PHAPi: Cyber-attack on PhilHealth to further delay unpaid claims reimbursement

The Private Hospitals Association of the Philippines Inc. on Wednesday said it is expecting further delays in the reimbursement of arrears of the Philippine Health Insurance Corporation to private hospitals due to the cyber-attack on the agency's online system.

According to PHAPi president Dr. Rene de Grano, the cyber-attack on the state-run health insurer's online system is expected to cause further delay in its promise to settle its outstanding debts to hospitals amounting to P27 billion.

"During the past hearing, PhilHealth president [Emmanuel] Mandy Ledesma promised to pay by December the P27 billion-worth of supposed arrears of PhilHealth to different hospitals," De Grano told reporters in a chance interview.

"Of course, we are hoping that it will be pushed through. But then this problem (cyber-attack) came, which made PhilHealth's entire system down, then of course, we will be expecting more delays," he added.

Over the weekend, PhilHealth confirmed reports that there was an "information security incident" on its online system.

The Department of Information and Communications Technology previously stated that the agency's system was attacked by Medusa ransomware.

As defined by Trend Micro, a multinational cyber security software company, ransomware is a type of malware that prevents or limits users from accessing their system, either by locking the system's screen or by locking the users' files until a ransom is paid.

In the state-run health insurer's case, the Medusa ransomware group was said to be demanding $300,000 in exchange for access to its system. The group threatened to leak the personal information of PhilHealth members if it did not pay the ransom.

Worst case scenario

Earlier this month, Ledesma made a commitment before lawmakers in the budget deliberation of the House Committee on Appropriations on the proposed P199 billion budget of the Department of Health for next year that the state-run health insurer would settle "a bulk or majority" of its P27 billion unpaid claims to various hospitals in the country.

Of the P27 billion worth of unpaid claims by PhilHealth to various hospitals, P10 to P15 billion are estimated to be from private hospitals.

Unlike big private hospitals that have "buffer funds," De Grano said that further delays in payment would cripple the operations of smaller private hospitals.

"Most of the small private hospitals rely on or are very dependent on patients who are NBB, charity patients, or no balance billing," he said. "If there would be further delay in payments, smaller private hospitals will run out of money to the point that it will affect their cash flow. It will affect their operations."

If the non-payment of PhilHealth continues, he warned that smaller private hospitals would require their patients to pay their bills from their pockets.

"The worst that will happen, initially, perhaps smaller private hospitals would no longer accept [PhilHealth] beneficiaries. They would ask patients to pay their bills out of their pockets," he said.

"Because, otherwise, we can no longer provide these services. Private hospitals are paying for their nurses, medicines, and supplies. If PhilHealth won't pay them, it would empty their funds," he added.

Delayed HEA

Meanwhile, De Grano also expressed his support for the complaint filed by a group of private healthcare workers against several DOH regional offices before the Anti-Red Tape Authority over the long overdue distribution of their health emergency allowances or HEA.

"They prioritized the government facilities. The private [hospitals] were left," he said. "They should tell the truth. They must tell if there are no longer funds available."

Earlier this week, the United Private Hospital Unions of the Philippines, whose members are part of at least 26 private hospitals in the country, filed a complaint against DOH regional offices over its failure to distribute P5.8 billion worth of HEA.

Under Republic Act No. 11494, also known as the Bayanihan to Recover as One Act, healthcare workers who were at the frontline of the government's fight against COVID-19 are mandated to receive HEA and other benefits.