CEBU CITY – As part of the Philippine Health Insurance Corporation (PhilHealth)’s ongoing health financing reforms under the Universal Health Care (UHC) Act, the Corporation is transitioning from the current All Case Rates payment mechanism to a Diagnosis-Related Groups (DRG) payment system for inpatient services.
DRG is a patient classification and provider payment mechanism that groups hospital cases according to diagnosis, treatment, procedures performed, and other factors such as age, sex, and length of hospital stay.
Unlike the current All Case Rates (ACR) or fixed coverage system, which only allows reimbursement for a maximum of two diagnosis and/or procedure codes for the entire episode of care for a patient, DRG considers the full complexity of a patient’s condition and the resources required for treatment. With DRG, inpatient cases that have similar clinical management and resource use are grouped. Each group has a specific relative weight assigned, which directly correlates to its cost. Through this approach, PhilHealth can more accurately determine hospital payments based on the complexity of cases and the resources used in patient care.
In support of this initiative, PhilHealth Regional Office (PRO) VII is actively assisting hospitals across Central Visayas in preparing for the implementation of the DRG system. Through orientation sessions and capacity-building activities, PRO VII aims to help healthcare facilities understand the new payment mechanism and ensure a smooth transition toward a more efficient, equitable, and patient-centered healthcare system. This initiative will also help ensure that hospitals receive appropriate support based on the actual services they provide to patients.
To prepare for the transition, PhilHealth in Region VII started engaging with health facilities on Shadow Billing beginning in 2024.
Shadow Billing is a simulation process wherein hospitals generate hypothetical DRG claims alongside their regular claims while continuing to be paid under the existing ACR system. This allows PhilHealth to gather the data needed to develop DRG rates, improve patient classifications, and test the systems that will support future electronic claims processing. Participation is mandatory for health facilities that accept inpatient admissions and have the capability to submit claims through PhilHealth’s Electronic Claims (eClaims) system. More importantly, the exercise helps healthcare facilities become familiar with the new requirements and avoid disruptions once the DRG system is fully implemented.
Led by its Health Care Delivery Management Division (HCDMD) and DRG Team, the Regional Office has conducted training sessions for hospitals, infirmaries, and primary care facilities across Cebu, Bohol, Negros Oriental, and Siquijor.
As of July 29, 2026, a total of 41 health facilities have already been designated as Shadow Billing Sites across the region.
Since 2025, the following government and private health facilities in Central Visayas have been identified and tagged by PRO VII as Shadow Billing Sites. (The sequence of health facilities in this list is based on the date of receipt of complete requirements by PRO VII.)
- Concepcion Memorial Hospital
- Lim Community Hospital
- Tagbilaran Community Hospital Corporation
- Adventist Hospital-Cebu, Inc.
- Allied Care Experts (ACE) Medical Center-Bayawan Inc.
- Carcar Women and Children Lying-in Polyclinic and Laboratory
- Dr. Lim’s Clinic and Hospital
- Women’s and Children’s Community Hospital, Inc.
- Holy Child Hospital
- Cardinal Rosales Memorial Hospital, Inc.
- Our Lady of the Rule Maternity and General Hospital
- Cebu (Velez) General Hospital, Inc.
- Perpetual Succour Hospital of Cebu, Inc.
- Medical Mission Group Hospital and Health Services Cooperative
- Chong Hua Hospital
- Chong Hua Hospital Mandaue
This 2026, the following health facilities were added to the list after expressing their commitment to participate in the Shadow Billing initiative:
- Cebu North General Hospital, Inc.
- Siquijor Provincial Hospital
- Cong. Simeon G. Toribio Memorial Hospital
- Cebu Provincial Hospital (Balamban)
- Governor Celestino Gallares Memorial Medical Center
- Luz-Sikatuna Community Primary Hospital
- Cebu Provincial Hospital – Carcar City
- PNP Station Hospital
- Guba Community Hospital
- Amio Community Primary Hospital
- Bindoy District Hospital
- Catigbian District Hospital
- Garcia Memorial Provincial Hospital
- Vicente Sotto Memorial Medical Center
- Cebu South Medical Center
- Badian District Hospital
- Lapu-Lapu City Hospital
- Pacuan Community Primary Hospital
- Sta. Rosa Community Hospital
- Tuburan District Hospital
- Gov. William “Billy” Villegas Memorial Hospital
- Saint Anthony Mother and Child Hospital
- Mabinay Medicare Community Hospital
- Maribojoc Community Hospital
- Dr. Jose Ma. V. Borromeo Memorial Hospital
By participating in the Shadow Billing initiative, health facilities contribute to PhilHealth’s ongoing healthcare reforms aimed at improving health service delivery, helping pave the way for a more efficient provider payment system that will ultimately enhance access to quality healthcare services and better health benefits for PhilHealth members and their families. (END)
