Legal basis and policy rationale
- Republic Act No. 7875, as amended by Republic Act No. 10606, sets guiding principles that PhilHealth must adopt in pursuing the National Health Insurance Program (NHIP).
- The circular reiterates priority principles emphasizing universality, uniform basic benefits, effectiveness (balancing economical use of resources with quality of care), cost sharing (ensuring members’ costs are fair and equitable and provider charges are reasonable), and cost containment.
- The circular directs a shift because fee-for-service (FFS) constrains the full realization of those guiding principles and has led globally to prolonged hospital stays, overutilization of diagnostic procedures, and unnecessary/inefficient services.
- The circular states that a shift to case-based payments (including case rates and more advanced Diagnosis-Related Group (DRG) payments) advances equity by using one uniform rate for a minimum level of quality care regardless of member category or health care institution type.
- The circular explains that fixed amounts improve administrative efficiency, reduce turnaround time for paying providers, and strengthen member understanding of entitled benefits while reducing discretionary claims deductions and computations.
- The circular links case rates to implementation of the No Balance Billing (NBB) policy for sponsored program members in government ward or ward-type accommodations to provide financial protection for the poor and indigent.
Objectives and general coverage rules
- The circular provides for phasing out fee-for-service and establishing case rates as the preferred provider payment mode.
- All claims for medical conditions and procedures submitted to PhilHealth are paid using case rates.
- The circular’s general objectives include:
- Phasing out fee-for-service payment mechanism.
- Simplifying reimbursement rates across sectors.
- Improving turnaround time of processing claims.
- Case rate payments apply uniformly to all medical conditions and procedures, regardless of member category, admitted in accredited health care institutions (HCIs).
- Case rate payments apply to all identified day surgeries and select procedures done in accredited health care institutions.
- Case rates also apply to directly filed claims by members, subject to compliance with rules on direct filing.
Definitions governing implementation
- Case-based Payment is defined as a payment method that reimburses providers a predetermined fixed rate for each treated case or disease; it is also called per case payment.
- Case rate (CR) is defined as a fixed rate or amount PhilHealth reimburses for a specific illness/case, covering:
- 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.
- Day Surgery (also called ambulatory or outpatient surgery) is defined as elective (non-emergency) surgical procedures ranging from minor to major operations, requiring local, regional, or general anesthesia, where patients are safely sent home within the same day for post-operative care, consistent with DOH Administrative Order No. 183 s. 2004.
- Relative Value Scale (RVS) is defined as a systematic listing and coding of surgical procedures where each procedure is assigned a corresponding Relative Value Unit (RVU); each procedure/service is identified with a five-digit code.
- Relative Value Unit (RVU) is defined as a number assigned to surgical procedures by the Corporation reflecting their relative weight or degree of complexity compared to another.
- ICD-10 is defined as the International Statistical Classification of Diseases and Related Health Problems Tenth Revision, a hierarchical system of mutually exclusive code categories describing all disease concepts.
- Critical Poor is defined as persons assessed and identified as poor by the hospital Medical Social Welfare Assistance Officer who are not listed/registered to the Sponsored Program but can immediately avail of NHIP benefits, with continuous enrolment subject to validation of the DSWD in succeeding years.
- Sponsored Members are defined as members whose contribution is being paid by another individual, government agency, or private entity under rules prescribed by the Corporation.
- Geographically Isolated and Disadvantaged Areas (GIDA) refers to communities with marginalized population physically and socio-economically separated from the mainstream society, characterized by:
- Physical Factors: isolated due to distance, weather conditions and transportation difficulties (island, upland, lowland, landlocked, hard to reach and unserved/underserved communities); and
- Socio-economic Factors: high poverty incidence, presence of vulnerable sector, and communities in or recovering from situation of crisis or armed conflict.
- Charge to future claims is defined as a system of charging reimbursements that will be claimed by the health care provider for sanctions to violations of PhilHealth policies and other instances where PhilHealth should recover what was previously paid for.
- No Balance Billing (NBB) Policy is defined as a rule that no other fees or expenses shall be charged or paid by the patient-member above and beyond the packaged rates.
Case rate payment mechanics and provider duties
- The circular requires that the fee-for-service model is phased out and case rates are the preferred mode for paying all claims for medical conditions and procedures.
- The circular requires that case rates reduce out-of-pocket expenditures of patient-members and provides that case rates shall not be added to the expenses in any instance.
- For certain surgical procedures, the circular provides that patient admission may not be necessary to provide complete quality care; such surgical case rates are paid in full whether done as inpatient or outpatient (day surgeries).
- The list of surgical procedures where admission may not be necessary must be specified in the implementing guidelines.
- All CR payments must be paid to account of the HCI.
- The circular makes HCIs accountable to PhilHealth and to beneficiaries for what happens to the patient while under the HCI’s care.
- The circular requires HCIs to facilitate payment to health care professionals (HCP) not exceeding 30 calendar days upon receipt of reimbursement, or within a timeframe agreed upon by the specific facility management and their professionals.
- The circular requires PhilHealth to regularly inform HCPs of payments made to the HCI through copies of the Notice of Paid Claims and/or Notice of Denied Claims.
- The circular requires HCI withholding of taxes:
- expanded withholding tax in accordance with BIR policy on payments to doctors/medical practitioners for professional fees; and
- final value added tax (VAT) on Government Money Payment (GMP), if applicable.
- The circular also requires PhilHealth withholding of income tax in accordance with BIR policy against the case rate amount to be paid to the HCI.
- Credentialing and privileging of doctors (including specialists), and other health care professionals, are delegated to the concerned HCI.
- PhilHealth must no longer use tiered payments according to training or specialization of the doctors.
- HCIs are required to file PhilHealth claims of beneficiaries within the prescribed period of filing, and the circular states that this is 60 days.
- Direct filing by members is allowed only for certain circumstances prescribed by PhilHealth.
- The No Balance Billing (NBB) policy applies to all indigents and sponsored sectors.
- The Corporation must set specific case rate guidelines for:
- GIDA;
- Health Human Resource Shortage areas;
- Emergency/acute care for selected emergency department visits skillfully evaluated and efficiently managed without need for further admission; and
- other special circumstances determined by the Corporation.
Member benefits, accreditation, and claim limitations
- HCIs must deduct the entire CR amount from the patient’s total hospitalization/facility bill, including professional fees, at all times.
- Professional services must be provided by accredited health care professionals.
- The circular requires that a claim is reimbursed if there is at least one (1) PhilHealth accredited doctor managing the case.
- The circular requires denial when the services rendered are provided by non-PhilHealth accredited professionals or doctors only.
- The circular requires PhilHealth to endeavor to pay for all admissible medical conditions and/or procedures for patients with multiple medical conditions, co-morbidities, or requiring multiple procedures per confinement.
- The circular subjects such multiple-condition/procedure payments to limits set by the PhilHealth Board.
- The circular directs that a separate PhilHealth circular will define the detailed mechanics for payments to multiple cases.
System enhancements, monitoring, and policy review
- PhilHealth must design and improve its database to generate real time, quality, and responsive information/evidence for evidence-based policy and rate adjustments.
- PhilHealth must regularly monitor and evaluate provider compliance with the circular.
- Post-audit evaluation must be conducted on CR claims under the rules of existing post-audit implementing guidelines.
- The circular requires annual review of case rates and review as necessary.
- The circular requires the use of costing and performance inputs to enhance rates and groupings, including:
- costing spreadsheets;
- actual costs;
- proposed costing and grouping from medical societies and organizations;
- costing surveys conducted by the Corporation and other groups;
- monitoring results;
- and feedback from patients, members, partners, and providers.
Penalties, sanctions, and performance consequences
- Any violation of the circular must be met with the appropriate penalty and sanctions under Republic Act No. 7875, as amended by Republic Act No. 10606, its IRR, and applicable PhilHealth issuances.
- Violation