THE country’s health maintenance organizations (HMOs) posted strong overall performance in 2017, with revenues increasing by 11.53 percent, the Insurance Commission (IC) has reported.
Based on the very first industry report on HMOs released by the IC since it assumed jurisdiction over this sector in November of 2015, the total revenue of HMOs for 2017 amounted to P36.83 billion compared to the 2016 figure of P33.02 billion.
The unaudited Interim Financial Statements submitted by all licensed HMOs in the country as of December 31, 2017, to the IC reported that its revenues increased by 11.53 percent year-on-year.
Insurance Commissioner Dennis B. Funa said that 96.20 percent, or P35.43 billion, of the total revenue of HMOs were generated from fees paid by its members in exchange for the assumption of the risk funding members’ health-care services and related administrative costs.
Reported assets of the HMO industry reached P32.91 billion as of year-end 2017, up by 19.85 percent from the P27.46 billion recorded during the same period in 2016.
The majority of the assets of the HMO industry consists of loans and receivables, cash and cash equivalents, financial assets available for sale and investment in subsidiaries, associates and joint ventures.
The net earnings of the HMO industry, likewise, surged by 40.44 percent to P937.5 million as of the end of fourth-quarter 2017, from the P667.5 million reported during the same period in 2016.
“Based on the data submitted to the IC, the HMO industry incurred P29.27 billion in the delivery of health-care benefits and claims, such as medical services and hospitalization. Nevertheless, the industry reported a net income of P937.5 million,” Funa said.
Funa pointed out that the IC recently adopted a manual of examination of HMOs intended as a guide in the examination of the financial conditions of HMOs.
“The target of the IC is to issue a Standard Chart of Accounts [SCA] to be used in the financial reporting requirements of HMOs. In the interim, we implemented a manual of examination of HMOs, which is intended to serve as a guide in the financial examination requirements and procedures concerning HMOs,” he added.
The SCA for HMOs will serve as the financial reporting framework for HMOs to ensure transparency in their financial conditions and the consistent application of existing regulations.
“The objective of establishing an SCA is to provide a uniform and comprehensive chart of accounts to improve financial collection, reporting, accuracy and comparability. The SCA will also provide a logical framework in the determination of the allocation and use of funds of HMOs in compliance with the rules and regulations promulgated by the IC,” he said.
He added that the SCA for HMOs will also serve as a tool for the IC in the conduct of a comprehensive study on the health-care industry in the country.
Apart from the SCA, Funa reiterated that there is still a need for more regulations concerning different aspects of the operations of HMOs in the country, to ensure its financial viability and soundness. He added that the IC is set to issue this year rules on investment and valuation standards for HMO reserves.
“Since the IC assumed supervision over HMOs, we issued numerous regulatory issuances, including rules on licensing, minimum capitalization and financial capacity requirements, product approval and manual of examination.
However, there are still a number of issues that need to be addressed to ensure that HMOs are financially sound and consumers are protected,” he added.
According to the IC, as of 2016, the HMO industry has around 270,000 individual clients and 4 million corporate clients.
“In addition to the SCA for HMOs, the IC is set to issue rules on investment and valuation standards for HMO reserves within the year,” he said.