SECTION 2. Authority - These rules and regulations are issued pursuant to Section 4 (h), Executive Order No. 119 which mandates the Department of Health to,

"regulate the operation of and issue licenses and permits to government and private hospitals, clinics and dispensaries, laboratories, bloodbanks, drugstores, and such other establishments which by the nature of their functions are required to be regulated by the (Department)..."

SECTION 3. Purpose - These rules and regulations are promulgated to:

3.1. ensure the general public of quality services by the Health Maintenance Organizations, and

3.2 promote the growth of these Health Maintenance Organizations,

SECTION 4. Definition of Terms - As used in these rules,

4.1. "Association" shall refer to the Association of Health Maintenance Organizations in the Philippines.

4.2. "Contract" shall refer to any contract or agreement entered into by the Health Maintenance Organization with a member or group of members for the provision of any pre-agreed or designated health care services.

4.3. "Department" shall refer to the Department of Health.

4.4. "Health Maintenance Organization (HMO)" shall refer 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.

4.5. "Member" shall refer to any individual who has contracted, or on whose behalf, a contract has been entered into, with an HMO.

4.6. "Provider" shall refer to the physician, hospital or any other institution or person licensed to provide health care services.

SECTION 5. Regulatory Authority - The Department through the Office for Health Facilities Standards and Regulations (OHFSR) shall exercise all regulatory functions embodied herein, subject to such powers and functions granted to the Securities and Exchange Commission and the Cooperative Development Authority by existing laws.

SECTION 6. Clearance to Operate - All Health Maintenance Organizations (HMOs), whether investor-based, community-based or cooperative, are hereby required to procure a Clearance to Operate from the Department through the OHFSR.

Existing entities who wish to expand operations and engage in the HMO business must likewise get a Clearance therefor from the Department.

SECTION 7. Application Requirements - The Department through the OHFSR shall supply a standard application form to be filled out by each applicant HMO. Each application for clearance shall be accompanied by the following:

7.1 A statement of the HMO's capitalization duly certified and attested by the Securities and exchange Commission (SEC) or the Cooperative Development Authority (CDA), as the case may be;

7.2 A listing of the names and locations of the providers and other persons or facilities either owned or controlled by the applicant HMO or with it has contracted to furnish designated health care services to its prospective members;

The minimum facilities required of any applicant HMO shall be:

7.2.1.1. management of one tertiary hospital or affiliation with five (5) affiliated tertiary hospitals.

7.2.1.2 an Outpatient Clinic with basic diagnostic facilities for:

-resting ECG
-chest and extremity X-rays
-CBC, urinalysis and fecalysis

7.2.2.1 one (1) affiliated general hospital

7.2.2.2 one (1) affiliated Outpatient Clinic

7.3 A copy of the standard benefit packages to be offered to prospective members;

7.4 Schedule of fees to be charged for the standard packages;

7.5. Forms of all standard contracts to be entered into with prospective members;

7.6 A copy of the brochures on the standard procedures for availment of benefits to be given to prospective members;

7.7. A statement describing the differences, if any, in the standard benefits and fees of a Medicare member against a non-member.

7.8. A copy of the agreements between the applicant HMO and the providers who shall furnish the pre-agreed or designated health care services to the HMO's prospective members.

SECTION 8. Fees - The applicant HMO shall pay a non-refundable processing fee based on the following schedule:

-P25,000.00 for a stock corporation
-P5,000.00 for a non-stock or non-profit cooperative or community-based HMO

SECTION 9. Issuance of Clearance - The Department shall issue the clearance within thirty (30) days from filing of the completed application and upon payment of the prescribed fee.

In the event that an application for clearance is denied, the Department shall notify the applicant within thirty (30) days from the filing of the completed application.

All contracts entered into by an HMO with its members shall include a statement advising them about this arbitration procedure.

SECTION 10. Sanctions - Suspension, cancellation or revocation of the Clearance to Operate shall be imposed against an HMO found by the Department upon examination to have repeatedly violated any of the provisions contained herein.

A re-application fee of P5,000.00 for stock corporation and P1,000.00 for non-stock or non-profit cooperative or community-based HMO shall be charged against HMOs seeking to apply for a new Clearance after the old one has been canceled or revoked.

SECTION 14. Publication - The Department shall periodically publish a list of HMOs with Clearance to Operate and those whose Clearance has been suspended, canceled or revoked. Medical and employer organizations shall be provided a copy of this list.

SECTION 15. Transitory Provision - HMOs which have been registered with the Securities and Exchange Commission or the Cooperative Development Authority and have been operating prior to the adoption of these rules and regulations should apply for clearance within a year from the effectivity hereof.

The Clearance will be issued only upon compliance with the requirement prescribed above.

SECTION 16. Effectivity - These rules and regulations shall take effect fifteen days after publication in the Official Gazette or in a newspaper of general circulation.

Adopted:

(SGD.) JUAN M. FLAVIER, M.D., M.P.H.
Secretary of Health