Court Orders Hospital to Reimburse Senior Patients for Mandatory Discounts

The Court of Appeals recently mandated Notre Dame De Chartres Hospital in Baguio City to reimburse nearly one million pesos to senior patients. This decision followed the hospital's failure to apply mandatory discounts, as outlined in the June 18 ruling by the Special 11th Division. The hospital's administrative liability stemmed from improperly deducting value-added tax (VAT) and senior citizen discounts from eligible patients' bills.

Notre Dame breached its accreditation warranties under the National Health Insurance Act of 1995, as it is an accredited provider of the Philippine Health Insurance Corp. (PhilHealth). The case arose from multiple administrative complaints filed in 2018 concerning the hospital's failure to grant the full 20-percent senior citizen and VAT discounts mandated by law. This oversight resulted in additional out-of-pocket expenses for senior patients.

The appellate court ordered the hospital to reimburse P908,116 to affected patients, rectifying the improper charges. Moreover, a penalty of P70,000 was imposed on Notre Dame, marking a significant reduction from PhilHealth's original penalty of P7.7 million, which was based on multiple violations.

PhilHealth's arbitration office initially determined that Notre Dame was liable for 77 violations of Republic Act No. 7875, with each violation carrying a P100,000 penalty. Despite Notre Dame's appeal to the PhilHealth board, the board upheld the arbitration office's verdict.

Notre Dame contended that it was not required to apply a 12-percent VAT exemption, asserting that no output VAT was incorporated into the hospital bills. Nonetheless, the appellate court found this argument unfounded, stressing that existing laws and PhilHealth circulars did not support Notre Dame's position. The court emphasized legislative intent to reduce financial burdens broadly and mandatorily on senior citizens.

The court clarified the process for accredited healthcare providers: first applying the 12-percent VAT exemption to total hospital charges, followed by the 20-percent senior citizen discount. Subsequently, the PhilHealth benefit should be deducted, with the remaining balance forming the senior citizen's co-payment. This methodology is also applicable to calculations related to doctors' professional fees and case rates.

Recently, Notre Dame's PhilHealth accreditation revocation in 2022—linked to unspecified violations—drew criticism from Baguio City Mayor Benjamin Magalong. He deemed the decision excessively harsh, given the hospital's vital role for PhilHealth beneficiaries in the region.