Health Insurance Fraud, Again

In the case of PhilHealth, fraud can arise from ghost patients, upcoding or upcasing, and over-admission. The costs of these different types of fraud have not been calculated, but they run in the hundreds of millions a year. 

As the country gears up for the implementation of universal health care (UHC), yet another PhilHealth scandal involving ghost dialysis patients, breaks out. We have had similar stories involving ingrown toenails, cataract removals, and pneumonia cases. One wonders what’s going to be the next procedure that fraudulent providers will resort to.

President Duterte quickly asked the board members and senior officers of PhilHealth to resign en masse, and has appointed a retired general at the helm. 

Fraud is almost synonymous with health insurance. The breakup of the direct payment nexus between the patient and the provider occasioned by the intercession of a third-party payer (PhilHealth or HMO) gives rise to all sorts of incentives that result in overutilization of health services, whether legit or not.

In the case of PhilHealth, fraud can arise from ghost patients (where a provider bills PhilHealth for non-existent care), upcoding or upcasing (where a provider charges PhilHealth for a procedure that reimburses more, rather than the real lower-cost procedure performed on a patient), and over-admission (where providers encourage patients to get hospitalized, even though a more cost-effective outpatient option is available). Over-charging has been reduced with the adoption of an all-case rate system (or simply, “pakiyaw” payment per type of diagnosis) in public hospitals, but since in private hospitals, balance-billing is still the norm, then over-charging still occurs. Fraudulent members also tend to lend their PhilHealth cards to non-members. 

The costs of these different types of fraud has not been calculated, but they run in the hundreds of millions a year. The latest scandal involving WellMed seems to be just the tip of the iceberg. 

What should be done? In my next column, I will deal with the systems issues plaguing PhilHealth. But for now, jail the culprits and take their license and accreditation away. File cases against PhilHealth staff in cahoots with providers. Further systems strengthening in PhilHealth is also called for, specifically, the installation of a utilization review system that picks up fraud much more quickly through data analytics.

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About the Author
Mr. Oscar F. Picazo is a retired specialist in health systems, health economics, and social policy. He has worked in 24 countries for the World Bank, the United States Agency for International Development (USAID), and as an independent consultant. He returned to the Philippines in 2009 and became a senior research consultant for the Philippine Institute of Development Studies.
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