Chapter 10: Financing Health and Care Liability

Financing health care has evolved from personal payment at the time-of-service delivery to financing
through health insurance (prepayment) by the employer and employee at the workplace. This has
progressed in most industrialized countries towards governmental financing through social security or
general taxation, supplemented by private and non-governmental organizations, and personal out-of-
pocket expenditures. Ultimately, every country faces the need for governmental funding of health care
either for the total population or at least for vulnerable groups such as the elderly and the poor, as in
the USA, where governmental funding comes to nearly 50 percent of total health expenditures.
Government funding is necessary also for services that insurance plans avoid or are inefficient in
reaching, including as community-oriented services and groups at special risk, such as infants and
women

Disability Insurance

Disability Insurance is a type of insurance product that provides income in the event that a
policyholder is prevented from working and earning an income due to a disability.

 Disability insurance is a type of insurance protecting against loss of income due to disability.
 Disability insurance is available through both public and private programs.
 Some of the variables affecting the cost of disability insurance include the strictness of
requirements for qualifying under the plans; the amount of income to be replaced; the length
of time in which benefits are paid; the medical history; and the length of time policyholders
must wait before beginning to collect those benefits.

How Disability Insurance Works?

Oftentimes, insurance products will protect against a specific loss, such as when a property and
casualty insurance plan reimburse the policyholder for the value of stolen property. However, in the
case of disability insurance, this compensation relates to the lost income caused by a disability.

Example:

if a worker earned P360,000 per year prior to becoming disabled, and if their disability prevents them
from continuing to work, their disability insurance would compensate them for a portion of their lost
income provided that they qualify.

Sickness Benefits

Social Security System (SSS)

Brief History

It was former President Manuel A. Roxas who first proposed a bill in Congress, seeking the
establishment of a social security system for wage earners and low-salaried employees. This he said on
January 26, 1948, during his State of the Nation Address.

On July 7, 1948, after the death of Pres. Roxas, Pres. Elpidio Quirino created a Social Security
Commission, his first official act as president. This commission drafted the Social Security Act that was
submitted to Congress. This draft was introduced by Rep. Floro Crisologo, Senators Cipriano Primicias
and Manuel Briones to the House and was enacted as Republic Act 1161, or the Social Security Act
1954.
However, its implementation was delayed by objections made by business and labor groups. It was only
in 1957, that amendatory bills were presented in Congress creating the RA 1792, amending the original
Social Security Act.

On September 1, 1957, the Social Security Act of 1954 or the Social Security Law (SS Law) was finally
implemented adopting the social insurance approach to social security, covering the employed segment
of the labor force in the private sector.

In 1980, some groups of self-employed persons were also required to contribute to the social security
fund from which benefits are paid upon the occurrence of a contingency provided by law. In 1992, self-
employed farmers and fisher folks were also included in the program. In 1993, household helpers who
earn at least P1,000 were included in the compulsory coverage of employees and in 1995, workers in
the informal sector earning at least P1,000 a month, like the ambulant vendors and watch-your-car
boys, were also covered by SSS.

On May 1, 1997, Pres. Fidel V. Ramos, signed RA 8282, Social Security Act of 1997, an act which
further strengthen the SSS. This act provides better benefit packages, expansion of coverage, flexibility
in investments, stiffer penalties for violators of the law, condonation of penalties of delinquent
employers, and the establishment of a voluntary provident fund for members.

In 1995, upon the enactment of Republic Act 7875 or the National Health Insurance Act of 1995, SSS,
which used to administer Medicare program for hospitalization and other medical needs of private
sector workers, transferred the administration to Philippine Health Insurance Corporation (PhilHealth)
for an integrated and comprehensive approach to health development.

Republic Act No. 11199, otherwise known as the Social Security Act of 2018, expressly repealed
Republic Act No. 1161 (the old Social Security Law) and Republic Act No. 8282 (amending the old
previous Social Security Law).

Signed into law on 07 February 2019, the new charter of the Social Security System took effect on 05
March 2019. It introduced major changes and innovations on the state-operated social security
program.

Sickness Benefit (definition from SSS) is a daily cash allowance paid to a qualified member for the
number of days he/she is unable to work due to sickness or injury.

FOR SELF-EMPLOYED, VOLUNTARY, OVERSEAS FILIPINO WORKER (OFW), NON-WORKING SPOUSE

(NWS), AND MEMBER SEPARATED FROM EMPLOYMENT

 A daily cash allowance paid for the number of days a member is unable to work due to sickness
or injury.

Qualifying Conditions:

A member is qualified to avail of this benefit if he/she:

 Is unable to work due to sickness or injury and is confined either in a hospital or at home for at
least four (4) days;
 Has paid at least three (3) months of contributions within the 12-month period immediately
preceding the semester of sickness or injury;
 Has duly notified the SSS directly of the fact of sickness or injury.

Amount of Benefit:

The amount of the member’s daily sickness benefit allowance is equivalent to ninety percent (90%) of
his/her Average Daily Salary Credit (ADSC).
How is average daily salary credit calculated?

 Divide the total monthly salary credit by 180 days to get the average daily salary credit (ADSC).
 Multiply the ADSC by ninety percent (90%) to get the daily sickness allowance.
 Multiply the daily sickness allowance by the approved number of days to arrive at the amount
of benefit due.

1. Exclude the semester of contingency.

 A semester refers to two (2) consecutive quarters ending in the quarter of sickness.
 A quarter refers to three (3) consecutive months ending in March, June, September, or
December.
 Semester of Contingency is used to evaluate if a pregnant woman is qualified for SSS
maternity benefit. This is a period of 6 consecutive months, or two consecutive
quarters or also called as semester. A quarter refers to three consecutive months.

2. Count twelve (12) months backwards starting from the month immediately before the semester
of contingency.

3. Select the six (6) highest monthly salary credits within the 12-month period to arrive at the
total monthly salary credit.

 Monthly salary credit (MSC) refers to the compensation base for contributions and benefits
related to the total earnings for the month.

4. Divide the total monthly salary credit by 180 days to get the average daily salary credit (ADSC).

5. Multiply the ADSC by ninety percent (90%) to get the daily sickness allowance.

6. Multiply the daily sickness allowance by the approved number of days to arrive at the amount of
benefit due.

How many days in a year can a member be granted sickness benefit?

A member can be granted sickness benefit for a maximum of 120 days in one (1) calendar year. Any
unused portion cannot be carried forward/added to the total number of allowable compensable days
for the following year.

The sickness benefit shall not be paid for more than 240 days on account of the same illness. If the
sickness or injury persists after 240 days, the claim will be considered a disability claim.

What is the prescriptive period in the filing of sickness benefit claim?

The following prescriptive periods in filing Sickness Benefit application must be strictly followed:

FILING OF SICKNESS BENEFIT APPLICATION (SBA) FORM:

 HOME CONFINEMENT:

SBA Form must be submitted to SSS within five (5) calendar days after the start date of confinement.

 Sickness Benefit Application Form (SBA Form)

 HOSPITAL CONFINEMENT

SBA Form must be submitted to SSS within one (1) year from the date of hospital discharge.

What are the implications of late filing?

 Failure to observe the rule on notification shall be a ground for the reduction or denial of the
sickness claim application.
 If the member notifies the SSS beyond the prescribed five-day period, the confinement shall be
deemed to have started not earlier than the fifth (5th) day immediately preceding the date of
notification.

EXAMPLE:

The member gets sick and was confined at home from March 1 to 31, 2019 for a total of 31 days.

PHILHEALTH

THE call to serve the rural indigents echoed since the early '60s when the Philippine Medical
Association introduced the MARIA Project which prioritized aid to communities in need of medical
assistance. The Project would then be considered a valuable precursor to the Medicare program, from
which a medical care plan for the entire Philippines was created. On August 4, 1969, Republic Act
6111 or the Philippine Medical Care Act of 1969 was signed by President Ferdinand E. Marcos which
was eventually implemented in August 1971.

The Philippine Medical Care Commission (PMCC) was tasked to oversee the implementation of the
program which went for almost a quarter of a century.

In the 1990s, a vision for a better, more responsive government health care program was prompted by
the passage of several bills that had significant implications on health financing. The public's clamor for
a health insurance that is more comprehensive in terms of covered population and benefits led to the
development of House Bill 14225 and Senate Bill 01738 which became The National Health
Insurance Act of 1995 or Republic Act 7875, signed by President Fidel V. Ramos on February 14,
1995. The law paved the way for the creation of the Philippine Health Insurance Corporation
(PhilHealth), mandated to provide social health insurance coverage to all Filipinos in 15 years'
time.

PhilHealth assumed the responsibility of administering the former Medicare program for government
and private sector employees from the Government Service Insurance System in October 1997, from
the Social Security System in April 1998, and from the Overseas Workers Welfare Administration in
March 2005.

Benefits:

Inpatient Benefits

 These benefits are paid to the accredited Health Care Institution (HCI) through All Case Rates

 The case rate amount shall be deducted by the HCI from the member’s total bill, which shall
include professional fees of attending physicians, prior to discharge.

 The case rate amount is inclusive of hospital charges and professional fees of attending physician.

 Documents needed: copy of Member Data Record or PhilHealth Benefit Eligibility Form (PBEF) and
duly accomplished PhilHealth Claim Form 1

 Where available: all accredited HCIs*

o Different case rate amounts for selected medical conditions are being implemented when done
in Primary Care facilities (PhilHealth Circular 14, s-2013)

o Only admissible cases shall be reimbursed

 Admissible capable or worthy of being admitted

Outpatient Benefits:

 Day Surgeries

(Ambulatory or Outpatient Surgeries) Are Services That Include Elective (Non-Emergency) Surgical
Procedures Ranging from Minor to Major Operations, Where Patients Are Safely Sent Home Within the
Same Day for Post-Operative Care.

 Payments for these procedures are made to the accredited facility through All Case Rates
 The case rate amount shall be deducted by the HCI from the member’s total bill, which shall
include professional fees of attending physicians, prior to discharge
 The case rate amount is inclusive of hospital charges and professional fees of attending
physician
 Documents needed: copy of Member Data Record and duly accomplished PhilHealth Claim Form
 Where available: Accredited Ambulatory Surgical Clinics (ASCs)
 Radiotherapy

 The case rate for radiotherapy using cobalt is P2,000 per session and P3,000 per session for
linear accelerator
 Includes radiation treatment delivery using cobalt and linear accelator
 Claims for multiple sessions may be filed using one (1) claim form for both inpatient and
outpatient radiation therapy
 May be availed of even as second case rate (full case rate amount)
 45 days benefit limit: One session is equivalent to one day deduction from the 45 allowable
days per year
 If procedure is done during confinement, only the total number of confinement days shall be
deducted
 Exempted from Single Period of Confinement (SPC) rule (admissions and re-admissions due to
same illness or procedure within 90-calendar day period)
 Where available: Accredited HCIs including Primary Care Facilities that are accredited for the
said service.

 Hemodialysis

 The Case Rate for hemodialysis is P2,600 per session

 Covers both inpatient and outpatient procedures including emergency dialysis procedures for
acute renal failure
 Claims for multiple sessions may be filed using one (1) claim form for both inpatient and
outpatient hemodialysis
 May be availed of even as second case rate (full case rate amount)
 90 days benefit limit: One session is equivalent to one day deduction from the 90 allowable
days per year
 If procedure is done during confinement, only the total number of confinement days shall be
deducted
 The procedure is exempted from Single Period of Confinement rule (admissions and re-
admissions due to same illness or procedure within 90-calendar day period)
 Where available: All Accredited HCIs – this benefit is no longer restricted to hospitals and free
standing dialysis centers provided that the service is within their capability as provided for in
the DOH license

 Outpatient Blood Transfusion

 The case rate for outpatient blood transfusion is P3,640 (one or more units)
 Includes Drugs & Medicine, X-ray, Lab & Others, Operating Room
 Covers outpatient blood transfusion only
 One day of transfusion of any blood or blood product, regardless of the number of bags, is
equivalent to one session
 May be availed of as second case rate (full case rate amount)
 45 days benefit limit: One session for each procedure is equivalent to one day deduction from
the 45 allowable days per year Exempted from the SPC rule
 Where to avail: All Accredited HCIs
Z Benefit

If we were to rank and classify all illnesses from A to Z, those illnesses that push patients into
prolonged hospitalization and very expensive treatments would be the last letter or the Z illnesses.
These illnesses are what the package will be addressing. 

SDG Related

Part of the agency’s mandate is to set objectives in line with the United Nations Sustainable
Development Goals (SDG). To make sure these objectives are met, PhilHealth has created medical
packages for members with medical conditions or undergoing procedures of the following:

 Outpatient malaria
 Outpatient HIV-AIDS
 Anti-TB through DOTS course
 Voluntary surgical contraception
 Animal bite treatment

Maternity benefits

PhilHealth provides four packages to women who are about to give birth. These include:

 Antenatal care package – Provided that the mother went to a minimum of four prenatal
checkups, the mother will receive P1,500 worth of coverage. The last checkup should be in the
third trimester of the pregnancy.
 Normal spontaneous delivery package – Pertains to the post-partum period within the
immediate 72 hours and the seven days after giving birth. The mother will have a coverage
amounting to P5,000 for delivery at the hospital or P6,500 for delivery at maternity
clinics/birthing homes.
 Other methods of delivery – Cesarean (P19,000); complicated vaginal delivery (P9,700);
breech extraction (P12,120); and vaginal delivery after a previous Cesarean method (P12,120)
 Newborn care package – Essential health care worth P1,750 will be given to your baby. There’s
no maximum number of births, but filing should be within 60 days after the childbirth.

Senior citizen benefits

Senior citizens (and retirees/pensioners) are automatic and lifetime members of PhilHealth granted
that they meet the eligibility requirements. They can also be listed as dependents of principal
members. Their benefits include inpatient, outpatient, Z health services, and TsekAp diagnostic exams
that are appropriate to their conditions.
OFW benefits

OFWs and their dependents can avail of the same health care benefits in the Philippines. If they are
confined outside the country, the expenses can be reimbursed by filing at any PhilHealth office. OFWs
are also eligible to become lifetime members like that of retirees and pensioners.

PhilHealth documentary requirements

These are the three ways you can avail of your PhilHealth benefits:

 For automatic deduction on hospital/clinic bills:

PhilHealth ID or an updated copy of MDR. If you’re a dependent, make sure you are listed on the
principal member’s MDR. If not registered in the MDR, submit proof that you’re a dependent of the
member.

 PhilHealth claim form 1, original and duly accomplished. If the member is an employee,
the form must be signed by the employer. It can be acquired from the hospital, your
employer, or downloadable file online.
 Receipt/proof of premium payments with OR numbers (for employees only)
 Valid government-issued ID

 For reimbursement/direct filing:

 Original copy of PhilHealth claim form 2. It should be filled out by the attending physician.
 Official receipts from the hospital or waiver from the doctor
 Record for surgeries, if the operative procedure is performed

Note: The documents for reimbursement should be submitted to PhilHealth or hospital earlier, or
within 60 days after the discharge.

 For confinement abroad

 Original copy of PhilHealth claim form 1
 Copy of MDR
 Proof of premium payments with OR numbers (if applicable)
 Original copy of the official receipt or detailed statement of account (should be in English)
 Copy of medical certificate (should be in English)

Note: The documents above should be submitted within 180 days after the discharge. Overseas
confinements should be paid based on the Level 3 hospital benefit rates.

How to claim PhilHealth benefits

Here are the steps to claim your PhilHealth benefits:

 Make sure you meet the qualifications (qualifying contributions and the sufficient regularity of
the principal member; enlistment on MDR for the dependents). You can check the information
through the online PhilHealth account or the hospital personnel in charge of claims processing.

 Prepare your proof of identification and proof of PhilHealth membership. For members, present
your PhilHealth ID or MDR. For dependents, present the MDR of the principal member where
you are listed. Duly accomplish PhilHealth claim forms 1 or 2 and other forms that the hospital
may require.
  Take note that when you submit these documents to the hospital personnel before you get
discharged from the hospital, your benefits will be automatically applied to your bill. This may
offset your bill or result in deduction of the total bill to pay, depending on the accumulated
amount of your contributions. The excess amount not covered by your benefits will be
shouldered by you.
 Once the deduction/reimbursement of your benefits is done, PhilHealth will send a benefit
payment notice or BPN to the address found in the claim form. You can compare the amount
stated on the BPN to the deduction in the statement of account from the hospital.
 In case of discrepancies or other concerns, you can reach out to PhilHealth or your HC
providers and submit the benefit payment notice.

SOURCE/REFERENCES:

https://www.investopedia.com/

https://www.sciencedirect.com/

ttps://www.sss.gov.ph/

ttps://www.philhealth.gov.ph

Prepared by:

Lesley Allen D. Kabigting, MBA

College of Business Administration
Guagua National Colleges