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1.0 Background

1.1 Introduction

The Federal Health Claims Processing System (FHCPS) is the automated system that processes health claims for three government departments: Veterans Affairs Canada (VAC), the Department of National Defence (DND) and the Royal Canadian Mounted Police (RCMP). To administer this large and complex system, Public Works and Government Services Canada contracts the services of a private health insurer, Medavie Blue Cross (MBC). MBC has 170,000 health care providers registered to deliver benefits and services to Veterans.

Of the three departments, VAC is the largest user: its claims account for 87% of the claims. In 2010/11, 13.5 million transactions were processed for over 100,000 eligible VeteransFootnote1 valued at over $640 million. These claims related to two programs: Treatment Benefits and Veterans Independence.

The Treatment Benefits Program provides the health care benefits and services that Veterans require. Benefits and services are made available through fourteen Programs of Choice (POC), which allow Veterans to obtain their benefits from the health care provider of their choosing. The following are the services provided under the fourteen POCs:

  • Aids to daily living
  • Ambulance/Health Related Travel
  • Audio services
  • Dental services
  • Hospital services
  • Medical services
  • Medical supplies
  • Nursing services
  • Oxygen therapy
  • Prescription drugs
  • Prosthetics and orthotics
  • Related health services
  • Special equipment
  • Vision care

For more detail on the POCs and associated annual expenditures see Appendix A

The Veterans Independence Program (VIP) is designed to help Veterans remain healthy and independent in their own homes and communities. To this end, the VIP provides Veterans the financial assistance to obtain the services they need. The VIP is tailored to their individual needs, and is divided into nine "service elements":

  • Personal care
  • Housekeeping
  • Access to nutrition
  • Grounds keeping
  • Health and support
  • Ambulatory health care
  • Transportation
  • Home adaptations
  • Nursing-home care

In 2005/06, VAC conducted an internal audit of the FHCPS contract. One of the objectives of this audit was to assess the adequacy of the NIU's operations and audit results identified several opportunities to improve operations. In 2007, amendments were made to the FHCPS contract. One of these amendments revised the billing for resources in the NIU. Prior to this contract amendment VAC paid for 4 resources with additional resources provided as required. Following the 2007 contract amendment, there are now 10 full-time resources comprised of management, investigators and analysts. In addition, all recommendations from the 2005/06 internal audit of the FHCPS contract have been addressed.

1.2 Overview of the National Investigative Unit

The National Investigative Unit (NIU) provides investigative services for the over 170,000 health care providers registered with MBC. This unit is part of MBC with direction provided from VAC, DND and the RCMP. The NIU conducts various activities to ensure that its health care providers are complying with the requirements. These activities include:

Profiling Activities

This is various forms of data analysis used to initiate investigations. The primary focus of profiling is prescription drugs to analyze high dollar payments and billing practices to identified potential duplicate invoices, overcharging or even fraud. The results of this data analysis will determine if a mail audit or on-site audit is required.

Client Verification Letters

In 2010/11, 21,000 letters were mailed to Veterans requesting them to verify that the benefit or service was provided. If the Veteran's response to the letter indicates that he or she did not in fact receive the goods or services, or not for the price indicated, the NIU will investigate further and potentially initiate a mail audit or on-site audit.

Mail Audits

Letters are mailed to health care service providers requesting them to submit additional documentation to support a claim submitted. All mail audits are subject to VAC approval prior to initiation. Between April 1, 2007 and March 31, 2011, 475 mail audits were conducted; however, in 2009/10 and 2010/11 a special project of 345 mail audits were conducted to further investigate billing discrepancies for hearing aid batteries. This particular project resulted in over $1 million in identified recoveries.

On-site Audits

In some cases, an investigator will travel to the health care provider's business to meet with the staff and review the supporting documentation on location. These on-site audits are generally reserved for providers with higher volume providers. All on-site audits are subject to VAC approval prior to initiation. Between April 1, 2007 and March 31, 2011, 197 on-site audits were conducted. The main purpose of these on-site audits is to identify any funds that were inappropriately paid to health care providers. But they serve other purposes as well. In addition, these are an opportunity to educate providers on billing requirements and program components and to provide a deterrent effect against fraud, since providers are made aware that their billing practices are being reviewed.

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