May 8, 2026 HMOs Explained: Legal Framework and What Every Member Needs to Know
Health Maintenance Organizations or HMOs are widely used in the Philippines, especially by employees, families, and businesses. Yet many people still assume that HMOs are simply insurance companies. While they may look similar in practice, Philippine law treats them differently, and understanding this difference helps explain how your coverage actually works.
Are HMOs the Same as Insurance Companies?
The answer is no. The distinction begins with the Insurance Code of the Philippines, which defines insurance as a contract where one party agrees to indemnify another against loss caused by an uncertain event. In simple terms, insurance is about paying you back after something happens.
HMOs operate differently. Instead of reimbursing a loss, they provide or arrange access to healthcare services through a network of hospitals, clinics, and doctors. When you use your HMO card, you are not being paid for a loss. You are being given access to medical care based on the benefits defined in your plan.
This legal distinction was confirmed by the Supreme Court in Philippine Health Care Providers Inc. v. Commissioner of Internal Revenue, G.R. No. 167330, September 18, 2009. The Court ruled that HMOs are not insurance companies because their main role is to provide healthcare services, not to indemnify or compensate for losses.
Why Are HMOs Regulated by the Insurance Commission?
If HMOs are not insurance companies, it is fair to ask why they are supervised by the Insurance Commission.
Before, HMOs were regulated by the Department of Health because they were seen primarily as healthcare providers. This changed during the administration of Benigno Aquino III through Executive Order No. 192, series of 2015, which transferred regulatory oversight to the Insurance Commission.
The reason for this shift is practical. HMOs collect fees and commit to providing healthcare services over time. This creates financial responsibilities that need close monitoring. The Insurance Commission is better equipped to ensure that HMOs remain financially stable and capable of delivering the benefits promised to members.
Importantly, this change in supervision did not turn HMOs into insurance companies. It simply placed them under a regulator that focuses on financial strength and consumer protection.
Regulation Does Not Change Their Legal Nature
Even under the Insurance Commission, HMOs remain legally distinct from insurance companies.
The law has not changed the definition of insurance to include HMOs. Instead, HMOs are regulated because they manage funds and have long-term obligations to their members. This regulatory setup ensures that they maintain adequate reserves, follow reporting standards, and operate responsibly.
At the same time, they are not treated purely as healthcare providers either. This is why HMOs operate within a hybrid system that combines healthcare delivery with financial regulation.
The Most Important Document: The Health Care Agreement
For consumers, the most important thing to understand is this: your relationship with your HMO is governed by the Health Care Agreement.
This agreement is the contract that explains what you are entitled to, what is covered, what is excluded, and how you can avail of services. It defines your rights and the obligations of the HMO.
However, this is not just any ordinary contract. It must first be approved by the Insurance Commission before it can be used. This requirement comes from Insurance Commission Circular Letter No. 2017-19, which ensures that the terms are fair and compliant with regulatory standards.
Even more important, the Health Care Agreement cannot be changed freely by either side. Insurance Commission Letter of Opinion No. 2021-13 makes it clear that any amendment or revision must first be approved by the Insurance Commission. This means the agreement cannot be altered at the discretion of any of the parties.
Commercial Terms Are Negotiated
For corporate accounts, it is also important to understand that not all HMO plans are identical.
The commercial terms of a Health Care Agreement, including benefits, coverage limits, inclusions and exclusions, and even the type of plan, are subject to negotiation between the HMO and the corporate client. For example, a company may choose between a clinic-based plan, which focuses on outpatient services through designated clinics, and a full HMO plan, which includes broader hospitalization and specialist coverage.
Other elements such as maximum benefit limits, co-payment structures, and access to specific hospitals or doctors may also be tailored depending on the agreement reached. This is why employees from different companies may have very different HMO experiences, even if they are under the same provider.
Multiple Coverage and Why You Cannot Claim Twice
A common question among members is whether they can claim benefits from multiple providers for the same medical expense. For example, if a person has both an HMO and a separate insurance policy, or two HMOs, can they claim from both?
The answer is no, at least not for the same expense.
Even if HMOs are not insurance companies, the principle behind this rule is similar to the concept of indemnity found in insurance law. The law does not allow a person to profit from a loss. In practical terms, this means you cannot recover more than the actual cost of the medical service.
Since HMOs provide access to services, once the cost of a particular treatment has already been covered or paid through one provider, there is no remaining expense to be charged to another. Allowing multiple claims for the same service would result in an unjust benefit to the member.
This is why Health Care Agreements typically contain coordination of benefits or non-duplication provisions. These clauses prevent overlapping claims and ensure that coverage is applied only to actual, unpaid medical expenses.
The legal basis for this approach can also be traced to the Civil Code of the Philippines, particularly the principle against unjust enrichment. No person should be allowed to benefit at the expense of another without a valid legal basis.
How the Health Care Agreement Is Interpreted
When issues arise, such as disputes over coverage or benefits, the Health Care Agreement is interpreted using Philippine law.
The Civil Code applies, particularly the rules on contracts. These include principles such as the binding force of agreements and the interpretation of unclear provisions. Regulatory issuances from the Insurance Commission are also considered part of the framework, since they are effectively built into every approved agreement.
In some cases, concepts from insurance law may be used for guidance, but only when consistent with the nature of HMOs.
Deal Only with Licensed HMOs
Consumers should be mindful to deal only with HMOs that are properly licensed by the Insurance Commission.
An HMO that is granted a Certificate of Authority by the Insurance Commission has complied with regulatory requirements, including capitalization, reserve levels, corporate governance standards, and reporting obligations. This certification means that the HMO is legally authorized to operate and is subject to ongoing supervision by the regulator.
Engaging with a licensed HMO provides assurance that the company has passed regulatory scrutiny and is accountable to the Insurance Commission. It also gives members access to regulatory remedies in case of disputes or complaints.
Industry Note
As of February 20, 2026, iCare ranks 4th among HMOs in the Philippines, a significant rise from its position at no. 12 in 2018. This growth followed a strategic reset after the company was acquired by Singapore-based Value-Based Healthcare in 2023.
Conclusion
HMOs play a vital role in making healthcare more accessible in the Philippines. While they may resemble insurance companies, the law treats them differently.
They are not insurance companies under the Insurance Code, as confirmed by the Supreme Court. Their transfer from the Department of Health to the Insurance Commission through Executive Order No. 192 was meant to strengthen oversight, not to change their legal classification.
At the center of everything is the Health Care Agreement, a regulator-approved contract that defines your coverage. Understanding this framework, including plan terms, regulatory safeguards, and the limits on multiple claims, helps you better appreciate your rights as a member and how your HMO is expected to operate.
