DOJ reviews PhilHealth-Red Cross deal on testing ‘for procurement issues’

Kristine Joy Patag ( – October 22, 2020 – 1:26pm

MANILA, Philippines — The Department of Justice is reviewing the agreement between the Philippine Red Cross and the Philippine Health Insurance (PhilHealth) Corp. on the conduct of COVID-19 testing.

Justice Secretary Menardo Guevarra said that PhilHealth CEO and president Dante Gierran requested the department to issue a legal opinion on the Memorandum of Agreement between PRC and the state insurer.

“The DOJ opinion was requested by PhilHealth before it makes a decision to pay its [debt] to the Philippine Red Cross,” he added.

Red Cross announced last week that it will halt COVID-19 swab tests covered under PhilHealth over the state insurer’s unpaid debts that ballooned to over P930 million.

Guevarra explained that they will be reviewing the whole MOA “but more particularly on procurement issues.”

The DOJ will render the legal opinion this week. “We’re giving this our preferential attention,” he added.

Review to look into validity, liability

The justice secretary said that they are focusing on the validity of the MOA and potential civil liability, but he stressed that they are not ruling out criminal liability until they complete their review.

PRC’s move to suspend PhilHealth-covered testing left thousands of returning Overseas Filipino Workers stranded in Metro Manila hotels and unable to return to their home provinces.

Red Cross said last week they need the payment for buying test kits. “The PRC does not have unlimited resources to replenish the testing kits for its laboratories unless PhilHealth, its major creditor, settles its unlawful obligations.”

Presidential spokesperson Harry Roque announced on Tuesday that the government aims to settle half of PhilHealth’s debt to Red Cross “at the soonest time possible.”

The agreement

The agreement was signed by Sen. Richard Gordon and then-PhilHealth chief Ricardo Morales on May 5, 2020. Gordon is chairman of the Philippine Red Cross.

Under the MOA, PhilHealth shall cover all testing conducted by PRC, including cases screened by, and endorsed under, PRC in its agreements with local government units and other government agencies. Front line health workers who need periodic testing are also covered.

Under the agreement, PhilHealth is obligated to pay P3,500 for each test the Red Cross conducts.

Upon signing, the state insurer must also pay PRC an advance fee of P100 million, from where cost of testing services will be deducted.

It also states: “To allow PRC to maintain sufficient inventory of testing supplies for its mass testing service thus preventing their depletion, PhilHealth shall replenish the advance cash payment so that the same will again amount to P100 million within three days upon written notice by the PRC.”

If the agreement is terminated and balance is left from the advanced cash payment, it will remain with PRC “as stranded costs in case other people need to be tested and in the event that test failures or errors resulted… that may require re-testing.”

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