IC eyes measures to improve HMO regulation

The Insurance Commission (IC) is pushing for measures to better regulate the health maintenance organization (HMO) sector to strengthen healthcare in the country, including a law covering the industry and possibly transferring its oversight or jointly regulating it with another agency, its top official said.

Insurance Commissioner Reynaldo A. Regalado told reporters on Thursday that the IC is working on rules to strengthen the HMO industry.

The IC on March 13 issued a draft circular scrapping the planned increase in existing HMOs’ minimum capital requirement.

The latest draft now only requires new HMOs to have a paid-up capital of at least PHP 100 million and classifies companies into tiers based on their net worth, requiring them to maintain a net worth not lower than their capital base.

The regulator in 2024 had sought comments on a possible hike in the sector’s minimum paid-up capital, which it had planned to implement over 10 years. Under the earlier proposal, from the current PHP 10-million requirement, existing HMOs needed to have at least PHP 50 million in paid-up capital by end-2024, which would be increased every three years to reach PHP 500 million by end-2034.

Mr. Regalado said the new proposal was the result of “a more extensive discussion” with HMOs.

“There are HMOs that have been operating on a certain level whose responsibilities have been properly exercised the whole time. What we saw is they can still maintain the level and the quality of service that they can provide without actually having to go big [in terms of capital],” he said. “So, we thought, we don’t need to make them big. We just need to make them effective.”

The IC will focus on prudential regulation, including for HMOs’ expansion, Mr. Regalado added. “We’re putting focus on how we’re supposed to be handling HMOs.”

“We really need to have them properly regulated… That’s why we’re putting all these rules already. The next thing to consider… is to have a new HMO Code,” he said.

Mr. Regalado was referring to House Bill No. 8787 filed by Malasakit and Bayanihan Party-list Rep. Anthony T. Golez, Jr. or the HMOs Act of 2023, which seeks to provide a regulatory framework for the sector in recognition of these firms as “unique medical service providers combining financial management and the direct and indirect provision of health services.”

Under the proposal, HMOs will be regulated by a new agency attached to the Department of Health.

The IC chief said the agency remains open to handing over the supervision and regulation of the HMO sector or possibly jointly handling it with another government agency.

He said they are looking to discuss the matter with the Department of Health, especially state health insurer Philippine Health Insurance Corp. (PhilHealth).

“PhilHealth is like the HMO without competition. That’s how they operate to a certain extent,” Mr. Regalado said. “PhilHealth is improving their services, and that will have an effect on HMOs — positively in the first part, but later on, we will have to adjust. It could lead to better services and better offerings for HMOs.”

“We want to know where we can come in… I’m open to any arrangement that can help the bottom line, which is self-protection.”

The HMO industry booked a combined net income of P979.8 million last year, a turnaround from the P4.27 billion net loss recorded in 2023, latest IC data showed. — AMCS