PhilHealth to pay Red Cross debt, but flags irregularities in contract for COVID-19 tests

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Metro Manila (CNN Philippines, October 16) — The Philippine Health Insurance Corp. will pay its debts to the Philippine Red Cross, its chief Dante Gierran said Friday, as he pointed out some questionable provisions of the existing deal for COVID-19 tests.

"One thing is certain: may utang po ang PhilHealth sa Philippine Red Cross. We recognize the help of Philippine Red Cross to the government, particularly our brothers, victims that are to be tested for COVID," the PhilHealth president and chief executive officer told CNN Philippines' The Source.

"One thing is sure also: we will pay for that, regardless of whether the DBM (Department of Budget and Management) will assume a negative position on the matter... babayaran talaga ng PhilHealth 'yan [PhilHealth will really pay for that]," he added.

The Red Cross announced Thursday that it has stopped accepting clients who want to undergo swab testing where the cost will be shouldered by PhilHealth after the agency accumulated a debt of nearly ₱931 million. The unpaid balances have hampered Red Cross operations, particularly its purchases of additional test kits and equipment.

National COVID-19 task force chief implementer Carlito Galvez, Jr. said Thursday that task force chairman and Defense Secretary Delfin Lorenzana and Gierran have been in talks with the Red Cross, represented by its chairman, Senator Richard Gordon, to address the issue.

The Red Cross said PhilHealth did not mention "any forthcoming payment" in its October 6 letter, which eventually led to this decision.

Malacañang said Red Cross' facilities account for one-fourth of the country's testing capacity, which could leave thousands of Filipinos –– including overseas Filipino workers, arriving airport and seaport passengers, frontliners, and government workers –– unable to avail of COVID-19 testing while the issue is unresolved.

PhilHealth said in a statement that it has paid ₱1.6 billion to the Red Cross as of September, covering 433,263 tests. The non-profit group said it has conducted 1 million tests as of last week.


Although Gierran pledged to pay PhilHealth's dues, he explained why reimbursements to Red Cross have been held as his team found questionable items in the agency's existing deal with the non-government organization.

"We want to pay, only that we have to clear some legal issues affecting the memorandum of agreement that was entered into earlier between the management of PhilHealth and the Philippine Red Cross," Gierran said, pointing to some questions on procurement.

RELATED: PH Red Cross defends all transactions with PhilHealth legal

Gierran said that while the Bayanihan to Heal as One Act allowed PhilHealth to proceed under an emergency negotiated bidding with the Red Cross in May, the contract between the two entities should have complied with existing procurement laws. This entails the requirement of publishing a copy of the contract through the Government Procurement Policy Board and on the PhilHealth website, including its details and price.

He said the contract, approved by former PhilHealth president Ricardo Morales to provide a ₱100-million revolving fund, did not comply with the procurement directives of the Office of the Executive Secretary.

"The right thing for me to do is to be prudent. I have to seek the opinion of the Department of Budget, and up to this point, still waiting," said the PhilHealth chief, who is a lawyer and certified public accountant. The Budget Department oversees the country's procurement service.

Morales has since resigned from PhilHealth in the middle of allegations of corruption and fraud.

Even if procurement rules have been relaxed, Gierran said there are still basic standards which must be met.

"The moment that government's money is being transferred to a private hand, it should be regulated by the procurement body," he said.

"It's not enough that there is a directive for doing this and then we will not make safety nets for the disbursements of those money. Otherwise, I will be committing another round of imprudence like what happened under the previous management – it's something I will not do," he added.

Full amount not covered

While PhilHealth acknowledges its piling debt to the Red Cross, Gierran said the agency may not need to settle the full ₱930 million being collected.

He claimed that the Red Cross based its computation on a rate of ₱3,500 per test, but said the cost of each polymerase chain reaction (PCR) test has since dropped to ₱3,409 each with higher available supply.

READ: PhilHealth lowers rates of COVID-19 testing package

Gierran said he met with Gordon and Health Secretary Francisco Duque III recently to discuss this matter of reducing the COVID-19 testing package rate.