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MANILA - The Insurance Commission has signed an order that would mandate all health maintenance organizations (HMOs) to set a minimum capital to ensure that health care providers are paid for their services and customers' needs are met.
Insurance Commissioner Emmanuel Dooc has signed circular letter no. 2016-41 that mandates all existing HMOs to have a minimuim paid-up capital of at least P10 million in 15 days after release of the circular.
The circular also required newly set-up HMOs to have paid-up capital of at least P100 million, while community-based and cooperative HMOs shall maintain a paid-up capital equivalent to 50 percent of what is prescribed for regular HMOs.
Dooc said the commission deemed it sufficient for new entrants to have P100 million in capital. But while existing companies do not have such requirement, the IC will still require them to hike their capital based on the business that they have churned in the previous year, such that capital should correspond to the amount of risks that they take.
Insurance Commissioner Dooc said, "we want to make sure that every HMO company can service its obligations. Once they receive medical services, then the providers will be duly paid."
The IC said the move was in part suggested by an industry group, the Association of Health Maintenance Organizations of the Philippines, following reports of fly-by-night HMOs that preyed on unsuspecting customers without giving them the promised service.
AHMOPI officials declined to comment as of press time.
There are currently 29 HMOs in the country. Supervision over them was transferred to the IC in January from the Department of Health through an executive order signed by former President Benigno Aquino III.
Prior to the transfer of supervision to the IC, Dooc noted, there was no proper financial examination of such companies.
Without naming specific companies, he said some HMOs are better capitalized compared to other insurance companies with more than P500 million in paid-up capital, while there is at least one HMO with a negative net worth.
In the absence of a law that governs the operations of HMOs and protects the rights of its customers, he said the IC has to step in.
"We welcome the enactment of a pertinent law that will effectively govern the HMO industry similar to the Insurance Code for the insurance industry. But I know that it will take time to achieve that. Meanwhile, we cannot leave the industry without any effective regulatory guidelines. So we're stepping in to address that," Dooc said.
"We step in because there's no HMO code or law, so we're trying to fill the gap."
Meanwhile, Dooc said around 80 percent of insurance firms have already complied with the commission's higher capital capital requirement.
Based on their business plans submitted to the IC, insurance firms offer additional stocks, infuse additional cash, merge, or partner with foreign investors in order to raise funds for the required capital, Dooc said.
The IC earlier ordered insurers to raise their paid-up capital to P550 million by year-end from the current minimum of P250 million.
He said the ICs talking to individual insurance companies who have yet to raise funds.
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