“Paying whichever is lower does not change the payment mechanism from ACR to FFS.”

This is true. Choosing to pay whichever is lower will not automatically change the payment mechanism from All Case Rates (Case-based payment) to Fee-for-Service. The “change” in payment mechanism does not depend on how we choose to pay, but on what the PhilHealth Board decides or the law mandates. We need a policy to change a payment mechanism. However, we are not saying that “choosing to pay for whichever is lower” is true to the principles of case-based payment or ACR.

Truthfully, paying for whichever is lower NEGLECTS the principles of case-based payment (i.e. ACR). Rather, it subscribes to the principles and mechanism of FFS. Paying for whichever is lower is likened to paying for the bill handed to you by the hospital. You pay for the amounts printed on the receipt. You pay a peso for every peso spent in caring for a patient.

Why do we consider this inefficient and susceptible to fraud? By paying whatever is declared in the receipt, the hospital/provider has the incentive to produce services even though they are not necessary to gain more income. For example, a patient who suffered from stroke and is being treated with Mannitol will need to undergo a blood test (creatinine) to check if the kidney is still functioning well (because Mannitol increases the risk for acute kidney injury). Clinical Practice Guidelines might suggest that creatinine should be monitored every 3 days for patients receiving high doses of Mannitol. Because the payment mechanism is FFS, the hospital/provider has the incentive to increase the frequency of such blood test from every 3 days to once daily. This simple scenario, while hypothetical, illustrates how paying for whichever is lower “changes” the payment mechanism.