THE Commission on Audit has reported that the Philippine Health Insurance Corp. (PhilHealth) still has unsettled disallowances totaling P7.58 billion as of yearend 2023, a slight reduction from P7.858 billion at the start of the year.
According to a summary provided in the 2023 audit report on the agency, PhilHealth Head Office had the biggest share with P1.84 billion in total disallowances, or 24.3 percent.
It was followed by PhilHealth Region 3 (Central Luzon) with P610.45 million, PhilHealth-Region 6 (Western Visayas) with P583.4 million, and PhilHealth-National Capital Region (NCR) with P571.72 million.
According to a 53-page breakdown provided by the audit team detailing the nature of the disallowances, the biggest chunk consists of unauthorized or illegal allowances, bonuses, cash gifts, cash assistance, cash incentives, gratuity, and Christmas package that PhilHealth officials and employees paid themselves dating as far back as 2003.
A “notice of disallowance” (ND) includes a requirement for persons held liable to refund the amount in full but PhilHealth personnel have contested the COA ruling by filing various motions for reconsideration and petitions for review.
Among the biggest amounts disallowed were the P467.73 million Provident Fund contribution disallowed in 2020 and various salary adjustments totaling P524.21 million granted in various years.
There were also numerous gifts – labor management relations gift, birthday gift, gratuity gift, sustenance gift, special event gift, nominal gift, anniversary gift, efficiency gift, contractor’s gift, alleviation gift, and Corporate Transition and Achievement Premium gift.
PhilHealth likewise had a long list of allowances: educational assistance allowance, project completion incentive allowance, medical mission critical allowance, subsistence allowance, laundry allowance, special representation allowance, shuttle service allowance, birthday allowance, hazard allowance, Collective Negotiations Agreement allowance, transportation allowance, rice allowance, sustenance allowance, PS WE CARE Allowance, grocery allowance, and traveling allowance.
According to COA these were all unauthorized additional compensation outside what were permitted under the Salary Standardization Law.
As often as state auditors issued notices of disallowance, PhilHealth simply continued paying out cash incentives and filed challenges against the Commission’s ruling every step of the way.
In the 2023 audit, auditors pointed out that some of these challenges have run their course and, having been denied, the COA had issued Notices of Finality of Decision (NFDs) on disallowances totaling P85.522 million.
But PhilHealth COA’s Notice of Finality does not make the resolution final.
“Upon inquiry, the FMSr (Financial Management Sector) still considers the decisions related to these unrecorded NDs as not final, anticipating ongoing Supreme Court trials and possible actions …which may affect the finality of the decisions regarding these NDs,” the audit team said.
The COA insisted that since the disallowance were already many years old, they should be recorded in the books of account.
PhilHealth was equally insistent that it does not need to do that just yet.
“PROs (PhilHealth Regional Offices) IVA, VI and VIII’s position is to record only NFDs after receiving a final decision from the Supreme Court. NFDs with ongoing Petition for Review or MR in the Supreme Court are considered not yet final,” the audit team said.
