The audit function

The Senate blue ribbon and health committees, both headed by Sen. Teofisto Guingona III, are conducting an inquiry into “highly suspicious” payments made by PhilHealth to private healthcare providers who have extended medical services to its members. The investigation has been prompted by PhilHealth’s own finding of a sudden increase in government health insurance claims. Red flags have been raised, in particular, on cataract procedures performed by two eye care centers in Metro Manila, for which P325 million in PhilHealth benefits have been paid.

The rise in fraudulent PhilHealth claims is perhaps to be expected. First, because of the earmarking of so-called “sin taxes” collected on cigarettes and alcoholic drinks for healthcare insurance, suddenly there is a lot of money available in the system. Second, because of the comparative ease with which PhilHealth membership can now be obtained and maintained, health insurance has become available to those who previously had very limited access to the health system. Without any doubt, these are by themselves welcome developments. Unfortunately, they also attract abuse and pose complex challenges to PhilHealth’s internal control system.

“We are therefore conducting an inquiry on this matter,” said Senator Guingona, “to ensure that PhilHealth, as the country’s premier health insurance provider, would have adequate policing mechanisms that will promote transparency and accountability among healthcare providers.” One cannot agree more with Senator Guingona’s assessment. But, I wonder if a Senate investigation is the best way to uncover the deficiencies of the prevailing system and to identify the reforms needed to plug the holes and address the weaknesses of the system.

This is the function of external audit. Every corporate organization worth its salt conducts a periodic assessment of its internal control system. This is usually ordered by the board of trustees or directors of an organization, and is performed by a professional firm from outside, whose interest is not in determining the moral competence of the personnel but in identifying the different areas of vulnerability of the organization’s control system. Neither is such a review confined to determining whether current practice conforms to existing rules or procedures—which is what the Commission on Audit typically does. A full system audit begins with a review of the adequacy of the existing rules and procedures themselves in the light of organizational expansion and growing complexity.

The existing PhilHealth enrollment level, now at 87 percent, is the farthest point the country has reached in its attempt to realize the goals of a universal healthcare system. This has been a great achievement of the present administration. Most certainly, it has been made possible by the distribution of PhilHealth cards to all the enlisted households in the government’s expanded Conditional Cash Transfer Program, as well as to indigent families who have not qualified under the CCT program. It is also in large measure ascribable to the automatic enrollment of all senior citizens as PhilHealth members. I hope no one seizes upon the fraudulent transactions that have been unearthed to justify further tightening of the eligibility requirements for PhilHealth membership.

For, the core problem, as I see it, involves the procurement process. This is the bane of all organizations in the private and public sectors. It is the epicenter of the scam involving the Priority Development Assistance Fund. It is what lies behind the present problems of the Land Transportation Office and the Metro Rail Transit Corp. The goods and services that are paid for can be any of the following: fictitious or nonexistent, unnecessary or excessive, overpriced or inferior, or downright injurious or dangerous.

The volume of caesarean sections and cataract operations has increased tremendously in the last few years, observes Dr. Anthony Leachon of the Philippine College of Physicians Foundation, largely because of active solicitation of patients by healthcare providers. Most of these procedures might have been unnecessary, but the patients could not have known better. PhilHealth’s concern to speed up the payment of claims, he argues, has often meant foregoing the detailed review of claims.

“Fraud of this nature is a group crime,” says Dr. Leachon in the note he recently sent to me. Indeed, it is difficult to see how unscrupulous private healthcare facilities and doctors can repeatedly milk the government health insurance system without the conscious participation of PhilHealth people at various levels of the agency. The many who are not themselves on the take usually know who are involved, yet hesitate to blow the whistle because there is no assurance they will be protected if the corrupt fight back.

The onus of reform has often been put on the shoulders of leaders who are recruited for their moral integrity. But the system of corruption can easily neutralize the initiatives of even the most honest of leaders. Without the benefit of an external audit that can form the basis for comprehensive structural and procedural reforms, it is often pointless, for instance, to shuffle personnel, thinking this can disrupt the cycle of corruption.

It is interesting how the word “audit” first came into use in the 15th century: It meant reading the accounts out loud so that everyone could hear. Its modern sense has changed little insofar as it represents a structure that compels transparency and accountability.

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