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Executive Summary

The Federal Health Claims Processing System is the automated system that processes health claims for Veterans Affairs Canada, the Department of National Defence and the Royal Canadian Mounted Police. To administer this large and complex system, Public Works and Government Services Canada contracts the services of a private health insurer, Medavie Blue Cross. Of the three departments, Veterans Affairs Canada is the largest user accounting for 87% of the total volume of claims processed. In 2010/11, there were 13.5 million claims processed for Veterans Affairs Canada at a value of $640 million.

To protect the financial integrity of the claims processed, Medavie Blue Cross is contractually obligated to conduct investigative services of the 170,000 health care providers registered to deliver benefits or services to Veterans. The National Investigative Unit, within Medavie Blue Cross, conducts various audit activities to ensure that the health care providers are complying with the requirements. These activities include:

  • analyzing claims data to identify providers whose billing practices may not comply with the requirements;
  • distributing letters to Veterans to verify that benefits and services billed were actually received;
  • mail audits requesting providers to submit additional documentation to support a claim submitted; and
  • on-site audits where investigators will travel to the health care provider's business to meet with the staff and review the supporting documentation on location.

The purpose of these audit activities is to identify potential recoveries, educate health care providers on the billing requirements and act as deterrent to improper billing practices.

In 2005/06, Veterans Affairs Canada conducted an internal audit of the Federal Health Claims Processing System contract. One of the objectives of this audit was to assess the adequacy of the National Investigative Unit's operations and audit results identified several opportunities for improvement. Since the 2005/06 audit, the contract has been amended and all recommendations have been addressed.

The purpose of this audit was to conduct a more detailed assessment of the National Investigative Unit's operations to determine whether there is an effective planning process, adequate management of collectibles and if resources are effectively expended. This audit focused on the operations of both Medavie Blue Cross and Veterans Affairs Canada but did not assess activities related to the Department of National Defence and the Royal Canadian Mounted Police. Planning commenced in October 2011 with the analysis completed in May 2012.

Overall results

In the opinion of the audit team, the operations of the National Investigative Unit have made progress since the 2006 audit. The planning process was found to be well developed, Medavie Blue Cross was meeting all contract requirements and resources were effectively expended. However, the audit did identify some areas for improvement as it relates to governance within Veterans Affairs Canada and the process for reporting and collecting recoveries. Overall, the activities were determined to be "Generally Acceptable" with no significant weaknesses identified.

Recommendation 1: The Director General, Service Delivery and Program Management Division, collaborate with Medavie Blue Cross to develop a multiyear plan that includes enhanced audit coverage of the Programs of Choice. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
Service Delivery and Program Management Division will, in partnership with the DND and the RCMP, work collaboratively with Medavie Blue Cross to develop a multiyear audit plan with enhanced audit coverage of the Programs of Choice which will meet the needs of all three partner departments. Service Delivery and Program Management Division April 2013
Recommendation 2: The Director General, Service Delivery and Program Management Division and the Director General, Finance Division, determine the reporting requirements and ensure these reports are shared with staff who require the information to monitor and provide direction to the National Investigative Unit. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
Service Delivery and Program Management Division, in collaboration with MBC and Finance Division, will determine the reporting requirements and update the list of individuals who require these reports. Service Delivery and Program Management Division and Finance Division April 2013
Recommendation 3: The Director General, Finance Division, direct Medavie Blue Cross to return all stale-dated cheques on a quarterly basis. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
In consultation with Service Delivery and Program Management Division, MBC will be advised verbally to return funds from stale-dated cheques on a quarterly basis. Finance Division May 2012
Confirm in writing to MBC the requirement for the contractor to return funds from stale-dated cheques on a quarterly basis. Finance Division July 2012
Recommendation 4: The Director General, Service Delivery and Program Management Division, in consultation with the Director General, Finance Division, institute a process for aged files to either collect the money in a timely manner or to take action to close the files. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
Service Delivery and Program Management Division will work closely with Finance Division to outline a process to ensure the collection of monies and/or closure of files in a timely manner. Service Delivery and Program Management Division and Finance Division December 2012
Recommendation 5: The Director General, Service Delivery and Program Management Division, in consultation with the Director General, Finance Division, improve the Client Verification Letters process to enhance its value. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
Service Delivery and Program Management Division will work with MBC to refine the current Client Verification Letter process by:

  • Setting a dollar threshold for sending client verification letters.
  • Targeting client verification letters in line with the enhanced POC coverage in lieu of a generic random sample.
Service Delivery and Program Management Division September 2013
Service Delivery and Program Management Division will work with MBC to establish an appropriate turnaround time for mailing Client Verification Letters. Service Delivery and Program Management Division October 2013
Recommendation 6: The Director General, Service Delivery and Program Management, and the Director General, Finance Division, direct Medavie Blue Cross to review the content of audit results letters to ensure the appropriate terminology is used and applied, and appropriate action is taken in instances beyond basic noncompliance issues. (Essential)
Corrective Action to be taken Office of Primary Interest (OPI) Target Date
Service Delivery and Program Management Division will engage MBC in reviewing and adjusting the current on-site audit process including the current threshold for initiating an on-site audit to ensure continued relevance and effectiveness. Service Delivery and Program Management Division December 2012
Service Delivery and Program Management Division will engage MBC and VAC Finance Division to develop standardized terminology and letter formats to communicate audit results and outcomes to VAC providers. Service Delivery and Program Management Division and Finance Division April 2013
Service Delivery and Program Management Division and Finance Division, in collaboration with MBC will develop a process for resolving individual audit findings in an effective and appropriate manner. Service Delivery and Program Management Division and Finance Division June 2013

Statement of Assurance

In the professional judgment of the Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support with a high level of assurance the accuracy of the audit opinion provided in this report. This audit opinion is based on a comparison of the situation at the time of the audit and the pre-established audit criteria that were agreed on with management. The audit opinion is only applicable to the entity, process and system examined. The evidence was gathered in compliance with Treasury Board policy, directives, and standards on internal audit and the procedures used meet the professional standards of the Institute of Internal Auditors. The evidence has been gathered to be sufficient to provide senior management with a high level of assurance on the audit opinion.

Chief Audit Executive’s Signature

Original signed by
Murielle Belliveau
Chief Audit Executive

Date
July 3, 2012

The audit team consisted of:
Jonathan Adams, Director, Audit and Evaluation Division
Michael Spidel, Audit and Evaluation Manager
Adrianne Van Lunen-Gallant, Audit and Evaluation Officer
Sivajan Nagulesapillai, Audit and Evaluation Officer

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