Evolution Of The Hmo In The Philippines 4g3b4q

Evolution of the HMO in the Philippines Ma. Jojo M. Mercado, MD

Objective: 

Examines the process of legislating regulation for the Philippine HMO industry.



How interest groups compete with each other and attempt to influence legislation of the regulation law.



The health Maintenance Organization (HMO) industry is the fastest growing component of the national health care system.



In 1989, total enrollment was 375,000



Ten years later, total enrollment exceeded 2.5 million, equivalent to an average growth rate of 19% annually.

“Substantial number of government agencies and private organizations, principally the Association of health Maintenance Organization of the Philippines Inc. (AHMOPI), lobbied for or influenced regulation”.

Karl Kendrick T. Chua; Legislating regulation for the HMO Industry The Philippines Review of Economics, vol. XLIII

Problem perception

Policy conception

Agenda setting

Decisionmaking

Political execution

Interest Groups, Media, Public opinion

Problem Areas

CONGRESS

(eg, health, security, pollution)

PRESIDENT

Political Parties

F E E D B A C K

SUPREME COURT

BUREAUCRACY

Political impact

Share of HMO in Total expenditure 60

50 40 30

Share

20

Growth in Share

10 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

History of HMO in the Philippines 



Began in the late 1970’s as a spill over from a successful run in the United States. 

US Congress ed the HMO Act of 1973



Paved the way for a federal grant and loan program to encourage and stimulate the growth of US HMOs.

PIONEERS WERE: 

Philam Care



Medicard



Fortune Care



Health Maintenance Inc.

Problem encountered 

Department of Health 

2001 accredited 40HMO’s



itted that Existence of a fly by night HMO which offers lower s but with higher probability of default



Medical Inflation 

Medical costs have risen rapidly over years



HMO brokers revealed that rates of their clients grew by an average of 20-30%in 2003



Contracts used to be 3 years



Causes competition among HMOs

Self regulation by AHMOPI 

Government requires HMOs to with the SEC 





SEC does not have regulatory power on HMO since they do not sell securities

To secure clearance from the Bureau of Health Facilities and Services of the DOH 

Mandated by Executive Order 102*



Directs DOH to supervise all health care services and facilities.



DOH only issues clearance to operate though do not have direct regulatory power over HMOs.

Insurance Commission (IC) 

Does not consider HMOs as an insurance companies.

Association of Health Maintenance Organization of the Philippines Inc. (AHMOPI) 

The official trade association of Philippine HMOs



Mandated by its mission to protect the interest of the industry and individual member firms as well as to improve means of providing appropriate health care at affordable costs.



Goals: 

To attain proper recognition for itself and the industry



To establish minimum industry standards



To represent the industry in transactions with the government.



AHMOPI was formed in 1987 by the first six HMOs: 

Health Maintenance



Philam Care



Medicard



Fortune Medicare



Health Plan Philippines



Integrated Health Care Services

Role of AHMOPI 

Primarily regulates the marketing and financial standards.



discounts offered are checked for their sustainability



Determines standard procedures that can be covered in hospitals, clinics and by doctors.



Prevent destructive price wars and maintain sustainability of corresponding to an agreed upon quality of service.



Hears all complaints filed by or against a member firms.

The Road to Regulation 

HMOs were already a national issue As early as the 8th Congress



In the Senate 

Senate Resolution 425 



Directed the Senate Committee on Health to look into the practices, program, policies, procedures and government supervision of HMOs

In the Lower House 

House Bill 16185 

Sought to revise the Philippine Medicare Act and establish a national non-profit HMO

Bill-by-Bill summary comparison Provision

HB 588 HB 826

HB 2436

HB 4666

1. Defines HMO as an insurance company

Y

N

N

Y

2. Regulator

IC

DOH

DOH

Both

3. Rights of consumers and providers

Y

N

N

Y

4. Mechanism for arbitration and review

Y

Y

N

Y

5. Provides sanctions for erring HMOs

Y

Y

Y

Y

6. Tax incentives

Y

Y

Y

N

7. Recognition of AHMOPI

N

Y

N

Y

Conclusion Medical Care is a right and its protection is necessary, but it does not automatically follow that state regulation of HMOs can improve total welfare.

Conclusion: Since PHIC and HMOs have a common objective of providing a quality health care at low cost, then the law creating and regulating them must necessarily explore possible areas of collaboration, which may need some amendments to the National Health Insurance Act and the HMO Bill to achieve smoother functions.