Republic of the Philippines

PHILIPPINE HEALTH INSURANCE CORPORATION

8/F Philippine Heart Center Medical Arts Building
East Avenue, Diliman, Quezon City

EXECUTIVE SUMMARY

FOR : HONORABLE MEMBERS OF THE CABINET CLUSTER C

FROM : PHILIPPINE HEALTH INSURANCE CORPORATION

RE : IMPLEMENTING RULES AND REGULATIONS

OF THE NATIONAL HEALTH INSURANCE
ACT OF 1995

DATE : 30 APRIL 1996

ACTION
REQUESTED: ENDORSEMENT TO PRESIDENT FIDEL V. RAMOS
FOR EXECUTIVE AND LEGISLATIVE ACTION

I. Backgrounder on the National Health Insurance Law

On February 14, 1995, President Fidel V. Ramos signed into law RA 7875, otherwise
known as the National Health Insurance Act (NHI) of 1995. A major piece of social
legislation, the NHI Law promises to provide financial access to quality health care
services though a social health insurance program.

The NHI law was enacted as an answer to the growing imperative to make more
available and accessible quality, appropriate and adequate health care services at
affordable and reasonable cost. Prior to the enactment of the NHI law, health care
financing schemes in the country has proved wanting. The government’s sole health
care financing scheme, the Medicare Program catered only to the working population
and has covered only 25M of the 69M Filipino population. In short, 44M Filipinos are
not covered by social health insurance. Moreover, the indigent population, the most
needy, financially and healthwise, were left to their own devises and lay most
vulnerable.

The current health care financing profile of the country paints a picture of
misallocation and misallocation of public and private funds: over the years, health
expenditures has not substantially increased. Current health care financing schemes
both in the public and the private sector likewise reveal a Filipino population growing

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Republic Act 7875 IRR page 1
 more vulnerable to health contingencies.

As mandated by law, the PHIC has completed the drafting of the IRR of RA 7875
within the prescribed time frame. The PHIC now presents the attached IRR for
endorsement to His Excellency Fidel V. Ramos for executive and legislative action.

II. Process of IRR Consultation

The IRR of the NHIP was drafted in constant consultation with the different sectors,
stakeholders, government and private agencies and experts to ensure that it is faithful
to the mandate of the law and reflects the concerns and interests of all involved
sectors.

The TWGs
The 10 Technical Working Groups (TWGs) that drafted the IRR were composed of
experts/resource persons from the DOH, the academe, professional associations, non-
government organizations, the social security organizations and experts, and personnel
from the Philippine Medical Care Commission. The draft IRR were subjected to a
Nationwide Public Consultations. The consultations were held in Metro Manila,
Dagupan City, Baguio City, Cebu City, Iloilo City, Davao City and Cagayan de Oro
City. A total of 2,100 representative from the different sectors participated in the
activity.

III. Highlights of the IRR of the NHIP

• No increase in Premium Contribution

The IRR adopts the existing premium contribution levels and contribution sharing
schemes for all member groups.

For the indigency program, the National Government through the PHIC and the
local government unit where the qualified indigent resides shall shoulder the premium
contribution. The LGU share shall be determined by their capability to pay as
determined by their classification.

• Improved Basic Benefit Package and Provisions for a Supplementary Benefit

Package

a.) Basic Benefit Package – The Basic Benefit Package (BBP) for all member
groups shall be equivalent to the current SSS Benefit Package levels. This means a
20% qualitative improvement in benefits for GSIS members.

b.) Supplemental Benefit Package – In addition to the BBP, the SSS and OWWA
members shall enjoy a Supplemental Benefit Package equivalent to 50% of the BBP
levels. The GSIS’s availment of the SBP shall be subject to the availability of the
Equalization Fund.
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Republic Act 7875 IRR page 2
 • Provisions for ensuring Universality
Membership and contribution to the program is mandatory and compulsory.
a.) Indigency Program and LGU partnership
The program shall target the poorest 25% of the population, or an equivalent to 3.6
M indigent families over a period of five years. To this end, Local Health Insurance
Offices shall be established in the areas where the indigency program shall be
implemented.

b.) Expansion of coverage of Employed Sector

The NHIP shall expand the coverage of the employed sector, with special focus on
the Overseas Contract Workers and the self -employed. The NHIP shall expand OCW
enrollment from the current 200,000 to 2M members.

• Ensuring Quality of Health Care Delivery

As a condition for accreditation under the program, health care providers are
required to abide by the Quality Assurance Program and standards set by the PHIC.
Accreditation may be denied or revoked and payment for claims may be denied
payment upon violation of or failure to conform with the Quality Assurance program.

• Containing Cost of Health Services and Goods

The IRR grants the PHIC Board the authority to institute Cost Containment
Measures that will rationalize health care delivery and their cost, deter fraud against
the Health Insurance Fund as well as drive down the incidence and recurrence of
diseases through preventive and promotive measures. Initially, the IRR provides for
the
a.) Institution of In-patient Education Program, and
b.) Price limits on medicines as a condition for reimbursement

• Improved Fraud Control and Quasi-Judicial Powers of the PHIC

The IRR enhances the Quasi-Judicial powers of the PHIC to allow it to curb fraud
against the system/program. The Rules of Procedure abbreviates the administrative
procedures to allow expeditious disposition of cases. The IRR likewise provides for
eventual centralization of administration of the current Medicare program now under
the SSS, GSIS and the OWWA — under one administrative agency: PHIC. This shall
make efficient the handling of the Health Insurance Fund due to economies of scale as
well as do away the problems attendant to fragmented administration.

IV. STATUS OF PREPARATIONS FOR EARLY IMPLEMENTATION

To immediately implement the NHIP, the PHIC has undertaken the following:

ƒ Finalized the Organizational Design and Staffing Pattern Plan that will allow the
PHiC to undertake the early and effective implementation

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Republic Act 7875 IRR page 3
 ƒ Finalized the Program Manual of Operations

ƒ Finalized the Information System Plan to allow efficient and effective management
of data and information between the Corporation and the LHIOs as well as with
the SSS and the GSIS

ƒ Analyzed and identified priority areas for implementation of the Indigent Program.
7 SRA areas will be prioritized for 1996. In 1997, there will be an additional 25
Areas.

V. CHALLENGES AND ACTION REQUESTED

ƒ DBM
a.) Immediate release of Employers Counterpart Contribution for the Medicare
Program to the GSIS to allow the latter to build up the GSIS Health Insurance
Fund
b.) Immediate Action on the PHIC Corporate Budget and the PHIC Organizational
Design and Staffing Pattern
c.) Immediate Release of Funds specifically allocated by the RA 7875 for Indigent
premium subsidy.
d.) Yearly Programming/Allocation of Funds for the Program

ƒ Oversight Committee on Devolution

For the Oversight Committee on Devolution to address the issue of Devolution
Funding difficulties and the LGU counterpart contribution to Indigent premium
subsidy

ƒ Congress
a.) Enactment of a law establishing an Equalization Fund to allow the GSJS to
increase Benefit Package levels for GSIS members as provided for in Sec. 25.,
GENERAL PROVISIONS, GAA 1996 (RA 8174)

b.) Amendment of Sec. 32 of RA 7875 re 3 year in operation requirement (for

Health Care Institutions as a condition for Accreditation under the NHIP.
Certification of Amendment requested from His Excellency

ƒ PIA
a.) Assistance in the Information Dissemination/Campaign on the NHIP

ƒ DECS/CHED
a.) Inclusion of the NHIP in the curriculum

ƒ National Computer Center

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Republic Act 7875 IRR page 4
 a.) Approval of the PHIC Information System Plan

ƒ Malacanang
a.) Amendment of Executive Order 195 s. 1994 to effect the transfer of
administration of he OWWA Medicare Program to the PHIC

We are looking forward for a closer partnership with your office for the successful
implementation of the NHIP. Thank you very much and more power.

(Sgd.) ATTY. JOSE A. FABIA

President, PHIC

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Republic Act 7875 IRR page 5
 ____ Philippine Health Insurance Corporation

MEMORANDUM

TO: The Chairman and Honorable Members of the

Cabinet Cluster C

FROM: Atty. Jose A. Fabia

President and CEO
Philippine Health Insurance Corporation

RE: Implementing Rules and Regulations of RA 7875

DATE: 30 April 1996

ACTION
REQUESTED: Endorsement of IRR to President Fidel V. Ramos

The R.A. 7875: National Health Insurance Act of 1995 provides for the institution of a
National Health Insurance Program and establishes the Philippine Health Insurance
Corporation. It aims to provide health insurance coverage and ensure affordable, acceptable,
available and accessible health care services for all citizens of the Philippines.

After a series of nationwide consultations with the affected sectors and round table
discussions with health care providers, beneficiaries and local government units, the PHIC
Board approved the Implementing Rules and Regulations (IRR) of RA 7875 last 19 April
1996, as per PHIC Board Resolution No. 34, Series of 1996.

The LRR was presented to and provisionally approved by NEDA’s Social

Development Committee last 25 April 1996 for endorsement to Cabinet Cluster C. In view
of this, may we respectfully request the honorable chairman and members of the Cabinet
Cluster C to endorse the IRR of RA 7875 to President Fidel V. Ramos for implementation

Thank you.

_________________________________________________________________

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Republic Act 7875 IRR page 6
 SOCIAL DEVELOPMENT COMMITTEE
RESOLUTION NO.____
SERIES OF 1996

Approving the Implementing Rules and Regulations of

RA 7875: National Health Insurance Act of 1995

WHEREAS, the Philippine Constitution declares that the State shall adopt an
integrated and comprehensive approach to health development which shall endeavor to
make essential goods, health and other social services available to all the people at
affordable cost; and that priority for the needs of the underprivileged, sick, elderly,
disabled, women, and children shall be recognized; and that it shall be the policy of the
State to provide free medical care to paupers;

WHEREAS, RA 7875 has been enacted in line with the declared policy of the
state to provide adequate social services and improved quality of life for all, and for this
purpose, the state shall adopt an integrated and comprehensive approach towards health
development;

WHEREAS, the Ten-year Public Investment Plan for the Health Sector (1994-
2004) identifies national health insurance as one of its public investment packages
towards a national framework for universal insurance coverage; and

WHEREAS, the draft IRR on RA 7875 was formulated through the efforts of an
inter-agency Technical Working Group, Task Force IRR, National Organizing
Committee, national consultations of the affected sectors, and round-table discussions
with health care providers, beneficiaries, and local government units;

WHEREAS, the IRR has been approved by the Philippine Health Insurance
Board last 19 April 1996, as per PHIC Board Resolution No. 34, Series of 1996;

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Republic Act 7875 IRR page 7
 NOW, THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, by
the Chairman and members of the NEDA Board’s Social Development Committee (SDC)
Cabinet Cluster C, to endorse the Implementing Rules and Regulations of RA 7875 to
President Fidel V. Ramos for implementation.

HON. CIELITO F. HABITO, Jr.

Secretary for Socio-Economic Planning
Chairman, Social Development Committee
Cabinet Cluster C

HON. LINA B. LAIGO HON. ROBERT BARBERS

Secretary Secretary
Department of Social Department of Interior and
Welfare and Development Local Government

HON. JOSE BRILLANTES

Secretary HON. CARMENCITA REODICA
Department of Labor Secretary
and Employment Department of Health

HON. RICARDO T. GLORIA HON. SALVADOR ESCUDERO

Secretary Secretary
Department of Education, Department of Agriculture
Culture and Sports

HON. WILLIAM PADOLINA HON. ERNESTO GARILAO

Secretary Secretary
Department of Science Department of Agrarian Reform
and Technology

HON. RUBEN TORRES

Secretary
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Republic Act 7875 IRR page 8
 Office of the Executive Secretary

MALACAÑANG
MANILA

BY THE PRESIDENT OF THE PHILIPPINES

ADMINISTRATIVE ORDER NO._____

DIRECTING PARTICIPATING NATIONAL GOVERNMENT AGENCIES AND

LOCAL GOVERNMENT UNITS TO ENSURE THE SPEEDY
IMPLEMENTATION OF THE NATIONAL HEALTH INSURANCE
PROGRAM AND FOR OTHER PURPOSES

WHEREAS, the Philippine Constitution declares that the State Shall adopt an
integrated and comprehensive approach to health development which shall endeavor to
make sure essential goods, health and other social services available to all the people at
affordable cost; and that priority for the needs of the underprivileged, sick, elderly,
disabled, women, and children shall recognized; and that it shall be the policy of the State
to provide free medical care to paupers;

WHEREAS, RA 7875: The National Health Insurance Act of 1995 has been
enacted in line with the declared policy of the State to provide adequate social services
and improved quality of life for all, and for this purpose, the State shall adopt an
integrated and comprehensive approach towards health development;

WHEREAS, t he Ten -Year Public Investment Plan for the Health Sector (1994-
2004) identifies national health insurance as one of its priority public investment
packages toward a national framework for universal insurance coverage;

WHEREAS, the Implementing Rules and Regulations of RA 7875 was

formulated through the efforts of the inter-agency Technical Working Groups, National
Organizing Committee, Task Force IRR, national consultations of the affected sectors,
and round table discussions with care providers, beneficiaries, and local government
units;

WHEREAS, the IRR has been approved by the Board of Directors of the
Philippine Health Insurance Corporation last 19 April 1996, as per PHIC Board
Resolution No.34, series of 1996, and has been endorsed by Cabinet Cluster C to the
president last 30 April 1996;

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Republic Act 7875 IRR page 9
 NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, by virtue in me by law, do hereby order:

SECTION 1. Five-Year Phased-In Implementation of the Indigent

Component of the National Health Insurance Program. The Philippine Health
Insurance Corporation is hereby directed to ensure that the NHIP shall have covered at
least the poorest twenty five percent of the population within a period of five years.

SEC. 2. Directive to Department of Finance. The DOF is hereby directed to

ensure the automatic programming of all funds identified by law for premium subsidy of
the Indigent Component of the NHIP.

SEC. 3. Directive to Department of Budget and Management. The DBM is

hereby directed to automatically allocate the programmed funds for premium subsidy in
the annual Budget of the National Government; and to ensure the immediate and regular
release of the Employer’s Counterpart Contribution for the Medicare Program.

SEC. 4. Directive to the Oversight Committee on Devolution. The Oversight

Committee on Devolution is hereby directed to work with the PHIC in addressing the
issue of devolution funding difficulties vis-à-vis the local government units’ counterpart
contribution to the Indigent premium subsidy.

SEC. 5. Directive to the Philippine Informational Agency. The PIA is hereby

directed to assist and support the PHIC in the information dissemination/campaign on the
NHIP.

SEC. 6. Directive to Local Government Units. The LGUs are hereby directed
to ensure the immediate and effective implementation of the Indigent component of the
NHIP in their respective jurisdiction. To this end, the LGUs are directed to prioritize the
NHIP in their annual social development plans.

SEC. 7. Effectivity. This Administrative Order shall take effect immediately.

DONE, in the City of Manila, this day of in the year of Our Lord,
Nineteen Hundred and Ninety-Six.

By the President:

RUBEN D. TORRES
Executive Secretary

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Republic Act 7875 IRR page 11