Press Release
March 20, 2006


The Senate Committee on Health and Demography led by Senator Pia S. Cayetano is set to hear tomorrow, March 21, five bills seeking to protect members of Health Maintenance Organizations (HMOs) and strengthen the regulatory framework covering the operation of HMOs.

Cayetano said the proposed measures seek to protect HMO members from unfair arrangements that may arise from their health care management plan.

The bills will also encourage more players to enter the industry by offering business incentives and ensure the smoother operation of HMOs by transferring jurisdiction over them from the Department of Health (DoH) to the more appropriate Insurance Commission.

"Given the sad state of the public health care system, HMOs should be allowed to thrive under a viable business climate. At the same time, the government should also look after the interest of HMO members to make sure that they get the services they pay for," she said.

The five bills, which the committee will hear jointly with the Committees on Finance and on Ways and Means, include: Senate Bill No.32 authored by Senators Juan Flavier and Edgardo Angara, SBN 191 (Sen. Loi Estrada), SBN 225 (Sen. Serge Osmea), SBN 1110 (Sen. Franklin Drilon), and SBN 1227 (Sen. Ramon Revilla, Jr.).

Cayetano stressed the need for a specific law governing HMOs, noting that these institutions fall under DoH supervision by virtue of Executive Order No.119, which was issued way back in 1987 by then Pres. Corazon Aquino. The number of HMOs since the late eighties has increased to an estimated 14 firms operating nationwide.

"Essentially, HMOs operate very much like insurance companies and therefore should be supervised as such to ensure their uninterrupted service to members," she explained. Like insurance companies, she said HMOs offer pre-agreed medical services through accredited physicians to members who pay a fixed premium.

The five bills also seek to propose the creation of an internal grievance committee to be put up by the HMOs themselves. This would serve as a venue for members to contest coverage denials by their HMOs.

The worst thing that could happen, however, is when members are left without any insurance coverage when their HMO closes down.

"There is no appropriate government regulation that would address such a situation," she pointed out.

"All these problems cannot be adequately addressed under the current setup wherein the DoH is simply the regulatory agency, but does not have the technical capability to evaluate the financial viability of an HMO."

On the other hand, she said the Insurance Commission would be better equipped to monitor HMOs and make sure they adhere to sound corporate practices, as well as set standards for the industry, including capitalization and investment regulation.

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