, the Audit
Team sought clarification why CF4 is not included among the mandatory
documentary requirements.
21.20. In its Reply dated March 4, 2021, PRO NCR & Rizal Management
informed that the audit issue was referred to the PhilHealth HO - FMSr
and HFPS on February 15, 2021. Accordingly, the same was endorsed by
the HFPS to the Legal Sector on February 18, 2021. A follow-up letter
dated February 26, 2021 was issued by PRO NCR & Rizal Management
to PhilHealth HO FMSr and HFPS; however, no feedback was received
from said offices as regards the query on CF4. It further informed the
Audit Team that it should follow the documentary requirements
stated in the COVID-19 Case Rates guidelines pending the response from
the HO.
21.21. Consequently, validation and post-audit of 240 manual sampled claims for
FFRP and ICH package rates, applied in the liquidation of IRM funds
released to various HCIs in the total amount of P93.748 million, revealed
that only eight (8) claims amounting to P3.108 million were supported with
CF4, as itemized in Table 44.
Table 44 – Claims for FFRP and ICH Package Rates with attached CF4
HCI CRV1 With Attached

No. Claim Series Code HCI Name CR1 Amount Code CR1 Case Description CF4?
FFRP FOR FILIPINO HEALTH
WORKERS AND PATIENTS
1 2006230200392 280628 USTH P 110,053 C19FRP Yes
AGAINST CORONAVIRUS DISEASE
(COVID-19)
2 2006230200410 280628 USTH 155,699 C19FRP -do- Yes
3 2006230200414 280628 USTH 729,342 C19FRP -do- Yes
4 2006230200483 280628 USTH 969,096 C19FRP -do- Yes
Sub-total North Branch P1,964,190
5 2009170100120 -312902 PCGH P 333,519 C19IP3 Severe Pneumonia (COVID-19) Yes
6 2009170100123 -312902 PCGH 333,519 C19IP3 -do- Yes
7 2009170100125 -312902 PCGH 333,519 C19IP3 -do- Yes
8 2009220100007 -311501 LPGHSTC 143,267 C19IP2 Moderate Pneumonia (COVID-19) Yes
Sub-total South Branch P1,143,824
Grand Total P3,108,014
21.22. The Audit Team deems that the attachment of CF4, as part of the
mandatory documentary requirements in the liquidation/reimbursement of
claims, is viable for the HCIs had it been included in the provisions of
PhilHealth Circular Nos. 2020-0009 and 2020-0011. Meanwhile, the
requirement of CF4 may not be mandatory for COVID-19 Testing and
Community Isolation cases since these are not as complex as FFRP and
ICH.
21.23. Further, the Audit Team deems that inclusion of CF4 as one of the
documentary requirements in claims liquidation/reimbursements filed by
HCIs is crucial for PhilHealth in measuring and assessing the quality of
181
care being provided by the HCIs to member-patients. Moreover, non-
requirement of such document from the HCIs might increase the
vulnerability for up-casing/up-coding of cases to the detriment of
PhilHealth considering its poor current financial position.
21.24. We recommended that top Management consider amending

PhilHealth Circular Nos. 2020-0009 and 2020-0011 to include CF4 as
one of the minimum mandatory documentary requirements in filing
for FFRP and ICH benefit packages so that assessment of the quality
of care rendered by HCPro to PhilHealth member-patients will be
adequately conducted.
21.25. PRO NCR & Rizal Management commented that the noted observation
was already endorsed to the HFPS, for consideration. It informed that in
lieu of CF4, a patient's clinical chart is required, following PhilHealth
Circular No. 2018-0019 regarding Health Care Provider Performance
Assessment System (HCP PAS), as its basis to validate compliance of
HCPro to standards of care and health outcomes. The said chart is used
both for premedical and post-audit evaluation to lessen the chance of up-
casing.
21.26. In the Exit Conference, top Management confirmed that during the policy
formulation, it was decided that CF4 will not be a mandatory requirement
in the FFRP and ICH packages, granting the request of the HCIs not to
include the same raising the issue that CF4 is tedious to accomplish; it
would expose them to COVID-19 and, most of RTH and denied claims
were due to non-accomplishment of CF4.
21.27. In its recent update, PhilHealth HO commented that the recommendation

was addressed in PhilHealth Circular No. 2021-008 dated June 15, 2021
re: Clarification on the Coverage for COVID-19 Inpatient Benefit package.
As stated in Item V.B, “To properly evaluate claims, either CF4 or clinical
chart will now be required for inpatient COVID-19 claims. For facilities that
have submitted CF4, PhilHealth Regional Offices and Branches may
require submission of copies of clinical charts to further evaluate claims.”
21.28. As a rejoinder, the Audit Team acknowledges the issuance of PhilHealth

Circular clarifying the requirement for CF4. Considering that the
submission thereof is an alternative requirement, proper implementation
of the provision will form part of the Audit Team’s regular audit of claims
covered by the said issuance.
Ten (10) manual sampled claims totaling P0.028

million for SARs-CoV-2 Testing in which the
individuals appeared in the Extracted File Report
as "contract traced individuals" but the same were
neither identified in the certified true copy of CIF
prescribed by the DOH as such nor specified in
CF2, thus casting doubt as to the validity of these
182
claims and contrary to Item VI.A of PhilHealth
Circular No. 2020-0017
21.29. Item VI.A of PhilHealth Circular No. 2020-001717 requires that “PhilHealth
member entitled to the benefit package for SARs-CoV-2 testing by RT-
PCR shall be based on applicable DOH guidelines (Annex B) or its
revision/amendments in consideration of the evolving clinical
management for CODIV-19. PhilHealth shall disseminate updates
accordingly.”
21.30. The List of Priority Individuals and Healthcare Workers for SARS-CoV-2
testing in Annex B of the aforesaid Circular, identifying the sub-groups of
at-risk individuals arranged in order of greatest to lowest need for testing,
is provided as follows:
a. Subgroup A: Patients or healthcare workers with

severe/ critical symptoms, relevant history of travel/
contact;
b. Subgroup B: Patients or healthcare workers with mild

symptoms, relevant history of travel/contact, and
considered vulnerable. Vulnerable populations include
those elderly and with preexisting medical conditions
that predispose them to severe presentation and
complications of COVID-19. These also include:
i. Pregnant patients who shall be tested during the

peripartum period;
ii. Dialysis patients and patients on
immunosuppressed states, such as those in
chemotherapy or radiotherapy, who shall be tested
at the discretion of the attending physician,
following the existing guidelines of Philippine
Society for Microbiology and Infectious Diseases;
c. Subgroup C: Patients or healthcare workers with mild

symptoms, relevant history of travel/contact;
d. Subgroup D: Patients or healthcare workers with no

symptoms but relevant history of travel/contact, with
special attention to those living in confined spaces
such as persons deprived of liberty or institutionalized
persons;
e. Subgroup E: Front liners indirectly involved in health

care provision in the response against COVID-19
which include, but not limited to the following:
17
Benefit package for SARs-CoV-2 testing using RT-PCR (Revision 1)
183
i. Personnel manning the Temporary Treatment and
Quarantine Facilities (LGU- and Nationally-
managed);
ii. Personnel manning Quarantine Control Points,
including those from Armed Forces of the
Philippines, Bureau of Fire Protection, and others;
iii. National/Regional/Local Risk Reduction and
Management Teams;
iv. Barangay Health Emergency Response teams and
barangay officials providing border control and
performing COVID-19 related tasks;
v. Personnel of Bureau of Corrections and Bureau of
Jail Penology and Management;
vi. Personnel manning the One-Stop-Shop in the
Management of the Returning Overseas Filipinos;
vii. Personnel serving at the COVID-19 swabbing
center;
viii. Social workers providing amelioration and relief
assistance to communities and performing COVID-
19 related tasks; and
ix. All personnel (national and local) directly involved
in the response against COVID-19;
f. Subgroup F: Other vulnerable patients such as those

with comorbidities like, those who will undergo high risk
elective surgical procedures, those who are pregnant,
elderly, immunocompromised and others.
21.31. Review of the Extracted File Report submitted by ITMU vis-à-vis post
audit of 397 manual sampled claims of SARs-CoV-2 testing package case
rates totaling P2.341 million disclosed that 10 claims amounting to P0.028
million (Table 45) in which the sub-group indicated in the Extracted File
Report was “contract-traced individuals”, but the same was neither
identified in the certified true copies of CIF prescribed by the DOH as
such, nor specified in the CF2.
Table 45 – Claims of SARs-CoV-2 Testing Package Case rate

Sub-Groups Not Indicated in CIF or CF 2
CT Patient
HCI Subgroup per
Claim Series Code HCI Name CR1 Amount CR1 Case Description Extracted File
1 201120020038 313701 DJNRMHS P 2,077 TEST KITS ARE Contact-traced
3 DONATED TO THE individuals
TESTING
LABORATORY
2 201121020135 313701 -do- 2,077 -do- -do-
2
3 201201020126 313701 -do- 2,077 -do- -do-
8
4 201203020141 280102 UP-PGH 5,450 -do -do-
3
5 201203020169 280102 -do- 5,450 -do- -do-
184
CT Patient
HCI Subgroup per
Claim Series Code HCI Name CR1 Amount CR1 Case Description Extracted File
8
6 201203020234 280102 -do- 2,077 -do- -do-
3
7 201205020017 313701 DJNRMHS 2,077 -do- -do-
2
8 201205020091 313701 -do- 2,077 -do- -do-
3
9 201209020037 313701 -do- 2,077 -do- -do-
0
10 201209020063 313701 -do- 2,077 -do- -do-
2
Grand Total (North Branch) P27,516
21.32. Although per the concerned HCIs’ reports, the sub-group of the member-
patients was identified, but inconsistencies were noted upon cross-
checking the classification specified in the said reports with the
information provided in the CIF and CF2. For instance, under the HCI’s
report, the patient was classified under Subgroup D; however, upon
verification of the CIF and CF2, there was no identification that the patient
had a relevant history of travel/contact and living in confined spaces such
as persons deprived of liberty or institutionalized persons. Therefore, the
HCIs’ reports could not be relied upon.
21.33. The Audit Team deems that for a member-patient to avail of and the
concerned HCI to claim the PhilHealth benefit for SARs-CoV-2 testing
package, the member-patient is within the list of sub-groups of at-risk
individuals (Annex B of Item VI.A of PhilHealth Circular No. 2020-0017)
and shall be properly indicated in the CIF prescribed by the DOH as such
as well as in the CF2.
21.34. We recommended that top Management require the PRO NCR &
Rizal Management to provide the Audit Team the basis in
classifying/tagging in the ITMU Extracted File Report the individuals,
in the ten claims amounting to P0.028 million, as "contract-traced
individuals", for verification.
21.35. PRO NCR & Rizal Management justified that those claims where sub-
groups were not identified in the CIF of CF2, it referred to the Claims
Summary Forms (CSF).
21.36. As a rejoinder, the Audit Team would like to emphasize that the
information disclosed in the attached documents supporting the ten claims
for SARs-CoV-2 testing package should have been consistent.
Meanwhile, the Team will conduct further validation of the CSFs if the
same could be considered substantial compliance.
115 claims for Testing for SARS-CoV-2 and one (1)

claim for Community Isolation, in the total amount
of P0.716 million, applied as liquidation of IRM
funds were not adequately supported with requisite
185
documents; hence, not compliant with the pertinent
provisions of various PhilHealth Circulars and
casting doubt on the validity and propriety of the
subject claims as well as the entitlement of the
concerned member-patients to the benefits
21.37. There are three types of the COVID-19 benefit packages currently being
offered to PhilHealth members, namely, Inpatient Coverage for the
Hospitalization, Swab Testing, and Community Isolation. Various required
documents shall be attached to the claims by the accredited HCI to
support the availment of these types of COVID-19 benefit packages
pursuant to the following PhilHealth Circulars:
a. Item VII.H of PhilHealth Circular No. 2020-0009 provides for the

documentary requirements for benefit packages for inpatient care of
probable and confirmed COVID-19 developing severe
illness/outcomes application, viz.:
 Properly accomplished CF2

 Itemized billing statement, including professional/reader’s fee
 PMRF for unregistered PhilHealth members, or updated
PMRF, as needed.
b. Item VI.D of PhilHealth Circular No. 2020-0010, as amended by

Item VII.F of PhilHealth Circular No. 2020-0017 provides for the
documentary requirements for benefit packages for SARS-CoV-2
testing application, viz.:

 Certified True Copy of CIF that is prescribed by the DOH
 Itemized billing statement, which includes the reader’s fees
c. Item VI.H of PhilHealth Circular No. 2020-0011 provides for the

documentary requirements for financial risk protection for Filipino
Health Workers and Patients against COVID-19 application, viz.:

 Itemized billing statement, including profession/reader’s fee
 PMRF for unregistered PhilHealth members, or updated
PMRF as needed
 Certification of Employment, regardless of employment status,
or certificate of appointment of personnel working in health
facility, or a certification from the health facility for security and
utility personnel working in their hospital
 Certificate as health volunteer deployed in a health facility
from the appropriate authority, such as provincial health
officer, municipal health officer, city health officer, chief of
hospital or head of agency or authorized representative
186
d. Item V.C.3.k of PhilHealth Circular No. 2020-0018 provides for the
documentary requirements for the COVID-19 community isolation
benefit package (CCIBP) application, viz.:
 CF2
 Accomplished CSF
21.38. Validation and post audit of 639 claims (Table 46) for COVID-19 benefit
packages applied as liquidation of IRM funds, disclosed that some claims
were not supported with requisite documents, as summarized in Table 47.
Table 46 - No. of Post Audited Claims
COVID-19 Benefit Package North Central South Total

FFRP 56 32 69 157
ICH 7 13 63 83
Testing for SARS-CoV-2 284 0 113 397
Community Isolation 0 0 2 2
Grand Total 347 45 247 639
Table 47 – Number of Claims with Incomplete Submission of Requisite Documents
Number of Claims
Central North South Total
Testing for SARS-CoV-2
1. CIF 0 0 15 15
2. Itemized Billing Statement 0 79 21 100
0 79 36 115
Community Isolation Benefit Package
1. CSF 0 0 1 1
21.39. As can be gleaned from Table 47, all the requisite supporting documents
were attached to the 157 and 83 COVID-19 benefits claims for FFRP and
ICH, respectively. However, 115 claims for Testing for SARS-CoV-2 and
one (1) claim for Community Isolation in the total amount of P0.716 million
were not supported with some of the requisite documents. Hence, the
Audit Team was precluded to ascertain the validity and propriety of these
claims as well as to determine whether the concerned member-patients
are entitled to the benefits absence of the requisite documentary
requirements.
a. Direct the HFPS to: (i) re-evaluate the existing policy; and (ii)
develop a new one that will benefit all stakeholders and enable
compliance by HCIs regarding the out-of-pocket expenses
incurred by the member-patients for ICH and FFRP packages.
b. Require the PRO NCR & Rizal to implement strictly the rules in
the submission of the requisite documents for COVID-19
benefits claims pertaining to Testing and Community Isolation
packages and deny claims with incomplete documentary
187
requirements. This is without prejudice to the issuance of an
NS as a result of post-audit.
21.41. Management commented that PhilHealth benefits aim to provide all

beneficiaries financial access to health services and minimize out-of-
pocket payments. However, items like Remdesivir are not covered as it is
not yet in the Philippine National Formulary, and there is no positive
recommendation from the (HTAC) yet (Note: HTAC recommendation on
Remdesivir came out last May 10, 2021). Section 34 of the UHC Act
provides that "investments on any health technology or development of
any benefit package by the DOH and PhilHealth shall be based on the
positive recommendations of the HTA.’’
21.42. PRO NCR & Rizal Management commented that it will conduct
revalidation on the 115 claims for Testing for SARS-CoV-2 and one (1)
claim for Community Isolation packages that were not supported with the
requisite documents. Updates on the result of revalidation are as follows:
a. On the lacking CIFs - Upon verification of eight (8) claims listed, it

was noted that the CIF were already attached with the claims.
b. On the lacking itemized billing - Upon verification of eight (8)

sampled claims, it was noted that these claims were made prior to
the implementation of PhilHealth Circular No. 2020-0017, which was
only published on June 25, 2020. The itemized billing was not
required in PhilHealth Circular No. 2020-0010.
c. On the lacking CSF - The Branch is already following the

recommendation of the Audit Team. The claim is initially returned to
the HCI for compliance of the deficient document and claim is
denied when non-compliant.
d. Validation is still on going for the remaining claims.
21.43. As a rejoinder, while the recently submitted updates on the result of

revalidation are still to be verified by the Audit Team in PRO NCR & Rizal,
it is emphasized that all claims shall be supported with complete
documentary requirements. The PRO NCR & Rizal should deny claims
with incomplete documentary requirements, otherwise the Team is
constrained to issue an NS.
22. Seventy-two (72) benefit claims in the total amount of P0.829 million
initially filed on March 16, 2020 and onwards, but beyond the allowable
period of 60 days and 120 days from the dates of discharge of patients
whichever is applicable, were considered as “valid claims” and applied as
deductions from the IRM funds received by the HCIs. Likewise, 33,645
benefit claims in the total amount of P444.099 million that were initially filed
in prior years (PYs) but were returned to the HCIs and consequently refiled
on March 16, 2020 and onwards were improperly charged to the IRM funds.
Both instances are contrary to the pertinent provisions of PhilHealth
Circular No. 2020-0007 and defeated the main objective of IRM to ensure
188
HCIs’ liquidity and financial viability to adequately respond to the COVID-19
pandemic. In addition, lack of definition of “valid claims” on PhilHealth
Circular No. 2020-0007 created confusion and various interpretations as to
what claims shall be allowed/deducted from the IRM fund.
22.1. The IRM fund, as defined in PhilHealth Circular No. 2020-0007, refers to
the special privilege granted by PhilHealth for the provision of substantial
aid to eligible HCIs directly hit by the fortuitous event, with clear and
apparent intent to continuously operate and/or rebuild the HCI to provide
continuous health care services to adversely affected Filipinos.
Accordingly, PhilHealth has considered the COVID-19 pandemic as a
fortuitous event under the context of IRM.
22.2. Meanwhile, in an official statement dated May 27, 2020 by then

PhilHealth’s PCEO, Management maintained that the IRM is an
emergency cash advance measure applied by PhilHealth to provide
hospitals with an emergency fund to respond to unanticipated events like
natural disasters and calamities.
22.3. Relative thereto, PhilHealth Circular No. 2020-0007 dated March 20, 2020
provides the guidelines on the provisions of special privileges to those
affected by a fortuitous event (Revision 1), and among its salient features
are the following:
Item G.1 – Submission of claims 120 calendar days from the

date of discharged.
This shall cover also claims due for submission for

discharges covering the period sixty (60) days before
and until the day prior to the actual date of the
occurrence of the of the fortuitous event.
Item V.G.10.f - Deduction of Reimbursements for All Valid

Claims from the IRM Fund.

claims reimbursement;

IRM fund has been fully liquidated;
f.3 xxx.
22.4. Also, Section 46 of the Revised IRR of RA No.7875, as amended by RA

No.10606, provides that, “All claims for reimbursement or payment for
services rendered shall be filed within a period of sixty (60) calendar days
from the date of discharge of the patient from the health care provider.”
189
22.5. Interview with PRO NCR Branch Management revealed that a particular
good claim from an IRM fund-recipient HCI is directly considered in the
liquidation of the IRM fund. Accordingly, all valid claims received and
refiled from March 16, 2020, and onwards were deducted from HCIs’ IRM
fund until such time that the IRM funds of the HCIs are all exhausted.
22.6. Based on the Liquidation Reports (LRs) and Subsidiary Ledgers (SLs) of
the IRM-recipient HCIs submitted by the three (3) PRO NCR and Rizal
Branches disclosed that out of the IRM funds released to 162 HCIs in
NCR & Rizal amounting to P4.353 billion, 88 per cent or P3.814 billion
(excluding over-liquidation of P1.384 million) had been liquidated, while
12 per cent or P538.793 million remained unliquidated as of December
31, 2020.
22.7. Nevertheless, from the said submitted LRs and SLs of IRM HCIs, the
Audit Team was not able to determine the details, particularly on the
period of confinement of the covered member-patient and amount of each
benefit claim applied as IRM liquidation. Although the Audit Team was
given access to the Benefit Payment System (BPS), it is too tedious and
time consuming to access each Auto Credit Payment Notice (ACPN) per
HCIs in the BPS given the voluminous data, not to mention the
intermittent/unstable internet connection.
22.8. Hence, the Audit Team made use of the CY 2020 extracted file submitted
by the ITMU of PRO NCR & Rizal in determining the breakdown and
details of claims applied as deductions to the IRM fund of each HCI.
Consequently, verification disclosed that 72 benefit claims in the total
amount of P0.829 million initially filed on March 16, 2020 and onwards,
but beyond the allowable period of 60 days and 120 days from the dates
of discharged of patients, whichever is applicable, were improperly
considered as valid claims and applied as a deduction from the IRM funds
received by the HCIs, as summarized in Table 48.
Table 48 – Claims Paid Filed beyond the Allowable Period from Dates of Discharge
Applied as IRM Liquidations
Branch Number of IRM HCIs Number of Claims Amount

Central 9 18 P210,515
North 4 15 345,869
South 6 39 272,695
Total 19 72 P829,079
22.9. Although it is stated in Section G.10.f.2 of PhilHealth Circular No. 2020-

0007 that, “all reimbursements for valid claims filed from the occurrence
of an event onwards by the IRM HCI shall be deducted from the IRM fund
until such time that the IRM fund has been fully liquidated,” it is the Audit
Team’s view that “valid claims” filed from the occurrence of the event
prescribed in the said PhilHealth Circular as a deduction from the IRM
fund of the HCIs should not include those filed claims with dates of
190
discharged 60 days prior to March 16, 2020, in compliance with Section
46 of the Revised IRR of RA No. 7875, as amended by RA No. 10606.
Hence, filed claims on March 16, 2020 and onwards with dates of
discharged of member-patients on January 15, 2020 and prior should not
be applied as liquidation of IRM funds.
22.10. Also, “valid claims” should not include those claims filed on March 16,
2020 and onwards that were beyond 120 days or those with dates of
discharged from January 16, 2020 and onwards in compliance with
Section G.1 of PhilHealth Circular No. 2020-0007, wherein claims with
dates of discharged starting January 16, 2020 and onwards will be given
120 calendar days for HCIs to file their benefit claims. Given the
foregoing, the 72 claims in the total amount of P0.829 million should have
been reimbursed by PhilHealth to the HCIs thru regular mode of payment
of benefit claims reimbursement and not applied as a liquidation of the
IRM funds received by the concerned HCIs.
22.11. It was further noted that 33,645 benefit claims in the total amount of
P444.099 million initially filed in PYs but were returned to the HCIs (RTH
claims) and consequently refiled on March 16, 2020 and onwards were
improperly charged to the IRM fund of concerned HCIs as summarized in
Table 49.
Table 49 – PYs RTH claims refilled on March 16, 2020 and onwards that were
charged to IRM
Central Branch North Branch South Branch Total

PY with (68 HCIs with IRM) (42 HCIs with IRM) (38 HCIs with IRM) (148 HCIs with IRM)
RTH No. of No. of No. of No. of
claims claims Amount claims Amount claims Amount claims Amount
CY 2013 2 P 31,962 - P - - P - 2 P 31,962
CY 2015 81 854,099 - - - - 81 854,099
CY 2016 89 665,492 - - 3 19,298 92 684,790
CY 2017 586 5,544,786 - - 3 46,880 589 5,591,666
CY 2018 299 4,370,532 11 170,970 105 1,227,232 415 5,768,734
CY 2019 6,830 95,318,999 13,233 177,648,122 12,403 158,200,570 32,466 431,167,691
Total 7,887 P106,785,870 13,244 P177,819,092 12,514 P159,493,980 33,645 P444,098,942
22.12. Although refiled claims could be considered as "valid claims," it would
defeat the main objective of the IRM (to ensure HCIs' liquidity and
financial viability to adequately continue their operations during the surge
of the COVID-19 pandemic) when these are charged against the IRM
fund. Likewise, these PYs refiled claims should not be applied as
liquidation of IRM fund since the concerned HCIs’ liquidity and their cash
flows were not yet an issue when these claims were initially filed in the
PYs and considered as RTH.
22.13. The foregoing circumstances would indicate that the IRM funds were not
utilized in accordance with its main objective to ensure HCIs' liquidity and
financial viability to adequately respond to the COVID-19 pandemic.
22.14. The lack of definition of "valid claims" on PhilHealth Circular No. 2020-
0007 created confusions and various interpretations as to what claims
should be allowed as liquidation of/deduction from the IRM fund. For
191
example, the Audit Teams of the government-HCIs interpreted those
claims with the admission date as the reckoning date, while others - the
discharged dates prior to the occurrence of the event or on March 16,
2020 should not be applied as IRM liquidation. Thus, these different
interpretations could result in the unreconciled IRM fund balances
between the records of PhilHealth and the concerned HCIs with IRM.
a. Require the PRO NCR & Rizal Management to:
a.1. Submit valid written justification why claims that were

initially filed beyond 60 days and 120 days from the dates
of discharged of covered member-patients, whichever is
applicable, and those PYs claims refiled on March 16,
2020 and onwards were considered "valid claims" and
allowed as liquidation of the IRM funds released to HCIs;
and
a.2 Coordinate with PhilHealth HO for possible

enhancement/modification of certain provisions of
PhilHealth Circular No. 2020-0007, particularly on
providing clarifications on the allowable claims to be
charged against the IRM fund.
b. Consider revisions on certain provisions of PhilHealth Circular

No. 2020-0007 that contradict the main objective of the IRM
fund.
22.16. The PRO NCR & Rizal Management commented that they would conduct
further validation as to the possible reason(s) for the identified claims
processed beyond the 60 to 120 days, and would endorse this matter to
PhilHealth HO, as to why the system (NClaims) could not automatically
detect if such claims were filed beyond 60 days or 120 days from the
dates of discharged of member-patients. As regards the “valid claims,” an
inquiry, via email, to the HO concerning the reckoning date of IRM
liquidation. They have also referred the audit finding to the HO for
appropriate action through an endorsement dated July 19, 2021.
22.17. In an Exit Conference conducted on August 3, 2021, HO Management

mentioned that the HFPS and other concerned HO Offices would hold a
meeting to clarify valid claims to be charged to the IRM fund. Official
communication will be provided to the COA on the outcome of the
meeting.
22.18. As rejoinders, the PRO NCR & Rizal Audit Team will review the validation
that Management would conduct. Likewise, the action(s) that the HO
would take on this observation will be evaluated in the CY 2021. However,
based on the Management’s comments, the issue on PYs refiled claims
applied to IRM fund is not considered for resolution. Thus, we further
192
recommended that Management include in the agenda for resolution
the propriety of charging PYs refiled claims in the IRM fund.
IRM - TAAL VOLCANO ERUPTION
23. Funds totaling P321.705 million were disbursed to HCIs under the IRM
without the required resolution of the PhilHealth BOD, contrary to Section
26 of RA No. 7875, as amended by RA No. 10606, in relation to Section 4(1)
of PD No. 1445. Likewise, 37 out of 131 HCIs granted with IRM funding
were located in areas that were not directly affected by the Taal Volcano
eruption. Thus the propriety of the funds released to said HCIs could not be
ascertained.
23.1. As previously discussed, the IRM is a process by which PhilHealth

extends assistance to members affected by fortuitous events through the
release of funds to HCIs. Audit of the IRM funds released to HCIs
intended for those affected by the Taal Volcano eruption in January 2020
showed some deficiencies, as discussed in the succeeding paragraphs.
Funds totaling P321.705 million were disbursed to

HCIs under the IRM without the required resolution
of the PhilHealth BOD
23.2. On November 15, 2013, PhilHealth, thru its then PCEO, issued PhilHealth
Circular No. 34, series of 2013, providing the guidelines for the extension
of special privileges to those affected by a fortuitous event. The special
privileges provided for in said Circular are the following:
a. Submission of claims 120 calendar days from the date of discharge;

b. Exemption from the forty-five (45)-day benefit limit and Single
Period of Confinement (SPC) for admissions directly or indirectly
related to the fortuitous event;
c. Reimbursement for both referring and receiving HCI;
d. Exemption to the less than 24-hour confinement rule;
e. Priority in processing of claims;
f. Extension on the submission of the required/mandatory HCI reports;
g. Extension of the accreditation validity and/or submission of
application of health care providers;
h. Reimbursement for destroyed claims; and
i. Extension of deadline of payment of premium contributions and/or
extension of the date of an existing coverage as prescribed by the
Corporation.
23.3. On January 12, 2020, the Taal Volcano in the Province of Batangas
erupted from its main crater. The eruption was phreatomagmatic that
spewed ashes across CALABARZON, Metro Manila, and some parts of
Central Luzon and Ilocos Region, resulting in the suspension of school
classes, work schedules, and flights in the area. The Philippine Institute of
Volcanology and Seismology (PHIVOLCS) subsequently issued an Alert
193
Level 4, indicating "that a hazardous explosive eruption is possible within
hours to days."
23.4. By January 26, 2020 the PHIVOLCS observed an inconsistent but

decreasing volcanic activity in Taal, prompting the Agency to downgrade
its warning to Alert Level 3. It was on February 14, 2020 when the
PHIVOLCS decided to downgrade the volcano's warning to Alert Level 2
due to its decreasing volcanic activity. Finally, PHIVOLCS, on March 19,
2020 downgraded its warning to Alert Level 1.
23.5. On January 21, 2020, PhilHealth announced thru its website that it is
extending special privileges under PhilHealth Circular No. 34, series of
2013 specifically to those HCIs within Batangas Province, as a response
to the fortuitous event, the Taal Volcano eruption. In addition to the
special privileges granted, 131 HCIs within the province of Batangas
received funding under the IRM equivalent to fifty per cent (50%) of all
pending good claims totaling P321.705 million.
23.6. On January 30, 2020, the PhilHealth Board Resolution No. 2496 was
issued authorizing the release of funds to HCIs in areas affected by the
Taal Volcano eruption equivalent to fifty per cent (50%) of all pending
good claims within the province of Batangas under the IRM. The
PhilHealth Board also resolved to include IRM among the special
privileges conferred during a fortuitous event.
23.7. On March 20, 2020, PhilHealth Circular No. 2020-0007 on the Guidelines
on the Provision of Special Privileges to those Affected by a Fortuitous
Event (Revision 1) was issued revising PhilHealth Circular No. 34, series
of 2013 by incorporating the IRM, albeit providing a different way of
computation, as follows:
“IRM Fund = Average Reimbursement Per Day (ARPD) x

Number of days covered”
23.8. Review of the DVs and supporting documents relative to the release of
IRM funds for Taal Volcano eruption revealed that these were processed
and credited to the individual account of HCIs between January 24 to 29,
2020, as summarized in Table 50.
Table 50 – Dates of Release of IRM Funds for Taal Volcano Eruption
DV Authority to Debit Account (ADA) Crediting Date

No. of HCIs Date No. of HCIs Date No. of HCIs Date
130 01/24/2020 124 01/27/2020 23 01/27/2020
62 01/28/2020
39 01/29/2020
6 01/28/2020 6 01/29/2020
1 01/28/2020 1 01/28/2020 1 01/29/2020
131 131 131
194
23.9. Analysis of the provisions of PhilHealth Circular No. 13, PhilHealth Board
Resolution (PBR) No. 2496, and PhilHealth Circular No. 2020-0007
revealed that prior to January 30, 2020, there is no expressed authority to
release funds to HCIs under the IRM since there is no provision in the
PhilHealth Circular No. 13 that pertains to IRM.
23.10. It is only upon the issuance of PBR No. 2496 that the PhilHealth
Management obtained from the Board the authority to release funds to
HCIs within the province of Batangas under the IRM, and it is only upon
the issuance of PhilHealth Circular No. 2020-0007 that the IRM became
part of the special privileges available during a fortuitous event.
23.11. Thus, prior to the issuance of PBR No. 2496, there is no existing provision
of law or board resolution authorizing the release of funds under the IRM.
Therefore, the release of the funds is contrary to Section 26 of RA No.
7875, otherwise known as the “National Health Insurance Act of 1995”, as
amended by RA No. 10606, in relation to Section 4(1) of PD No. 1445.
23.12. Section 26 of RA No. 7875, as amended by RA No. 10606, provides:
SEC. 26. Financial Management. – The use, disposition,

investment, disbursement, administration and management
of the National Health Insurance Fund, including any
subsidy, grant or donation received for program operations
shall be governed by applicable laws and in the absence
thereof, existing resolutions of the Board of Directors of the
Corporation, subject to the following limitations:
(a) All funds under the management and control of the

Corporation shall be subject to all rules and regulations
applicable to public funds. xxx
23.13. Likewise, Section 4 of PD No. 1445 provides that financial transactions

and operations of any government agency shall be governed by the
fundamental principles set forth thereunder, which include, among others:
1. No money shall be paid out of any public treasury of

depository except in pursuance of an appropriation law
or other specific statutory authority.
23.14. Based on the above-quoted provisions, it is clear that disposition of the

corporate funds of PhilHealth requires a law or, in the absence of specific
statutory provision, a resolution of the BOD. This is because in a
corporate set-up, as in the case of PhilHealth, corporate power resides in
the BOD. This is made clear by RA No. 10149, otherwise known as
“GOCC Governance Act of 2011”, which defines “Board of
Directors/Trustees” as the “governing body that exercise the corporate
powers of a GOCC.” The absence of a board resolution authorizing the
release of funds under the IRM renders the same as legally infirm.
195
Thirty-seven (37) HCIs granted with IRM funding
were located in areas that were not directly
affected by the Taal Volcano eruption
23.15. The province of Batangas has 30 municipalities and four cities. The Taal
Volcano is an island volcano located within Taal Lake. The northern half
of the volcano island falls under the jurisdiction of the lakeshore town of
Talisay and the southern half of San Nicolas. The other communities that
encircle Taal Lake include the cities of Tanauan and Lipa and the
municipalities of Talisay, Laurel, Agoncillo, Santa Teresita, San Nicolas,
Alitagtag, Cuenca, Balete, and Mataas na Kahoy, as shown in the
following map18.
23.16.
On the
other hand, the following map shows the communities within the 14
kilometer (km) and 17 km radius danger zones:
18
Amended per RA No. 10673, An Act Reapportioning the Province of Batangas into Six (6) Legislative District: Batangas City as
5th District and Lipa City as the 6th District
196
23.17. Immediately following the eruption of Taal Volcano, the whole province of
Batangas was placed under the State of Calamity. However, data made
available by PHILVOCS in its daily Taal Volcano Bulletin (TVB) and other
sources would suggest that the impact of the eruption of Taal Volcano
was concentrated in the areas within the 14km and 17km Radius Danger
Zones and those in the north, northeast, northwest, west and southwest
direction of the Taal Volcano.
23.18. The municipalities and cities under the 1st, 2nd, and 3rd legislative districts
suffered most, if not all, of the damage caused by the ash fall and soil
deformation that followed the eruption of Taal Volcano.
23.19. Based on available data presented by PHILVOCS in its January 13, 2020,
TVB, the ashfall from the initial eruption of Taal Volcano on January 12,
2020 fell on the city of Tanauan and reached the cities of Metro Manila
and the provinces of Cavite, Laguna, and Bulacan. Large particles called
lapilli fell on the areas of Tanauan and Talisay, Batangas, as well as in
Tagaytay City, Nuvali, and Sta. Rosa, Laguna. Based on the daily TVB
from January 14 to March 18, 2020, the ash from Taal Volcano generally
drifted southwest from its crater, thus affecting the towns southwest of
Taal Lake, specifically the municipalities of Agoncillo, Lemery, and Taal,
as shown in Table 51 and Figure 1.
Table 51 – Dates and Scale of Ashfall
Ash Column
Height (meters;
Dates Alert Level highest) General Direction from Crate
January 12 to 25, 2020 4 2,000 Southwest, west
January 26 to February 13, 2020 3 800 Southwest
February 14 to March 18, 2020 2 500 Southwest, Northeast
197
Figure 1 - Direction of the Ashfall from Taal Volcano Eruption 19
23.20. As per January 13 to 24, 2020 TVB, the PHILVOCS reported that the
Philippine Seismic Network (PSN) plotted 695 volcanic earthquakes
related to the eruption of Taal Volcano with peak magnitudes of M4.1 to
M2.1. Likewise, as per daily TVB, the Taal Volcano Network (TVN) plotted
between January 13 to 24, 2020, 5,101 volcanic earthquakes.
23.21. As per TVB, most of these earthquakes were felt on the towns within the
14-17km Danger Zone, mostly in the municipalities of Talisay, Agoncillo,
Lemery and Laurel and Tanauan City. As shown in Figure 2, the epicenter
of most of these earthquakes swarmed at the western side of the Taal
Lake, around Agoncillo and Lemery.
Figure 2 - Earthquakes around Taal Volcano as of January 23, 2020 20

19
Source: Manila Observatory (http://www.observatory.ph/2020/04/20/impacts-of-taal-volcano-phreatic-eruption-12-january-2020-
on-the-environment-and-population-satellite-based-observations-compared-with-historical-records/)
20
198
23.22. In its January 15, 2020 TVB, PHILVOCS reported that fissures were
observed in the towns of Lemery, Agoncillo, Talisay, Laurel and San
Nicolas. These fissures were manifestation of ground deformation
resulting from movement of magma underground. Subsidence or gradual
downward settling of the ground surface was observed in the west and
side of the Taal Lake as shown in Figure 3.
Figure 3 - Subsidence West and East of Taal Lake21
23.23. The foregoing data show damages were concentrated on the 1st, 2nd, and
3rd legislative districts of Batangas and that the 4th and 5th legislative
on-the-environment-and-population-satellite-based-observations-compared-with-historical-records/
21
on-the-environment-and-population-satellite-based-observations-compared-with-historical-records/)
199
districts, particularly the municipalities of Ibaan, Padre Garcia, San Jose,
San Juan and Taysan, and Batangas City, suffered little to no damage at
all.
23.24. Between January 27 and 29, 2020, PhilHealth credited funds to the HCIs
of all of the six (6) legislative districts of Batangas under the IRM, as
Table 52 – Fund Releases to the Legislative Districts of Batangas Province
Number of General Location Relative to Total Amount of

Legislative District HCIs Taal Volcano and Taal Lake IRM
1st (Balayan, Calaca, Calatagan, Lemery, Lian, 35 West, Southwest P 62,259,969
Nasugbu, Taal and Tuy)
2nd (Bauan, Lobo, Mabini, San Luis, San Pascual, 12 South, Southeast 21,110,506
Tingloy)
3rd (Tanauan City, Agoncillo, Alitagtag, Balete, 28 Adjacent to Taal Lake, 30,943,693
Cuenca, Laurel, Malvar, Mataas na Kahoy, San North, Northeast, east
Nicolas, Sta. Teresita, Sto. Tomas and Talisay)
4th (Ibaan, Padre Garcia, Rosario, San Jose, San 21 Southeast 33,660,611
Juan and Taysan)
5th (Batangas City) 16 Southeast 82,784,178
6th (Lipa City) 19 Adjacent to Taal Lake, 90,946,035
Southeast
Total 131 P321,704,992
23.25. As discussed above, the municipalities of the 4th legislative district and
the sole legislative district of Batangas City were fairly unaffected by the
Taal Volcano, except perhaps by the influx of evacuees from the 1st, 2nd,
and 3rd legislative districts. Nevertheless, as summarized in Table 53, 37
HCIs in the 4th and 5th legislative districts received IRM funding from
PhilHealth.
Table 53 – Fund Releases to Municipalities not affected by Taal Volcano Eruption
Legislative District Municipality/ City No. of HCIs Amount

4th Ibaan 2 P 720,000
Padre Garcia 1 644,800
Rosario 8 15,302,067
San Jose 2 8,810,345
San Juan 7 8,139,949
Taysan 1 43,450
5th Batangas City 16 82,784,178
Total 37 P116,444,789
23.26. In PBR No. 2496, supposedly authorizing the release of funds under the
IRM, PhilHealth Board authorized the payment of “fifty percent (50%) of
all pending good claims in the Province of Batangas”. While it may appear
to be a blanket authority, in one of its Whereas Clauses, the PhilHealth
Board cited “extensive damage to life and property brought about by the
eruption of Taal Volcano.” Hence, it can be reasonably inferred that the
200
BOD intended to extend financial assistance to HCIs that suffered
“extreme damage” due to the Taal Volcano eruption. The same can be
inferred from the provisions of PhilHealth Circular No. 34, series of 2013
and PhilHealth Circular No. 2020-0007. PhilHealth Circular No. 34, series
of 2013 states the objectives of PhilHealth in issuing the same, viz.:
One of the Guiding Principles and Objectives of R.A. 7875,

as amended by National Health Insurance Act of 2013 (R.A.
10606), states that ‘the Government shall provide public
health services for all groups’ this was further explicitly
clarified to include ‘displaced communities and communities
in environmentally endangered areas.
23.27. PhilHealth Circular No. 2020-0007, which amended PhilHealth Circular

No. 34, series of 2013 made the intent clearer, as follows:
This Circular establishes the Corporation’s policies and

procedures to ensure continuous access to PhilHealth
benefit and be able to provide substantial aid to Health Care
Institutions (HCIs) in rebuilding their critically damaged
healthcare system in order to provide continuous provision
of health care services to all Filipinos adversely affected by
fortuitous event.
23.28. In said Circular, the IRM has been defined as:
Xxx a special privilege for the provision of substantial aid to

an eligible Health Care Institutions directly hit by fortuitous
event with clear and apparent intent to continuously operate
and/or rebuild the HCI in order to provide continuous health
care services to adversely affected Filipinos.
23.29. From the above-quoted provisions of PhilHealth Circulars and PBR No.
2496, the intent of the PhilHealth Board to extend financial aids to HCIs
directly affected by a fortuitous event can be reasonably inferred. As
such, the 37 HCIs in the 4th and 5th legislative districts of Batangas
should not have received IRM funding since said HCIs could not have
been directly affected by the eruption of the Taal Volcano. Therefore, the
propriety of the release of P116.445 million to the 37 HCIs mentioned
above is questionable.
23.30. It should also be noted that the funds were released to 37 HCIs at least
two (2) weeks from the eruption of Taal Volcano, sufficient time to
ascertain the areas directly affected by said eruption as well as the HCIs
in need of financial assistance from PhilHealth. While the circumstances
following the eruption of Taal Volcano required prompt and decisive
actions, Management did not exercise the diligence of a good father of
family in safeguarding the funds of PhilHealth when it released IRM funds
to ineligible HCIs.
201
23.31. Had the PRO IV-B Management exercised the diligence of a good father
of a family, the 4th and 5th Districts of Batangas which were not directly
affected and not within the proximity of the Taal eruption should have not
been given the IRM funds, instead these funds should have been
released to the HCIs within the proximity of Taal eruption in need of
additional funds for the immediate provision of health care services.
a. Submit the necessary documents or PBR showing the

authority of or instructions to PRO IV-B to release to HCIs the
IRM funds for Taal Volcano eruption;
b. Require the PRO IV-B to:
b.1. Submit to the Audit Team written explanation why the 37

HCIs in the 4th and 5th legislative districts of Batangas
received IRM funds when they were not adversely
affected by the eruption of the Taal Volcano; and
b.2. Strictly comply with the provisions of Section 26 of RA

No. 7875, as amended by RA No. 10606, in relation to
Section 4(1) of PD No. 1445.
23.33. The PRO IV-B Management commented that:
a. Taal payment was an emergency response to a disaster situation.

The health system of the Batangas Province badly needed financial
assistance. In such a critical situation, the Provincial Government of
Batangas asked for financial assistance to be utilized for the
medical needs of the calamity-affected population. Hence,
PhilHealth responded accordingly. The former PCEO issued a
Memorandum directing the immediate payment of 50 per cent of all
valid pending claims. In response to the Memorandum, the former
AVP of PRO IV-B submitted proposed procedures to implement the
50 per cent payment of in-process claims in possession of PRO’s
BAS while PRO IV-B started preparing the DVs.
b. Payment of 50 per cent of in-process claims was right and just. In

that time of great disaster and in that time of need, PhilHealth had to
act urgently.
c. The 4th and 5th districts of Batangas were not spared by the effects
of the Taal Volcano eruption. Batangas City and its 5th legislative
district served as host local government unit (LGU) with 34
evacuation centers that accommodated internally displaced persons
from 12 cities/municipalities of the province within the 14-km radius
danger zone. The municipalities of the 4th legislative districts also
served as host LGUs to Internally Displaced Persons (IDPs).
202
d. The Taal payments were different from IRM. It was an initiative
independent of and pending the implementation of IRM. Payment of
the subject claims was carried out by PRO IV-B pursuant to its
function of processing and paying claims for reimbursement for
services rendered by HCIs as prescribed by the Revised IRR of the
National Health Insurance Act of 2013, as amended.
e. The issuance of PBR No. 2496, s. 2020 can be said as mere

ratification or confirmation of the initiative of PhilHealth Management
in making the Taal payments.
23.34. The following are the Audit Team’s rejoinders:
a. The Audit Team took cognizance of the dire situation brought about
by the Taal Volcano eruption and the immediate action necessary to
address said natural calamity.
b. The payment of 50 per cent of all in-process claims can be

considered as PhilHealth adopting a new guideline in benefit
payment. However, as provided in Section 16(d) of RA No. 7875,
the power to formulate and implement guidelines on contribution
and benefit payments is vested in the Corporation itself. Further,
pursuant to Section 93, Rule XIX of the IRR of RA No. 7875 as
amended, corporate powers shall be exercised by the BOD as the
policy-making body of the Corporation. Hence, it can be considered
that there was no authority on the part of the PCEO and AVP to
adopt and implement the guidelines for payment of 50 per cent of all
in-process claims.
c. Thus, we reiterated our recommendation that top Management

submit the necessary documents or PBR showing the authority of or
instructions to PRO IV-B to release to HCIs the IRM funds for Taal
Volcano eruption. Moving forward, we further recommended that
top Management exercise the diligence of a good father of a
family in the succeeding releases of funds in response to
fortuitous events, if any, to protect the interest of the
Corporation in particular and the government in general.
INTERIM FINANCING MECHANISM (IFM)
24. The grant of advance cash payment amounting to P100 million to the
Contractor was made without legal authority due to absence of prior
approval of the President of the Philippines as required under Section 88(1)
of PD No. 1445, otherwise known as the Government Auditing Code of the
Philippines.
24.1. It is the declared policy of the State, as provided under Section 2 of PD

No. 1445, that all resources of the government shall be managed,
expended, or utilized in accordance with law and regulations and
safeguarded against loss or wastage through illegal or improper
203
disposition, with a view to ensuring efficiency, economy, and effectiveness
in the operations of government. The same Section also provides the
responsibility to ensure that such policy is faithfully adhered to rest directly
with the chief or head of the government agency concerned.
24.2. Section 88(1) of the same PD provides for the proscription against
advance payments on services not yet rendered or supplies and materials
not yet delivered except with the prior approval of the President of the
Philippines. Specific provision of the proscription reads as follows:
Except with the prior approval of the President (Prime

Minister) the government shall not be obliged to make an
advance payment for services not yet rendered or for
supplies and materials not yet delivered under any contract
therefor. No payment, partial or final, shall be made on any
such contract except upon a certification by the head of the
agency concerned to the effect that the services or supplies
and materials have been rendered or delivered in
accordance with the terms of the contract and have been
duly inspected and accepted.
24.3. The prohibition on advance payments on government contracts is

categorical and explicit that as for transactions which are not compliant
thereto can be considered as illegal expenditures under Item 3.3 of COA
Circular No. 2012-003 dated October 29, 2012, as amended, which refers
to cases of violations of laws in the use of government funds and
property.
24.4. On April 24, 2020, a MOA was executed by and between PhilHealth, as
represented by its then PCEO and the Contractor, as represented by its
Chairman, for the former to implement the prospective payment
mechanism concerning SARS-CoV-2 testing service rendered by the
latter and to cover and pay for SARS-CoV-2 tests of Filipinos pursuant to
its mandate under RA No. 1060622 and RA No. 11469, otherwise known
as the Bayanihan to Heal as One (BAHO) Act.
24.5. As stated in the MOA, PhilHealth will implement a prospective mechanism

with respect to SARS-CoV-2 testing services to be rendered by the
Contractor, pro hac vice, and cover and pay for SARS-CoV-2 tests of
Filipinos pursuant to its mandate under RA No. 10606 and RA No. 11469.
24.6. Item D of the subject MOA provides that:
PhilHealth shall have the following obligations:
1. Xxxx
22
National Health Insurance Act of 1995
204
2. Upon signing of this Agreement, immediately forward to
xxx [Contractor] the full Advance Cash Payment of one
Hundred Million Pesos (Php100,000,000.00) xxx.
24.7. Verification disclosed that PhilHealth released the P100 million cash
advance to the Contractor as evidenced by Official Receipt (OR) No.
3712419 dated May 05, 2020, following the above-quoted provision in the
MOA. Under PBR No. 2521 dated May 14, 2020, the advance payment
was confirmed/ratified by the PhilHealth BOD, as follows:
WHEREAS, the extreme urgency to conduct targeted testing

for Covid-19 nationwide and Section 3(f) of RA No. 11469
which mandates the government to “ensure that there is
sufficient, adequate and readily available funding to
undertake the foregoing” offer valid justification for the
advanced payment to xxx [Contractor] in the amount of One
Hundred Million Pesos (Php100,000,000.00), subject to
replenishment as may be warranted.
24.8. Relative thereto, an AQM No. 21-003 HO dated February 10, 2021 was
issued to Management seeking clarification on the legality of advance
payment made to the Contractor. In its reply, PhilHealth Management
averred that the requirement of Presidential approval for advance
payment under Section 88 of PD No. 1445 is not applicable to the
prospective payment of P100 million to the Contractor, emphasizing the
following arguments:
a. The P100 million initial payment to the Contractor is within the legal
contemplation of “other provider payment mechanism” allowed
under RA No. 7875, as amended by RA No. 10606, and
“prospective payment” and “prepayment” provisions of the UHC Act
and its IRR;
b. The prohibition of advance payment is not absolute as there are

recognized exceptions pursuant to Government Procurement Policy
Board (GPPB) Resolution No. 6-2020 and GPPB Circular No. 1-
2020 dated April 6, 2020, which allowed advance payment of up to
30% and 50% of the contract amount for procurement projects
involving goods and critical services to address the pandemic;
c. Memorandum Order (MO) No. 48, s. 2020 entitled “Increasing the

Allowable Amount of Advance Payment for Procurement Activities
under Republic Act No. 11469 of the Bayanihan to Heal as One Act”
allows advance payment of up to thirty per cent (30%) of the
contract amount for the procurement of goods and services and
ancillary services to address the COVID-19 pandemic;
d. The advance payment as one key health financing actions identified

by World Health Organization (WHO) to remove financial barriers to
health services; and
205
e. The Contractor has a “sui generis” status and an auxiliary of the
government in the implementation of humanitarian programs; thus, it
requires a case-to-case approach.
24.9. Notwithstanding the arguments of PhilHealth, the main issue here is

whether the MOA entered into by and between PhilHealth and the
Contractor conforms to the Agency’s mandate and the prevailing laws,
rules, and regulations. Attention is invited to Section 4(v) of the BAHO
Act, allowing the President in implementation of COVID-19 response and
recovery intervention, which states that:
SEC. 4. COVID-19 Response and Recovery Interventions –

Pursuant to Article VI, Section 23(2) of the Constitution, the
President is hereby authorized to exercise powers that are
necessary and proper to undertake and implement the
following COVID-19 response and recovery interventions:
Xxxx
(v) Partnering with the [Contractor], as the primary

humanitarian agency that is auxiliary to the government in
giving aid to the people, subject to reimbursement, in the
distribution of goods and services in the fight against
COVID-19.
24.10. As explicitly stated in the foregoing provision, the payment mechanism to

be applied in the said partnership by the parties shall be through
reimbursement, not advance payment.
24.11. Moreover, under Paragraph A of the subject MOA, PhilHealth will

implement through the prospective mechanism. As defined under Section
4.29 of the IRR of RA No. 11223, the prospective mechanism refers to a
method of reimbursement in which payment is based on a predetermined,
fixed amount. Thus, the advance payment was a contradiction to that
effect.
24.12. The contention of Management that, pursuant to Section 34 of RA No.

7875, as amended by RA No. 10606 and Section 18.10 of the IRR of RA
No. 11223, PhilHealth is allowed to adopt other appropriate mechanisms,
but these provisions do not explicitly allow advance payment. Moreover,
the rule prohibiting advance payment under Section 88(1) of PD No. 1445
is indeed not without exceptions as discussed by Management; however,
it must be emphasized that the prohibition on advance payment is the
general rule and any exception to the same shall be provided only by the
clear and unequivocal provision of law to that effect.
24.13. In its letter dated October 12, 2020, PhilHealth sought the legal opinion of
the GPPB relative to the subject MOA clarifying the applicability of RA No.
9184 on the same as well as the reimbursement structure of payment to
the Contractor. The GPPB opined that: (a) the advance payment
provisions under 2016 Revised IRR of RA No. 9184 and GPPB Circular
206
No. 001-2020 would only apply to procurement undertaken pursuant to
the said legal authorities; (b) the legal authority in the provision of
advance payment is pursuant to Section 88 of PD No. 1445; and (c) the
representation of the subject MOA undertaken pursuant to the partnership
arrangement authorized under Section 4(l) of the Bayanihan Act
effectively closes the door to the application of the rules on advance
payment for procurements made under RA No. 9184 or Section 4(k) of
the Bayanihan Act. Instead, accounting and auditing rules on
reimbursement are within the purview of the COA.23
24.14. Correspondingly, in its letter dated October 23, 2020, the Department of
Justice (DOJ) confirmed the same legal basis as prescribed under
Section 88 of PD No. 1445 on the prohibition of advance payment on
government contracts except with the President's approval. Further, the
DOJ opined that even if PhilHealth failed to get such approval from the
President, the same may still be obtained post facto, as no provision in
the said law makes the transaction invalid, solely on account of a failure to
obtain the President’s prior approval.
24.15. Likewise, the Audit Team holds no contention on the sui generis status of

the Contractor and an auxiliary of the government in the implementation
of humanitarian programs as well as the adaptation of WHO guidelines
and best practices by PhilHealth to address the pandemic as provided
under Section 4(a) of RA No. 11469 which states that:
(a) Following the World Health Organization (WHO) or the

United States Centers for Disease Control and Prevention
guidelines and best practices, adoption and implementation
of measures to prevent or suppress further transmission and
spread of COVID-10 through effective education, detection,
protection, and treatment: xxx
24.16. However, the Team noted that although the WHO recognizes the
advance payment as a complement to retrospective reimbursement, it still
boils down to the legality of the approach mentioned. PhilHealth could
have at least exercised the required diligence of a good father of a family
to check whether or not advance payments can be made without any
legal impediment or requirements to be met. At the very least, PhilHealth
could have secured the prior approval of the President of the Philippines,
which the latter may approve given the circumstances faced by the
country brought about by the COVID-19 pandemic that greatly affected
the Filipino citizenry.
24.17. The grant of cash advance of P100 million to the Contractor for the
SARS-CoV-2 testing services violated Section 88 of PD No. 1445. Hence,
in the absence of proof showing that the cash advance made to the
Contractor has legal basis or a post-facto approval of the President of the
Philippines justifying exemption from the proscription against advance
payment, the same was without legal authority and could be considered
23
GPPB NPM 006-2020 dated October 16, 2020
207
as illegal expenditures as defined under Item 3.3 of COA Circular No.
2012-003 dated October 29, 2012.
24.18. We recommended that PhilHealth top Management:
a. Secure a post facto approval of the President of the Philippines

on the release of cash advance of P100 million to the Contractor;
and
b. Moving forward, stop granting cash advance payments for

services not yet rendered or for supplies and materials not yet
delivered under any contract without the prior approval of the
President and beyond the limitations prescribed under the
existing laws, rules, and regulations to protect the interest of the
government.
24.19. In its response, PhilHealth Management maintained its position on the

validity of the grant of cash advance and stated that:
a. The P100 million initial payment to the Contractor is within the legal
contemplation of “other provider payment mechanism” allowed
under RA No. 7875, as amended by RA No. 10606, and
“prospective payment” and “prepayment” provisions of the UHC Act
and its IRR, hence, the PD No. 1445 prohibition on advance
payment should not apply.
b. The prohibition on advance payment is not absolute as there are

recognized exceptions. The UHC Act IRR allows “other appropriate
mechanisms.” Even MO No. 48, s. 2020 allows Advance Payment
of Up to 30% of the Contract Amount.
c. The WHO identified advance payment as one of the key health

financing actions to remove financial barriers to health services.
Further, the Contractor has sui generis status and auxiliary to the
government, neither an instrumentality of the government nor a
private corporation.
24.20. As rejoinders, the Audit Team would like to emphasize that

Management’s comments have already been addressed as discussed
above. Absent new arguments on the grant of cash advance to the
Contractor, the Audit Team maintains its position that claims under the
IFM are subject to reimbursement only, thus pursuant to Section 4(v) of
the BAHO Act, we reiterate our recommendation that PhilHealth secure
authority on the release of the cash advance from the Office of the
President.
25. The propriety and occurrence of claims under the IFM amounting to P3.375
billion could not be reasonably established due to: (a) non-submission of
duly accomplished CIF for the 950,144 Reverse Transcription – Polymerase
Chain Reaction (RT-PCR) tests; and (b) inconsistencies and deficiencies in
208
the validated line list or summary of test results, such as: (i) 26,448
validated RT-PCR tests bore no CIF Reference Number and other pertinent
information of member-patients tested, i.e. complete address, admission
date, procedure date, assigned PIN; (ii) multiple RT-PCR tests were
conducted to 8,155 members; (iii) about 764 members have been tested
twice in one day; (iv) a total of 1,532 RT-PCR tests were declared twice in
the line list; and (v) 2,120 RT-PCR tests under 1,053 PINs appearing twice or
more in different or conflicting names; thus, not in conformity with the
provisions under the IFM MOA, Department of Health (DOH) Department
Circular No. 2020-0318, DOH Department Memorandum No. 2020-0436 and
PhilHealth Circular No. 2020-0010, as amended by PhilHealth Circular No.
2020-0017 and, these disbursements could be considered unsubstantiated
claims, contrary to Section 4(6) of PD No. 1445.
25.1. Pursuant to the provisions of the BAHO Act24, PhilHealth entered into a
MOA with the Contractor for the latter to provide RT-PCR testing services
to Filipinos, the costs of which will be covered and paid by PhilHealth
under the IFM. Initially, PhilHealth released a cash advance to the
Contractor amounting to P100 million, subject to replenishment upon the
submission of required documents.
25.2. Relative thereto, the Audit Team post-audited 30 DVs aggregating P3.375
billion representing the total cost of 950,144 RT-PCR tests paid in several
batches. The propriety and occurrence of the disbursements, however,
could not be reasonably established due to the following deficiencies:
Non-submission of duly accomplished CIF for the

950,144 RT-PCR tests
25.3. The conditions outlined in the MOA as regards the replenishment of fund
are embodied in the following provisions:
C. PROOF OF TESTING
The parties agree that for purposes of this Agreement the

only accepted proof of testing services as basis for
[Contractor] to deduct the cost of the same from the Advance
Cash Payment are: (i) duly accomplished customer
information form duly signed by the person tested xxx.
Xxxx
E. OBLIGATIONS OF [CONTRACTOR]
1. Provide SARS-COV-2 testing services in accordance

with its status as a PhilHealth Accredited Testing
Laboratory, as well as in keeping with prevailing laws,
rules and regulations;
24
RA No. 11469 approved on March 24, 2020
209
2. Ensure that all its testing laboratories for SARS-COV-2
adhere to the standards and accepted protocols set
forth in PhilHealth Circular No. 2020-0010 (Benefit
Package Testing for SARS-COV-2);
3. Submit to PHILHEALTH the following documents as

the only accepted proof of testing services required for
a faster and simplified process, as well as basis for
[Contractor] to deduct the cost of the testing services
from the Advance Cash Payment: (i) duly
accomplished customer information form duly signed
by the person tested, and (ii) [Contractor] summary of
test results duly certified by [Contractors] pathologist
as submitted to the DOH and RITM and/or attached
agencies xxx
25.4. The same requirement can be found in the DOH Department Circular No.
2020-031825, which enjoins all Disease Reporting Units (DRUs), Hospitals,
and LGUs to provide accurate, complete, and timely data on COVID-19
cases. Said Circular was instructive, viz.:
All specimens tested for COVID-19 should have a completely

filled-up Case Investigation Form (CIF) with emphasis on
complete address (House/Building No., Street, Barangay,
City/Municipality, and Province), and contact number to
initiate contact tracing activities.
Xxx. Specimens with incomplete CIF shall not be accepted

by the laboratories for processing. xxxx
Xxx. Likewise, the laboratories are enjoined to ensure

accuracy and completeness of the data submitted with
specific focus on onset of illness, complete address (house
number, street, barangay, City/Municipality, and Province),
and contact number of patients.
25.5. Further, DOH Department Memorandum No. 2020-043626 also highlighted

the importance of completely filled out CIFs for timely, accurate, and
relevant surveillance and epidemiologic information on COVID-19 cases
and their close contacts in the country. Hence, the Memorandum provides
the following:
II. GENERAL GUIDELINES
Xxxx
25
DOH Department Circular No. 2020-0318 dated August 7, 2020, re: Mandatory Submission of Accurate, Complete, and Timely
COVID-19 Case Data through the COVID Document Repository System (CDRS) and Laboratory Information System API
26
DOH Department Memorandum No. 2020-0436 dated October 1, 2020, re: Minimum Data Requirements of COVID-19-Related
Information Systems
210
2. The revised Case Investigation Form (CIF) shall
contain the specified minimum data
requirements.
3. Disease reporting units shall complete these data

when filling out the Case Investigation Form
(CIF) in accordance with Department Circular No.
2020-0318 xxx
III. SPECIFIC GUIDELINES
Xxxx
4. All items must be filled out or must have a check

mark on the appropriate box. Items with asterisk
(*) are required fields and must be filled in
completely and properly. Never leave an item
blank, just write N/A or not applicable
25.6. Under Item E.2 of the MOA, the Contractor is obliged to ensure that all its
testing laboratories shall adhere to the standards and accepted protocols
set forth in PhilHealth Circular No. 2020-0010 27, now amended by
PhilHealth Circular No. 2020-01728. Hence, the Contractor is also bound
to submit documents as required in Item VII.F of the said PhilHealth
Circular, to wit:
1. Properly accomplished SARS-CoV-2 Claims Summary

Form (preferably in MS Excel Format or CSV file);
2. Scanned copy of the properly accomplished CIF that is
prescribed by the DOH (preferably in pdf format);
3. Itemized billing statement, which includes the readers’
fees (preferably in MS Excel format or CSV file); and
4. For directly filed claims, original copy of the official
receipt and waiver (Annex D) issued by PhilHealth
accredited SARS-CoV-2 testing laboratory that the
member paid the full amount for the SARS-CoV-2
testing and no PhilHealth deductions was made.
25.7. Likewise, Item VII.G of the same PhilHealth Circular is instructive that:
All claim applications shall have complete attachments as

required in Item VII.F of this policy. Claims with incomplete
attachments shall be returned to the testing laboratory/HCP
following the existing rule on Return to Sender (RTS).
25.8. Based on the foregoing provisions, the CIF is undoubtedly a vital

document that significantly impacts the fight against the COVID-19
27
PhilHealth Circular No. 2020-0010 re: Benefit Package for testing for SARS-CoV-2, signed on April 8, 2020
28
PhilHealth Circular No. 2020-0017 re: Benefit Package for SARS-CoV-2 testing using RT-PCR (Revision 1), signed on June 22,
2020
211
pandemic. The data indicated in the revised CIF include not only the
personal data of the member-patients, but also relevant information
necessary to be documented for monitoring and contact tracing. Hence,
CIFs should be taken into account not only as a mere documentary
requirement in the liquidation, but also as a tool in fighting against the
pandemic. Important fields to be filled in include, among others:
a. Testing Category/Subgroup
b. Patient Profile
c. Current Address in the Philippines and Contact Information
d. Current Workplace Address and Contact Information
e. Consultation and Admission Information
f. Disposition at Time of the Report
g. Health Status at Consult
h. Case Classification
i. Special Population
j. Permanent Address and Contact Information (if different from
current address)
k. Address outside the Philippines and Contact Information (for
Overseas Workers and Individuals with Residence outside the
Philippines)
l. Clinical Information
m. Laboratory Information
n. Outcome/Condition at Time of Report
25.9. Review of the relevant DVs disclosed that all the 950,144 RT-PCR tests
were not supported with duly accomplished CIFs. The Audit Team then
requested the submission thereof through Memorandum No. 2021-058
HO dated February 23, 2021. However, electronic copies of the CIFs
submitted in response thereto covering batches 01 to 25, showed that
these were neither duly signed nor completely accomplished. The
necessary fields, as enumerated in the immediately preceding paragraph,
were either left blank or with incomplete details. Notably, most of the data
indicated therein included only the names, incomplete addresses, contact
numbers, and dates when the specimens were collected. Hence, the
same cannot be considered to have satisfied the requirement.
25.10. It is also worth mentioning that PhilHealth, in several instances, paid the
Contractor prior to the submission and validation of the CIF. This is
evidenced by the Contractor’s letters requesting for the replenishment of
the fund (cash advance) with its undertaking to submit the CIF on dates
later than the check dates for the corresponding payment. In addition
thereto, there were deductions made amounting to P13.377 million on two
DVs29 resulting from adjustments to previous payments. No documents
were attached to the DVs to determine the composition and propriety of
the adjustments but accordingly, the same were made due to the
following reasons: (a) no middle name; (b) foreign-sounding names; (c)
with special character; and (d) defective birthdate, which would indicate
29
Disbursement Voucher Nos. 2020-11-0200 dated November 23, 2020 and 2020-12-0257 dated December 17, 2020
212
that claims were not thoroughly validated by the PhilHealth before
payment thereof.
25.11. It can be recalled that PhilHealth requested for the relaxation of audit
requirements on the succeeding fund transfer (2nd Tranche) to the
Contractor through its letter dated June 4, 2020, addressed to the COA. In
recognition of the COVID-19 crisis, the COA approved its request to allow
the payment thereof upon the Contractor’s submission of a line list in the
interim, subject to its undertaking that PhilHealth shall ensure that the
Contractor submits the liquidation reports within a reasonable period.
However, it must be emphasized that the COA’s assent was only specific
to the request dated June 4, 2020, pertaining the release of 2nd tranche.
Therefore, all other releases subsequent thereto shall be subjected to the
usual liquidation requirements.
25.12. The disbursements of funds for the RT-PCR tests without the properly
accomplished CIFs were contrary to the conditions set forth in the MOA
and of the provisions under DOH Department Circular No. 2020-0318,
DOH Department Memorandum No. 2020-0436 and PhilHealth Circular
Nos. 2020-0010 and 0017. Moreover, it precluded the Audit Team from
determining the propriety of the claims since absence of the duly
accomplished CIFs, there is no way for the Audit Team to verify whether
the concerned individuals were indeed tested or at least examined as to
their appropriateness to undergo the RT-PCR test.
Inconsistencies and deficiencies in the validated

line list or summary of test results
25.13. Under Item E.3 (ii) of the MOA, the Contractor is specifically obliged to
submit as proof of testing the summary of test results or the line list duly
signed by its pathologists, in addition to the duly accomplished CIFs.
While the Contractor fell short in submitting the duly accomplished CIFs, it
was not remiss in supporting its disbursements with the required line list.
Accordingly, the line lists were validated by PhilHealth and submitted to
the Audit Team in compact disks where claims paid were tagged as good
claims.
25.14. To determine duplicity of claims in the validated (good) claims, PhilHealth

Identification Number (PIN) was used in the analysis considering it the
unique identifier for each member. Deficiencies noted in the line list were
as follows:
a. 26,448 validated RT-PCR tests bore no CIF Reference Number and

other pertinent information of member-patients tested, i.e. complete
address, admission date, procedure date, assigned PIN
The line list submitted by the Contractor should contain the

minimum information as it will serve as the basis for PhilHealth to
identify the claims. Should there be missing information, the same
should have been addressed during PhilHealth’s validation so that
only those claims with complete and verified information will be
213
endorsed as “good” claims and allowed for payment. However,
claims in the submitted disk that have gone through validation by
PhilHealth included RT-PCR tests without their respective PINs and
CIF reference numbers despite being tagged as “good” claims.
Good claims without the necessary identifier are exposed to higher
risk of being paid more than once.
b. Multiple RT-PCR tests were conducted to 8,155 members
Audit disclosed that multiple RT-PCR tests were conducted to 8,155

members as summarized in Table 54.
Table 54 - Summary of Multiple RT-PCR Tests
Total No. of RT-PCR Tests

No. of Tests Per Member No. of Members Conducted
2 7,233 14,466
3 462 1,386
4 279 1,116
5 76 380
6 55 330
7 33 231
8 11 88
9 5 45
11 1 11
Total 8,155 18,053
As reflected in Table 54, it can be inferred that a total of 18,053 RT-

PCR tests were conducted on 8,155 members, with each of them
being tested two to eleven times in CY 2020. Considering the
absence of properly accomplished CIFs, the Audit Team could not
validate whether the RT-PCR tests are actually administered to
these individuals. Moreover, the Audit Team could not determine if
the concerned individuals were required to undergo the tests
multiple times as there was no available information in the submitted
line list as to the reason(s) for the repeated test.
c. About 764 members have been tested twice in one day
Testing a member more than once a day is unlikely as the test

results would not come out on the same day. However, audit
disclosed that at least 764 members were tested twice in a single
day. Due to the absence of the duly accomplished CIFs, the
propriety of conducting 1,528 RT-PCR tests or twice for each of the
764 members within a day could not be established.
d. A total of 1,532 RT-PCR tests were declared twice in the line list
In the submitted line list, each RT-PCR test conducted was

assigned with a respective CIF Reference Number. Said CIF
Reference Numbers are unique identifiers assigned for each test
conducted and supposedly should only appear once. However,
214
review revealed that 1,532 CIF Reference Numbers appeared twice
therein, thereby resulting in the payment of 1,532 tests, when in
fact, only 768 tests were conducted.
e. 2,120 RT-PCR tests under 1,053 PINs appearing twice or more in

different or conflicting names
The Audit Team’s reliance on the PINs is premised on the fact that
each member is issued/assigned one unique PIN. However, audit
showed that 1,065 PINs appeared twice in the line list, each with
different names from the other. Also, some tests have incomplete
details, like the middle name of the member. Hence, the validity of
the 2,120 RT-PCR tests conducted could not be determined based
on the line list alone.
25.15. Even the line list, which was supposed alternative for the accomplished
CIF in the interim, could not be depended upon. The non-submission of
the duly accomplished CIFs precluded the Audit Team from determining
the propriety and occurrence of the RT-PCR tests. Hence, payments
made to the Contractor is contrary to Section 4(6) of PD No. 1445, for
inability to support the same with complete documentation.
25.16. We recommended that PhilHealth top Management direct the FMSr

to:
a. Submit properly accomplished CIFs on all payments made to

the Contractor and the relevant documents supporting the
deductions made amounting to P13.377 million, otherwise the
disbursements will be suspended in audit;
b. Revalidate the previous payments made to the Contractor to

ascertain that only those valid RT-PCR tests conducted will be
paid and to deduct overpayment(s), if any, in the succeeding
claims of the Contractor; and
c. Comply strictly with the DOH Department Circular No. 2020-

0318, DOH Department Order No. 2020-0436, PhilHealth
Circular No. 2010-0010, as amended by PhilHealth Circular No.
2010-0017 and Section 4(6) of PD No. 1445 to ensure that the
subsequent payments to the Contractor are duly supported
with complete documentation.
25.17. In response to the audit recommendations, Management submitted the

following comments:
a. PhilHealth submitted CIFs from Batches 26 to 36 of the claims

received and paid to Contractor, contained in a hard drive. The
Information Technology Management Department (ITMD) is
currently downloading the remaining CIFs from the Contractor’s C19
platform. Once completely downloaded, the same shall be
furnished to COA. Also, access to the server containing previously
215
downloaded CIFs from Batches 1 to 720 will be granted to the Audit
Team.
b. Through continuous revalidation mechanisms, PhilHealth was able

to identify 5,374 claims with deficient records, e.g., no middle
names, foreign-sounding names, names with special characters,
invalid birthdates. Adjustments amounting to P18.809 million have
already been deducted from the outstanding payables to the
Contractor for these claims. Moreover, no succeeding deductions
were made as deficient claims were returned to the Contractor for
evaluation and completion or corrective action.
c. The observation will be submitted to the Contractor after validation

of the deficiencies noted. A breakdown of the adjustments already
made against the two DVs will be submitted to the Audit Team for
audit reference.
d. PhilHealth assured the COA of its strict compliance with the DOH
Department Circular No. 2020-0318 and Department Order No.
2020-0436, as well as PhilHealth Circular No. 2020-0010, as
amended by PhilHealth Circular No. 2020-0017, and PD No. 1445 in
the subsequent payments to the Contractor.
25.18. The Audit Team’s rejoinders are as follows:
a. The Audit Team acknowledged the commitment of PhilHealth to

grant COA full access to Batches 1 to 720, and any deficiencies
noted will be communicated to Management. Meanwhile, initial
review of the newly submitted CIFs from Batches 26 to 36 based on
samples disclosed the same observations as the previous Batches.
That being the case, we further recommended that Management
consider requiring FMSr to conduct pre-audit of the CIFs being
downloaded by the ITMD and ensure that the deficiencies
noted are already addressed before submitting the same to the
Audit Team to avoid issuance of NS.
b. Management’s commitment to comply with the DOH and PhilHealth

regulations is appreciated, however, the full implementation of the
recommendations will be monitored in the CY 2021 audit of IFM.
c. Considering the voluminous transactions on the IFM, it is informed

that a special audit shall be conducted by a composite Team from
COA Central Office.
216
PHILHEALTH BENEFIT PACKAGES AND CLAIMS
26. The ultimate objectives of the Electronic Claims (eClaims) of reducing the
Turn Around Time (TAT) and improve the operational efficiency in the
processing/payment of claims were not fully attained in PRO NCR & Rizal
due to the delayed payment of 649,893 claims totaling P6.519 billion in CY
2020, an increase of 568,643 claims aggregating P5.732 billion or eight
times higher than the reported data or 81,250 claims totaling P786.747
million in CY 2019, contrary to Item I of PhilHealth Circular No. 2017-0030.
Likewise, 829,348 claims under the All Case Rate (ACR) provider payment
mechanism in the total amount of P8.428 billion in CY 2020 were paid in
PRO NCR & Rizal and PRO XI beyond the prescribed period of 60 days from
the date of receipt of claims or date of re-filing in the case of RTH, contrary
to Section 47 (l) of RA No. 7875, as amended by RA No. 10606. Further,
payments of 889 Z Benefit claims amounting to P31.407 million in CY 2020
by PRO XI were made beyond the stipulated period of 30 working days,
contrary to Item IX.D of PhilHealth Circular No. 2015-035.
26.1. These are reiterations of prior year’s observations as Management did not
fully implement the audit recommendations.
26.2. Item I of PhilHealth Circular No. 2017-0030 dated July 21, 2017 provides
the purpose and benefits of eClaims, which include the achievement of
greater efficiency in claims processing, improved claims data integrity
through minimization and/or elimination of manual encoding, and
improved TAT in the processing claims.
26.3. It is emphasized that while Section 47 (l) of RA No. 7875, as amended by

RA No. 10606, requires PhilHealth to process all completed claims,
except those under investigation within sixty (60) calendar days (cds) from
receipt, the same is on the assumption that the processing is done
manually. With the implementation of eClaims, it presents opportunities
for fraud detection, monitoring, and prevention. In other words, the benefit
claims processing under eClaims will enable the validation of the
information quickly, adjudicate the claims against a schedule of benefits,
and pay the correct health provider with the end view of reducing the TAT.
26.4. Item IX.D of PhilHealth Circular No. 2015-035 states that all Z Benefit
claims shall be processed by PhilHealth within 30 working days from
receipt of claim provided that all requirements are submitted by the
contracted HCI.
26.5. In PRO NCR & Rizal, analysis and comparison of CYs 2020 and 2019
data on ACR claims paid thru the eClaims disclosed that in CY 2020
649,893 claims totaling P6.519 billion were paid beyond the allowed 60
days as mandated by law in claims processing, an increase of 568,643
claims aggregating P5.732 billion or eight times higher than the reported
data of 81,250 claims totaling P786.747 million in CY 2019, as
217
Table 55 – Comparative Data of ACR Claims Paid Beyond the Allowed 60 cds
During CYs 2019 & 2020 in PRO NCR & Rizal
No. of Claims
CY 2019* CY 2020 Increase by % of Increase
(a) (b) (c)=b-a (d)= b/a
Central Branch 44,109 237,829 193,720 539%
North Branch 15,376 202,357 186,981 1,316%
South Branch 21,765 209,707 187,942 964%
Total 81,250 649,893 568,643 800%
Amount
CY 2019* CY 2020 Increase by % of Increase
(a) (b) (c )=b-a (d)= b/a
Central Branch P409,460,826.00 P2,325,518,948.00 P1,916,058,122.00 568%
North Branch 166,178,262.00 2,096,608,130.00 1,930,429,868.00 1,262%
South Branch 211,108,112.00 2,096,697,252.57 1,885,589,140.57 993%
Total P786,747,200.00 P6,518,824,330.57 P5,732,077,130.57 829%
*Figures for CY 2019 were taken from the prior year’s Audit Observation Memorandum (AOM) No. 20-009(19) NCR
dated July 30, 2020
26.6. Moreover, analysis of the data on the monthly extracted paid claims
provided by the IT Department of PROs NCR & Rizal and XI, and review
of the sampled attached Validation Reports from the NClaims Web
System disclosed that there were 829,348 claims aggregating P8.428
billion processed and paid beyond the required period of 60 cds. These
claims represent 44.48 per cent of the total number of processed and paid
claims during CY 2020 in the said PROs, thus, the commitment of
PhilHealth to improve the TAT for benefit claims processing/payment
under the ACR provider payment mechanism was not fully attained. The
details are presented in Table 56.
Table 56 – Actual TAT on Claims Processing of PROs NCR & Rizal and XI for CY 2020
(Number of Claims Processed and Paid)

TAT PRO NCR & Rizal PRO XI Total
1-10 days 138,053 1,341 139,394
11-20 days 31,939 24,453 56,392
21-30 days 76,425 57,186 133,611
31-40 days 169,023 46,726 215,749
41-50 days 134,096 100,074 234,170
51-60 days 121,536 134,154 255,690
Sub-total (Processed and Paid Within 60 days) 671,072 363,934 1,035,006
Beyond 60 days 649,893 179,455 829,348
Percentage (%) 49.20% 33.03% 44.48%
Total number of eClaims processed and paid in
CY2020 1,320,965 543,389 1,864,354
(Equivalent Amount of Claims Processed and Paid)
218
TAT PRO NCR & Rizal PRO XI Total
1-10 days P 1,532,555,311.00 P 13,664,288.00 P 1,546,219,599.00
11-20 days 352,141,406.00 260,819,384.00 612,960,790.00
21-30 days 809,220,458.00 619,623,091.60 1,428,843,549.60
31-40 days 1,772,377,623.00 506,106,428.80 2,278,484,051.80
41-50 days 1,406,184,157.00 1,078,659,697.20 2,484,843,854.20
51-60 days 1,207,872,396.00 1,460,459,349.40 2,668,331,745.40
Sub-total (Processed and Paid Within
60 days) 7,080,351,351.00 3,939,332,239.00 11,019,683,590.00
Beyond 60 days 6,518,824,330.57 1,909,100,506.40 8,427,924,836.97
Total amount of eClaims Processed and
Paid in CY 2020 P13,599,175,681.57 P5,848,432,745.40 P19,447,608,426.97
26.7. The TAT was computed from the date of receipt by the PRO or Branch of
the claim electronically filed by the HCI up to the date the equivalent
amount of reimbursement of claim was paid or credited to the designated
depository account of the HCI through the ACPS. For claims with Motion
for Reconsideration (MR) or Return to Hospital (RTH) that have been
refiled and resulted in “good claims”, the counting started from the date of
receipt of the refiled claims.
26.8. Furthermore, in PRO XI, it was observed that the TAT in the processing
and payments of 889 Z Benefit claims totaling P31.407 million in CY 2020
were beyond the stipulated period of 30 working days30, contrary to Item
IX.D of PhilHealth Circular No. 2015-035.
26.9. Inquiry with the responsible personnel from PROs NCR & Rizal and XI
disclosed that the claims in question might refer to “crude claims.” These
claims refer to processed, reviewed, and evaluated claims but were put
on hold or had undergone interruptions/delays due to system and policy
issues. The BAS of PRO XI added that delays in payments were caused
by a lack of adjudicators and processors assigned to them.
26.10. For PRO NCR & Rizal, these observations were already noted during the
CY 2019 audit, where it was recommended that Management of PRO
NCR & Rizal undertake a root cause analysis on the proliferation of “crude
claims” so that the underlying causes can be appropriately addressed with
the end view of reducing the TAT in the processing thereof.
26.11. In response to the prior year’s audit recommendation, PRO NCR & Rizal
Management issued Corporate Memorandum No. 2020-029 dated
November 5, 2020, addressing and establishing the TAT in the
processing of crude claims. However, the Audit Team would like to
emphasize that the 60 days TAT should no longer be the basis of
processing/payment of claims since it would defeat the objectives of
eClaims to reduce the TAT and improve the operational efficiency in the
processing/payment of claims by PhilHealth.
26.12. Further, the delayed payments of benefit claims due to non-observance of

the TAT on processing thereof would adversely affect the timely delivery
30
Saturdays, Sundays, and Holidays were excluded in the counting of the 30-day period.
219
of the necessary health services by the concerned HCIs because of
funding issue, thus defeating PhilHealth’s commitment to providing quality
health care services to its members.
a. Consider establishing a policy to lower/reduce the 60 days TAT

on claims processing/payment given the integration and full
implementation of eClaims and ensure compliance thereof by
all PROs.
b. Require the PRO NCR & Rizal to submit to the Audit Team
proof(s) that the claims processed/paid beyond 60 cds in CY
2020 were crude claims.
c. Direct the PRO XI Management to make an analysis on the

optimal ratio between the claims received per day and the
adjudicators and processors needed to meet the required TAT
on the processing of ACR claims, and if warranted, hire
additional adjudicators and processors.
26.14. The following are the comments of Management of PROs NCR & Rizal
and XI:
a. The abrupt increase in TAT on claims processing was caused by

multiple factors, such as, crude claims, the adverse impact of the
COVID-19 pandemic on the Branch's daily operation that called for
the adoption of a skeleton workforce and isolation of staff,
intermittent to no internet connection, and lack of human resource
complement. Necessary documents will be submitted by PRO NCR
& Rizal to the Audit Team to substantiate the crude claims.
b. PRO NCR & Rizal South and North Branches averred that early in
CY 2020, NClaims System was not yet updated for the new
packages related to COVID-19 admissions, and such claims were
subjected to Medical Prepayment so that assessment of the quality
of care rendered by the Health Care Professionals (HCPro) is
properly evaluated.
c. PRO NCR & Rizal committed to strictly monitor the implementation

of Corporate Memorandum No. 2020-029 dated November 5, 2020,
addressing that these claims should be acted upon within the
established TAT.
d. PRO XI committed to submit the analysis on the optimal ratio

between claims received per day and the adjudicators and
processors.
26.15. The following are the audit rejoinders:
220
a. The Audit Team acknowledged the commitment of PRO NCR &
Rizal to strictly monitor the implementation of Corporate
Memorandum No. 2020-029 dated November 5, 2020. However, it
is emphasized that the said Corporate Memorandum should be
revisited with the end view of reducing the standard 60-day TAT to
an acceptable level considering the responsibility of encoding data
in the eClaims has been transferred to the HCIs.
b. The number of claims related to system and policy issues for the
new packages associated with the COVID-19 pandemic was
insignificant since based on the extracted files, only 105 claims
totaling P2.693 million were attributed to COVID-19 related claims.
Thus, the Audit Team would like to point out that the abrupt increase
in delayed payments should be addressed by the PROs. The
recommendation that the PROs NCR & Rizal and XI consider hiring
additional adjudicators and processors, if warranted, to meet the
required TAT in the processing of benefit claims is reiterated.
27. The practice of full reimbursements to HCIs of package rates (ACR and Z
Benefit), despite the actual hospital charges plus the maximum amount of
Professional Fees (PF) incurred by member-patients were lower, still
persist as evidenced by 186,044 validated sampled claims which resulted in
an overpayment of P610.495 million, contrary to Section 2 of PD No. 1445.
Moreover, PhilHealth’s program objective of increasing financial health
protection of member-patients was not fully achieved since the HCIs were
the ones who benefited from the excess payments.
27.1. This is a reiteration with updates of the previous years’ observation as the
corresponding recommendation was not implemented yet by
Management.
27.2. Section 2 of PD No. 1445, otherwise known as "The Auditing Code of the
Philippines," states that: "It is the declared policy of the State that all
resources of the government shall be managed, expended or utilized in
accordance with law and regulations, and safeguarded against loss or
wastage through illegal or improper disposition, with a view to ensuring
efficiency, economy, and effectiveness in the operations of government.
The responsibility to take care that such policy is faithfully adhered to
rests directly with the chief or head of the government agency concerned."
27.3. PhilHealth Circular No. 011-2011, on the payment of reimbursement

package to HCIs under the Case Rate System, allows the reimbursement
of the full amount of case rates to HCIs regardless of the actual amounts
incurred by the member-patients. The program's objective is to provide
optimum financial protection to its members through consistent and fixed
benefit rates.
27.4. The Audit Teams in the six (6) PROs were provided by IT Department of
the Monthly Extracted Paid Claims Information in excel file format.
221
Verification of the data therein corroborated by the continuing validation of
sampled claims that can be viewed and accessed from the NClaims Web
System plus the sampled manually submitted Z Benefit Claims disclosed
that several HCIs were reimbursed with the full amount of the package
rates even though the actual hospital charges plus the maximum amount
of PF incurred by the member-patients were lower than the package
rates, resulting in an overpayment of P610.495 million (sampled claims
totaling 186,044 only) as summarized in Table 57.
Table 57 – Overpayment (Package Rate vis-a-vis Actual Charges)
No. of Sampled
Claims based on Package Rate Actual Hospital
Branch Extracted File* Amount** Charges + PF Overpayment
ACR
PRO NCR & Rizal 88,886 P1,153,842,782 P 814,470,793 P339,371,989
PRO I 437 4,058,140 3,029,033 1,029,107
PRO V 411 3,567,038 2,490,136 1,076,902
PRO VI 99 1,103,662 893,385 210,277
PRO IX 51,237 528,455,376 403,440,804 125,014,572
CARAGA 44,893 419,909,157 278,835,548 141,073,609
Sub-total 185,963 2,110,936,155 1,503,159,699 607,776,456
Z Benefit Package
PRO NCR & Rizal 81 6,609,093 3,890,491 2,718,602
Sub-total 81 6,609,093 3,890,491 2,718,602
Grand Total 186,044 P2,117,545,248 P1,507,050,190 P610,495,058

*Continuing validation
**Inclusive of Case Rate 1 and 2
27.5. The data in Table 57 also included overpayment for the newly established
comprehensive insurance benefits and coverage of PRO NCR & Rizal
related to the COVID-19 pandemic, such as FFRP, ICH, testing costs,
and community isolation in the aggregate amount of P61.732 million,
breakdown in Table 58.
Table 58 – Overpayment on COVID-19 Case Rates (PRO NCR & Rizal)
No. of Sampled
Claims based Actual
on Extracted Package Rate Hospital Total Hospital
File Amount Charges PF Charges Overpayment
FFRP 31 P26,321,098 P 3,448,613 P 2,813,025 P 6,261,638 P20,059,460
ICH 229 50,890,029 11,191,317 16,132,812 27,324,129 23,565,900
Testing Packages 3,102 18,625,736 408,898 131,012 539,910 18,085,826
Community Isolation 5 70,000 23,177 24,650 48,827 21,173
Total 3,367 P95,906,863 P15,072,005 P19,101,499 P34,173,504 P61,732,359
27.6. The overpayments shown in Tables 57 and 58 were computed based on

the actual hospital charges indicated in the Statements of Account (SOAs)
or CF2 in case no SOA was attached, plus the PF.
27.7. The existing payment scheme is disadvantageous to PhilHealth's interest

as the latter incurred unnecessary expenses. The HCIs were the ones
222
that benefitted from the excess payments, and that the member-patients
were not able to avail the full benefits given by PhilHealth, which is not
aligned with the program's objective to increase financial risk protection
for PhilHealth member-patients. Moreover, the excess payments being
made to the HCIs constitute a loss to PhilHealth as it could have been
utilized to pay other benefit claims. Hence, this practice is not in
conformity with Section 2 of PD No. 1445 to safeguard Agency’s assets
from wastage or loss through improper disposition.
27.8. We reiterated our previous years’ recommendation that top

Management re-evaluate the present guidelines on the
implementation of the ACR and Z Benefit package rate and
reconsider revising the same accordingly by including a provision
that reimbursements shall be based on member-patients' actual
hospitalization charges plus PF or the case rate amount, whichever
is lower, to protect the interest of the government and the
members/beneficiaries.
27.9. Management of PROs NCR & Rizal, I, V, VI, IX, and CARAGA
commented that they have referred the matter to the HO and that
PhilHealth Circular will be issued accordingly.
27.10. During the exit conference on August 3, 2021, top Management confirmed
that a new policy would be circularized to address the audit
recommendation. It was further informed that the application of the new
policy on reimbursements for claims based on member-patients' actual
hospitalization charges plus PF or the case rate amount, whichever is
lower, shall be prospective.
27.11. As rejoinders, the Audit Teams acknowledged the initial action taken by
top Management to address the recommendation. It is emphasized,
however, that amounts paid to HCIs in excess of the charges constitute
overpayment. Further, the full implementation by Management of the audit
recommendation will be monitored in CY 2021 audit.

benefit package under ACR paid by PROs to various HCIs during CY 2020,
as follows:
a. 41,123 ACR claims aggregating P403.343 million for local and abroad
confinement processed and paid in PROs NCR & Rizal, I and V were
filed beyond the allowed calendar days from the date of discharge of
the member-patients from the HCIs, while nine (9) claims amounting
to P121,100 were processed and paid despite these were filed earlier
than the date of discharge of member-patients, contrary to Sections
41 and 46 of RA No. 7875, as amended by RA No. 10606, and Item
V.G.1 of PhilHealth Circular No. 2020-007 and resulted in
unnecessary expenses in the total amount of P80.497 million.
223
b. Three (3) manual sampled claims for In-Patient Care were processed
and paid by PRO NCR & Rizal despite the inclusion of
testing/swabbing fees in the amount of P35,860, which should have
been filed separately and applied for the SARS-CoV-2 benefit
package, contrary to PhilHealth Circular No. 2020-009 and resulted in
the non-reimbursement of the testing/swabbing fees to the
concerned HCIs.
c. CF4 was not explicitly indicated/provided as one of the mandatory

documentary requirements for reimbursement of COVID-19 benefit
claims under PhilHealth Circular Nos. 2020-0009 and 2020-0011,
which is inconsistent with Item V.A of PhilHealth Circular No. 2019-
0002, thus, non-requirement thereof may unfavorably affect the
assessment of the quality of care rendered to PhilHealth
patients/beneficiaries.

d. Two (2) COVID-19 Benefit Package totaling P280,983, net of tax, were
paid by PRO IV-B despite non-attachment of the required itemized
billing statement, contrary to the provisions of PhilHealth Circular
No. 2020-009, thus, the propriety of the disbursements could not be
established.
e. Seven (7) benefit claims totaling P307,979 were processed and paid
by PRO IV-B as mild pneumonia notwithstanding that the patients
were diagnosed as COVID-19 asymptomatic, contrary to the
provisions of PhilHealth Circular No. 2020-009 in relation to the
PhilHealth Circular Nos. 2020-004 and 2020-012, as amended by
PhilHealth Circular No. 2020-018, thus casting doubt on the
validity/legality of the payments.
f. Two (2) benefit claims totaling P287,432 processed and paid in PRO
CAR required out of pocket cash outlay from patients, contrary to
PhilHealth Circular Nos. 2020-0009 and 2020-0011 thus, adding
financial burden to member/patients.
g. Six (6) claims totaling P603.888 million which have unreconciled

data of actual charges between the SOA and CF2 were paid by PRO
CARAGA, casting doubt on the reliability of the claims.
h. PRO CARAGA did not look into the claims for reimbursement of the
top five private HCIs and the top five government HCPro for medical
cases of pneumonia with the highest claim reimbursements in CY
2019 totaling P206.717 million, thus, posing risk that simple cough
could turn into a medical case of pneumonia and possible abuse by
unscrupulous institutions/individuals.
i. 462 claims for normal and operative (caesarean) delivery packages

without the required Newborn Screening Package were paid by PRO
BARMM, contrary to provisions of RA No. 9288 and PhilHealth
Circular No. 54, s. 2012.
224
j. Non-compliance by accredited private hospitals under PRO BARMM
with PhilHealth Circular Nos. 54, s. 2012 and 15, s. 2005, viz.: (i) non-
submission of Mandatory Monthly Hospital Report (MMHR) by 19
private hospitals; (ii) performance of services beyond service
capability or bed occupancy rate of more than 100 per cent by five
(5) private hospitals; and (iii) under-utilization of services or
utilization of less than 15 per cent bed capacity of eight (8) private
hospitals.
41,123 ACR claims aggregating P403.343 million

for local and abroad confinement processed and
paid in PROs NCR & Rizal, I and V were filed
beyond the allowed calendar days from the date of
discharge of the member-patients from the HCIs,
while nine (9) claims amounting to P121,100 were
processed and paid despite these were filed
earlier than the date of discharge of member-
patients
28.1. The Revised IRR of RA No. 7875, as amended by RA No.10606 provided

the following:
Section 41. Benefits of Members and their Dependents

Confined Abroad -
Members and/or their dependents shall be eligible to avail of

benefits for confinement/s outside the country: Provided, that
the conditions for entitlement under this Rules are met and
the following requirements are submitted within one hundred
eighty (180) calendar days from the date of discharge.
Section 46. Reimbursement Period to File Claims
All claims for reimbursement or payment for services

rendered shall be filed within a period of sixty (60) calendar
days from the date of discharge of the patient from the
health care provider. The period to file the claim may be
extended for such reasonable causes as may be determined
by the Corporation.
28.2. In light of the COVID-19 global pandemic, PhilHealth extended certain

privileges to ensure continued provisions of responsive health care
benefits to members, which included but are not limited to the extension
of filing of claims from 60 cds to 120 cds from the date of discharge of the
patient, pursuant to Item V.G.1 of PhilHealth Circular No. 2020-0007
dated March 20, 2020, with retrospective application up to 60 cds prior to
the declaration of the state of calamity on March 16, 2020, to wit:
Submission of claims 120 calendar days from the date of

discharge. This shall also cover claims due for submission
for discharges covering the period sixty (60) calendar days
225
before and until the day prior to the actual date of the
occurrence of the fortuitous event.
28.3. Generally, the local confinement benefit claim shall be filed within the
allowed period of 60 or 120 cds, whichever is applicable depending on the
date of discharge of member-patient from HCI. During CY 2020 audit,
benefit claim with discharge date of January 16, 2020 and thereafter, 120
cds was the basis used in determining the filing period; otherwise, the rule
on 60 cds shall apply.
28.4. Verification of the monthly Extracted Paid Claims Information provided to

the Audit Teams by the PROs NCR & Rizal, I and V, in addition to the
continuing validation of sampled claims revealed that 41,112 local
confinement ACR benefit claims totaling P402.558 million were filed
beyond the allowed cds from the date of discharge of the member-
patients from the HCIs, as summarized in Table 59.
Table 59 – Summary of Local Confinement ACR Benefit Claims filed beyond the
Required cds from date of discharge of Patient-Members
Claims filed beyond 60 Claims filed beyond 120

cds cds Total
No. of No. of No. of
PRO Claims Amount Claims Amount Claims Amount
NCR & Rizal 7,737 P 77,416,070 183 P2,269,256 7,920 P 79,685,326
I 33,190 322,733,543 - - 33,190 322,733,543
V 2 138,677 - - 2 138,677
Total 40,929 P400,288,290 183 P2,269,256 41,112 P402,557,546
28.5. Relative to the confinement abroad benefit claims, it was noted that nine
claims in PRO NCR & Rizal and two claims in PRO I, in the amounts of
P0.690 million and P95,500, respectively, were filed beyond 180 cds from
the dates of discharge of concerned member-patients from the HCIs.
28.6. Further, nine ACR benefit claims amounting to P121,100 were processed
and paid by PRO NCR & Rizal despite these were filed earlier than the
date of discharge of member-patients, contrary to the requirements that
all claims should be filed after the date of discharge of the member-
patients from the HCIs. It is emphasized that the final diagnosis is
determined on the date of discharge, which would be the basis of the
applicable case rate to be paid/reimbursed to HCIs. Hence, the propriety
of these claims is doubtful considering the final diagnosis that would be
the basis of the amount of case rate for payment was not yet determined
at the time of filing the claims.
28.7. In view of the foregoing deficiencies, the PROs NCR & Rizal, I and V
incurred unnecessary expenses in the total amount of P403.465 million,
summarized in Table 60, since no payment should have been made on
these claims because these were filed beyond the required filing period of
claims reimbursements and prior to the date of discharge of member-
patients from the HCIs.
226
Table 60 – Summary of claims reimbursements not filed within the reglementary
period and filed prior to the date of discharge
Particulars No. of Claims Amount

ACR claims filed beyond the required cds from date of discharge
(60 and/or 120 cds, as the case maybe) – local confinement 41,112 P402,557,546
Add: Confinement abroad- Claims filed beyond 180 days from
date of discharged – PRO NCR & Rizal 9 690,380
PRO I 2 95,500
Sub-Total 41,123 403,343,426
Add: Claims Filed Earlier than the Date of Discharge 9 121,100
Total 41,132 P403,464,526
28.8. Similar audit observation was noted in prior year calling the attention of
PRO NCR & Rizal Branch Offices, in coordination with Benefit and
Technical Assistance Monitoring Office (BTAMO), to submit justification
and proof of validation made for the selected claims enumerated by the
Audit Team thru an email dated October 21, 2020. The PRO NCR &
Rizal Management justified that the claims were paid pursuant to
PhilHealth Advisory No. 2018-007631, resolutions issued by Protest and
Appeals Review Department (PARD) & Claims Review Committee (CRC),
and due to: (a) humanitarian considerations; (b) system enhancements
and/or lapses; (c) the date of filing falls on either Saturday, Sunday or
Holiday; (d) error in encoding; (e) motion/appeal with merit; and (f) other
considerable reasons.
28.9. However, the Audit Team could not validate the veracity of the reasons
mentioned in the said PARD/CRC resolutions, indicated in the Summary
of Claims Validation Report, as they only state that “motion/appeal with
merit” with no attached documents such as appeal letters from the HCIs,
among others.
Three (3) manual sampled claims for In-Patient

Care were processed and paid by PRO NCR &
Rizal despite the inclusion of testing/swabbing
fees in the amount of P35,860, which should have
been filed separately and applied for the SARS-
CoV-2 benefit package
28.10. Item VII.B of PhilHealth Circular No. 2020-00932 states that “claims for
testing for SARS-CoV-2 shall be filed separately”. However, post-audit of
33 manual sampled claims amounting to P0.620 million filed for In-Patient
Care benefit package disclosed that three of the said claims were
processed with Testing/Swabbing Fees totaling P35,860.
28.11. The said testing/swabbing fees were included as a line item in the
attached SOAs/Billing Statements of the three (3) claims filed for the In-
Patient Care benefit package, hence, only the applicable COVID-19 case
31
Exemption on the 60th Day Rule on Reimbursement and Period to File Claim for Reasonable Cause(s)
32
Benefit Packages for Inpatient Care of Probable and Confirmed COVID-19 Developing Severe Illness/Outcomes
227
rate for In-Patient Care was applied, to the disadvantage of the concerned
HCIs.
28.12. Review of CF2 also showed that there were no co-pay/out-of-pocket

expenses from the member-patients. Had the testing/swabbing fees been
filed separately, the required COVID-19 benefit package for testing
SARS-CoV-2 could have been availed of by the concerned HCIs.
CF4 was not explicitly indicated/provided as one

of the mandatory documentary requirements for
reimbursement of COVID-19 benefit claims under
PhilHealth Circular Nos. 2020-0009 and 2020-
0011, which is inconsistent with Item V.A of
PhilHealth Circular No. 2019-0002
28.13. The CF4, as defined in PhilHealth Circular No. 2019-000233, shows the
summary of pertinent clinical information of member-patients during their
hospitalization/episode of care that shall be utilized by PhilHealth to
conduct evaluation and review of claims.
28.14. Likewise, Item V.A of the same PhilHealth Circular, applicable for
admissions starting March 1, 2019, provided that all claims for
reimbursement, with exceptions enumerated in Item V.D, should be
accompanied by the CF4 and photocopies of the corresponding
laboratory and imaging results. The following are the benefit packages
that do not require the submission of CF 4: (a) Z-Benefit Packages; (b)
Outpatient HIV/AIDS Treatments; (c) Outpatient Malaria Package; (d)
Animal Bite Treatment; (e) TB-DOTS; (f) Antenatal Care Package; (g)
Normal Spontaneous Delivery; (h) Maternity Care Package; (i) Newborn
Care Package; (j) Subdermal Contraceptive Insertion Package; (k)
Intrauterine Device Insertion Package; (l) No-scalpel Vasectomy; (m)
Resuscitation Package; and (n) Referral Package.
28.15. However, based on the provisions of PhilHealth Circular Nos. 2020-0009

and 2020-0011, the CF4 was not specifically provided as one of the
documentary requirements in the liquidation/reimbursement of claims for
ICH and FFRP packages for health workers that is to be submitted by
HCIs to PhilHealth.
28.16. Consequently, on the continuing validation and post-audit of 80 manual

sampled claims that were processed and paid for ICH and FFRP package
rates, it was noted that out of P31.886 million claims for reimbursement by
various HCIs only two claims amounting to P440,723 were supported with
CF4.
28.17. The Audit Team deems that the attachment of CF4, as one of the
mandatory documentary requirements in the liquidation/reimbursement of
claims, is viable for the HCIs had it been included in the provisions of
PhilHealth Circular Nos. 2020-0009 and 2020-0011, though, the
33
Documentary Requirements for Claims Reimbursements and Medical Pre-payment Review of Claims (Revision 2)
228
requirement of CF4 may not be mandatory for COVID-19 Testing and
Community Isolation cases since these are not as complex as FFRP and
ICH.
28.18. In the Exit Conference for Compliance Audit held on March 11, 2021,
Management explained that during the policy formulation, it was decided
that CF4 will not be a mandatory requirement in the FFRP and ICH
packages, granting the request of the HCIs not to include the same,
raising the issues that CF4 is tedious to accomplish; it would expose them
to COVID-19; and most of RTH and denied claims were due to non-
accomplishment of CF4.
28.19. However, the Audit Team maintains its position that inclusion of CF4 as
one of the documentary requirements in the filing of claims for
reimbursements by HCIs is crucial for PhilHealth in measuring and
assessing the quality of care being provided by the HCIs to member-
patients. Moreover, non-requirement of such document from the HCIs
might increase the vulnerability for up-casing/up-coding of cases to the
detriment of PhilHealth, considering its poor current financial position.
Two (2) COVID-19 Benefit Package totaling

P280,983, net of tax, were paid by PRO IV-B
despite non-attachment of the required itemized
billing statement, contrary to the provisions of
PhilHealth Circular No. 2020-009, thus, the
propriety of the disbursements could not be
established
28.20. PhilHealth Circular No. 2020-0009 provides the following:
VII. CLAIMS FILING AND REIMBURSEMENT
A. Xxxx
H. To file a claim for reimbursement, the accredited

1. Properly accomplished CF2.

professional/reader’s fees. The process flow for
submission of itemized billing statements is
needed.
28.21. Review of the documents covering 101 benefit claims totaling P12.928
million for COVID-19 benefit package which were processed and paid by
PRO IV-B revealed that no itemized billing statements were attached to
229
two (2) benefit claims amounting to P280,983. In view of the non-
attachment of the required supporting documents under PhilHealth
Circular No. 2020-0009, the propriety of the disbursements could not be
established.
Seven (7) benefit claims totaling P307,979 were

processed and paid by PRO IV-B as mild
pneumonia notwithstanding that the patients were
diagnosed as COVID-19 asymptomatic, contrary
to the provisions of PhilHealth Circular No. 2020-
009 in relation to the PhilHealth Circular Nos.
2020-004 and 2020-012, as amended by
PhilHealth Circular No. 2020-018, thus casting
doubt on the validity/legality of the payments
28.22. Section IV of PhilHealth Circular No. 2020-00934 provides the definitions of

“suspect”, “probable” and “confirmed” cases of COVID-19, to wit:
A. Suspect case – is a person who is presenting with any

of the following conditions:
1. All severe acute respiratory infection (SARI)

cases where no other etiology fully explains the
clinical presentation;
2. Influenza-like-illness (ILI) cases with nay of the

following:
a. With no other etiology that fully explain the

clinical presentation and a history of travel to
or residence in an area that reported local
transmission of COVID-19 disease during
the 14 days prior to symptom onset; or
b. With contact to a confirmed or probable case

of COVID-19 disease during the 14 days
prior to the onset of symptoms
3. Individual with fever or cough or shortness of

breath or other respiratory signs or symptoms
fulfilling any of the following conditions:
a. Aged 60 years and above;

b. With a co-morbidity
c. Assessed as having a high-risk pregnancy
d. Health worker
34
Benefit Packages for Inpatient Care of Probable and Confirmed COVID-19 Developing Severe Illness/Outcomes
230
B. Probable case – a suspect case who fulfils any of the
following listed below:
1. Suspect case whom laboratory testing for

COVID-19 is inconclusive; or
2. Suspect who underwent testing for COVID-19

but not conducted in a national or sub national
reference laboratory or officially accredited
laboratory for COVID-19 confirmatory testing; or
3. Suspect case for which testing could not be

performed for any reason.
231
C. Confirmed case – any individual, irrespective of
presence or absence of clinical signs and symptoms,
who was laboratory-confirmed for COVID-19 in a test
conducted at the national reference laboratory, a
subnational reference laboratory, and/or officially
accredited laboratory testing facility.
28.23. Section VI.A of PhilHealth Circular No. 2020-009 also provides that:
A. The case-based payment of the benefits that shall be

available for any Filipino patient with probable or
confirmed COVID-19 are indicated in Table 1:
Table 1. Inpatient case management for confirmed COVID-19 developing severe illness or outcomes:
Package Package Amount

Code (PHP) Severity HCP Category
C19IP1 43,997 Mild pneumonia in the elderly L1 to L3 hospital, private room
or with co-morbidities
C19IP2 143,267 Moderate pneumonia L1 to L3 hospital, private room
C19IP3 333,519 Severe pneumonia L2 to L3 hospital, private room,
ICU
C19IP4 786,384 Critical pneumonia L2 to L3 hospital, private room,
ICU (capable of ECMO, RRT)
(Underscoring supplied)
28.24. Further review of the documents covering 101 benefit claims totaling
P12.928 million for COVID-19 benefit package which were processed and
paid by PRO IV-B revealed that seven (7) claims were classified as mild
pneumonia (C19IP1). Scrutiny of the documents, however, revealed that
the patients, subject of the seven benefit claims, were diagnosed as
COVID-19 asymptomatic. Moreover, the patients were “essentially
normal” and had no symptoms, as presented in Table 61.
Table 61 - Post-audit Results of seven benefit claims diagnosed as

COVID-19 asymptomatic
Patient Profile
Name of Date of Medical History Discharge Diagnosis per CF4, Clinic
Level
per attached
HCI Confinement per CF4 Diagnosis Abstract, etc.
documents
No cough, cold or fever.
Confirmed
COVID-19 asymptomatic.
HCI A 2 July 3-8, 2020 Male, 41y/o NA COVID; Mild
Normal plain CT scan of the
Pneumonia
chest. Normal chest x-ray result.
Exposure to COVID, no
Confirmed symptoms noted. Essentially
HCI B 2 May 5-18, 2020 Female, 28y/o Unremarkable COVID; Mild normal per physical
Pneumonia examination. Lungs were clear
per x-ray result
Confirmed
symptoms noted. Essentially
HCI A 2 May 5-18, 2020 Male, 26y/o Unremarkable COVID; Mild
normal per physical
Pneumonia
examination.
232
Confirmed
normal per physical
Pneumonia
examination.
Confirmed
HCI A 2 May 5-18, 2020 Female, 37y/o Unremarkable COVID; Mild
normal per physical
Pneumonia
examination.
Confirmed
HCI A 2 May 5-18, 2020 Female, 47y/o Unremarkable COVID; Mild
normal per physical
Pneumonia
examination.
Confirmed
normal per physical
Pneumonia
examination.
28.25. Classifying the above benefit claims as mild pneumonia (C19IP1) and
paying each claim P43,997, less tax, appeared to be inconsistent with the
provisions of PhilHealth Circular No. 2020-009.
28.26. The Audit Team believes that to be covered by PhilHealth Circular No.
2020-009, the patient, who is either be elderly or with co-morbidities, must
be diagnosed with mild pneumonia, at the very least. In DOH-Department
Memorandum (DM) No. 2020-0381 dated July 21, 2020, the DOH defined
“Mild Disease” as:
Symptomatic patients presenting with fever, cough, fatigue,

anorexia, myalgias; other non-specific symptoms such as
sore throat, nasal congestion, headache, diarrhea, nausea
and vomiting; loss of smell (anosmia) or loss of taste
(ageusia) preceding the onset of respiratory symptoms with
NO signs of pneumonia or hypoxia.
28.27. It appeared, therefore, that asymptomatic patients are not covered by

PhilHealth Circular No. 2020-009. Even those developing mild pneumonia
are not automatically entitled to the benefit payment under the subject
Circular except if the patient is elderly or with co-morbidities.
28.28. Thus, it can be inferred that the proper treatment of asymptomatic

patients and those with mild pneumonia who are neither elderly nor with
co-morbidities should be under the community isolation provided for in
PhilHealth Circular No. 2020-012, as amended by PhilHealth Circular No.
2020-01835, which replaced Hospital Isolation Package under PhilHealth
Circular No. 2020-004.
28.29. Section V.A.2 of PhilHealth Circular No. 2020-004 36 dated February 10,
2020, provides that:
35
Guidelines on the COVID-19 Community Isolation Benefit Package (CCIBP)
36
Enhancement of Packages related to Corona Virus Infection
233
For Confirmed cases of 2019 nCOV with mild symptoms, if
the course of the ward is unremarkable and eventually
discharged, the Isolation package may be claimed.
28.30. The Hospital Isolation Package under PhilHealth Circular No. 2020-004
was replaced by COVID-19 Community Isolation Benefit Package
(CCIBP) pursuant to PhilHealth Circular No. 2020-012 effective May 11,
2020. PhilHealth Circular No. 2020-012 was revised by PhilHealth
Circular No. 2020-018, signed on July 7, 2020. In Annex F of PhilHealth
Circular No. 2020-018, Figure 1C illustrates the protocol for Community
Isolation, consistent with the treatment recommended for mild pneumonia
as provided in DOH-DM No. 2020-0381:
FIGURE 1C. COMMUNITY QUARANTINE PROTOCOL
28.31. It is clear from the reading of the afore-quoted provisions and protocol that
with respect to patients who developed mild pneumonia but without other
risks, the recommended treatment is predominantly isolation, either in
one’s own home or in a community facility. Thus, it follows that for
asymptomatic patients without other risks, the same treatment is
recommended.
234
28.32. In the case of the seven benefit claims, the attached CF2 indicated
COVID-19 Mild Pneumonia (C19IP1) in the discharge diagnosis. This
appeared to be inconsistent with the diagnosis noted in the attached CF4,
clinical abstract, and X-Ray result, which showed that the patients had no
symptoms and were “essentially normal.” As such, the treatment should
have been consistent with the treatment recommended for mild
pneumonia with no other risks, thus, predominantly home isolation or
isolation in a community facility. It follows, therefore the benefit package
should have been limited to Community Isolation Benefit Package (CIBP),
amounting to P22,449 under PhilHealth Circular No. 2020-012, as
amended by PhilHealth Circular No. 2020-018.
28.33. As a result, by allowing benefit claim for Mild Pneumonia (C19IP1) instead
of a more appropriate benefit package of CIBP, there appears to be an
excess payment totaling P150,836, computed in Table 62.
Table 62 - Excess payment between C19P1 and CIBP for seven claims
Mild
Name Pneumonia
Level
of (C19IP1) CIBP Excess

HCI PABN No. BDVS No. (a) (b) (c)=(a)-(b)
P09-2011-
HCI B 2 B09-2011-00093
04044 P 43,997 P 22,449 P 21,548
P09-2011-
2 B09-2011-00094
04051 43,997 22,449 21,548
P09-2011-
2 B09-2011-00094
04051 43,997 22,449 21,548
P09-2011-
2 B09-2011-00094
HCI A 04051 43,997 22,449 21,548
P09-2011-
2 B09-2011-00094
04051 43,997 22,449 21,548
P09-2011-
2 B09-2011-00094
04051 43,997 22,449 21,548
P09-2012-
2 B09-2012-00002
00002 43,997 22,449 21,548
Total P307,979 P157,143 P150,836
28.34. Considering the relevant provisions of PhilHealth Circular No. 2020-009 in

relation to PhilHealth Circular Nos. 2020-004, 2020-012 and 2020-018
and DOH DM No. 2020-0381, the validity/legality of the above payments
is doubtful.
Two (2) benefit claims totaling P287,432

processed and paid in PRO CAR required out of
pocket cash outlay from patients, contrary to
PhilHealth Circular Nos. 2020-0009 and 2020-
0011 thus, adding financial burden to
member/patients
28.35. PhilHealth issued Circular No. 2020-0011 to provide guidelines for the full
financial protection for Filipino health workers and patients against
COVID-19 for admission dates from February 1, 2020 to April 14, 2020.
235
Specific guidelines on Item V.A thereof states that, “All Filipinos for
COVID-19 from the period of February 1, 2020, to April 14, 2020, shall be
deemed eligible for any of the benefits for in-patient care with no co-
payment, whether in public or private facility. Filipinos who are not
registered in PhilHealth shall be automatically covered, provided that they
complete member registration prior to discharge from the facility.”
28.36. Meanwhile, Item V.C of PhilHealth Circular No. 2020-009 also provides
for inpatient care of probable and confirmed COVID-19 developing severe
illness/outcomes for admission dates beginning April 15, 2020. Specific
guidelines under Item V.A thereof states that, “All COVID-19 benefits for
inpatient care shall have no co-payment from patients for direct
healthcare services, both in private and public healthcare providers.
Patients can have co-payments for amenities such as suite room
accommodation.”
28.37. However, audit revealed that two benefit claims in the total amount of
P0.595 million showed out-of-pocket cash payment from member-patients
amounting to P287,432, which is contrary to the policy on no co-payment
provided under PhilHealth Circular Nos. 2020-0009 and 2020-0011 thus,
added financial burden to the COVID-19 patients.
Six (6) claims totaling P603.888 million which have

unreconciled data of actual charges between the
SOA and CF2 were paid in PRO CARAGA,
casting doubt on the reliability of the claims
28.38. The NClaims is a system that adopted several functions of the Unified
Claims Processing System (UCPS) and incorporated the processing of
Overseas Workers Welfare Administration (OWWA) claims. The
objectives of the NClaims, among others, are to: (a) consolidate all UCPS
databases currently being used by PROs for a common look-up; (b)
migrate the consolidated database to Relational Database Management
System (RDBMS) currently being used by Membership and Contributions
Systems; and (c) fast track the processing of claims by integrating
validations to do away with some process of manual verification and
report preparation.
28.39. The Internal Control Standards for the Philippine Public Sector (ICSPPS)
provides the objectives and describes the components of internal control.
One of the components of the internal control is Information and
Communication, which involves the capturing and exchanging of
information needed to conduct, manage and control the Agency’s
operations. And in order to have an efficient and effective Information and
Communication, Management shall be guided with the following
principles: (a) develop and maintain reliable and relevant financial and
non-financial information; (b) communicate throughout the agency; and (c)
communicate information with external parties.
28.40. The Risk on Operations – Information and Technology – Integrity – is

described as the risk that information systems do not provide reliable
236
information when it is needed or perform so slowly that operations are not
efficient.
28.41. Audit of the extracted file on benefit claim expenses provided by the PRO
CARAGA Information Technology Management Section (ITMS) disclosed
a total of 111,328 admitted patients and paid claims totaling P933.639
million in CY 2020.
28.42. Verification in the NClaims System of the samples of paid claims with
actual charges amounting to P500,000 and above, disclosed
discrepancies in the amounts indicated in the CF2 in the NClaims Module
and SOA for six (6) sampled claims totaling P603.888 million. Thus,
affecting the data integrity of the information system, cast doubt on the
reliability of the claims, and undermines internal control.
PRO CARAGA did not look into the claims for

reimbursement of the top five private HCIs and the
top government HCPro for medical cases of
pneumonia with the highest claim reimbursements
in CY 2019 totaling P206.717 million, thus, posing
risk that simple cough could turn into a medical
case of pneumonia and possible abuse by
unscrupulous institutions/individuals
28.43. Audit in CY 2020 of the CY 2019 extracted file/data on admitted and paid
benefit claims provided by the ITMS of PRO CARAGA showed paid claim
reimbursements totaling P1.312 billion, consisting of 149,654 claims, of
which P206.717 million were 13,660 claims for medical case of
pneumonia.
28.44. It was noted that PRO CARAGA did not look into/investigate the claims
for reimbursement of the top five private and government HCIs with the
highest paid claims reimbursements for pneumonia cases in CY 2019,
details shown in Table 63.
Table 63 - Top five Private and Government HCIs with Highest

Paid Claims Reimbursements for Pneumonia Cases
Hospital Bed
Capacity
% Based (HCB)
No. of on No. of as of
Rank HCIs Claims Claims Amount 6/30/20
A. Private HCIs
1 PRO Caraga PHCI A 1,293 21.65 P 20,188,540 75
2 PRO Caraga PHCI B 921 15.43 14,755,680 30
3 PRO Caraga PHCI C 792 13.27 13,465,130 100
4 PRO Caraga PHCI D 644 10.79 11,075,600 150
5 PRO Caraga PHCI E 562 9.41 9,229,000 50
Total of Top Five 4,212 70.55 68,713,950
6 Others (consists 15 Private HCIs) 1,758 29.45 23,778,000
5,970 100.00 92,491,950
237
Hospital Bed
Capacity
% Based (HCB)
No. of on No. of as of
Rank HCIs Claims Claims Amount 6/30/20
B. Government HCIs
1. PRO Caraga GHCI A 1,248 16.23 20,387,900 200
2 PRO Caraga GHCI B 910 11.83 13,888,000 100
3 PRO Caraga GHCI C 712 9.26 11,365,800 150
4 PRO Caraga GHCI D 693 9.01 10,803,000 30
5 PRO Caraga GHCI E 586 7.62 9,776,000 100
Total Top Five 4,149 53.95 66,220,700
6 Others (consists of 22 Government HCIs) 3,541 46.05 48,004,500
7,690 100.00 114,225,200
13,660 P206,717,150
28.45. As shown in Table 63, the top five private HCIs, out of the 20 PhilHealth
accredited private hospitals, garnered a combined total of 70.55 per cent
of the paid claims on pneumonia totaling P68.714 million, while the
remaining 29.45 per cent were paid to the 15 private hospitals. On the
other hand, the top five government hospitals garnered a total of 53.95
per cent of the paid claims on pneumonia totaling P66.221 million out of
27 PhilHealth accredited government hospitals, which garnered the
remaining 46.05 per cent of the paid claims.
28.46. The top five private and government HCPro with the highest paid claims
reimbursements for pneumonia cases in CY 2019, which were not
investigated by the PRO CARAGA, are shown in Table 64.
Table 64 - Top five Private and Government HCPro with Highest Paid Claims
Reimbursements for Pneumonia Cases
% Based on
No. of No. of
Rank HCPro Claims Claims Amount HCI/HBC
A. Private
1 HCP Code 23919 523 8.76 P 8,287,000 BCDH-30
BDHCI-150, MJDH-100,
Butuan Puericulture
2 HCP Code 1286 506 8.48 7,777,000 Centre No. 394, Inc. -50
3 HCP Code 11207 352 5.89 5,518,000 ASMHC -75
4 HCP Code 42897 193 3.23 2,946,000 SFDHI -50
5 HCP Code 26247 164 2.75 2,817,000 BCDH -30
Total of Top Five 1,738 29.11 27,345,000
6 Others (consists 163) 4,232 70.89 65,146,950
5,970 100.00 92,491,950
B. Government
1. HCP Code 11402 444 5.77 7,230,450 ASTMMC-200
2 HCP Code 17402 295 3.84 4,629,000 BDH- 50, TDH-30
3 HCP Code 41342 280 3.64 4,251,000 BuDH-50
4 HCP Code 40411 187 2.43 2,805,000 HDH -25
5 HCP Code 55183 184 2.39 2,794,000 DOPMH-100
Total Top Five 1390 18.08 21,709,450
6 Others (consists of 202) 6300 81.92 92,515,750
7,690 100.00 114,225,200
13,660 P206,717,150
238
28.47. It was further observed that even if the HCI had a bed capacity of 30 beds
only, it had 921 medical cases of pneumonia in CY 2019, not to mention
the other medical cases. Also, it was noted that the same HCI had two
accredited HCPro that had claims reimbursements which belonged to the
top five out of the 168 HCPro for the private HCIs.
28.48. Due to the inaction of the HCDMD in providing information and

communicating to the Legal Office, the latter could not look into the claims
of the top five (5) HCIs and HCPro.
28.49. Hence, no investigation was conducted by the PhilHealth CARAGA Legal

Office, thus, the risk that simple cough could turn into a medical case of
pneumonia and the possible abuse by unscrupulous individuals/
institutions could not be discounted.
462 claims for normal and operative (caesarean)

delivery packages without the required Newborn
Screening Package were paid by PRO BARMM,
contrary to provisions of RA No. 9288 and
PhilHealth Circular No. 54, s. 2012
28.50. RA No. 928837, Section 9 - Licensing and Accreditation, states that the
DOH and the PhilHealth shall require health institutions to provide
Newborn Screening services as a condition for licensure or accreditation.
28.51. Further, Item III of PhilHealth Circular No. 54, s. 2012, on the Provider
Engagement through Accreditation and Contracting for Health Services,
requires that HCIs shall be monitored regularly or deemed necessary by
the Corporation to ensure compliance with their performance
commitment. This shall include, among others, utilization review, post-
audit of claims, and/or visitation of the facility. When needed, a monitoring
survey of the facility shall be done by a team composed of 3 members
headed by a physician.
28.52. In PRO BARMM, audit revealed that there were 462 obstetric care
payments each amounting to P19,000, P5,000, P9,700, and P16,900 for
Caesarean Section, Normal Spontaneous Delivery, Vaginal Delivery with
Episiotomy, and Pre-term labor packages, respectively. However, the
patients have not availed of the required newborn screening package.
Such may indicate that either the patient was not given newborn
screening service or that the screening was rendered but at the expense
of the patient. Also, non-conformity with the DOH guidelines could result
in the suspension of accreditation or license of HCIs.
Non-compliance by accredited private hospitals

under PRO BARMM with PhilHealth Circular Nos.
54, s. 2012 and 15, s. 2005, viz.: (i) non-
submission of MMHR by 19 private hospitals; (ii)
performance of services beyond service capability
37
An Act Promulgating a Comprehensive Policy and a National System for Ensuring Newborn Screening
239
or bed occupancy rate of more than 100 per cent
by five (5) private hospitals; and (iii) under-
utilization of services or utilization of less than 15
per cent bed capacity of eight (8) private hospitals
28.53. PhilHealth Circular No. 54, s. 2012, provides that:
VII. MONITORING AND EVALUATION OF IHCP

PERFORMANCE
A. PhilHealth shall implement the enhanced monitoring

system to ensure that all IHCPs act in accordance with
the Performance Commitment for which they were
engaged, and provide a scheme to ensure the
following:
1. Strict compliance with all PhilHealth policies,

rules and regulations on quality assurance,
claims processing and, fraud detection and
prevention;
2. Determination of the offenses and violations
committed by the participating IHCPs as a result
of the monitoring of their performance, and that
will immediately warn of non-compliance with
engagement requirements and violations of the
policies, rules and regulations; and
3. Maintenance of high quality standards of care
being rendered to members by engaged IHCPs.
B. In order to efficiently carry out the monitoring of IHCPs,

they shall be regularly subjected to the following:
(a) Quality Assurance; and

(b) Fraud Detection.
1. Quality Assurance (QA) Monitoring.
All IHCPs shall be subjected to QA monitoring so as to

minimize if not prevent the following:
a. Violation of Section 76, Rule XII of the IRR of RA

7875
• Over- and under -utilization of services

• Withholding/denial of benefits or services to
members and dependents
b. Violation of PhilHealth Circular Nos. 11, 11-A, 11-

B, 15, 20, series of 2011, and all other policies
and issuance pertaining to case payment and No
Balance Billing (NBB) policy as follows:
240
• Performance of services beyond service
capability
28.54. Also, PhilHealth Circular No. 15, s. 2005, provides that, “All accredited
hospitals of the Corporation shall submit the Mandatory Monthly Hospital
Report (MMHR) and other reportorial requirements as determined by the
Corporation, to monitor their performance.”
28.55. Audit revealed that all of the 19 PhilHealth accredited private hospitals
had shown lapses in the submission of their MMHRs. Thus, monitoring
and evaluation of bed occupancy or utilization of said hospitals during
those months without MMHR could not be ascertained.
28.56. Further examination of the Monthly NHIP Bed Occupancy Rate

(MNHIPBOR) revealed performance of services beyond service capability
or bed occupancy rate of more than 100 per cent by five (5) private
hospitals on certain months, ranging from 107 to 231.48 per cent of
utilization with DOH Accredited Bed Capacity ranging from 5 to 25 units.
Moreover, verification of records also showed a MNHIPBOR of less than
15 per cent for eight (8) hospitals with DOH Accredited Beds ranging from
12 to 50 units.
28.57. Strict monitoring and evaluation of HCPs may detect the occurrence of
aforementioned violations; thus, appropriate measures could have been
implemented, and the risk of future recurrence would be avoided.
28.58. HCPs with observed lapses should be duly notified to implement

corrective measures and obliged to submit a plan of action to correct the
same within fifteen days from receipt of feedback from PhilHealth. Any
three violations that were not corrected or addressed shall be ground for
suspension, revocation, denial of participation, and/or filing of a criminal
complaint with the proper courts if warranted, without prejudice to the
reduction or denial of claims as provided in the IRR of RA No. 7875.
28.59. We recommended that top Management require the:
a. PROs NCR & Rizal, I and V Management to: (i) ensure that HCIs
observe and comply with the pertinent rules and regulations
specified under RA No. 7875, as amended by RA No. 10606 and
PhilHealth Circular No. 2020-007 relative to the deadline in the
filing of claims, otherwise deny the payment thereof; and (ii)
provide proof that the filing of the 41,132 claims in the total
amount of P403.465 million was extended for reasonable
causes as may be determined by PhilHealth and justification on
why there were instances when claims were filed before the
date of discharge of the member-patients from HCIs; otherwise,
these claims will be suspended/disallowed in audit.
b. PRO NCR & Rizal Management to: (i) keep track of HCIs’
compliance with the policy and minimum requirements on
241
claims reimbursement for In-Patient Care benefit package,
particularly on the separate filing of the claim for
reimbursement of the testing/swabbing fees pursuant to Item
VI.B of PhilHealth Circular No. 2020-009; and (ii) consider the
inclusion of CF4 as one of the minimum documentary
requirements to be submitted by HCIs in filing of claims
reimbursements for FFRP and ICH package to facilitate the
assessment of the quality of care rendered by HCPro to
PhilHealth member-patients.
c. PRO IV-B Management to: (i) cause the submission of the

lacking documents, i.e. itemized billing statement as required
under PhilHealth Circular No. 2020-009; (ii) explain in writing
the proper treatment of asymptomatic patients with respect to
the availment of benefit packages being provided under
PhilHealth Circular Nos. 2020-009, 2020-012 and 2020-018 and,
the reason for treating asymptomatic non-risk patients as
patients with mild pneumonia for purposes of benefit package
availment, otherwise, cause the refund from concerned HCIs
the excess benefit payment; and (iii) strictly comply with the
provisions of PhilHealth Circular No. 2020-009 in relation to
Section 4(6) of PD No. 1445, and PhilHealth Circular No. 2020-
012, as amended by PhilHealth Circular No. 2020-018.
d. PRO CAR Management to follow up with the concerned HCI for

possible refund to the concerned member-patients the co-
payments in the amount of P287,432.
e. PRO CARAGA Management to: (i) instruct the Head Chief,

HCDMD and Head, BAS to ensure that information is
consistent, and documents properly attached before benefit
claims are processed and paid; (ii) strengthen internal control
on information and communication to promote operational
efficiency and effectiveness; (iii) instruct the Head, ITMS to
look into and coordinate with appropriate office at PhilHealth
HO, if necessary, regarding the error noted on the NClaims
System per viewing access given to the Audit Team; (iv)
instruct the HCDMD to coordinate with the Legal Office the top
five HCIs and top five HCPro with highest paid claims for
medical cases of pneumonia, for investigation.
f. PRO BARMM Management to: (i) verify if the necessary

Newborn Screenings were provided by the concerned HCIs; (ii)
conduct monitoring of HCIs to ensure compliance with their
performance commitment; and (iii) enforce strict compliance
with PhilHealth Circular Nos. 54, s. 2012 and 15, s. 2005.
28.60. The concerned PROs’ Management commented, as follows:
242
a. On ACR claims for reimbursements -
The PROs NCR & Rizal, I, and V are conducting a re-evaluation at

their ends. Upon partial validation of paid claims for CY 2020, they
discovered that some claims marked as paid beyond 60 cds filing
period were qualified to be in the 120 cds filing period and other
claims tagged as paid that were filed beyond 120 days have
override codes from the Motion for Reconsideration Unit due to
consideration by the Motion for Reconsideration Committee.
b. On testing/swabbing fees not filed separately by concerned HCIs -
During the Exit Conference, PRO NCR & Rizal Management

mentioned that they are committed to formally inform the concerned
HCIs on this issue for their prospective compliance.
c. On CF4 not considered as one of the mandatory documentary

requirements for reimbursement of COVID-19 benefit claims -
According to PRO NCR & Rizal Management during the Exit

Conference on August 3, 2021, the consideration of including CF4
as one of the documentary requirements in claims reimbursements
filed by HCIs for FFRP and ICH package will be answered by
Benefits Development and Research Department (BDRD).
d. On the non-attachment of itemized billing statement for two COVID-

19 benefit package -
The PRO IV-B Management will submit the itemized billing

statements of the two subject benefit claims to the Audit Team.
e. On the seven benefit claims that were classified and paid as mild
pneumonia even though diagnosed as COVID-19 asymptomatic -
The PRO IV-B averred that the seven claims are for re-evaluation,
and per initial analysis, one of the patients on the noted claims was
a physician, hence entitled to full financial protection.
f. On the two benefit claims which required co-payment -
PRO CAR has already communicated with the concerned HCIs

regarding the patient of COVID-19, who was covered by the
PhilHealth policy on full coverage but incurred the noted co-
payment.
g. On the discrepancies in the amounts indicated in the CF2 in the

NClaims Module and SOA in PRO CARAGA -
243
Written clarifications from the involved facilities with regard to noted
inconsistencies and region-wide advisory to remind all PRO
CARAGA HCIs on accurate and quality data encoding of their
claims for reimbursement will be disseminated. PRO CARAGA
Management added that coordination with the ITMS regarding
viewing access in the NClaims System has already been made.
h. On the HCIs and HCPro with highest pneumonia claims in PRO

CARAGA -
PRO CARAGA will require the HCDMD to coordinate and

communicate to its Legal Unit the top 5 HCIs and HCPro with the
highest reimbursements paid claims on Pneumonia in CY 2019.
Compliance to the CY 2019 findings was delayed due to the
Congressional and Senate investigations on the alleged PhilHealth
anomalies, which led to providing voluminous documents as
required by the National Bureau of Investigation, COA, and the
Presidential Anti-Corruption Commission.
i. On the paid Normal and Operative (caesarean) Delivery Package

claims without the required Newborn Screening Package –
PRO BARMM BAS conducted a review of claims, and based on the

extracted data on February 23, 2021, there were a total of 318
claims for normal and operative (caesarean) delivery packages and
a total of 335 claims for Enhanced Newborn Package for the year
2020. On the monitoring of facilities, the PRO BARMM Accreditation
and Quality Assurance Section conducted virtual monitoring and
validation activities among their accreditation of HCIs for CY 2020 in
lieu of the usual physical conduct of hospital visitations and surveys.
This is based on Corporate Order No. 2020-0042 prescribing
Alternative Modes for conducting Corporate Activities given the
ongoing pandemic. As for other noted claims, no post-audit findings
of claims were presented to the HCP PAS pertaining to the non-
provision of the Newborn Care Package.
j. On the over/under utilization of service capability by private HCPs in

PRO BARMM -
PRO BARMM commented that it regularly monitors the HCIs using

the prescribed HCP PAS under PhilHealth Circular No. 2019-0019
and Corporate Order No. 2019-0046. Under the said guidelines, a
feedback letter shall be issued on all monitoring findings. Issuance
of Notice for Corrective Action shall be issued for adverse findings
that are not refuted. After the issuance of two (2) Notices of
Corrective Action (with the same policy deviation), the third adverse
monitoring finding shall be forwarded to the PRO Legal Office for
appropriate action. The same shall be counted as the first offense.
Also, all adverse monitoring findings with legal issues shall be
endorsed to the PRO BARMM Legal Office.
244
28.61. The following are the rejoinders of the Audit Teams:
a. It is requested that a written report with supporting documents to

substantiate the stated reasons on ACR claims filed beyond the
allowed cds upon discharge and claims filed earlier than the date of
discharge of patients be provided to the Audit Teams as proof that
the deficiencies in the filing were due to reasonable causes.
b. The Audit Team will do continuous monitoring on the separate filing

of the testing fee.
c. The Audit Team requests information on the action taken by the

BDRD on the recommendation that CF4 be considered as one of
the mandatory documentary requirements for reimbursement of
COVID-19 benefit claims.
d. The commitment of PRO IV-B Management to submit the itemized

billings statements of the two subject benefit claims to the Audit
Team is acknowledged. Compliance thereto will be monitored in the
CY 2021 audit.
e. A duly supported report of the result of re-evaluation of the PRO IV-

B on the noted seven benefit claims that were classified and paid as
mild pneumonia despite the patients were diagnosed as COVID-19
asymptomatic be provided to the Audit Team as proof that the
benefit payments made are valid.
f. The Audit Team requests a copy of the communication made to

concerned HCIs with regard to two benefit claims that required co-
payment.
g. Relative to the discrepancies in the amounts indicated in the CF2 in

the NClaims Module and SOA, the Audit Team will conduct
continuing post-audit and validation using viewing access in the
NClaims System.
h. On the HCIs and HCPro with highest pneumonia claims in PRO

CARAGA, the Audit Team requests a copy of the written
communications and status of legal actions taken by Management.
i. On the paid normal and operative (caesarean) delivery package

claims without the required newborn package screening in PRO
BARMM, the audit result refutes the assertion of PRO BARMM
Management that all obstetric care claims are with the NBS
package. The total number of obstetric care claims per audit is
greater by 144 claims. Hence, further reconciliation of data between
the Audit Team and the BAS be conducted.
j. On the over/under utilization of service capability by private HCPs in

PRO BARMM, the Audit Team requests that the reports on adverse
245
monitoring findings with legal issues endorsed to the Legal Office be
provided, for validation.
k. The Audit Teams will monitor the full compliance by the PROs with
the recommendations in the CY 2021 audit.

benefit claims under Z Benefit package paid by PROs NCR & Rizal, V and XI
to various HCIs during the CY 2020, as follows:
a. 835 Z Benefit claims of HCIs amounting to P21.250 million processed

and paid by PROs NCR & Rizal and V were not supported with SOAs
or Billing Statements (BSs) that would show the details of the
medical procedures done and medicines given to patients and serve
as proof of the correctness of the amount claimed, contrary to
Section 4(6) of PD No. 1445 and pertinent provisions of COA Circular
No. 2012-001 dated June 14, 2012, thereby, casting doubt on the
validity of the claims.
b. Four (4) claims totaling P1.121 million with no attached original Pre-
Authorization Checklist and Request were paid by PRO NCR & Rizal
and, 299 claims totaling P4.670 million with incompletely filled out
CF2 were processed and paid by PROs NCR & Rizal and V, contrary
to Items VIII.B.2, IX.E.3, and IX.E.4 of PhilHealth Circular No. 2015-
035 and thereby incurring additional expense on the part of said
PROs as no payment should have been made in the absence of the
said documentary requirement.
c. 32 member-beneficiaries in PRO NCR & Rizal who availed of the Z

Benefit package, covered under the “No Balance Billing” (NBB)
Policy and admitted in a ward type accommodation incurred “co-
pay/out-of-pocket expenses” in the total amount of P16,600, contrary
to Section 43 of RA No. 7875, as amended by RA No. 8241 and RA
No. 10606, and PhilHealth Circular No. 2017-0017, which provides
that no other fees or expenses shall be charged or paid by qualified
NBB patients above and beyond the package rates, hence, to the
disadvantage of the concerned member-patients.
d. Payments of 1,866 Z-Benefit claims amounting to P59.150 million in

CY 2020 by PRO XI could not be ascertained due to non-submission
of validation reports and the supporting documents, contrary to
Sections 2 and 4(6) of PD No. 1445 and prevented the Audit Team
from performing a timely review of the transactions and
recommending corrective measures on the deficiencies found in the
audit, if any.
835 Z Benefit claims of HCIs amounting to

P21.250 million processed and paid by PROs
246
NCR & Rizal and V were not supported with SOAs
or BSs
29.1. Section 4(6) of PD No. 1445 provides that, “Claims against government
funds shall be supported with complete documentation.” Likewise,
sufficient and relevant documents to establish the validity of claims is one
of the general requirements for all types of disbursements as stated under
COA Circular No. 2012-001 dated June 14, 2012.
29.2. Verification disclosed that 835 claims under Z Benefit Package amounting
to P21.250 million, as summarized in Table 65, were not supported with
the corresponding SOAs or BSs to prove the validity of the subject
claims.
Table 65 – Z Benefit Package Claims not supported with SOAs or BSs
PRO No. of Claims Amount

NCR & Rizal 560 P18,448,317
V 275 2,802,000
Total 835 P21,250,317
29.3. The said SOAs or BSs, duly signed by the member-patients or their
authorized representatives and the accountants or the billing clerks of the
accredited HCIs, will show whether the amounts of Z Benefit Package
rate being claimed by the HCIs, as reflected in Item A-Part III of CF2, tally
with the amounts incurred by the members-patients. The absence of the
said documents is contrary to Section 4(6) of PD No. 1445 and pertinent
provisions of COA Circular No. 2012-001 dated June 14, 2012,
thereby, casting doubt on the validity of the claims.
Four (4) claims totaling P1.121 million with no

attached original Pre-Authorization Checklist and
Request were paid by PRO NCR & Rizal and,
299 claims totaling P4.670 million with
incompletely filled out CF2 were processed and
paid by PROs NCR & Rizal and V
29.4. Item VIII.B.2 of PhilHealth Circular No. 2015-035 dated November 16,
2015 or The Guiding Principles of Z Benefits, states that: “to file a claim
for reimbursement, the contracted HCI shall submit a claim application
and submit to PhilHealth the original copy of the approved Pre-
authorization Checklist and Request signed by the patient, parents or
guardian and the health care providers who are members of the
multidisciplinary-interdisciplinary team managing the patient, as
applicable, for the first tranche.”
247
29.5. Meanwhile, Item IX.E of the same PhilHealth Circular on the Evaluation of
Claims for the Z Benefits states that claims shall be denied payment in the
following instances:
a. If a mandatory service was not provided by the contracted HCI;

b. If the required signatures in the forms are missing;
c. Incompletely filled-out forms;
d. Incomplete attachments, such as ME Form, Z Satisfaction
Questionnaire (except for the PD First Z Benefits), Operative
Record (for orthopedic implants bearing the code/serial number or
lot/batch number of the medical device), original copy of the
approved Pre-authorization checklist and request, and other
forms required, under the Z Benefit Packages; and
e. Late filing.
29.6. Evaluation of the submitted Z Benefit claims processed and paid in PRO
NCR & Rizal disclosed that four (4) claims with first tranche
case/diagnosis amounting to P1.121 million (Table 66) were not
supported with the originals of the Pre-authorization Checklist and
Request, instead only the scanned/photocopies thereof. It was also noted
that the Operative Record attached under Item No. 4 (Claim series No.
2003160300097) did not belong to the said patient but to another patient.
Table 66 – Original copy of requisite documents not attached
HCI HCI: APV Check Check Case /

No. Claim Series Name Number Number Date Amount Diagnosis Remarks
1 200213030171 NKTI P03-2002- AC 2/17/2020 P550,000 RENAL Pre-authorization checklist
6 03011 DISEASE - and request not original
TRANCH 1
2 200228030365 ACHS P03-2003- AC 3/3/2020 10,3 Z012 Pre-authorization checklist
4 00845 84 and request not original
3 200605030041 RPHS P03-2006- AC 06/18/202 10,384 Z012 Pre-authorization checklist
3 01885 0 and request not original
4 200316030009 NKTI P03-2006- AC 06/19/202 550,000 RENAL Pre-authorization checklist
7 02472 0 DISEASE - and request not original;
TRANCH 1 Operative Record did not
belong to the patient
P1,120,768
29.7. Further scrutiny of the sampled claims for Z Benefit Package as presented in
Table 67 showed that the CF2 attached to 279 claims amounting to P3.952
million did not show the actual charges on Part III-A Certification of Consumption
of Benefits, while the CF2 of 20 claims amounting P0.718 million were not
marked with the necessary Type of Accommodation, whether Private or Non-
Private (Charity/Service), under Part II-5 Patient Confinement Information.
Table 67 – Incomplete Filled-out CF2
248
PRO No. of Claims Amount Remarks
NCR & Rizal 4 P1,150,000 No actual hospital. charges indicated in Part
III-A of CF2
V 275 2,802,000 No actual hospital. charges indicated in Part
III-A of CF2
NCR & Rizal 20 717,637 Part II-5 of CF2 was not accomplished.
Total 299 P4,669,637
29.8. The PROs NCR & Rizal and V incurred additional expense in the total
amount of P5.791 million [P1.121 million + P4.670 million] since no
payment should have been made to these claims in the absence of said
documentary requirement.
32 member-beneficiaries in PRO NCR & Rizal

who availed of the Z Benefit package, covered
under the NBB Policy and admitted in a ward type
accommodation incurred “co-pay/out-of-pocket
expenses” in the total amount of P16,600
29.9. Section 43 of RA No. 7875, as amended by RA No. 8241 and RA No.

10606 or “The Implementing Rules and Regulations of the National Health
Insurance Act of 2013”, states that, “No other fees shall be charged to
indigent patient, subject to the guidelines issued by the Corporation. All
necessary services and complete quality care to attain the best possible
health outcomes shall be provided to them.”
29.10. PhilHealth Circular No. 2017-0017 dated May 2017 was crafted to
strengthen and improve the NBB Policy's enforcement.
29.11. Verification of the sampled benefit claims paid by PRO NCR & Rizal
disclosed that 32 member-beneficiaries who availed the Z Benefit
package, covered under the NBB Policy and admitted in a ward type
accommodation, as shown in the Validation Reports, incurred "co-pay/out-
of-pocket expenses" or assumed the balance that was above and beyond
the package rates in the total amount of P16,600 based on Part III of the
attached CF2. The HCIs' non-application of the NBB policy on said
patients runs counter to the guidelines set forth under RA No. 7875 and
PhilHealth Circular No. 2017-0017, hence, to the disadvantage of the
concerned member-patients.
Payments of 1,866 Z-Benefit claims amounting to

P59.150 million in CY 2020 by PRO XI could not
be ascertained due to non-submission of
validation reports and the supporting documents
249
29.12. The Audit Team of PRO XI noted that Z Benefits validation reports and
their supporting documents were not provided by the Fund Management
Section (FMSn), considering that in CY 2020, PRO XI paid 1,866 Z-
Benefit claims amounting to P59.150 million.
29.13. The non-submission of the validation reports and the documentary

requirements, as enumerated in Item B, Part VIII of PhilHealth Circular
No. 2015-035, to support the payments of Z Benefit claims of HCIs,
prevented the Audit Team from performing a timely review of the
transactions and recommending corrective measures on the deficiencies
found in the audit, if any.
29.14. We recommended that top Management direct the:
a. PROs NCR & Rizal and V to: (i) require the submission of SOAs
or BSs as one of the documentary requirements to support the
claims for Z Benefit Package reimbursements of the HCIs,
pursuant to Section 4(6) of PD No. 1445 and COA Circular No.
2012-001 dated June 14, 2012; and (ii) follow up with the BDRD
the issuance of the amendment to the existing policy on Z
Benefits Package requiring the HCIs to submit SOAs or BSs as
one of the attachments to support their claims for
reimbursement from PhilHealth.
b. PRO NCR & Rizal to: (i) ensure compliance by all concerned
with the payment conditions embodied under PhilHealth
Circular No. 2015-035; (ii) reimburse only those claims
applications with original and complete documentation and
properly accomplished claim forms, otherwise, deny payments
on these claims; and (iii) see to it that the HCIs observe strictly
the purpose of NBB policy in compliance with RA No. 7875 and
PhilHealth Circular No. 2017-0017 so that NBB patients can
avail of the benefits due them.
c. PRO XI Management to submit to the Audit Team all the

validation reports and their supporting documents for the Z
Benefit Package claims paid in CY 2020, otherwise, an NS will
be issued.
29.15. PROs NCR & Rizal, V and XI commented that:
a. On the submission of SOAs or BSs to support the claims for Z

Benefit Package reimbursement of the HCIs –
a.1. Since it is a policy issue, PRO NCR & Rizal Management will
refer the recommendation to HO – HFPS.
a.2. PRO V Management stated that under existing PhilHealth

Circulars, the SOA or BS is not one of the documentary
requirements for the processing and payment of claims under
250
Z Benefit Package. Certification of Consumption of Benefits is
attached to these claims, which is signed by concerned
government personnel. PRO V believes that the said
certification from a government entity is even a stronger
document than the SOA. The SOA, however, is useful for
purposes of verification of the accuracy of the entry in the
certification. Nevertheless, PRO V shall consider the
recommendation of requiring the SOA and ensure that claims
are with complete attachments and properly filled-out.
b. On reimbursement only of claims applications with original and

complete documentation and properly accomplished claim forms,
since it is a policy issue, PRO NCR & Rizal Management will refer
the recommendation to HO – HFPS.
c. On Z Benefit claims availed by patients under NBB policy, since this

is also a policy issue, PRO NCR & Rizal Management will refer the
recommendation to HO – HFPS.
d. On the submission of all the validation reports with the documentary

requirements for the Z Benefit Packages –
PRO XI Management Services Division (MSD) committed to submit

the CY 2020 validation reports for the Z Benefit package within 30
calendar days, subject to the verification on whether the Z benefit
packages were separated from the regular claims. As to the future
submission of validation reports, the PRO XI MSD also committed to
submit the validation reports of the Z Benefit package every 1st
week of the succeeding month.
29.16. As a rejoinder, the Audit Team of PRO NCR & Rizal acknowledged
Management’s action in elevating the issues on the submission of SOAs
or BSs, reimbursement of claims with original and completely filled out
CF2, and claims availed by patients under NBB to the HO-HFPS.
However, the full compliance by the concerned PROs with the audit
recommendations will be monitored in the CY 2021 audit.
30. PRO I granted additional Per Family Payment Rate (PFPR) funds to 16 HCIs
totaling P2.413 million, despite they have not yet issued Official Receipts
(ORs) for the previous funds credited to their bank accounts, contrary to
PhilHealth Circular No. 2017-0020.
30.1. PhilHealth implemented the ACPS to improve claim process efficiency by

automating its payment mechanism with the HCIs' banking service
providers. For this purpose, Philhealth Circular No. 2017-0020 was issued
to guide HCIs by prescribing standard requirements for auto credit
registration, official receipt information, and auto credit payment
schedules.
251
30.2. Items F and G, General Guidelines of PhilHealth Circular No. 2017-0020
state the following:
F. HCIs shall issue individual Official Receipt (ORs) for

every PhilHealth reimbursements credited/paid to their
deposit account/s xxx.
It shall ensure that the ORs are received by PhilHealth

with fifteen (15) calendar days after the corresponding
credit date.
G. Xxx that fail to issue and deliver OR on or before

the deadline shall not receive reimbursements on the
credit date after the fifteenth (15th) day.
30.3. The PRO I Audit Team noted that 148 PFPR vouchers of 34 HCIs for the
CY 2019 were not supported with ORs.
30.4. Inquiry with PRO I Management disclosed that the concerned HCIs had
been reminded to submit/issue ORs for the PFPR funds credited to their
respective bank accounts. However, some of said HCIs did not yet
provide required ORs, which resulted in the withholding of 14 fund
releases amounting to P170,000.
30.5. Further verification disclosed that 16 non-compliant HCIs were granted

additional funds totaling P2.413 million in CY 2020, contrary to PhilHealth
Circular No. 2017-0020 and putting the validity of the releases made to
said HCIs in question.
30.6. We recommended that top Management require PRO I Management

to ensure strict compliance by the HCIs with the provisions of
PhilHealth Circular No. 2017-0020, specifically on the issuance of OR
for funds received from PhilHealth, before releasing succeeding
funds.
30.7. Management explained that the Cash Management Unit generates

payment and its release to HCIs of PFPR through the BPS. The system
withholds succeeding releases of reimbursements once no OR/JEV is
encoded in the OR Registry Module for prior releases beyond 30 days or
four cut-off periods as per PhilHealth Circular No. 2017-0020. Initially, the
BPS was intended for payment of regular claims, which is done weekly
four times in a month compared to PFPR vouchers that are being
processed depending on received DVs. This mode of payment for PFPR
was not considered when the system was conceptualized; thus, the
incurrence of released payments to some HCIs though there were no
ORs/JEVs issued for prior reimbursements. Nonetheless, the matter will
be referred to BDRD of PhilHealth HO for system enhancement.
30.8. As a rejoinder, the PRO I Audit Team will monitor the full implementation
of the recommendation in the CY 2021 audit.
252
NOMINAL HOUSING ALLOWANCE
31. The grant of Nominal Housing Allowance to reassigned officers and

employees amounting to P1.880 million by PhilHealth HO during CY 2020
was inconsistent with Section 26 of RA No. 7305 and Department of Budget
and Management (DBM) National Budget Circular (NBC) No. 571 dated
December 4, 2017, thereby resulting in an overpayment totaling to P1.614
million and, the said excess grant could be considered as “irregular”
expenditures as defined under Item 3.1 of COA Circular No. 2012-003 dated
October 29, 2012.
31.1. The DBM NBC No. 571 dated December 4, 2017 provides the guidelines
on the provision of free quarter to certain officials which includes those
assigned at the Government -Owned or -Controlled Corporations
(GOCCs). Item 3.0 thereof states that only the officials and those of
equivalent rank who are assigned or transferred to a place other than of
their domicile, and do not own houses or rooms therein, by virtue of
agency policies and reshuffling or rotation. The list of officials and
equivalent ranks entitled to free quarters are presented in Table 68.
Table 68 - List of Officials and Equivalent Ranks entitled to Free Quarters
Salary Category per DBM

Rank per DBM NBC No. 571 PhilHealth Equivalent Rank38
Grade NBC No. 571
Bureau Directors; Senior Vice President
28 A
Department Regional Directors Corporate Secretary
Assistant Bureau Directors;
Department Assistant Regional Directors; Area Vice President
27 A
Bureau Regional Directors; (VP/VP Actuary/Area VP)
Department Service Directors
Assistant Vice President (Regional
VP);
Assistant Bureau Regional Directors and Department Manager III
26 B
those of equivalent rank (Senior/Branch Manager);
Attorney VI
Head Executive Staff
Attorney V;
Head Executive Assistant;
Bureau Assistant Regional Directors 25 B
Medical Officer VII;
Head Executive Assistant
38
For CY 2018 and in view of the approval of the Governance Commission for GOCCs (GCG) pertaining to PhilHealth’s adoption of
the Salary Standardization Law (SSL) IV under Executive Order (EO) No. 201, s. 2016, the same was used for purposes of
determining the equivalent rank and salary grade only
253
31.2. In addition, Item 5.2 of DBM NBC No. 571 provides that where there is not
enough space in government premises to be used as quarters, the
agency concerned may rent houses or rooms which shall serve as
quarters at reasonable rates based on the prevailing cost of rental in the
area or locality, but not to exceed the prescribed rates, as presented in
Table 69.
Table 69 - Prescribed Monthly Rates in the Area/Locality
Area/Locality Category A Category B

NCR P 5,500 P 5,000
Other Highly Urbanized Cities 4,500 4,000
Other Areas 4,000 3,500
31.3. Furthermore, Item 4.0 of the same Circular provides exemptions from the
coverage thereof which include those who are covered by RA No. 7305,
among others.
31.4. By virtue of Section 15 of RA No. 11223 39, otherwise known as the

“Universal Health Care Act,” all PhilHealth personnel shall be classified as
public health workers in accordance with the pertinent provisions under
RA No. 7305. Relative thereto, Paragraph 1 of Section 26 of RA No.
730540 provides that:
All public health workers (PHWs) who are on tour of duty and
those who, because of unavoidable circumstances are
forced to stay in the hospital, sanitaria or health infirmary
premises shall be entitled to free living quarters within the
hospital, sanitarium or health infirmary or if such quarters are
not available, shall receive quarters allowance as may be
determined by the Secretary of Health and other appropriate
government agencies concerned xxx.
31.5. Simply put, Section 26 of RA No. 7305 provides that to be entitled to living
quarters allowance, the concerned PHW must meet the two conditions,
namely: (1) he/she is forced to stay in the hospitals, sanitaria, or health
infirmary premises; and (2) such hospital, sanitarium, or health infirmary
has no existing living quarters to be stayed to by the affected PHW.
31.6. Verification disclosed that in CY 2020, PhilHealth granted housing

allocation allowance amounting to P2.613 million, of which P1.880 million
was paid in the PhilHealth HO. However, the amount granted to
PhilHealth officers and employees was in excess of that allowed under
the DBM NBC No. 571 by P1.614 million, details are summarized in Table
70 (please see next page).
31.7. Further evaluation of the documents to support the disbursements

revealed that the PhilHealth BOD issued PBR No. 1345, authorizing the
39
Universal Health Care Act, approved on February 20, 2019
40
Magna Carta of Public Health Workers, dated 26 March 1992
254
grant of Free Living Quarters or Housing Allocation and grant of Family
Visit Privilege. Accordingly, the PhilHealth BOD based its authorization
on Section 26 of RA No. 7305 and RA No. 11223.
Table 70 - Housing Allocation Allowance Granted during CY 2020
Location of No. of Allowance Allowance per

Domicile Re-assignment Employees* Granted DBM Excess
Region IV-A PRO I 1 P 71,400 P 40,000 P 31,400
Region IV-A HO 1 60,000 10,000 50,000
Region VIII HO 3 550,255 90,000 460,255
Region VIII PRO IV-A 1 240,000 - 240,000
Region X HO 2 450,000 75,500 374,500
Region XI HO 3 508,201 50,000 458,201
Total 11 P1,879,856 P265,500 P1,614,356
*Included officers and employees receiving salary below SG-26 and are, therefore, not entitled
31.8. Relative thereto, PhilHealth Corporate Order (PCO) No. 2020-0027 dated
April 7, 2020, was also crafted to implement the grant of Free Living
Quarters or Housing Allocation and grant of Family Visit Privilege to
reassigned PhilHealth officers and employees. Under Item V.2 of the said
PCO, the housing allocation rate per month shall be based on the
prevailing rate within the locality where the officer/employee shall be
reassigned, but not to exceed the maximum limit of P30,000.
31.9. While it is true that all PhilHealth personnel are considered PHW by virtue
of RA No. 11223 and that PhilHealth has no existing living quarters for the
purpose, the concerned officers and employees who were given housing
allocation were not actually forced to stay in a medical facility. Instead,
they were reassigned to a PhilHealth office outside of their
domicile. Accordingly, foregoing circumstances considered, PhilHealth
personnel are covered, not by Section 26 of RA No. 7305, but by DBM
NBC No. 571, dated December 4, 2017. Thus, the adopted rate for the
grant of housing allocation under PCO No. 2020-0027 violates the
requirements under RA No. 7305 and is also excessive compared to the
prescribed rates under DBM NBC No. 571.
31.10. It is worth mentioning that the noted deficiency was acknowledged by

PhilHealth when it issued Management Advisory No. 2020-06 dated
December 28, 2020, wherein the Governance Commission for
Government-Owned or Controlled Corporations (GCG) stated that
PhilHealth may only grant free living quarters allowance in accordance
with DBM NBC No. 571.
31.11. Given that PhilHealth officers and employees are covered by DBM NBC
No. 571, the payments made by PhilHealth HO for the grant of Housing
Allocation to reassigned PhilHealth officers and employees during
255
CY 2020 were therefore in excess of the prescribed rates provided by
said DBM NBC in an aggregate amount of P1.614 million (Table 70).
31.12. Consequently, the excess allowance can be considered as “irregular”

expenditures as defined under Item 3.1 of COA Circular No. 2012-003 41,
as those incurred without adhering to established rules, regulations,
procedural guidelines, policies, principles or practices that have gained
recognition in laws, among others.
31.13. We recommended that PhilHealth Management:
a. Direct the refund of the amount granted as nominal housing

allowance from the concerned officers and employees, in
excess of the prescribed rates authorized by DBM NBC No. 571
dated December 4, 2017.
b. Henceforth, strictly observe the requirements under DBM NBC

No. 571 dated December 4, 2017, in the grant of housing
allocation allowance to avoid future audit suspensions and/or
disallowances.
31.14. Management assured the Audit Team that the recommendations are duly
noted. The action to be taken will be referred to the Executive Committee
for discussion. Further, PCO No. 2020-0027 dated April 7, 2020 has
already been superseded by PCO No. 2021-001 or the Provision of Free-
Quarters or Quarters Allocation and Grant of Family Visit Privilege to
Reassigned Officials in the Corporation effective May 1, 2021 which is
now in accordance with the relevant provisions under DBM NBC No. 571.
31.15. As rejoinder, the Audit Team acknowledged Management’s assent to

comply with the audit recommendations. The full implementation of which
is subject to the Audit Team’s continuous monitoring.
ENROLLED SENIOR CITIZENS (SCs) IN THE PHILHEALTH PROGRAM
32. The process controls in the membership data collection of enrolled

6,235,438 SCs were deficient/weak resulting in: (a) a total of 8,156 SC
members who are already dead were still included in the PhilHealth
Members Database (PMD), of which 4,544 or 55.71 per cent pertained to CY
2019 deaths, but included in the billings to the DBM for the CY 2020,
resulting in over subsidy from the National Government (NG) amounting to
P22.720 million; (b) the non-updation of the status of the 2,187 out of the
2,344 samples of deceased members in the PhilHealth Members
Information System (MIS); and (c) duplication of members’ records in the
PMD due to errors in encoding members’ data, thus, exposing the
Corporation to risk of generating inaccurate/unreliable data and possible
payment of fraudulent claims.
41
Updated Guidelines for the Prevention and Disallowance of Irregular, Unnecessary, Excessive, Extravagant and Unconscionable
Expenditures, dated October 29, 2012.
256
32.1. The Audit Team audited the enrolled 6,235,438 SCs to the PhilHealth
Program billed to the DBM for the CY 2020 amounting to P31.177 billion
and noted several deficiencies as discussed hereunder.
A total of 8,156 SC members who are already dead

were still included in the PMD, of which 4,544 or
55.71 per cent pertained to CY 2019 deaths, but
included in the billings to the DBM for the CY 2020,
resulting in over subsidy from the NG amounting to
P22.720 million
32.2. With the enactment of RA No. 11223, otherwise known as the UHC Act,
every Filipino citizen shall be automatically included in PhilHealth's
National Health Insurance Program (NHIP). One of its objectives is to
ensure that all Filipinos are guaranteed equitable access to quality and
affordable health care goods and services and protected against financial
risk. The membership to the program of a Filipino citizen without the
capacity to pay a premium will be subsidized by the NG, which involves
the enrollment of all SCs not covered to any other member category of
PhilHealth.
32.3. Verification disclosed that for CY 2020, enrolled beneficiaries and the
subsidy received by PhilHealth from NG covering SCs nationwide in the
Health Program from January 1 to December 31, 2020, are summarized
in Table 71.
Table 71 – SCs Subsidized by NG for CY 2020
Amount of Premium Paid by the NG

Particulars No. of enrolled beneficiaries per pax thru DBM
SCs 6,235,438 P5,000 P31,177,190,000
32.4. To validate the reliability of the billed amount to DBM, the Audit Team
sent letters to sixty-nine (69) Philhealth Accredited Hospitals requesting
for the list of deceased patients from the effectivity of the UHC Act on
February 20 to December 31, 2020, of which 18 HCIs responded.
Verification of data gathered revealed that 8,156 SC members tagged as
deceased were still included in the PMD, as summarized in Table 72
(please see next page).
32.5. As can be gleaned in Table 72, 4,544 SCs died in CY 2019. Further
validation disclosed that the deceased patients were still included in the
billings to DBM for CY 2020, thus, resulting in over subsidy from the
National Government amounting P22.720 million 42 from the data gathered
from the 13 HCIs alone.
32.6. The Audit Team would like to emphasize that the 13 respondents
represent only one per cent (1%) of PhilHealth's total 1,201 accredited
42
Computed as 4,544 (No. of Deceased patients in 2019) multiplied by P5,000 (Premium amount per SC).
257
hospitals, not to mention those who died outside hospitals. Thus, the
possibility that significant number of deceased SCs is not yet captured in
the PMD given that only a percentage was considered in the Team’s
validation, to the prejudice of the NG that subsidizes the premium
contribution.
Table 72 - Summary of Deceased SCs from 18 Respondent HCIs
No. of Deceased Patients

No. HCIs 2019 2020 Total
1 HCI A 649 625 1,274
2 HCI B 437 245 682
3 HCI C 985 713 1,698
4 HCI D 12 34 46
5 HCI E 81 76 157
6 HCI F 69 23 92
7 HCI G 26 17 43
8 HCI H 2 16 18
9 HCI I 386 142 528
10 HCI J 10 35 45
11 HCI K 632 232 864
12 HCI L 39 38 77
13 HCI M 110 67 177
14 HCI N 406 315 421
15 HCI O 516 353 869
16 HCI P 90 109 199
17 HCI Q 34 53 87
18 HCI R 60 519 579
Total 4,544 3,612 8,156
Percentage (%) 55.71% 44.29% 100%
32.7. We recommended that Management update the PMD, specifically the

enrolled SC Members, to exclude those who are already dead so that
they will no longer be included in the amount to be billed to NG thru
the DBM.
32.8. Management concurred with the audit recommendation and commented

the following:
a. A MOA was signed on June 29, 2021 between the Corporation and
the Philippine Statistics Authority (PSA) wherein its objective is to
data match the membership database, both members and
dependents, with the PSA death registry.
b. The following draft issuances were already prepared and being

routed to the concerned offices for review and recommendations,
and approval by the Heads of Agencies to operationalize the
objective of the said MOA:
258
 Draft Corporate Personnel Order (CPO) re: “Composition of
the Technical Working Group (TWG) for the Data Sharing of
Death Information Records from PSA to PhilHealth”; and
 Joint Memorandum Order of PSA and PhilHealth re:

“Implementation Guidelines on the Data Sharing of Death
Information Records from PSA to PhilHealth.”
c. PhilHealth’s operational plan for CYs 2021 to 2023 integrated the

validation of the membership database under the NHIP with the
implementation of the Philippine Identification System Act (RA No.
11055). A Data Sharing Agreement (DSA) will be initiated towards
the last quarter of this year in this regard.
259
32.9. As a rejoinder, the Audit Team appreciated Management's initial actions
to cleanse the PMD. The Team shall monitor the project implementation
and accomplishment of data sharing with PSA in the succeeding audit.
The non-updation of the status of the 2,187 out of

the 2,344 samples of deceased members in the
PhilHealth MIS
32.10. The PhilHealth MIS is a system used to register/enroll direct and indirect
members, containing their personal data as enrolled members of
PhilHealth. It is also used in the amendment/update of the status of
members from “Active” to “Inactive” or “Deceased.”
32.11. The Audit Team selected 2,344 samples out of the list of deceased
members-patients provided by the 18 HCIs mentioned above and
validated if their status was updated in the system. The result of the
validation is summarized in Table 73.
Table 73 – Summary of the Result of Validation of Status of Deceased Members

from PhilHealth MIS
Status No. of SCs Percentage (%)

Active 2,187 93.30%
Inactive 70 2.99%
Deceased 38 1.62%
Null 49 2.09%
Total 2,344 100%
32.12. As reflected in Table 73, 2,187 or 93.30 per cent of the 2,344 deceased
SC members were still tagged as "Active" instead of "Deceased," which
means that said members' status was not updated in the PMD.
32.13. Considering that the data statistics of direct43 and indirect44 contributors
nationwide are sourced from the PMD, proper tagging of members’ status
is crucial as these data are used in various policy recommendations and
actuarial computations/assumptions. Thus, the Audit Team could not
ascertain whether the data contained in the PMD can be relied on.
32.14. It is emphasized that reliable and accurate data are vital for a sound
business decision. Deficient quality of data tends to produce inaccurate
reports/analyses that lead to poor decision-making.
32.15. We recommended that Management: (a) direct the concerned

Department(s) to secure from the HCIs or any competent authority
the Monthly List of Deaths and update their status as "Deceased" in
43
Direct Contributors - Refer to those who have the capacity to pay premiums, are gainfully employed and are bound by an employer-employee
relationship, or are self-earning, professional practitioners, migrant workers, including their qualified dependents, and lifetime members. (Section
4.8 of the UHC Act).
44
Indirect Contributors - Refer to all others not included as direct contributors, as well as their qualified dependents, whose premium shall be
subsidized by the national government including those who are subsidized as a result of special laws (Section 4.19 of the UHC Act).
260
the Database, if enrolled as members; and (b) consider crafting a
guideline for the purpose, when necessary.
32.16. Management commented that the recommendation would be studied and

consulted with the HFPS, specifically with the PMT-Claims on the
feasibility for immediate implementation on the integration of the eClaims
system with the membership database.
Duplication of members’ records in the PMD due

to errors in encoding members’ data
32.17. Interview with the Member Management Group (MMG) personnel

disclosed that during the enrollment, validations are made before a
member can be registered in the PhilHealth Program through the PMD.
Accordingly, the assigned encoders used five (5) data fields, namely, Last
Name, First Name, Middle Name, Birthday, and Gender in their matching
process to avoid duplication of records before generating a PIN to a new
member.
32.18. However, manual review of the 20,000 samples of SCs billed to DBM for
CY 2020 disclosed errors in the encoding of data in the MIS, resulting in
duplication of members’ records which were not screened in the conduct
of matching process of the encoders. Samples of errors noted are
presented in the Tables 74 to 83 below:
Table 74 - Misspelled Names
SE
MEMID_NO LAST NAME FIRSTNAME MIDDLE NAME Suffix BIRTHDAY Age X Municipality Province
061752607027 Same Sxx Same 19-Dec-56 63 F LAL-LO CAGAYAN
062008687574 Same Zxx Same 18-Dec-56 63 F LAL-LO CAGAYAN
212001282651 Same Same IxxNxS 17-Jul-58 62 F SJDM BULACAN
021752468408 Same Same IxxÑxZ 17-Jul-58 62 F SJDM BULACAN
Table 75 - Wrong Middle Name Encoded
MEMID_NO LAST NAME FIRSTNAME MIDDLE NAME Suffix BIRTHDAY Age SEX Municipality Province
042505437971 Same Same Cxxx 13-Apr-54 65 F TABUK KALINGA
042004492123 Same Same Gxxx 13-Apr-54 65 F TABUK KALINGA
051754230553 Same Same Axxx 10-Sep-54 65 F DINGRAS ILOCOS NORTE
051753787287 Same Same Bxxx 10-Sep-54 65 F DINGRAS ILOCOS NORTE
Table 76 - Error in Spacing
042002965687 Same Same Lx Vxxx 24-Jul-58 61 M FLORA APAYAO
040000203663 Same Same Lxvx 24-Jul-58 61 M FLORA APAYAO
261
Table 77 - Non-encoding of First or Second Name
MIDDLE
MEMID_NO LAST NAME FIRSTNAME Suffix BIRTHDAY Age SEX Municipality Province
NAME
061751419375 Same Jxxx Same 13-Mar-54 65 M CAUAYAN ISABELA
062004599832 Same Jxxx Axxx Same d 13-Mar-54 65 M CAUAYAN ISABELA
072011469400 Same Mxxx Same 3-Mar-55 64 F PILAR BATAAN
07175255375 Same Mx Mxxx Same 3-Mar-55 64 F PILAR BATAAN
Table 78 - Encoding of Middle Initial instead of Full Middle Name
052005434947 Same Same B 9-Apr-59 60 M SALCEDO (BAUGEN) ILOCOS SUR
052011399983 Same Same Bxxx 7-Apr-59 60 M SALCEDO (BAUGEN) ILOCOS SUR
052005442427 Same Same T 25-Jan-57 62 F STA. MARIA ILOCOS SUR
051754279706 Same Same Txxx 25-Jan-57 62 F STA. MARIA ILOCOS SUR
Table 79 - Error in Encoding Birth Date
052000002518 Same Same Same 21-Mar-57 62 M BAGULIN LA UNION
052000315109 Same Same Same 21-Mar-56 63 M BAGULIN LA UNION
052005189098 Same Same Same 20-Oct-57 62 M UMINGAN PANGASINAN
052013731551 Same Same Same 20-Nov-57 62 M UMINGAN PANGASINAN
Table 80 - Encoding of members’ nick names
062005703390 Same Mely Same 30-Oct-59 60 F SANTIAGO ISABELA
062007117391 Same Melinda Same 30-Oct-59 60 F ESANTIAGO ISABELA
061752425824 Same Sol Same 12-Sep-55 64 F ILAGAN ISABELA
061752784328 Same Soledad Same 12-Sep-55 64 F ILAGAN ISABELA
Table 81 - Suffixes not encoded in the right field
190265647077 Same Jxxx Same SR 16-Jun-59 60 M LAOAC PANGASINAN
052003202526 Same Jxxx Sr Same 16-Jun-59 60 M LAOAC PANGASINAN
060500260249 XXX Same XXX SR 4-Apr-55 64 M PEÑABLANCA CAGAYAN
062004966797 XXX Sr. Same XXX 4-Apr-55 64 M PEÑABLANCA CAGAYAN
Table 82 - Wrong entry of Gender
SE
MEMID_NO LAST NAME FIRSTNAME MIDDLE NAME Suffix BIRTHDAY Age X Municipality Province
062008186478 Same Same Same 16-Jun-56 63 F TUGUEGARAO CAGAYAN
062002205454 Same Same Same 16-Jun-56 63 M TUGUEGARAO CAGAYAN
062008679512 Same Same Same 28-Jul-56 63 M LAL-LO CAGAYAN
061752777712 Same Same Same 28-Jul-56 63 F LAL-LO CAGAYAN
Table 83 - Duplicate Entries
262
062000211899 Same Rodrigo Same 18-Jan-58 61 M SOLANO NUEVA VIZCAYA
Rodrigo -
062003323973 Same DP062000211899 Same 18-Jan-58 61 M SOLANO NUEVA VIZCAYA
062002717358 Same Jaime Same 10-Aug-56 63 M ILAGAN ISABELA
Jaime -
062003021519 Same DP062002717358 Same 10-Aug-56 63 M ILAGAN ISABELA
32.19. To recapitulate, the errors observed out of the 20,000 samples reviewed
are presented in Table 84.
Table 84 - Summary of Errors in Encoding Members’ Data
Nature of Error No. of Error

Misspelled names 76
Wrong middle name encoded 2
Error in spacing 1
Non-encoding of first or second name 5
Encoding of middle initial instead of full middle name 18
Error in encoding birth date 104
Encoding of members’ nick names 15
Suffixes not encoded in the right field 21
Wrong entry of Gender 3
Duplicate Entries 7
Total 252
32.20. Based on Table 84, the percentage of errors in encoding members’ data
in the PMD is 1.26 per cent45.
32.21. As of December 31, 2020, the total enrolled members subsidized by the
NG is presented in Table 85.
Table 85 - Summary of Enrolled Members Subsidized by NG
No. of enrolled Amount of Paid by the NG thru

Particulars beneficiaries Premium per pax DBM
SCs 6,235,438 P5,000 P31,177,190,000
National Household Targeting System
(NHTS) 12,620,838 2,400 30,290,011,200
PAyapa at MAsaganang PamayaNAn
Program (PAMANA) 21,953 2,400 52,687,200
Point of Service (POS) 346,763 2,400 832,231,200
Persons with Disability 17,232 2,400 41,356,800
Total 19,242,224 P62,393,476,400
32.22. Applying the percentage of error of 1.26 per cent, computed above, to the
total number of enrolled beneficiaries billed to DBM of 19,242,224, it is
estimated that around 242,452 duplicate data entries are in the Database.
32.23. It is important to highlight that duplicate data entries in the PMD would not
only overstate the billing of premiums to the NG through the DBM, but
could mislead Management as well as the public as to the actual number
of beneficiaries already covered in the NHIP and impact on the
45
Computed as 252 (wrong entries noted) divided by 20,000 (samples reviewed)
263
measurement of performance accomplishment of the Corporation.
Moreover, the noted errors in the data entries might cause inconvenience
to affected members as they need to request for update/amend the data
erroneously registered before they can avail of the PhilHealth program’s
benefits.
32.24. We recommended and PhilHealth Management agreed to:
a. Embed a preventive control in the MIS to detect errors in

encoding before proceeding with the registration or enrollment
to mitigate if not to eliminate duplication of members’ records;
b. Instruct the encoders to be extra cautious in encoding

members’ data in the MIS and to undergo refresher training
when necessary; and
c. Cause the corrections of noted errors in the MIS.
PROCUREMENT
33. Some of the technical specifications of the items delivered/offered by the

winning bidders for various Information and Communication Technology
(ICT) Projects totaling P495.384 million were vague and not compliant with
the Agency’s and/or contract requirements, contrary to RA No. 9184 and its
2016 Revised IRR and, thus, disadvantageous to PhilHealth and the
payments pertaining thereto may be considered irregular expenditures as
defined under Item 3.1 of COA Circular No. 2012-003 dated October 29, 2012.
33.1. Section 2 of PD No.1445, otherwise known as “The Government Auditing

Code of the Philippines,” reads as follows:
It is the declared policy of the State that all resources of the

government shall be managed, expended or utilized in
accordance with law and regulations, and safeguarded
against loss or wastage through illegal or improper
disposition, with a view to ensuring efficiency, economy and
effectiveness in the operations of government.
33.2. Section 17 of the 2016 Revised IRR of RA No. 9184, states that:
17.2 The specifications and other terms in the Bidding

Documents shall reflect the necessary specifications
required to meet the needs of the Procuring Entity in
clear and unambiguous terms.
33.3. Further, Section 3 of the same Revised IRR provides that the following
principles shall govern the Government of the Philippines' (GoP)
procurement activities/process:
264
d. System of accountability where both the public
officials directly or indirectly involved in the
procurement process as well as in the
implementation of procurement contracts and the
private parties that deal with GoP are, when warranted
by circumstances, investigated and held liable for their
actions relative thereto.
e. Public monitoring of the procurement process and the

implementation of awarded contracts with the end in
view of guaranteeing that these contracts are awarded
pursuant to the provisions of the Act and this IRR, and
that all these contracts are performed strictly
according to specifications. (Emphasis supplied)
33.4. Meanwhile, Section 3.1 of COA Circular No. 2012-003 dated October 29,
2012, defined irregular expenditures as:
The term "irregular expenditure" signifies an expenditure

incurred without adhering to established rules, regulations,
procedural guidelines, policies, principles or practices that
have gained recognition in laws. Irregular expenditures are
incurred if funds are disbursed without conforming with
prescribed usages and rules of discipline. There is no
observance of an established pattern, course, mode of
action, behavior, or conduct in the incurrence of
an irregular expenditure. A transaction conducted in a
manner that deviates or departs from, or which does not
comply with standards set is deemed irregular. A transaction
which fails to follow or violates appropriate rules of
procedure is, likewise, irregular.
33.5. The twenty-three (23) ICT contracts, together with their supporting
documents, entered into by PhilHealth with various suppliers in the
aggregate amount of P495.384 million for the Calendar Years (CYs) 2016
to 2019, as shown in the Table 86 were submitted to the COA Information
Technology Audit Office (ITAO), for technical evaluation and inspection.
Table 86 - List of ICT Contracts Reviewed by the COA-ITAO
No. Supplier Contract Date Particulars Amount

1. Supplier A May 23, 2018 One (1) Lot Storage Capacity P 39,698,988
Enhancements for Pasig Server Room (IB
No. SCEPSR 2017-008-IT)
2. Supplier B May 2, 2019 1 Lot Storage Capacity Enhancements for 39,888,883
Pasig Server Room (IB No. SCEPSR 2018-
020-IT)
3. Supplier C May 3, 2016 1 Lot Database Security Suite (ITB No. DSS 49,727,000
2015-020-IT)
4. Supplier D May 4, 2016 1 Lot Data Storage Upgrade and 14,768,880
Enhancements (ITB No. DSUE 2015-014-IT)
5. Supplier E May 30, 2016 1 Lot Interactive Voice Response System 11,849,882
265
No. Supplier Contract Date Particulars Amount
(IVRS) and Voice Logger/ Recorder (ITB No.
IVRS 2015-019-IT)
6. Supplier F August 18, 2016 Procurement of Various Desktop Computers 17,720,034
(ITB No. PC-2016-003-IT)
7. Supplier G November 22, 1 Lot Database Server Enhancements for 19,980,000
2016 Pasig Server Room (ITB No. DSE 2016-
2014-IT)
8. Supplier H September 21, 1 Lot Database Replication Licenses (ITB 19,793,931
2016 No. 2DRL 2016-011-IT)
9. Supplier I July 2, 2018 1 Lot Physical Access and Surveillance 13,650,854
Devices (ITB No. PASD 2017-013-IT)
10. Supplier J October 22, 2018 1 Lot Messaging and Collaboration Licenses 19,577,024
(ITB No. MCL2 2018-001-IT)
11. Supplier K October 18, 2019 1 Lot Enterprise Internet Caching Appliance 34,680,800
(IB No. EICA 2019-007-IT)
12. Supplier L October 18, 2019 1 Lot Replication Licenses and Support (IB 19,707,717
No. RLS2 2019-004-IT)
13. Supplier M May 30, 2019 Procurement of Various Desktop Computers 6,900,048
(ITB No. VDC 2018-018-IT)
14. Supplier N March 26, 2019 1 Lot Key Vault (IB No. KEYV2 2018-003-IT) 16,828,721
15. Supplier O July 31, 2019 1 Lot Software Development Platform 24,766,887
Solution (ITB No. SDPS 2018-022-IT)
16. Supplier P April 15, 2019 1 Lot Upgrading of PROs (ITB No. USPROs 20,299,860
2017-005-IT)
17. Supplier Q June 19, 2017 1 IP-VPN Connectivity of LHIOs (ITB No. 18,450,140
Router 2016-025-IT)
18. Supplier R July 9, 2018 1 Lot Identity Management System (ITB No. 17,575,000
IMS 2017-012-IT)
19. Supplier S May 25, 2016 1 Lot Upgrading of IP-PBX and Call Center 18,300,000
Upgrade (ITB No. UPGRADE 2015-030-IT)
20. Supplier T April 11, 2019 1 Lot Service Management Solution (IB No. 14,588,000
SMS 2018-014-IT)
21. Supplier U January 30, 2018 1 Lot Upgrading of Servers of PROs and 19,983,334
Application Server System Enhancements
and Support (IB No. USASSES 2018-015-
IT)
22. Supplier V January 8 ,2018 1 Lot Core Switch Enhancements (ITB No. 17,749,227
CSE-2017-002-IT)
23. Supplier W May 8, 2019 1 Lot Network Security Enhancement and 18,899,000
Support (IB No. NSECES 2018-005-IT)
Total P495,384,210
33.6. Based on the COA-ITAO's technical evaluation and inspection reports,

significant issues/deficiencies were noted pointing out that the delivered
items do not comply with the contract requirements of PhilHealth. The
noted observations included, among others, the following:
 items delivered/offered were not compliant with agency’s/contract

requirements;
 vague, not properly defined, and incomplete contract requirements;
 price inconsistencies;
 non-utilization of training contract components;
266
 missing and defective items;
 the required items are left to the discretion of the winning bidder;
 non-submission of the detailed breakdown of project cost and Bill of
Materials;
 reference to brand name, inconsistency in the quantity of delivered
items; and
 non-submission of some documentation/certification.
33.7. The details of the observations containing the results of the technical
evaluation and inspection of the projects/contracts are presented in Part
IV, Annex “A” of this Report.
33.8. The issues/deficiencies raised by the COA-ITAO are found to be

disadvantageous to PhilHealth in particular and government in general.
Likewise, the payments made for the said ICT projects/contracts to the
various suppliers in the total amount of P495.384 million may be
considered irregular expenditures as defined under Item 3.1 of COA
Circular No. 2012-003 dated October 29, 2012, since these were made in
violation of the procurement law or RA No. 9184 and its 2016 Revised
IRR.
33.9. We recommended that Management require the concerned

Department(s) to:
a. Provide to the Audit Team written justification(s) supported

with necessary documents showing that the subject contracts
were effectively and strictly implemented according to the
technical specifications and not disadvantageous to
PhilHealth, otherwise, the subject transactions will be
suspended or disallowed in audit; and
b. Henceforth, strictly comply with the provisions of RA No. 9184

and its Revised IRR and monitor and evaluate the
implementation of the contract deliverables to ensure that the
Government and PhilHealth are not put at a disadvantage.
33.10. In response to the audit recommendations, Management submitted

documents and provided written justifications on the implementation and
compliance of the winning bidders on the technical specification
requirements of the ICT contracts/projects.
33.11. As rejoinders, the documents and written justifications submitted by

Management were endorsed by the Audit Team to the COA-ITAO for
evaluation due to technical nature of the subject matter. The Audit Team
will also continuously monitor compliance by PhilHealth with the
recommendations in the CY 2021 audit.
34. Deficiencies were noted in the PhilHealth’s Internet Service Provider (ISP)
contracts, viz.:
267
a. The needed upgrade as recommended by the end users has not been
fully addressed on the renewed ISP contracts with the various
suppliers which are not in keeping with Items 3.3.1.2 and 3.3.1.3,
Annex A of GPPB Resolution No. 019-2006, as amended by GPPB
Resolution No. 41-2017, thus, resulted in the internet services with
lesser capacity which is not suitable to the needs of the end-users, in
particular, and to the Corporation, in general; and
b. The renewal of ISP contracts and upgrade of the terms thereof were
not done expeditiously due to non-observance of relevant provisions
of the 2016 Revised IRR of RA No. 9184 regarding significant time
periods in the procurement process, thus, may result in interruption
of internet access and any public service dependent on such access.
The needed upgrade as recommended by the end

users has not been fully addressed on the
renewed ISP contracts with the various suppliers
which are not in keeping with Items 3.3.1.2 and
3.3.1.3, Annex A of GPPB Resolution No. 019-
2006, as amended by GPPB Resolution No. 41-
2017, thus, resulted in the internet services with
lesser capacity which is not suitable to the needs
of the end-users, in particular, and to the
Corporation, in general
34.1. Items 3.3.1.2 and 3.3.1.3, Annex A of GPPB Resolution No. 019-2006, as
amended by GPPB Resolution No. 41-2017 state that:
Section 3.3.1.2 At the end of each year, however, the

procuring entity must assess the quality of services provided
by its ISP. For instance, it must compare the cost charged by
said ISP and the range of services it offers as against other
service providers in the area. It may also consider new
technologies that may prove less costly or those that are
more advantageous to the government in terms of use,
capacity, and services offered, e.g. bandwidth, speed,
platform, additional services, such as, but not limited to cloud
computing, cloud storage, etc.
Section 3.3.1.3 If the results of said assessment or cost-

benefit analysis, conducted by the end-user, continue to
favor the existing ISP, then the Head of the Procuring Entity
may simply renew its services. Xxx. For efficiency and
economy, during the effectivity of the contract, or upon its
renewal, the PE may consider the expansion or reduction of
the services provided by the existing service provider subject
to the need of the PE and the best way by which such need
may be addressed and satisfied, subject to existing
budgeting, accounting and auditing rules.
268
34.2. Review of the ISP contacts disclosed that PhilHealth has various ISP
contracts which were already expired in 2019 yet remained effective by
extending their terms for periods ranging from 10 months to a maximum
of 1 year through issuance of monthly extensions by the Bids and Awards
Committee (BAC), instead of promptly renewing these contracts, details in
Table 87.
Table 87 – Expired ISP Contracts Extended Month-to-Month
Notice of Award Notice to Period subjected to

Expiration of (NOA) Contract Date Proceed (NTP) month-to month
Project Name Original Contract Issuance* for Renewal Issuance** extension
ISP 1 - Renewal of contract for 12 months (the
One (1) Lot Secondary Link for contract was
04/04/2018 12/04/2018 06/25/2019 07/30/2019
PROs and LHIOs for Two (2) terminated effective
Years April 5, 2019)
ISP 2 - Renewal of contract for
12 months (there was
One (1) Lot Redundant ISP for
06/30/2018 12/04/2018 06/21/2019 07/30/2019 no billing for the period
PhilHealth Online Services for
July 1 – 31, 2019)
Two (2) Years
One (1) Lot ISP Subscription for
12/31/2018 05/21/2019 10/08/2019 10/09/2019 10 months
PROs and LHIOs (for non-
operation use) for Two (2) Years
One (1) Lot Redundant ISP for
04/10/2019 07/31/2019 03/03/2020 03/04/2020 11 months
PhilHealth Online Services for
Two (2) Years
*NOA was received by the service provider on the same day
**NTP was received by the service provider on the same day
34.3. Further review of the supporting documents attached to the contracts,

particularly the memoranda recommending the renewal of the four (4)
contracts mentioned in Table 87, disclosed the following information in
Table 88.
Table 88 – Recommendations of End-users for Contract Renewal
Project Name Relevant Recommendations of the End-Users Memorandum Date

ISP 1 - Renewal of contract for One
“Since this connectivity service is critical in the operations of
(1) Lot Secondary Link for PROs and April 27, 2018
PhilHealth, the existing bandwidth needs to be upgraded”
LHIOs for Two (2) Years
ISP 2 - Renewal of contract for One “The current requirement of the corporation for the Redundant ISP
(1) Lot Redundant ISP for PhilHealth for Philhealth Online Services has increased from 200Mbps to June 11, 2018
Online Services for Two (2) Years 800Mbps”
“The current bandwidth of 200 Mbps should be increased to cater
ISP 3 - Renewal of Contract for the new and existing services such as e-claims and expansion of
Procurement of One (1) Lot existing online services like EPRS, Online Member Inquiry, and
May 27, 2019
Redundant ISP Subscription for Two submission of health-related data as required by the UHC law. The
(2) Years larger bandwidth for the internet usage shall ensure continuous
and faster services for the members.”
ISP 4 - Renewal of One (1) Lot ISP “The current requirement for the Subscription for PROs and LHIOs
Subscription for PROs and LHIOs (for has increased from 400 Mbps to 800 Mbps to ensure larger February 12, 2019
non-operation use) for Two (2) Years backhaul for the internet usage”
269
34.4. For CYs 2019 and 2020, PhilHealth renewed the subject four (4) ISP
contracts with various suppliers in the aggregate amount of P90.802
million, as summarized in Table 89.
Table 89 – Renewed ISP Contracts
No. Project Name Contract Date Supplier Contract Amount

Renewal of contract for One (1) Lot Secondary
1. June 25, 2019 ISP 1 P65,737,728
Link for PROs and LHIOs for Two (2) Years
Renewal of contract for One (1) Lot Redundant
2. ISP for PhilHealth Online Services for Two (2) June 21, 2019 ISP 2 10,200,000
Years
Renewal of contract for One (1) Lot ISP
3. Subscription for PROs and LHIOs (for non- October 8, 2019 ISP 3 9,890,184
operation use) for Two (2) Years
Renewal of contract for the Procurement of One
4. (1) Lot Redundant ISP Subscription for Two (2) March 3, 2020 ISP 4 4,975,000.00
Years
Total P90,802,912
270
Table 90 – Proposed Significant Upgrades Recommended by End-Users
Significant
Upgrades
Existing under the recommended in
Original/Renewed the Contract
Project Name Specifications Contract Renewal
Backhauls (Pasig and
300Mbps 600Mbps
Clark) - bandwidth
ISP 1 - Renewal of contract for One (1) Lot Secondary LHIOs (98 sites) –
2Mbps 4Mbps
Link for PROs and LHIOs for Two (2) Years bandwidth
PROs/Branches (21 sites)
5Mbps 10Mbps
– bandwidth
ISP 2 - Renewal of contract for One (1) Lot Redundant
Bandwidth 200Mbps 800Mbps
ISP for PhilHealth Online Services for Two (2) Years
ISP 3 - Renewal of Contract for the Procurement of
One (1) Lot Redundant ISP Subscription for Two (2) Bandwidth 200Mbps 460Mbps
Years
ISP 4 - Renewal of One (1) Lot ISP Subscription for
PROs and LHIOs (for non-operation use) for Two (2) Bandwidth 400Mbps 800Mbps
Years
34.6. As presented in Table 90, the end-users needed the upgrades for their
existing bandwidth for inclusion in the renewal of the terms of the four ISP
contracts as early as April 27, 2018, June 11, 2018, May 27, 2019, and
February 12, 2019. However, PhilHealth renewed the four (4) ISP
contracts with the same terms and conditions and without the provision on
the desired upgrades in the bandwidth, despite the prolonged period of 10
to 12 months after the expiry of the original contracts. Thus, the needed
upgrades as recommended by the end-users were not addressed,
resulting in internet services with lesser capacity, which is not suitable to
the needs of the end-users, in particular, and to the Corporation, in
general.
The renewal of ISP contracts and upgrade of the

terms thereof were not done expeditiously due to
non-observance of relevant provisions of the 2016
Revised IRR of RA No. 9184 regarding significant
time periods in the procurement process, thus,
may result in interruption of internet access and
any public service dependent on such access
34.7. Relevant provisions of the 2016 Revised IRR of RA No. 9184 are quoted
as follows:
Section 37.1.2 Within a period not exceeding fifteen (15)

calendar days from the determination by the BAC of the
bidder with the LCRB, HRRB, SCRB, or SRRB, and the
recommendation to award the contract, the HoPE or his duly
authorized representative shall approve or disapprove the
said recommendation.
271
Section 37.1.3. In case of approval, the HoPE shall
immediately issue the Notice of Award to the bidder with the
LCRB, HRRB, SCRB or SRRB.
Section 37.2.1 The winning bidder shall post the required

Performance Security and enter into contract with the
Procuring Entity within ten (10) calendar days from receipt
by the winning bidder of the Notice of Award.
Section 37.4.1 The concerned Procuring Entity shall issue

the Notice to Proceed together with a copy or copies of the
approved contract to the successful bidder within seven (7)
calendar days from the date of approval of the contract by
the appropriate government approving authority. All notices
called for by the terms of the contract shall be effective only
at the time of receipt thereof by the successful bidder.
272
Section 65.1 Without prejudice to the provisions of R.A. 3019
and other penal laws, public officers who commit any of the
following acts shall suffer the penalty of imprisonment of not
less than six (6) years and one (1) day, but not more than
fifteen (15) years:
Xxxx
Section 65.1.b Delaying, without justifiable cause, the

screening for eligibility, opening of bids, evaluation and post
evaluation of bids, and awarding of contracts beyond the
prescribed periods of action provided for in this IRR-A.
34.8. Review of the submitted documentary requirements in the renewal of ISP

contracts disclosed that the reglementary periods for specific procurement
activities were not observed. Table 91 shows the number of days delayed
for each procurement activity.
Table 91 – Delays in the Procurement Activities on the Renewal of ISP Contracts
Date
Project Name Procurement Activity Signed Reglementary Period Remarks
ISP 1 - Renewal of contract for Approval of Resolution – 09/27/18 Undated
One (1) Lot Secondary Link for Issuance of NOA 12/04/18 – Cannot be determined
PROs and LHIOs for Two (2) Contract Signing 06/25/19 12/14/18 124 days delayed
Years Issuance of NTP 07/30/19 07/02/19 21 days delayed
ISP 2 - Renewal of contract for Approval of Resolution – 09/27/18 Undated
One (1) Lot Redundant ISP for Issuance of NOA 12/04/18 – Cannot be determined
PhilHealth Online Services for Contract Signing 06/21/19 12/14/18 122 days delayed
Two (2) Years Issuance of NTP 07/30/19 06/28/19 23 days delayed
ISP 3 - Renewal of contract for Approval of Resolution - 02/27/19 Undated
One (1) Lot ISP Subscription Issuance of NOA 05/21/19 - Cannot be determined
for PROs and LHIOs (for non- Contract Signing 10/08/19 05/31/19 88 days delayed
operation use) for Two (2)
Issuance of NTP 10/09/19 10/15/19 Compliant
Years
ISP 4 - Renewal of Contract Approval of Resolution – 09/27/18 Undated
for the Procurement of One (1) Issuance of NOA 07/31/19 – Cannot be determined
Lot Redundant ISP Contract Signing 03/03/20 08/10/19 137 days delayed
Subscription for Two (2) Years Issuance of NTP 03/04/20 03/10/20 Compliant
ISP 5 - Contract Renewal for Approval of Resolution 04/16/20 04/10/20 4 days late
One (1) Lot IT Equipment Co- Issuance of NOA 04/23/20 04/16/20 6 days late
Location and ISP for Online Contract Signing 07/30/20 05/03/20 63 days late
Services for Two (2) Years Issuance of NTP 05/11/20 08/06/20 Compliant
34.9. As shown in Table 91, most of the delays for each procurement activity
stemmed from the delay in the contract signing. An average of 107 days
delay was noted just for the signing of the contract. Considering the
importance of the services involved in the subject renewal of ISP
contracts which are critical in the operations of the Corporation, it is
incumbent upon the approving officers to ensure that these projects were
prioritized.
273
34.10. Meanwhile, compliance with the reglementary period under Section 37.1.2
of the 2016 Revised IRR of RA No. 9184 could not be established since
the approval of the corresponding BAC Resolutions recommending the
renewal of the contracts in Table 89 were not dated. It follows that
compliance with reglementary period for the issuance of NOA could not
also be determined since Section 37.1.3 of the Revised IRR of RA No.
9184 explicitly provides that the Head of the Procuring Entity (HoPE) shall
immediately issue the NOA once the recommendation of the BAC is
approved.
34.11. The process for renewing contracts involving the procurement of ISPs is
straightforward as provided in Item 3.3.1.3, Annex A of GPPB Resolution
No. 019-2006, as amended by GPPB Resolution No. 41-2017, unlike the
usual procurement process, which requires public bidding. Once the end-
user conducted an assessment or cost-benefit analysis that favors the
existing ISP, the HoPE may approve the renewal of services. The
objective of such provision is for the government to obtain the services for
ISP, which is cost-beneficial while receiving the quality of service.
Changing ISPs every year may be more expensive to the government as
every new ISP would entail additional costs to the procuring entity,
primarily for cabling and installation. However, if proven to be more
beneficial, the contract renewal for these projects should be processed
expeditiously to avoid any interruption of internet access and any public
service dependent on such access.
34.12. We recommended that Management:
a. Require the BAC and concerned Department(s) to assign

responsible personnel who will monitor expiring ISP contracts
and identify pending contract renewal of services that require
immediate action, and ensure that necessary upgrades are
considered in the renewal of ISP contracts;
b. Require the ITMD to develop an SOP specifically on time leads

in processing contract renewals for ISPs indicating, among
others, the periods within which to start the renewal process,
when to request for proposals from existing ISPs and timeline
to submit an assessment or cost-benefit analysis indicating
whether or not to renew expiring ISP contracts; and
c. Strictly monitor compliance by the concerned Departments

with the provisions of Revised IRR of RA No. 9184 and GPPB
Resolution No. 019-2006, as amended by GPPB Resolution No.
41-2017, relative to the procurement of ISPs vital to the
operations of Corporation.
34.13. Management commented that the following teams have been created
within the Secretariat for the BAC in compliance with the COA
recommendations:
274
a. Contracts Management Team - tasked to monitor expiring contracts
and identify pending contract renewal of services that require
immediate action. The Team is also tasked to ensure the
submission of contracts and their supporting documents within five
(5) days from the perfection thereof.
b. Secretariat Service Team - tasked to, among others, facilitate the

procurement of services vital to the operations of the Corporation.
c. Procurement Policy, Planning, Training, and Monitoring Team -

tasked to strictly monitor compliance with the provisions of IRR of
Government Procurement Reform Act (IRR of RA No. 9184), as
amended.
34.14. As a rejoinder, the Audit Team appreciated Management’s initial action to

implement the recommendations, which will be continuously monitored in
the CY 2021 audit.
PROPOSED CONSTRUCTION OF PHILHEALTH CORPORATE CENTER
35. Poor planning for the construction of the proposed PhilHealth Corporate
Center (PCC) resulted in the delayed implementation thereof and which
would further increase the rental expenses and related costs in the
continuous leasing of office spaces, warehouse and venue for the HO that
have already accumulated to P1.062 billion from CYs 2009 to 2020, contrary
to Section 2 of PD No. 1445.
35.1. Section 2 of PD No. 1445, provides that:
It is the declared policy of the State that all resources of the

government shall be managed, expended or utilized in
accordance with law and regulations, and safeguard against
loss or wastage through illegal or improper disposition, with
a view to ensuring efficiency, economy and effectiveness in
the operations of government. The responsibility to take care
that such policy is faithfully adhered to rests directly with the
chief or head of the government agency concerned.
35.2. Likewise, Section 7.1 of RA No. 9184 requires that all procurement shall
be meticulously and judiciously planned by the Procuring Entity.
35.3. On April 13, 2003, PhilHealth entered into a contract to sell for a parcel of
land situated in East Avenue, Barangay Pinyahan, Diliman, Quezon City,
with a total area of 17,230.50 square meters owned by the Bangko
Sentral ng Pilipinas (BSP) for a total amount of P439.380 million.
35.4. Based on the documents/reports gathered, the chronology of significant

events and communications undertaken by Management relative to the
construction of the proposed PCC are as follows:
275
a. In September 2003, shortly after acquiring the parcel of land, the
Corporation issued Special Order No. 1351, s-2003 creating a PMT
for Infrastructure Projects to work closely with consulting firms that
PhilHealth will hire to oversee its infrastructure projects. The team
had undergone various reconstitutions for a total of eight (8) times
since its creation up to the year 2004.
b. In 2006, the PMT was renamed to PhilHealth Project Management
Committee (PPMC), which was established to undertake activities
designed specifically to facilitate procurement of various services for
the construction of the proposed PCC in East Avenue, Quezon City.
c. In 2007, the Corporation issued the Special Order No. 1887, s-2007
to reconstitute and re-define the different functions of PPMC and its
Technical and Administrative Support Staff (TASS).
d. In October 2008, PhilHealth contracted the services of FDC for

Architectural and Engineering Design (AED), amounting to P27.500
million for the period of six (6) months. As of November 2012, or
four years and one month after the execution of the contract, FDC
has only rendered services up to the Contract Document Phase.
The long delay was due to a dispute between FDC and PhilHealth,
which centered on the denial of a payment request made by the
former for the revision of the design. Consequently, the Construction
Industry Arbitration Commission (CIAC) issued a writ of execution
ordering PhilHealth to pay P2.370 million to FDC.
e. Thereafter, in August 2009, PhilHealth contracted PSAC to oversee

and to manage the construction of the proposed PCC with Ancillary
Structures from Pre-Construction Phase to Post-Construction Phase
for P11.300 million. However, just sixteen (16) months into the
contract, PhilHealth proposed the mutual termination of the contract
since the construction of the PCC was considered to be among the
priority projects and earmarked to be part of the Private-Public
Partnership Projects (PPPs). Another reason was the pendency of
resolving several issues pertaining to AED with Contractor FDC.
f. The National Housing Authority (NHA) in April 2010 replied to the

letter of PhilHealth regarding its plan to acquire Right-of-Way from
NHA to gain access/egress to NIA Road.
g. In November 2011, the then PCEO issued an Office Order creating

a Task Force on Corporate Center and Offices (TFCCO) to provide
technical expertise in planning, implementing, monitoring, and
evaluating infrastructure projects.
h. On November 2, 2011, the Physical Resource and Infrastructure

Department (PRID) sent a Memorandum to PhilHealth PCEO to
update the latter on the construction of the proposed PCC. PRID
stated that the original approved budget of P1.2 billion for the
construction is no longer realistic based on current costs of both
276
labor and materials. And the revised budget needed for the
construction has increased to P2.67 billion to meet the current
market prices and be compliant with the design guidelines set by
Urban Triangle Development Commission (UTDC), requiring an
additional cost.
i. PhilHealth sent a Memo to FDC in August 2013 regarding the

Revised Drawings and Layout to be implemented to construct the
proposed PCC.
j. On October 21, 2013, FDC has agreed thru a letter to fully

cooperate to finish the revision of the Revised Drawings and Layout
within sixty (60) days without additional cost on the part of the
PhilHealth.
k. In March 2015, the TFCCO Head and the Technical Staff from the
Bureau of Construction, Department of Public Works and Highways
(DPWH) set a meeting regarding PhilHealth’s request for assistance
to evaluate the Project Cost Estimates submitted by FDC and
PSAC.
l. In April 2015, PhilHealth sent a Letter of Intent to DPWH to enter

into an Agreement for its services, particularly in bidding for the civil
works and managing the construction of the proposed PCC.
m. On May 11, 2015, the then DPWH Secretary sent a Memorandum,

informing PhilHealth that they are coordinating with TFCCO Head to
finalize the procurement timelines and MOA to facilitate early
implementation of the project.
n. In June 2015, a Memorandum was sent to the National Economic

and Development Authority (NEDA) to seek approval in the
construction of the proposed PCC. The NEDA replied instructing
PhilHealth to coordinate the matter with the DPWH.
o. On October 8, 2018, the representative from PhilHealth met with the

representatives from the Bases Conversion and Development
Authority (BCDA) to discuss the possible MOA between PhilHealth
and BCDA for the construction of PCC and development options of
PhilHealth property located in Bonifacio Global City (BGC), Taguig
City.
p. In November 2018, BCDA sent a letter to inform the options

available for PhilHealth if the latter decides to pursue the
development of its property located in BGC.
q. PCO No. 2019-1009 dated May 15,2019 was issued for the PPMC
TWG reconstitution.
r. In September 2020, an unsolicited proposal from a private

contractor addressed to the current PCEO, Atty. Dante A. Gierran,
277
was received for the design and construction of PhilHealth Main
Office.
35.5. Perusal of the foregoing narration showed that two (2) teams or
committees were created by PhilHealth, generally to plan and facilitate the
construction of the proposed PCC, namely PPMC and TFCCO. One of
the committees’ objectives is to provide recommendations to top
Management on the appropriate options for the construction. This would
necessarily include determining the most feasible and cost-effective mode
of procurement that PhilHealth may adopt. However, since the creation of
the aforementioned committees and up to this writing, more or less fifteen
(15) years, PhilHealth has yet to decide what mode of procurement is to
be adopted in the construction of PCC.
35.6. Moreover, the above narrations would indicate poor or inadequate

planning on the part of PhilHealth for the proposed construction of its own
building since it kept on changing its plan, specifically on the mode of
procurement. Initially, the plan was to conduct public bidding to procure
the services of a qualified contractor for the execution of the project.
Subsequently, there were discussions to have the proposed PCC
undertaken through PPP. Inquiry with the former members of the PPMC
disclosed that the DOH was even considered in facilitating the
construction. Then in 2015, PhilHealth, recognizing its lack of expertise in
executing a vast infrastructure construction project, sought assistance
from the DPWH through the Bureau of Construction to conduct the
bidding and management of the proposed PCC. Finally, in 2018, talks
with the BCDA have yet to yield positive developments.
35.7. Further inquiry revealed that PhilHealth could not finalize the mode of
procurement due to the recurring changes of leadership in the top
Management and the composition of the BOD. Accordingly, PPMC would
repeatedly present its recommendations to the BOD, and as a result, new
proposals are received and addressed every time there are new members
of the BOD.
35.8. It is evident that inadequate/poor planning, more specifically, on the

determination of the mode of procurement, contributed to the significant
delay in the implementation of the construction of the proposed PCC,
despite the Corporation had an AED completed in 2012. It was only in
2015 when PhilHealth realized its lack of technical expertise to undertake
the construction. As to the justification that frequent changes of leadership
resulted in the delayed implementation of the project, such changes are
normal, however, this matter needs to be properly addressed in order not
to hamper the construction of the PCC since the long delay in the
execution of the project will adversely affect the costs to be incurred
thereof.
35.9. The Audit Team noted that the delay in the construction of the PCC
resulted in the incurrence of rental, association dues, and lease of venue
expenses. Analysis of the data gathered revealed that from January 2009
to December 2020, expenses in the total amount of P1.062 billion were
278
incurred by PhilHealth for the rental of building for HO, as shown in Table
92.
Table 92 – Expenses Incurred Relative to Lease of Office Spaces for HO

For CYs 2009 to 2020
Association Lease of
Period Covered Rental for HO Dues Venues Total*
January 2009 to December 2020 P751,535,605 50,142,135 260,216,582* P1,061,894,322
*Based on the cost-benefit analysis provided which includes lease of venue expenses from CYs 2015-2019 only.
35.10. It was only in 2009 when PhilHealth intended to have its own building
when it contracted the services of PSAC to manage the construction of
the proposed PCC. Since then, it has already incurred substantial amount
of expenses for the lease of office spaces in the amount of P1.062 billion
as shown in Table 92. This amount did not include yet the rental
expenses incurred for the lease of warehouses, venue for years 2009 up
to 2014, and office spaces of PROs, Branches and LHIOs, which are
located in Quezon City, that could be housed in the proposed PCC. These
expenses could have been minimized had the construction of the
proposed PCC actually materialized as originally planned. Payments for
said rental expenses could have been used to finance the construction.
35.11. Further, unnecessary delays could adversely affect the eventual

construction of the PCC due to rising costs of both construction materials
and labor. Moreover, a significant amount of expenses in the leasing of
venues for activities could have been avoided since a function room in the
proposed PCC could have been utilized for the purpose.
35.12. In 2016, a value for money audit was conducted to determine the
efficiency and economy of leasing office spaces, instead of constructing
PhilHealth’s own office building. An Audit Observation Memorandum
(AOM) was issued where the Audit Team recommended that
Management craft a well-defined feasibility study and detailed plan for the
construction of its own building to avoid incurring huge lease expenses
that could be sufficient to fund the construction thereof. However, as of
this writing PhilHealth has not yet started the construction of PCC.
35.13. Per inquiry with the PRID personnel and former members of the PPMC,
the completion would take an extended period of time should PhilHealth
decide to pursue its plan of constructing its own building. Assuming that
the construction of PCC will be completed in the span of five (5) years
taking into account the time that would be spent in revising the AED,
bidding of the project, and the actual construction, an additional cost in an
estimated amount of P811.737 million will be incurred by PhilHealth for
continuously leasing office spaces, warehouse and venue for the HO, as
illustrated in Table 93.
Table 93 – Estimated Cost to be Incurred in leasing office spaces, warehouse and venue
for the HO for CYs 2021 to 2025*
279
Rental for HO
(with 3% Annual Rental Expenses for Association
Escalation Association Warehouse Dues for Lease of
Year Clause) Dues for HO (Marilao, Bulacan) Warehouse Venue Total
2021 P 97,344,660 P 517,792 P 5,935,680 P120,536 P 52,043,316 P155,961,984
2022 100,265,000 517,792 6,113,750 120,536 52,043,316 159,060,394
2023 103,272,950 517,792 6,297,163 120,536 52,043,316 162,251,757
2024 106,371,138 517,792 6,486,078 120,536 52,043,316 165,538,860
2025 109,562,272 517,792 6,680,660 120,536 52,043,316 168,924,576
P516,816,020 P2,588,960 P31,513,331 P602,680 P260,216,580 P811,737,571
*Based on the cost-benefit analysis provided
35.14. Considering the actual rental and related expenses incurred from CYs
2009 up to 2020 of P1.062 billion and future estimated costs by the end of
CY 2025 of P811.738 million for the continuous leasing of office spaces,
warehouse and venue for PhilHealth HO, or approximately P1.874 billion
in the span of seventeen (17) years, this sizeable amount could have
been utilized to fund other important projects had the construction of
PhilHealth’s own building materialized.
35.15. We recommended that Management consider pursuing the
construction of its own building and direct the PPMC to finalize its
recommendation, specifically on the mode of procurement to be
adopted for the long-delayed construction of the PCC, that is most
advantageous to the Corporation, and present the same to the BOD
for approval.
35.16. Management has no comment yet on this audit observation.
36. Payments for the Consultancy Services for Architectural and Engineering
Designs (AEDs) in the total amount of P27.339 million for the two (2)
construction projects of PhilHealth that did materialize for years could be
considered unnecessary expenditures as defined under COA Circular No.
2012-003 dated October 29, 2012.
36.1. Item 4.1 of COA Circular No. 2012-003 dated October 29, 2012, defined
“unnecessary expenditures”, as follows:
The term “unnecessary expenditures” pertains to

expenditures which could not pass the test of prudence or the
diligence of a good father of a family, thereby denoting non-
responsiveness to the exigencies of the service.
Unnecessary expenditures are those not supportive of the
implementation of the objectives and mission of the agency
relative to the nature of its operation. This would also include
incurrence of expenditure not dictated by the demands
of good government, and those the utility of which
cannot be ascertained at a specific time. An expenditure
that is not essential or that which can be dispensed with
without loss or damage to property is considered
unnecessary. The mission and thrusts of the agency incurring
280
the expenditures must be considered in determining whether
or not an expenditure is necessary.
36.2. Verification disclosed that PhilHealth incurred expenditures for AEDs

totaling P27.339 million, as presented in Table 94, for the two (2) projects
that the construction has yet to start, notwithstanding the completion of
the AED for years. These projects involved the construction of the
proposed PCC and PRO II Building. Despite the completion of the Pre-
Design, Basic Design, and Contract Document phases of these projects,
the construction phase has yet to start.
Table 94 – Summary of Payments Made for AEDs
Particulars Contractor Date Amount Paid

AED of PCC (1st billing) FDC 10/19/2009 P 4,125,000
AED of PCC (2nd billing) -do- 08/06/2012 9,625,000
AED of PCC (3rd billing) -do- 12/17/2012 9,625,000
AED Services for PRO II (1st billing) ABAA 04/07/2016 699,563
AED Services for PRO II (2nd billing) -do- 04/08/2016 1,632,315
AED Services for PRO II (3rd billing) -do- 01/27/2017 1,632,315
Total P27,339,193
36.3. Likewise, as per validation, the corresponding 3rd phase, which refers to
the contract document phase for each project, was already completed as
early as 2012 and 2016 for PCC and PRO II Building, respectively, as
shown in Table 95.
Table 95 – Completion of Contract Document Phase
Date of Acceptance of the Period of Delay in the

Particulars Contract Document Phase Construction Phase
PCC November 26, 2012 8 years and 1 month
PRO II November 16, 2016 4 years and 1 month
Note: Per acknowledgment and certificate of acceptance
36.4. As the AEDs were completed as early as 2012 and 2016, the
implementation and viability of these designs in the current setting may
prove to be doubtful since materials, labor and other associated costs
have increased significantly, while other factors, i.e. the LGU policies
could possibly affect the overall plan and design of the proposed office
buildings, hence, the uncertainty that the AEDs could still be utilized for
their intended purposes, assuming that the construction pushes through in
the future.
36.5. Inquiry with the PRID personnel disclosed that due to insufficiency of the
budget as a result of the reduction of the original budget, the start of
construction for these projects is not yet definite. Also, PhilHealth
Management is already considering procuring new AEDs which are
suitable to the current budget.
281
36.6. In view of the uncertainties in the construction phases as well as the plan
to procure new AEDs for the projects, payments totaling P27.339 million
for the AEDs of the proposed PCC and PRO II Building could be deemed
unnecessary expenditures as defined under COA Circular No. 2012-003
dated October 29, 2012.
36.7. We recommended that Management provide written justifications for

the non-implementation of the construction projects despite the
completion of the AEDs in CYs 2012 and 2016 to avoid issuance of a
Notice of Disallowance (ND) for the payments for Consultancy
Services for AEDs totaling P27.339 million.
36.8. Management provided to the Audit Team information on the chronology of

events reflected in the documents in possession of the TWG Secretariat
after the resolution of the Board to engage in an agreement with DPWH.
Management also updated the Audit Team as to what action they are
currently evaluating moving forward.
36.9. As rejoinders, the Audit Team would like to state that the information
provided by Management lacks significant details and justifications why
the construction of the two buildings was not implemented immediately
after the completion of the respective designs when the cost of materials
and labor were cheaper and could have avoided the needed supplemental
budget for the increased construction cost. Moreover, the Audit Team
requests that Management provide a report on the assessment if the
original AEDs could still be utilized, if the construction pushes through.
GENDER AND DEVELOPMENT (GAD)
37. The GAD-related programs, activities, and projects (PAPs) totaling P11.036
billion declared as implemented in PhilHealth’s GAD Accomplishment
Report (AR) for CY 2020 could not be validated in the absence of supporting
documents substantiating the attribution of the Agency’s major program
amounting to P11.034 billion using the Harmonized Gender and
Development Guidelines (HGDG) Tool/Checklist, contrary to Item 6.4 of
Philippine Commission on Women (PCW)-NEDA-DBM Joint Circular (JC) No.
2012-01. Likewise, PhilHealth’s CYs 2020-2025 GAD Agenda was not
compliant with the requirements under PCW Memorandum Circular (MC) No.
2018-0446 due to the non-inclusion of the GAD Strategic Framework (GADSF)
and non-conformance of the GAD Strategic Plan (GADSP) to the prescribed
template and, the said Agenda was not submitted to PCW for review, hence
the accuracy/reliability thereof could not be established.
GAD-related PAPs totaling P11.036 billion

declared as implemented in PhilHealth’s GAD AR
for CY 2020 could not be validated in the absence
of supporting documents substantiating the
attribution of the Agency’s major program
46
Revised Guidelines for the Preparation of the Gender and Development (GAD) Agenda dated September 19, 2018
282
amounting to P11.034 billion using the HGDG
Tool/Checklist
37.1. Item 6.4 of the PCW-NEDA-DBM JC No. 2012-01 discusses the process
when attributing the agency’s major programs to the GAD budget, to wit:
6.4 Attributing agency major programs to the GAD budget.
Attribution to the GAD budget of a portion or the whole

of the budget of an agency’s major programs is a
means towards gradually increasing the gender
responsiveness of government programs and budgets.
6.4.1 If an agency intends to attribute a portion of the

whole budget of major programs during the GAD
planning and budgeting phase, it may subject
the program to gender analysis using the HGDG
tool. If the agency is not yet trained on the use of
the tool, it may include said training in its GPB
and may seek the assistance of an expert on
gender analysis using the HGDG.
6.4.2 The use of the HGDG will yield a maximum

score of 20 points for each program or project.
Depending on the score on the HGDG, a
percentage of the budget of the agency’s
existing and proposed major program may be
attributed to the GAD budget as follows:
Corresponding Budget for the year of the

HGDG
Description program that may be attributed to the GAD
Score
budget
0% or no amount of the program budget
Below 4.0 GAD is invisible for the year may be attributed to the GAD
budget
Promising GAD 25% of the budget for the year of the
4.0-7.9 prospects (conditional program may be attributed to the GAD
pass) budget
50% of the budget for the year of the
8.0-14.9 Gender sensitive program may be attributed to the GAD
budget
15.0-19.9 Gender-responsive program may be attributed to the GAD
budget
20.0 Fully gender-responsive program may be attributed to the GAD
budget
6.4.3 After arriving at the score, the agency will now

set a target score in the HGDG. For example, if
the rating of a program in the HGDG is 4.0 and
the agency would like to achieve a score of 6 at
the end of the year, the agency should
283
subsequently plan and estimate cost of
interventions (or cost of gender mainstreaming)
to achieve its target and include these in its
GAD plan. It could attribute 25% of the budget
of the program that it wants to make gender-
responsive to its GAD budget.
6.4.4 During the preparation of its GAD AR, the

agency will again administer the HGDG test to
determine the extent that the targeted HGDG
score is attained. This score will be the basis in
determining actual expenditure that can be
attributed to the GAD budget. In the example
above, if the agency has an HGDG score of 8
(higher than its target), it can attribute 50% of
the program’s budget to the actual GAD
expenditure.
37.2. In addition, PCW MC No. 2021-0147 set the deadline for the online
submission of the CY 2020 GAD AR of GOCCs to PCW through the PCW
Gender Mainstreaming Monitoring System (GMMS) on March 19, 2021.
37.3. Review of the GAD AR furnished to the Audit Team on May 31, 2021
revealed that PhilHealth was able to timely submit the same on March 18,
2021 to the PCW thru the GMMS. Perusal thereof showed that PhilHealth
implemented GAD-related PAPs, attributing P11.036 billion or 5.6 per
cent of its CY 2020 Corporate Operating Budget (COB) of P197.051
billion. The attribution exceeded the minimum five per cent (5%)
requirement under Item 6.1 of the PCW-NEDA-DBM JC No. 2012-01. The
breakdown of the attribution is presented in Table 96.
Table 96 - CY 2020 GAD Budget and Actual Cost of PPAs Implemented
% over Total
Agency Approved % over Total Actual Cost/ Actual Cost/
Activity/ Program Budget COB Expenditure Expenditure
Client-Focused Activities P 120,307 0.00109% P 20,575 0.00019%
Organization-Focused Activities 3,712,568 0.03363% 1,124,943 0.01019%
Attributed Program* 11,034,494,084 99.96528% 11,034,494,084 99.98962%
Total P11,038,326,959 100.00% P11,035,639,602 100.00%
*PhilHealth Circular No. 2020-0009 dated 08 April 2020
37.4. As can be gleaned from Table 96, PhilHealth met the minimum five per
cent (5%) requirement under Item 6.1 of the PCW-NEDA-DBM JC No.
2012-01, mainly due to the attribution of P11.034 billion of its major
program expenditure.
37.5. However, using the prescribed HGDG Tool, the assessment of

PhilHealth’s major program’s attribution could not be conducted in the
absence of documents to support the said attribution. This was confirmed
47
Submission of FY 2020 GAD Accomplishment Report dated January 20, 2021.
284
upon checking the comments of PCW on the submitted CY 2020 AR.
According to the PCW, PhilHealth’s self-rated HGDG score could not be
validated because it did not attach any document to support its self-rated
HGDG score other than the accomplished PIMME Checklist. Hence, the
self-rated score declared by PhilHealth in its CY 2020 AR could not be
relied upon as it was not duly validated by the PCW.
PhilHealth’s CYs 2020-2025 GAD Agenda was not

compliant with the requirements under PCW MC
No. 2018-04 due to the non-inclusion of the
GADSF and non-conformance of the GADSP to
the prescribed template and, the said Agenda was
not submitted to PCW for review, hence the
accuracy/reliability thereof could not be
established
37.6. Item 4 of the PCW MC No. 2018-04 dated September 19, 2018 described
the GAD agenda as follows:
The GAD agenda is a two-part document consisting of the

GAD Strategic Framework (GADSF) and the GAD Strategic
Plan (GADSP). The GADSF outlines the agency’s GAD
Vision, Mission and Goals anchored on the mandate of the
agency, while GADSP defines the strategic interventions,
indicators, and targets to be pursued to achieve GAD goals
over a period of time.
The timeframe of the GAD agenda is six years.
37.7. Likewise, Annexes D and E of the same PCW MC are the prescribed
templates for the GADSF and GADSP, respectively.
37.8. Based on the CYs 2020-2025 GAD Agenda furnished to the Audit Team
on May 31, 2021, the same did not contain the duly accomplished
GADSF. Moreover, the submitted GADSP was not in compliance with the
form prescribed under PCW MC No. 2018-04.
37.9. Under the prescribed GADSP template, government agencies must

indicate their GAD outcome/result statement, indicator/s, baseline,
responsible unit/office, yearly targets, and yearly estimated budget for
each program/project/activity. Monitoring and evaluation mechanism must
be conducted on the third and final years of the GAD agenda that aims to
reflect the status of accomplishments and the overall assessment of the
GAD agenda's implementation. Without the required details, it would be
difficult to assess the agency's status of implementation and
accomplishments and whether modifications are necessary to reach the
declared targets.
285
37.10. It was further noted that the CYs 2020-2025 GAD Agenda of PhilHealth
was not submitted to PCW for review, thus the accuracy/reliability thereof
could not be established.
37.11. We recommended that PhilHealth Management require the GAD

Focal Point System to:
286
a. Submit to PCW relevant document(s) to support the attribution
made of Agency’s major program in CY 2020 GAD AR
amounting to P11.034 billion, for validation. Henceforth,
substantiate the annual GAD AR with supporting documents as
a basis to the self-rated HGDG score to facilitate the validation
thereof by the PCW; and
b. Comply strictly with the requirements set forth under PCW MC

No. 2018-04 in the preparation of the GAD Agenda and submit
the same to PCW for review/endorsement.
37.12. Management commented that the accomplished HGDG tools used in

assessing the attributed program, benefits packages for inpatient care of
probable and confirmed COVID-19 developing severe illness/outcomes,
were submitted to the PCW, where its programs were found to be gender-
sensitive. Management also submitted HGDG tools to support the
calculation for the attribution and GAD Strategic Framework.
37.13. As rejoinders, the Audit Team noted the submission to the PCW of the
accomplished HGDG tools used in assessing the attributed program,
benefits packages for inpatient care of probable and confirmed COVID-19
developing severe illness/outcomes. Relative thereto, it is requested that
the Audit Team be furnished with the results of the review/validation by
the PCW of the submitted documents. Moving forward, Management is
also reminded of its responsibility to submit to COA the GAD-related
reports/documents in the future periods, pursuant to Item V of COA
Circular No. 2014-00148 dated March 18, 2014.
COMPLIANCE WITH TAX LAWS, RA NOS. 8291, 9679 AND 7875, AS AMENDED
38. PhilHealth did not fully comply with the provisions of the law relating to the
employer’s duty to withhold taxes from salaries of its personnel and remit
the same to the Bureau of Internal Revenue (BIR). Likewise, the Corporation
was not able to dutifully remit the employees’ and employer’s contributions
to the Government Service Insurance System (GSIS), Home Development
Mutual Fund (Pag-IBIG), and PhilHealth itself; thus, exposing the Agency to
possible interest and penalties for non or late remittance.
38.1. The provisions of the laws and regulations that were not fully complied
with by the Corporation as regards the remittances of taxes to the BIR,
and statutory liabilities to GSIS, Pag-IBIG, and PhilHealth are presented
in Table 97.
Table 97 - Laws and Regulations Not Complied with as Regards the

Remittance of Mandatory Contributions
48
Revised Guidelines in the audit of Gender and Development (GAD) Funds and Activities in government agencies
287
REGULATORY BODY PROVISIONS
BIR Sections 2.58A, 2.80A and 2.81 of BIR Revenue Regulation (RR) No.
02.-98 dated April 17, 1998; and BIR Memorandum Circular No. 23-
2012 dated February 14, 2012
GSIS Sections 13 to 16 of the IRR of RA No. 8291, otherwise known as the
Government Service insurance System Act of 1997
Pag-IBIG Section 3, Rule VII of the IRR of RA No. 9679, otherwise known as the
Home Development Mutual Fund Law of 2009
PhilHealth Section 18 of the Revised IRR of the National Health Insurance Act of
2013
38.2. Verification disclosed that PhilHealth has outstanding balances on the

following accounts, i.e., Due to BIR, GSIS, Pag-IBIG, and PhilHealth as of
December 31, 2020, as shown in Table 98. The non-remittance of the
taxes withheld to the BIR and the statutory liabilities to the concerned
GOCCs exposes the Corporation to possible imposition of interest and
penalties by the concerned regulatory bodies.
Table 98 - Outstanding Balances on Due to BIR, GSIS, Pag-IBIG and PhilHealth
REGULATORY BODY AMOUNT PROs

BIR P18,499,970* NCR & Rizal, I and V
GSIS 688,397 NCR & Rizal, I and V
Pag-IBIG 703,673 NCR & Rizal, I and V
PhilHealth 76,351 I and V
Total P19,968,391
*Net of P97,018 over-remittance in PRO V
38.3. In addition, taxes on the compensation of several employees withheld by

HO and PRO NCR & Rizal, in excess of the amount due to the BIR
totaling P3.984 million, remained at the custody of the Corporation despite
the said amount being due for refund to the concerned employees for one
to four years already. This practice is not in accordance with Section
79(H) of RA No. 8424, directing the refund of taxes withheld more than
the tax due to the respective employees, not later than January 25
following the taxable year.
38.4. We recommended that top Management require the concerned

PhilHealth Offices to: (a) remit the amounts still due to the BIR,
GSIS, Pag-IBIG, and PhilHealth itself, to avoid payment of interests
and penalties without prejudice to the civil and criminal liabilities
that may be imposed on responsible officers and employees on non-
compliance with the pertinent laws and regulations; and (b)
henceforth, strictly comply with the deadlines set forth under
Section 79(H) of RA No. 8424, BIR RMC No. 23-012, Section 14 of IRR
of RA No. 8291 or the GSIS Act of 1997, HDMF Circular No. 275,
Section 18 of the Revised IRR of the National Health Insurance Act of
2013.
38.5. Management submitted the following comments:
288
a. PhilHealth HO Management commented that excess tax due refers
to the amount not yet refunded to retired, resigned, or separated
employees. The ComDep will provide the list to the Human
Resources Department for information dissemination and regularly
apprise the Audit Team on the refund updates to concerned
employees.
b. PRO NCR & Rizal Management replied that any amount still due
would be remitted to BIR and/or refunded to employees once the
reconciliation is completed. For unremitted tax related to Benefit
Payments, P17.245 million out of P17.252 million were validated to
be over-recording and corrected in July 2021 financial reports. The
remaining P7,573 balance is still for reconciliation. Regarding the
GSIS and HDMF contributions, it is a standard procedure that all
deductions made for the month should be remitted the following
month. In case of a discrepancy, the processor shall be required to
submit a report on the difference. A detailed schedule will be
prepared effective July 2021 payroll while reconciling backward from
June 2021. Once the reconciliation of the GSIS account is
completed, any amount still due will be duly remitted. As for the Due
to Pag-IBIG account, there were compelling reasons why the
amount was not remitted, i.e., non-operation of Pag-IBIG office due
to pandemic/lockdown, resigned employees with pending clearance,
employees on maternity leave, non-acceptance of payment due to
migration of reporting system of Pag-IBIG and prior year
adjustments.
c. PRO I Management agreed to comply with the audit

recommendations.
d. PRO V Management commented that the discrepancies are still

subject to reconciliation and that it will provide the Audit Team with
the adjustment once the reconciliation is done.
38.6. The concerned Audit Teams acknowledged Management’s commitment

to reconcile the unremitted balances appearing in the books. As to the
justification of PRO NCR Management on the Pag-IBIG contributions, the
concerned Audit Team posits that the compelling reasons cited are within
the control of the FMSn; hence, the reiteration of the recommendation for
the timely remittance of savings and loans amortization of its employee-
members. Further, the Audit Teams will continuously monitor the result of
reconciliations to verify the appropriateness of the actions taken by
PhilHealth offices concerned. Hence, it is requested that
reports/documents relative thereto be submitted to the respective Audit
Teams for further verification.
SUMMARY OF AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES
39. For CY 2020, the summaries of audit suspensions, disallowances and charges of
PhilHealth are shown in the Tables 99, 100, and 101, respectively. The details
289
and status of the unsettled audit suspensions, disallowances and charges
amounting to P148.146 million, P7.382 billion and P2.420 million, respectively are
presented in Part IV of this Report.
A. SUSPENSIONS
Table 99 - Summary of CY 2020 Audit Suspensions
This Period January 1 to

Beginning Balance, December 31, 2020 Ending Balance,
PRO January 1, 2020 Adjustments Issued Lifted/For ND December 31, 2020
IV-A P 42,314,239 P - P - P - P42,314,239
V 8,435,350 - - 603,221 7,832,129
VII 192,940 - - - 192,940
X 33,421,787 - - 198,000 33,223,787
CARAGA - - 64,487,449 - 64,487,449
BARMM - - 95,625 - 95,625
Total P84,364,316 P - P64,583,074 P801,221 P148,146,169
B. DISALLOWANCES
Table 100 - Summary of CY 2020 Audit Disallowances

Office/PRO January 1, 2020 Adjustments Issued Settled December 31, 2020
HO P1,342,721,588 P - P482,267,167 P5,575,294 P1,819,413,461
NCR 599,562,068 - - - 599,562,068
CAR 288,089,861 - 2,516,959 - 290,606,820
I 173,005,384 - 32,532 - 173,037,916
II 307,466,534 - 216,000 - 307,682,534
III 542,551,071 - - - 542,551,071
IV-A 285,331,164 - - - 285,331,164
IV-B 358,781,932 - - - 358,781,932
V 423,145,271 - 733,666 - 423,878,937
VI 542,959,786 - 1,624,060 - 544,583,846
VII 282,853,709 - - - 282,853,709
VIII 256,857,027 - - - 256,857,027
IX 252,080,132 - 1,007,750 18,750 253,069,132
X 471,323,572 - - 24,187 471,299,385
XI 309,365,090 - 2,184,092 - 311,549,182
XII 58,786,055 - - 1,243,760 57,542,295
CARAGA 347,839,852 - 17,059,248 - 364,899,100
BARMM 38,114,710 - 198,500 - 38,313,210
Total P6,880,834,806 P - P507,839,974 P6,861,991 P7,381,812,789
C. CHARGE
Table 101 - Summary of CY 2020 Audit Charges

PRO January 1, 2020 Adjustments Issued Settled December 31, 2020
290
BARMM P2,419,649 P - P - P - P2,419,649
Total P2,419,649 P - P - P - P2,419,649
291

11 PhilHealth2020 Part2B Observations and Recomm Non Financial

Uploaded by

Document Informationclick to expand document information

Copyright:

Available Formats

11 PhilHealth2020 Part2B Observations and Recomm Non Financial

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

11 PhilHealth2020 Part2B Observations and Recomm Non Financial

Uploaded by

Copyright:

Available Formats

B.

INTERIM REIMBURSEMENT MECHANISM (IRM)

CORONA VIRUS DISEASE 2019 (COVID-19)

Except with the prior approval of the President (Prime

13.3. The prohibition on advance payments on government contracts is

13.4. In its efforts to help the government in containing the unprecedented

Table 26 – Summary of IRM Fund Releases to HCIs

No. of HCIs IRM Funds Released

b. The IRR of the UHC Act allows "other appropriate mechanisms”.

c. The Health Care Providers (HCPs) have pending claims for

d. The prohibition on advance payment is not absolute as there are

13.10. Considering the enormous sum of P14.971 billion of funds released by

13.12. We recommended that top Management:

a. Submit specific statutory authority or prior approval from the

b. Henceforth, ensure strict compliance with Section 88(1) of PD

Within five (5) working days from the execution of a contract

Any unjustified failure of the officials and employees

14.3. On January 30, 2020, PhilHealth’s Board of Directors (BOD) issued

14.4. During the CY 2020, PhilHealth granted/approved various applications for

14.9. We recommended that top Management require the concerned

14.11. During the Exit Conference, we further recommended and top

15.2. The amount received by an HCI under the IRM is supposed to be

f.1 Claims filed by the IRM HCI shall be processed

f.2 All reimbursements for valid claims filed from the

Table 27 – Taxable IRM funds Released to Private HCIs

15.6. Sections 2.57.2(J), 2.57.3 and 2.57.4 of RR No. 2-98, as amended by RR

Section 2.57.2. Income Payments Subject to Creditable

(J) Income Payments made by a government office, national

Section 2.57.3. Persons Required to Deduct and Withhold.

(C) All government offices including government-owned or

Section 2.57.4. Time of Withholding. — The obligation of the

All Client/Customer shall, upon payment of deposits/

15.8. Moreover, perusal of the provisions of the relevant PhilHealth issuances,

15.10. The non-withholding of the required creditable income taxes of two

Section 2.58. Returns and Payment of Taxes Withheld at

(A) Manner, Venue and Time of Filing of Withholding Tax

Table 28 – Computation of Number of Days Delayed on the Remittance to BIR of

Month of Amount Amount Total IRM Creditable

IRM Funds Released to Private HCIs (505 HCIs) P7,680,205,470

Table 29 – Schedule of Tax Remittance on IRM Fund Releases to Private HCIs

PRO Amount Released to HCIs Grossed-up Amount Tax

Tax Treatment of Cooperative - Duly registered cooperatives

Table 30 – Creditable Income Tax Remittance of PROs

PRO Tax Remitted by PROs

15.18. Correspondingly, the grossing up of IRM fund releases as basis of

Xxx an expenditure incurred without adhering to established

Table 31 – Over-Remittance of 2% Creditable Income Tax to BIR on

Total IRM Fund Tax remitted Total tax Should be tax

15.20. We recommended that top Management direct the concerned

a. Submit written justifications on: (i) inability to withhold taxes

c. Henceforth, strictly comply with BIR RR No. 2-98, as amended

15.22. As rejoinders, the Audit Team recognized the actions taken by

b. Post-validation Report, containing recommendation, duly signed by

c. Approval by Regional Vice President (RVP) of validation team's

d. Recommendation of the Area Vice President (AVP) containing the

e. Written approval by the PhilHealth PCEO.

a. Approval of PCEO on the applied IRM;

b. MOA/Contract between the Hospital/HCI and PhilHealth together

c. Certificate of Availability of Funds (CAF) issued by the PRO; and