IC approval now mandatory on all HMO products

The Insurance Commission (IC) has adopted guidelines now requiring all health-maintenance organization (HMO) products to pass regulatory muster before these are sold to the public.

According to Insurance Commissioner Dennis B. Funa, all HMO products must pass prior IC scrutiny. The guidelines require the submission of HMO-client contracts, schedule of benefits and application forms for approval.

The provisions that must be contained in an HMO agreement include in-patient, emergency care and outpatient benefits and services, pre-existing conditions, availment and claims procedure, exclusions and limitations, and eligibility requirements.

“In the approval of HMO products, companies are now required to submit supporting documents prepared by IC-accredited actuary, together with their application for product approval. These include actuarial notes that contain product description, actuarial assumptions on morbidity and incidence rates, expenses and taxes, as well as actuarial formulations on net and gross premiums, reserves, table of gross membership fees and experience refund, if applicable,” Funa said.

HMOs are given one year to amend their existing HMO product agreements and contract forms to comply with the requirements of the new guidelines.

According to the IC, one of the important minimum provisions that must be in the HMO agreement is the 10-day period given to clients, counted from the effective date within which they can terminate their agreement. This can be done provided the client has not availed himself or herself any of the services provided under the agreement.

The guidelines require that an HMO product may be bundled with a group yearly renewable-term insurance plan, group accident-insurance plan or any similar product duly approved by the IC. In such cases, the HMO shall act as a group policyholder and as the lead provider that will assume responsibility for the administration of the bundled products or services.

To support their application for product approval, HMOs must submit the actuarial notes, actuarial formulations and other documents duly signed by an IC-accredited actuary.

“The submission of actuarial formulations and studies are for the purpose of ensuring that the membership fee to be collected by HMOs are adequately, fairly and reasonably priced to prevent underpricing and overpricing,” Funa said.

Other documentary requirements for the approval of HMO products include sample sales proposals and marketing materials, list of current affiliated hospitals and other service providers of the HMO and sample contract between the HMO and its service provider.

HMO products are pre-agreed or designated health-care services of enrolled members for a fixed pre-paid fee for a specified period of time of up to a year, through the use of a selected network of health-care providers.

An HMO product is expressly prohibited from including any saving or investment component and any mortality risk, according to the IC.

Regulation and supervision over HMOs was transferred from the Department of Health  to the IC by virtue of Executive Order 192, Series of 2015.

As of 2016, there are 29 operating HMOs in the Philippines.



1 comment

  1. Nice Article! Choosing the right HMO is not easy, that’s why it is very important to find and get the best healthcare insurance and find the best plan for yourself, and to your loved ones. Try to check this https://mariahealth.ph to know more about top healthcare brands in the Philippines.

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