Winning the Game: Strengthening PhilHealth’s Provider Fraud Control Mechanisms toward Improved Service Delivery and Financial Risk Protection for Filipinos

Fraud in social health insurance results in inefficient use of government resources and diverts funds away from necessary health care needs and subsidizing the poor. A process evaluation of the fraud control mechanisms of the Philippine Health Insurance Corporation (PhilHealth) was conducted to identify gaps and challenges in fraud prevention, detection, and deterrence, and to provide realistic, evidence-based policy recommendations to strengthen these mechanisms and ensure coherence in light of the provider payment system’s transition to a prospective global budget (GB) based on diagnosis-related groups (DRGs). Through stakeholder consultations with relevant PhilHealth offices, literature reviews, and descriptive analyses of fraud data, it was found that PhilHealth's fraud control mechanisms do not flag all potential fraudulent activities common to DRG-GB systems. A comprehensive fraud control strategy encompassing prevention, detection, and deterrence mechanisms is lacking, leading to a focus on reactive detection measures that take effect only after health care is provided or claims have been filed. Rather than proactively monitoring providers, PhilHealth’s reliance on pre-authorization to prevent fraud emphasizes cost-containment over setting incentives for efficient and quality service delivery. These challenges are exacerbated by limited human and information technology resources, leading to a lack of routine data monitoring and analysis. Consequently, PhilHealth’s current fraud control activities severely underestimate the incidence of health insurance fraud in the country. Moving forward, PhilHealth’s fraud control system requires the development of a framework that addresses different types of gaming across the continuum of care and processes to translate provider performance monitoring into payment incentives, supported by increased investments in staff and technology. These findings and recommendations are especially relevant as the Philippines transitions to a DRG-GB payment system, which provides an opportunity to incentivize quality service delivery through pay-for-performance purchasing. Strengthening PhilHealth’s fraud control mechanisms is a vital step toward realizing the agency’s commitment to guarantee affordable, acceptable, available, and accessible health care services for the Filipino people. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.