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7.1 Objective 1 - Compliance with Governing Authorities

7.1.1 Eligibility for Veterans Health Related Travel

The auditors observed varying interpretations for the eligibility for health related travel travel. Section 3 of the VHCR stipulates that clients, other than those in receipt of a disability pension or a disability award, are eligible to receive treatment benefits to the extent that the treatment benefits are not available to them either as insured services under a provincial health care system or as members or former members of the Canadian Forces. Section 6 of the VHCR stipulates that clients who receive treatment benefits are eligible for reimbursement of the costs of travel incurred by the client who travels to receive those treatment benefits. To the extent that a client is receiving "treatment benefits" either from the Canadian Forces or from a province as a provincially insured service, then that client is not eligible to receive the treatment benefit pursuant to the VHCRs. In summary, a client is eligible for the supplementary travel benefit if the client is receiving the treatment benefit either (I) if it is in respect of a pensioned condition; (ii) if it is not available to them from the Canadian Forces or (iii) it is not available to them as an insured service from a province.

Other interpretations of the VHCR, and the interpretation that was often observed over the course of the audit, have been that the Department is responsible for a client's travel to any health treatment, irrespective that the Canadian Forces or a province is responsible for the benefit payment and not the Department. Indeed, the VPPM, Section 2.3.1, Subsection 3.1 states "In order to receive the costs of health related travel from the Department, clients must be in receipt of treatment benefits that are authorized by the Department" where the term "authorized" has been interpreted to mean that the Department recognizes the treatment benefits as one which is described in paragraph 4(a) and (b) and but for the fact it is provided by the Canadian Forces or the province, would be covered by VAC. However, the word “authorized” is not found in the Regulations.

The exact number of travel claims submitted by clients for provincially insured health services and in respect to treatment benefits available to them as a member or former member of the Canadian Forces is not known, but could be substantial. The claim forms do not distinguish if the service was provincially insured or reimbursed by the Canadian Forces. The most likely persons in receipt of health related travel for provincially insured services are VAC's B clients because there is no requirement to link to a pensioned condition. 39% of the 12,870 clients who were issued cheques through FHCPS from February through May 2009 were "B" clients, and comprised approximately 60,300 transactions and $2.3 million in transactions. This is not to say that all these transactions were submitted for provincially insured services. The auditors found instances where travel was provided for provincially insured services, however, additional audit tests were not conducted to compute the extent of the situation.

The business processes and guidelines for health related travel provide no guidance to employees on eligibility of B clients and therefore districts and regions are left with their own interpretations of eligibility. The description of services on VAC's internet site clearly indicated that "B" clients are eligible for health care benefits " . . . provided you have a clearly demonstrable need and these benefits are not covered by your provincial health plan." (http://www.veterans.gc.ca/eng/services/health/treatment-benefits/poc#poc2)

Recommendation 1 (Critical)

It is recommended that the Director General, Service Delivery Management, in consultation with Legal Services Unit and the Director General Program Management, clarify the eligibility of clients to receive reimbursement for travel to provincially insured services and communicate the results to those responsible for processing and approving health related travel.

Management Response

Management agrees that clarification is required with respect to the eligibility of clients to receive reimbursement for travel to provincially insured services and that this information needs to be communicated to those responsible for processing and approving health related travel.

A policy interpretation has been provided on this issue and further discussions are taking place to consider impacts of each on the Health Related Travel Program.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
Confirm the policy interpretation of the Veterans Health Care Regulations with respect to client eligibility to receive reimbursement for travel to provincially insured services. SDM with Program Management and Legal Services March 2010
Analyze impact of the policy interpretation and the legal opinion on Health Related Travel program. Program Management September 2010
Develop options for program direction & finalize program directive. Program Management October 2010
Communicate to staff and clients. SDM October 2010

7.1.2 Five Dollar Taxi Deductible

The VHCR stipulates that a $5.00 deductible must be paid by clients when using a taxi as a mode of transportation. There are, however, three exceptions where the deductible may be waived. These are the following:

  1. if the client's mobility or cognition is severely impaired;
  2. if the deduction would seriously impede the client's ability to access treatment benefits; or
  3. in the case of a transfer between health care facilities.

A directive issued on August 15, 2007 instructs employees to waive the deductible if there "might be a negative impact on the client's ability to access their necessary treatment benefits," which has different meaning than the legislation. The legislation stipulates the deduction may be authorized if "the deduction would seriously impede the client's ability to access treatment benefits." The directive has been interpreted to mean that the vast majority of taxi deductibles should be waived, without a determination of a serious impediment to accessing services. In addition, the directive has been reproduced in the Department's Veteran Program Policy Manual under Section 2.3.1.

The auditors reviewed 80 clients who claimed a taxi in February through May 2009 and found that 80% of the clients had a taxi waiver on file. Further, the taxi waivers were often not linked to individual treatment benefits, but rather were waived in all instances and for a blanket period of time. The most common reason for taxi waivers was financial hardship for clients attending frequent appointments.

In addition to the ambiguous waiving of the taxi deductible, there were instances of informal arrangements with transportation companies. The billing from these transportation companies is often not adequate enough to determine if the company charged the client the deductible. Since VAC is not able to determine if the deductible had been applied by the transportation company, VAC may not be recovering the deductible from the client and, therefore, may be waiving the taxi fee without any determination of the necessity of the waiver. Additionally, there is not direction on the criteria developed to ensure the consistent application of the taxi deductible. Criteria should be developed to ensure the proper compliance with the VHCR.

Recommendation 2 (Essential)

It is recommended that the Director General, Program Management, in consultation with Legal Services Unit, the Director General, Service Delivery Management and the Director General, Finance Division, provide functional direction on waiving the taxi deductible, including the criteria required to approve waiving the fee and communicate the results to staff responsible for processing and approving health related travel.

Management Response

Management agrees with the recommendation. A program directive was issued on December 2, 2009 from the Director General, Program Management to the Director General, Service Delivery Management, reiterating the criteria in regulation by which the taxi deductible may be waived and clarifying staff requirement to document the decision to support waiving the fee. This directive is currently with the Service Delivery and Commemoration Branch for distribution to appropriate staff.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
Audit and Evaluation Division will follow up with the Director General, Service Delivery Management, to determine if the directive has been communicated to staff. DG, SDM February, 2010

7.1.3 Financial Directives, Policies and Authorities

The audit conducted a review of a sample of transactions in FHCPS to determine the degree of compliance with governing authorities for that benefit code. The audit did not assess compliance for taxis or eligibility due to the issues stated in Sections 7.1.1 and 7.1.2. The auditors supplemented their findings with the Department's post payment verification reports.

The post payment verification results for the past several years have been consistently higher than the maximum tolerable limit (4%). For 2008, the error rate was 31%; for 2007, the error rate was 25%. There were several instances of noncompliance with TBS Directives. Regional and district offices that have more robust account verification, and where employees understand their responsibilities under the Financial Administration Act (FAA), have fewer errors.

VAC's Finance Division, through its post payment verification process, has highlighted a number of errors and noncompliance. For the 2008 calendar year, the error rate was 31% and the errors were mostly relating to either incorrect payment amounts (13%) or inappropriate supportive documentation (15%). Incorrect payment amounts were largely human error and related to using incorrect kilometric or escort rates. Errors due to inappropriate supportive documentation were largely due to agreements with taxi companies to bill for costs of transportation to medical appointments, where no proof of attendance at that appointment was provided. This type of error comprised 9% of the total error rate. As mentioned in section 7.1.3, the taxi deductible may or may not have been paid. The post payment verification report indicates that this error will cease when the standing offer with the taxi company expires, but this is not the case because there continue to be informal agreements with transportation companies, including taxis.

The inability to provide source documentation in a timely manner points to a control weakness in the management of financial records. Due to the inability of the auditee to provide source documentation in a timely manner, the auditors were unable to examine the informal agreements with transportation companies in more depth; for example, to understand how the informal agreements function in the district offices and wether they are in accordance with contracting and procurement policies. In addition, source documentation was requested for transactions to deceased clients and the auditors were unable to test the controls in place to ensure that they are functioning appropriately.

TBS's Directive on Account Verification outlines the responsibilities for account verification by individuals responsible for certification under section 34 of the FAA. In instances where there are charges not payable under the VHCR, employees are instructed to pay the full amount to the client and then issue a letter indicating that the ineligible service will not be reimbursed in future. The practice of paying for ineligible items is not in compliance with the TB Directive on Account Verification, which instructs section 34 of the FAA officers to remove the ineligible item from the request for payment.

The review of transactions for the audit used a different sampling methodology than the Finance Division's post payment verification and therefore the national results are not directly comparable. However, the results are supportive of Finance Division's findings. The overall error rate observed by the audit team was approximately 12%. The errors were mostly due to no record of authorization for the service paid or lack of proof of attendance at a medical appointment. These errors are human errors made by those responsible for certifying section 34. The errors could also be due to a lack of verification by those processing the claims, but it is ultimately the section 34 officer who is responsible for ensuring the request for payment is correct.

Treasury Board's Directive on Account Verification indicates that the chief financial officer is responsible for documenting and communicating account verification management practices and controls to individuals and financial officers responsible for certifying payments and settlements. The Directive further states chief financial officers are to ensure corrective actions are taken to address instances of noncompliance. Corrective actions can include additional training, changes to procedures and systems, the suspension or removal of delegated authority, disciplinary action, and other measures as appropriate. Interviews with staff completing account verification indicate that they were not in possession of any documentation in terms of their responsibilities and requirements for account verification. The implementation of standard QA policies and processes for account verification would reduce errors. This process is especially important since the error rates have been outside the tolerable limit for a considerable length of time. The implementation of systems changes could also improve the error rates and improve efficiencies (refer to Section 7.3.3).

There are a number of informal agreements with transportation companies. The file review found the majority (65%) of invoices from third parties were processed without confirmation that the transportation was health related. The invoices were submitted and paid without adequate proof that the services were in fact rendered and that they were rendered for health related travel expenses. This process must be reviewed and corrective action taken.

Recommendation 3 (Critical)

It is recommended that the Assistant Deputy Minister, Corporate Services Branch, in consultation with the Director General, Service Delivery Management:

  • document procedures for account verification in the districts and regions;
  • develop a process for quality assurance of account verification (Section 34 of the FAA);

Management Response

Management agrees.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
A checklist for use by those performing account verification has been developed and feedback received from Regional Internal Control Officers. Consultation to take place with SDC to determine how to introduce the requirement to complete the checklist to the operational staff. ADM, CS
(DG, FIN)
DG, SDM
Feb 28, 2010
Quality assurance of the account verification process is undertaken through monthly sampling, and monthly reports are issued to all interested parties. ADM, CS
(DG, FIN)
DG, SDM
Jan 8, 2010

Recommendation 4 (Essential)

It is recommended that the Director General, Finance Division, in consultation with the Director General, Service Delivery Management, review informal transportation agreements to ensure that direction is provided on the appropriate source documentation required prior to certifying Section 34 of the FAA and ensure appropriate quality assurance occurs.

Management Response

Management agrees.

Management Action Plan

Management Action Plan
Corrective Actions to be taken OPI (Office of Primary Interest) Target Date
A checklist for use by those performing account verification has been developed and feedback received from Regional Internal Control Officers. Consultation to take place with SDC to determine how to introduce the requirement to complete the checklist to the operational staff. The checklist sets out the requirements for source documentation with no regard to any differences in the payee or service provider. DG, FIN

DG, SDM
Feb 28, 2010
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