Transferring The Regulation And Supervision Over Health Maintenance Organizations From The Department Of Health To The Insurance Commission, Directing The Implementation Thereof And For Other Purposes

Case Overview and Summary

Summary of Executive Order No. 192

Transfer of Regulation and Supervision over Health Maintenance Organizations (HMOs)
- Jurisdiction over HMOs shall be transferred from the Department of Health (DOH) to the Insurance Commission (IC) to regulate and supervise the establishment, operations, and financial activities of HMOs. (Section 1)

Definition of HMO
- An HMO refers to a juridical entity legally organized to provide or arrange for the provision of pre-agreed or designated health care services to its enrolled members for a fixed pre-paid fee for a specified period of time, as defined in DOH Administrative Order No. 34 (s. 1994). (Section 2)

Organizational Structure and Personnel Augmentation
- The IC, in coordination with the Department of Budget and Management, is authorized to streamline and augment its human resource component to effectively and efficiently perform its functions and exercise its powers under this Order. (Section 3)

Authority of the IC over HMOs
- The IC shall have the authority to: (Section 4)
• Issue rules and guidelines on HMO minimum capitalization, net worth, reserve funds, security deposit requirements, qualification/disqualification of directors, officers and marketing personnel, reportorial/examination requirements, registration of contracts and plans, adjudication of claims, and other relevant matters.
• Approve, amend, renew, decline, suspend, or revoke any license, registration, or certificate of authority issued to HMOs.
• Fix, assess, collect, and utilize fees and/or charges as it may find reasonable.
• Regulate, supervise, and monitor the operations and management of HMOs to ensure compliance.
• Issue orders to prevent fraud and injury to HMO plan holders and industry stakeholders.
• Order the examination of documents, papers, files, tax returns, books of accounts and other records of any entity or person under investigation, including those with related interests.
• Impose sanctions and/or appropriate penalties pursuant to existing laws, rules, and regulations.
• Enlist the aid and support of and/or deputize any law enforcement agencies for implementation.
• Issue directives, such as the appointment of conservators, receivers or liquidators, to non-compliant HMOs.
• Prepare, approve or amend rules, regulations, orders, circulars, and issue opinions and guidance.
• Formulate policies and recommendations on issues concerning the health maintenance industry, including proposed legislations.
• Exercise other powers provided by law or necessary to carry out the objectives of this Order.

License to Operate
- All HMOs, whether investor-based, community-based or cooperative, are required to comply with the regulatory requirements of procuring a License to Operate from the IC. (Section 5)
- The IC shall honor previously issued "Clearance to Operate" by the DOH, subject to modifications, revisions, adjustments, and changes as provided in the implementing rules and regulations.

Funding
- Funds needed to carry out the provisions of this Order shall be taken from the current appropriations of the IC. (Section 6)
- Subsequent funding requirements shall be incorporated in the annual budget proposal of the IC.

Efficient Transition
- The DOH and the IC may enter into inter-agency agreements to ensure the full and appropriate transfer of all functions related to HMOs, including the temporary detail of DOH personnel to the IC. (Section 7)

Transitory Matters
- All books, contracts, correspondences, documents, papers, records, other associated items, and pending business pertaining to the DOH's functions over HMOs shall be turned over, transferred, and delivered to the IC for continuation, modification, or termination. (Section 8)
- The IC shall constitute a special team to handle all matters related to HMOs and shall secure and transfer all the HMO-related files and records of the DOH to the IC within ninety (90) days from the effectivity of this Order.
- Personnel under the DOH affected by this Order shall continue their service with the DOH but may be detailed to the IC for efficient transition and effective discharge of functions.

Creation of Oversight Committee
- An Oversight Committee composed of the Secretary of Finance (as Chairman), the Secretary of Health, and the Insurance Commissioner (as members) is constituted to ensure the effective transfer of jurisdiction and regulation over HMOs to the IC. (Section 9)
- The Oversight Committee shall exist until 30 June 2016.

Role of the DOH
- All issues relating to medical matters including practice of the medical profession, medical procedures and standards, and health programs, policies, services, and facilities, shall be referred to the DOH. (Section 10)

Implementing Rules and Regulations
- The IC shall formulate, adopt and implement such rules, regulations, and other issuances as may be necessary in the effective implementation of the provisions of this Order. (Section 11)

Repeal
- All orders, issuances, or parts thereof, which are inconsistent with the provisions of this Order, are hereby repealed or modified accordingly. (Section 12)

Separability
- If any provision of this Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting. (Section 13)

Effectivity
- This Order shall take effect immediately upon publication in a newspaper of General Circulation. (Section 14)