ALL CASE RATES (ACR) POLICY NO. 1 – GOVERNING POLICIES IN THE SHIFT OF PROVIDER PAYMENT MECHANISM FROM FEE-FOR-SERVICE TO CASE-BASED PAYMENT

Article 1 Section 2 of Republic Act 7875, as amended, states the
guiding principles that PhilHealth must adopt in pursuit of achieving
the intents of the National Health Insurance Program (NHIP). Among the
principles, the following are hereby reiterated for emphasis in terms of
benefit development, namely:

The adoption of the Fee-for-Service (FFS) Provider Payment
Mechanism has intrinsic constraints that limited the Corporation from
fully realizing the intents of the aforementioned guiding principles.
Globally, studies have shown how FFS has led to prolonged hospital
stays, overutilization of diagnostic procedures, and provision of
unnecessary and inefficient health care services that insurances paid
for without offering any additional value to members. These wasteful
payments significantly reduced the already constricted financial and
administrative resources of the Corporation. Moreover, though the FFS
schedule is uniform across member categories, there is inequity in terms
of claims paid for similar conditions when comparing payments to
private and government health care institutions (HCIs). For a similar
condition, PhilHealth beneficiaries may receive higher reimbursements if
they go to private than government HCI. However, despite higher
payments, Phil Health’s support value in private HCIs remains lower than
30% as an average. Worse, indigent patient members still have to pay
cost-shares for services even in government HCls whereby failure to
produce the needed finances from their own pocket limits their access to
quality health care services.

On the other hand, the global trend towards the achievement of
Universal Health Care (UHC), locally embodied in the Kalusugan
Pangkalahatan (KP) Program, is to have social health insurances
(PhilHealth) shift to and implement Case-based Payments as Provider
Payment Mechanism. Case-rated payments and the more advanced
Diagnosis-Related Group (DRG) Payments are advantageous to the members
and health care providers alike. These serve to have one uniform rate
for the provision of a minimum level of quality care under the most
modest of accommodations regardless of member category or the nature of
the health care institution. Thus, it promotes an equitable basic
standard benefit that is the same for similar conditions whether
admitted in government or private HCIs. By having fixed amounts, Case
Rate (CR) also allows PhilHealth to improve administrative efficiency
and reduce turnaround time for paying health care providers. Case rate
allows PhilHealth members to know how much they are entitled to in terms
of benefit payments thereby strengthening their own power as a patient
of said health care institution and member of the Corporation. It
reduces the discretion of claims processors in terms of deductions and
computation of reimbursements. It allows PhilHealth to effectively
impose the No Balance Billing (NBB) policy for sponsored program members
admitted in ward or ward-type accommodations in government health care
institutions. The latter is a policy intended to assure financial
protection for the poor and indigent members in order for the country to
collectively enjoy the advantages and societal benefits of a healthier
community.

Therefore, the mounting evidences of the advantages of
paying case rates require PHilHealth to implement an all case rates at
the soonest possible time. The initial experiences of Case Rates,
implemented thru PhilHealth Circular 11 s. 2011, have proven its value.
The NBB policy for sponsored program members admitted in government
hospital wards was introduced for the initial 23 conditions under the
Case Rates system. Turnaround time (TAT) for claims processing improved
from more than 70 days before health care providers received their
payments to 45-55 days with some regions reporting TATs of 17 days.

However, the fact that case rates were limited to only 23 conditions
out of the vast number of possible procedures and medical conditions has
strained the PhilHealth operational systems and has stymied the
realization of the promises of case rates. In response to this, the
PhilHealth Board through Board Resolution No. 1679 s. 2012 has approved
the shift of the provider payment mechanism from FFS to Case Rates. In
response to the Board directive, extensive consultations on the concepts
of case based payments, the goals and intents of CR, the coverage of
the NBB policy, and the determination of the rates were conducted with
various stakeholders nationwide. For consistency, herein follows the
policy statements and reforms devised to guide the implementation of
case rates.

II. GENERAL OBJECTIVES

1. To phase out fee-for-service payment mechanism
2. To simplify reimbursement rates understood by all sectors
3. To improve turnaround time of processing of claims

III. SCOPE AND COVERAGE

1. Case rate payments shall be uniformly applied to all medical
   conditions and procedures, regardless of member category, that are
   admitted in accredited health care institutions.
2. It shall also apply to all identified day surgeries and select procedures done in accredited health care institutions.
3. It shall also be applied to directly filed claims by members subject to compliance to rules on direct filing.

IV. DEFINITION OF TERMS

1. Case-based Payment – Payment method that reimburses to health
   care providers a predetermined fixed rate for each treated case or
   disease; also called per case payment.
2. Case rate (CR) – Fixed rate or amount that PhilHealth will
   reimburse for a specific illness/case, which shall cover for the fees of
   health care professionals, and all facility charges including, but not
   limited to, room and board, diagnostics and laboratories, drugs,
   medicines and supplies, operating room fees and other fees and charges.
3. Day Surgery – Day surgeries, also known as ambulatory or
   outpatient surgeries, are services that include elective (non-emergency)
   surgical procedures ranging from minor to major operations whether
   requiring local, regional or general anesthesia, where patients are
   safely sent home within the same day for post-operative care (DOH
   Administrative Order No. 183 s2004).
4. Relative Value Scale (RVS) – A systematic listing and coding of
   surgical procedures where each procedure is assigned a corresponding
   Relative Value Unit (RVU). Each procedure or service is identified with a
   five-digit code. With this coding and recording system, the reporting
   of procedures performed by physicians are simplified and accurately
   identified.
5. Relative Value Unit (RVU) – A number assigned to surgical
   procedures identified by the Corporation that reflects its relative
   weight or its degree of complexity as compared to another. Therefore,
   the more difficult the procedure is, the higher its relative value unit.
6. International Statistical Classification of Diseases and
   Related Health Problems Tenth Revision (ICD 10) – A statistical
   classification that contains a limited number of mutually exclusive code
   categories which describe all disease concepts. The classification is
   hierarchical in structure with subdivision to identify broad groups and
   specific entities.
7. Critical Poor – Persons assessed and identified as poor by the
   hospital Medical Social Welfare Assistance Officer who are not listed or
   registered to the Sponsored Program but can immediately avail of NHIP
   benefits. Their continuous enrolment to the sponsored program in the
   succeeding years shall be subject to validation of the DSWD.
8. Sponsored Members – A member whose contribution is being paid by
   another individual, government agency, or private entity according to
   the rules as may be prescribed by the Corporation.
9. Geographically Isolated and Disadvantaged Areas (GIDA) – Refer
   to communities with marginalized population physically and
   socio-economically separated from the mainstream society and
   characterized by: (1) Physical Factors – isolated due to distance,
   weather conditions and transportation difficulties (island, upland,
   lowland, landlocked, hard to reach and unserved/underserved
   communities); (2) Socio-economic Factors (high poverty incidence,
   presence of vulnerable sector, communities in or recovering from
   situation of crisis or armed conflict)
10. Charge to future claims – A system of charging to reimbursements
    that will be claimed by the health care provider for sanctions to
    violations to PhilHealth policies and other instances where PhilHealth
    should recover what have been previously paid for.
11. No Balance Billing (NBB) Policy – It shall mean that no other
    fees or expenses shall be charged or paid for by the patient-member
    above and beyond the packaged rates.

V. GENERAL POLICIES ON CASE RATE PAYMENTS

1. The FFS is being phased out and the preferred mode shall be
   case rates. All claims for medical conditions and procedures submitted
   to PhilHealth shall be paid using case rates.

2. The objective is to reduce the out-of-pocket expenditures of
   patient-members. In no instance, therefore, shall case rates be added to
   the expenses.

3. For certain surgical procedures, in order to promote better
   efficiency and the most modern interventions, patient admission may not
   be necessary in the provision of complete quality care. Thus, these
   surgical case rates shall be paid in full whether done as inpatient or
   outpatient (i.e., day surgeries). A list of these procedures shall be
   specified in the implementing guidelines.
4. All CR payments shall be paid to account of the HCI.
   1. Due to this, the HCI shall be made accountable to
      PhilHealth and to its beneficiaries for all that happens to the patient
      beneficiary while under the HCI’s care.
   2. In order to promote business in good faith, it is incumbent
      upon the HCI to facilitate the payment to health care professionals
      (HCP) not exceeding 30 calendar days upon receipt of the reimbursement
      or to a time frame as agreed upon by the specific facility management
      and their professionals. PhilHealth shall regularly inform the HCPs of
      payments made to the HCI through a furnished copy of the Notice of Paid
      Claims and/ or Notice of Denied Claims.
   3. The HCI shall withhold the expanded withholding tax as per
      BIR policy on payments to be made to doctors or medical practitioners
      for their professional fees. In addition, the HCI shall withhold the
      final value added tax (VAT) on Government Money Payment (GMP), if
      applicable.
   4. PhilHealth shall withhold the income tax as per BIR policy against the case rate amount to be paid to the HCI.
5. Consistent with making HCIs accountable for services given to
   PhilHealth beneficiaries, credentialing and privileging of doctors
   (including specialists), and other health care professionals shall be
   delegated to the concerned HCl. PhilHealth shall no longer have tiered
   payments according to training or specialization of the doctors.

6. HCIs shall be responsible to file the claims of PhilHealth beneficiaries, within the prescribed period of filing (60 days).
7. Direct filing by members shall only be allowed for certain circumstances as prescribed by PhilHealth.
8. The No Balance Billing (NBB) policy shall apply to all indigents and sponsored sectors.
9. The Corporation shall set specific case rate guidelines for the following special circumstances:
   1. Geographically Isolated and Disadvantaged Areas (GIDA)
   2. Health Human Resource Shortage areas
   3. Emergency/acute care – selected emergency department visits
      that are skilfully evaluated and efficiently managed without need for
      further admission
   4. Other special circumstances as determined by the Corporation

VI. MEMBER BENEFITS UNDER CASE RATES

1. It is incumbent upon the HCI to deduct the entire CR amount
   from the patient’s total hospitalization/ facility bill including
   professional fees, at all times.
2. Professional services must be provided by accredited health care
   professionals. It is the responsibility of the HCI to inform PhilHealth
   members on the status of accreditation of their health care
   professionals. The claim shall be reimbursed if there is at least one
   (1) PhilHealth accredited doctor managing the case. If the
   services-rendered were provided by non- PhilHealth accredited
   professionals or doctors ONLY, then the claim shall be denied.
3. For patients with multiple medical conditions, co-morbidities or
   requiring multiple procedures per confinement, PhilHealth shall
   endeavour to pay for all admissible medical conditions and/or procedures
   subject to the limits as set by the PhilHealth Board. A separate
   PhilHealth circular shall be released to describe the details of how
   payments to multiple cases shall be made.

VII. SYSTEM ENHANCEMENT

The PhilHealth database shall be designed and improved to be
able to generate real time, quality and responsive information/
evidences to be used in the development of evidence-based policies and
rates adjustments.

VIII. COMPLIANCE MONITORING

Compliance of health care providers to the policy contained
herein shall be regularly monitored and evaluated. Post-audit evaluation
shall also be conducted on CR claims subject to the rules of existing
post-audit implementing guidelines.

IX. PERIODIC REVIEW, EVALUATION AND ADJUSTMENTS IN POLICY AND RATES

This Circular on case rates shall be reviewed annually and as necessary.

Costing spreadsheets, actual costs, proposed costing and
grouping from medical societies and organizations, costing surveys
conducted by the Corporation and other groups, monitoring results,
feedback from patients, members, partners and providers, among others,
shall be used to enhance the rates and groupings for the case rates.

X. PENALTIES AND SANCTIONS

Any violation of the provisions of this Circular shall be
meted the appropriate penalty and sanctions pursuant to R.A 7875, as
amended by R.A. 10606, its IRR and applicable issuances of PhilHealth.

In addition, any violation of the health care providers shall
be included in the monitoring and evaluation of health care providers’
performance under the Provider Engagement through Accreditation and
Contracting for Health Services (PEACHeS). The penalties to these
violations shall be charged to future claims of the HCI.

The Department of Health (DOH), the Professional Regulations
Commission (PRC), and/or other concerned agencies shall be furnished
with a copy of the decision rendered against the HCl for information
and/or appropriate action.

XI. REPEALING CLAUSE

All provisions of previous issuances that are inconsistent with
any provisions of this Circular are hereby amended/ modified/or
repealed accordingly.

XII. SEPARABILITY CLAUSE

In the event that a part or provision of this Circular is
declared unauthorized or rendered invalid by any Court of Law or
competent authority, those provisions not affected by such declaration
shall remain valid and effective.

XIII. EFFECTIVITY

This Circular shall take effect fifteen (15) days after
publication in any newspaper of general circulation and shall be
deposited thereafter with the National Administrative Register at the
University of the Philippines Law Center.

(SGD) ALEXANDER A. PADILLA

President and CEO