Management of the Military Health Insurance Company: errors in both the register of the insured and in the award of public procurement. Internal control system did not work
Press release to audit 18/14 – 13 May 2019
The Supreme Audit Office examined how the Military Health Insurance Company (in Czech “Vojenská zdravotní pojišťovna” or “VoZP”) had managed resources allocated to public health insurance from 2015 to 2017. Auditors reviewed a total of CZK 3.9 billion and found a number of deficiencies. For example, the insurance company had errors in the register of the insured and claimed payments for already deceased insured persons. It had also made mistakes in the public procurement and had given some insured persons an advantage in the drawdown of prevention programmes. Furthermore, the internal control system of the insurance company did not work.
VoZP had incorrect information about the insured in its information system. For example, 24,667 insured persons were excluded from the category “reimbursed by the State” and administrated them as unclassified at the end of 2017. They were temporarily deemed to be persons without taxable income. There was no reason for that as VoZP had not received any notice from the insured about becoming such persons. This shortcoming had an impact on the premiums collected.
Auditors also found out in a sample of 156 insured persons that the insurance company registered 81 deceased persons for which they had claimed premiums over CZK 1.5 million from the state. In addition, for 41 of them, it had paid out almost CZK 112 thousand to doctors within per capita fixed payments. 14 people had become insured persons of VoZP after they had died. In the insurance company, there was no internal control system that would have detected such deficiencies.
According to auditors, the insurance company proceeded in a non-transparent and a discriminatory manner when drawing finances from the fund. For two programmes, it did not publish drawdown conditions on its website and restricted so a target group of insured persons who should have had access to these programmes. Since 2004, VoZP have paid out a total of over CZK 12 million only to some selected insured persons.
For example, within the ‘´Management Programme’, only insured persons selected by the Director General and the directors of VoZP branches had an option to draw funds on the basis of contracts concluded last in 2013. Under the ‘Prevention package’, the insurance company made a contract with one union and one employer of its insured persons. It means that only their members and staff could draw benefits, however, that package was intended mainly for soldiers deployed on foreign missions.
According to auditors, the insurance company also paid over CZK 406 thousand for analyses which did not generate any new information. Both were based on publicly available sources, on information from the insurance company’s accounts, and one also on interviews with employees. Moreover, the insurance company hardly used the results of the analyses.
Auditors also found errors in the public procurement. They examined 13 contracts and for 11 of them, they found that VoZP did not act in compliance with the Public Procurement Act. It had actually purchased services directly from suppliers and made it impossible to obtain a more convenient offer. This included, for example, a contract for the acquisition of new insured persons or a contract for legal services.
Supreme Audit Office