Filenews 4 February 2022 - byNikoletta Kourousi
The Auditor General is sounding the alarm about the way the HIO operates, which is directly related to the sustainability of the General Health System.
As recorded in the report of the Management Audit of the Health Insurance Organisation, there is a dramatic increase in expenditure, disproportionate to the growth of GDP.
"Essentially, the HIO, taking advantage of the increase in its revenues, has tolerated and/or allowed the expenditure side to skyrocket, to such an extent that they are disproportionate even to this increase in revenues, resulting in a violation of the GHS Law and acting on the basis of a deficit Budget", the report states, among others.
Therefore, as noted, "the HIO must appropriately reduce the various global budgets and then adjust the remuneration of services accordingly, in order to eliminate the deficits.
It is also clarified that "this reduction should be of the total order of 20%, but may be different in the different services", indicating that "if this is not done by the HIO, it is our opinion that it should be imposed by the state, i.e. by the Council of Ministers, during the approval of the Budget and then by the House of Representatives".
There are abuses, distortions and inefficiencies that threaten the GHS, which can only be addressed, as the Audit Office points out, by taking serious preventive and suppressive measures. "This issue is extremely degraded by the HIO," the Audit Office estimates.
It concludes that the viability of the HIO is guaranteed as long as the state, albeit illegally, will cover its deficits, which places a significant burden on public finances.
It also notes that the practices applied by the HIO, with regard to its agreements with private hospitals, are completely opaque and are not based on objective criteria. And warns that the inadequacy of the controls carried out does not ensure the correctness of the payments to the healthcare providers, stressing the urgency of strengthening without delay the public governance and internal control of the HIO.
Below are the main findings of the Audit Office:
Article 22 of the GHS Law sets June 1, 2020 as the date of commencement of the provision of inpatient care, as well as various health care services, the provision of which began with a long delay:
In addition, the Health Insurance Organisation (HIO) has so far refused to cover the expenses paid by the Ministry of Health for referrals of patients abroad, as well as the expenses paid by the Ministry for referrals of patients to private sector hospitals in Cyprus for services not covered by the hospitals with which the HIO has contracted.
A similar issue arises for expenses for the purchase of medicines.
Moreover, the HIO refuses to pay to the State Health Services Organization (CYSO) the full costs it incurs for various health care services, such as, inter alia:
Services provided at the Kyperounta Rural Hospital and Centres
Primary care of remote or sparsely populated areas.
Pharmacies at Polis Chrysochous Hospital and 15 Health Centres in Remote Areas.
Thalassaemia Center and Thalassaemia clinics in every city.
Dialysis Clinics in all hospitals.
Paediatric Neurology Clinic at Makarios Hospital.
AIDS Clinic.
Mental health clinics in hospitals (the GHS Law excludes only the chronic psychiatric institutional or compulsory care, which is provided under the provisions of the Psychiatric Hospitalization Law).
HIO contracts with hospitals for the provision of inpatient health care within the GHS framework.
a. Opaque contracts with different fees for similar services.
According to the GHS legislation, the procedures for the remuneration of hospitals contracted with the HIO for the provision of inpatient health care, as well as the way they are remunerated (groups of congenital diagnoses or other methods) should be determined by Regulations to ensure transparency.
Instead, the HIO follows a policy of opacity and has concluded contracts with the hospitals, on the basis of arbitrary and non-objective criteria, with different unit prices for each hospital, even determining the volume of work that will be carried out by each hospital for which it guarantees the unit price.
b. Illegal imposition of a direct charge on GHS beneficiaries for services provided to them by hospitals that have contracted with the HIO
The HIO, with its relevant circular, dated. 23.7.2020, determined that a contracted hospital is entitled to provide services to a GHS beneficiary and he to pay directly the hospital, because supposedly this will be a service that is not provided under the GHS.
This is manifestly illegal.
c. HIO payments that go to non-GHS doctors
The HIO accepted, until recently, that a doctor who is not contracted with the GHS provides inpatient services in a contracted hospital and "simply its services will be considered outside the GHS and will not be reimbursed by the GHS". Moreover, the HIO, in writing and officially, admitted that through the contracted hospitals, knowingly and with its own explicit consent, HIO money ended up with doctors who are not contracted with the GHS. This is manifestly illegal. Recently, he seems to have left that position.
Given that, in our letters, we are dated. 15.7.2020, 30.9.2020 and 30.8.2021, we had pointed out to the HIO the fact that it acts in blatantly and blatantly violating fundamental provisions and the whole philosophy of the GHS Law, without the HIO taking measures to comply with the legislation, we have brought to the attention of the Attorney General all the above, so that, exercising its constitutional powers, it can decide whether there is a need to investigate the possibility of committing, by Ann. General Manager of the HIO or by any other person, of any offense.
Amount of HIO revenue and expenditure
The actuarial study of MERCER, carried out on behalf of the Ministry of Health, was updated in 2013.
It was based on specific assumptions and came up with specific forecasts regarding national health expenditure.
In relation to the basic assumptions regarding the course of Gross Domestic Product (GDP) and unemployment, the reality proved to be more favourable, compared to the two basic scenarios adopted by MERCER.
This picture was not reversed, not even because of the 2020 recession, as a result of the pandemic. Therefore, the projection of the pandemic as an alibi for any problems in the HIO is not documented.
From the comparison of the HIO's revenues that had been forecast by MERCER, in relation to the actual revenues, it is obvious that, on the one hand, the increase in GDP and, on the other hand, the fact that the actuarial study of the house was, as it seems conservative, led in practice to a very large increase in the HIO's revenues, of the order of 30%, in relation to the revenues projected in the study.
The larger increase in GDP (compared to mercer's forecasts) was bound to bring about some increase in the demand for medical services (and thus in the HIO's expenditure), but this increase was not expected to be at the same rate as the increase in revenues.
In practice, what we are seeing is a dramatic increase in expenditure, disproportionate to gdp growth. In fact, the HIO, taking advantage of the increase in its revenues, has tolerated and /or allowed the expenditure side to skyrocket, to such an extent that they are disproportionate even for this increase in revenues, thus violating the GHS Law and acting on the basis of a deficit Budget.
Our Service considers important the provision of subsection (3) of article 48 of the GHS Law that "the expenses of the Organization shall not exceed its revenues."
Therefore, the HIO must appropriately reduce the various global budgets and then adjust the remuneration of services accordingly in order to eliminate deficits. This reduction should overall be of the order of 20% but may be different in different services.
Since this is not done by the HIO, it is our view that it should be imposed by the state, i.e. by the Council of Ministers, during the approval of the Budget and then by the House of Representatives.
Abuses and other forms of improper financial management
Generally
Fraud, abuse, distortions and inefficiencies are inherent weaknesses of every national health system.
The Report lists the risks threatened by the GHS, which can only be addressed by taking serious measures to prevent and suppress abuses, distortions and phenomena of fraud and corruption.
As shown below, this issue is extremely degraded by the HIO.
Personal Doctors (PD) for 2020
➢ On 31.12.2020 there were 998,391 beneficiaries registered with the GHS with 774 personal doctors.
➢ For 2020, the total compensation of PDs amounted to €84,630,601 or an average of €109,342 per doctor. An amount of €1,800,500 concerns compensation for births, €451,740 compensation for recording patients' medical history and €557,889 compensation for vaccination of patients.
➢ The remuneration of a personal doctor for children reached €421,283.
➢ 28% of PDs had more than 2,000 beneficiaries registered each.
➢ 11.8% of PDs are over 70 years old, with the oldest one being 83 years old.
Medical Specialists (OS) for 2020
➢ On 31.12.2020 there were 1,514 OS registered with the GHS.
➢ The total amount of compensation of specialists for 2020, for outpatient health care services, amounted to €116,762,682 or an average of €77,122 per doctor.
Of these, 440 doctors are registered as legal entities.
➢ Sixty-seven (67) EI had earnings in excess of €300,000, of which 37 were legal persons, one was a doctor of the CySEC and 29 natural persons. Several of them had not filed a tax return for the years 2018 and 2019, while those who had filed a tax return for the years 2017, 2018 and 2019, their declared income was clearly lower than what they received from the HIO.
➢ Eleven (11) Institutions had incomes above €500,000 in 2020. The highest fee of an OS was €870,742. A pair of gynaecologists received together in 2020 a fee of €1.4m. for outpatient health care services only.
Hospitals
The HIO has agreed with each hospital a different number of units (volume of work to be carried out by each hospital for which the HIO guarantees the unit price) and a different unit price. The annual total number of units was agreed with the hospitals when the HIO requested and secured information on their turnover for inpatient care services for the year 2018. As we found out, several hospitals, as shown below, greatly increased their revenues, compared to the pre-GHS era for the provision of these services.
The 20 largest in compensation (in 2021) private hospitals had an increase of 46%, compared to the declared cycle of inpatient services in 2018, without even taking into account for 2021 the revenues from the provision of health care services to non-GHS beneficiaries (e.g. foreign nationals) and /or GHS beneficiaries from whom they illegally (but with the tolerance of the HIO) received remuneration.
Check payment claims from providers.
a. Control rate of payment claims
The audit of payment claims is carried out on a random basis at a rate of 3% of the total claims.
The percentage of payment claims, which were rejected for the period 6/2019-10/2021, in relation to the audited payment claims ranges between 0% to 1.21%.
In October 2021, 1,339,935 payment claims were submitted. Of these, 40,196 claims were checked and 248 were rejected. This means that 3% of the claims were checked and 0.02% of the claims submitted were rejected.
The main problem seems to be the absence of dissuasive penalties, which is necessary in any system based on random rather than 100% control.
Internal Audit Issues
In an organisation with an extremely high degree of inherent risks for abuse, fraud, corruption and inefficient procedures, such as the HIO, strong internal control is a sine qua non.
We have observed that, in relation to its size and the inherent risks, internal control in the HIO is extremely degraded and under-staffed.
Supply of consumables
The Tenders Council of the Ministry of Health cancelled an open tender for the supply of consumables for a hospital of the CySO, after the intervention of the HIO, since the consumables will be compensated through a list of the HIO, based on its current procedures.
On the legality of the whole process, we requested the views of the Treasury of the Republic, as the Competent Authority for Public Procurement and the CySEC, the answer of which is pending, although about five and 14 months have elapsed, respectively, since they were requested by our Service.
General recommendations
Almost three years after its entry into operation, the GHS, apart from the many positives brought about by its introduction, is becoming a source of fiscal risk for public finances and a field of serious abuses against the taxpayer's money.
The recommendations contained in this Report revolve around the following axes:
a. The HIO should provide all the services provided by the GHS Law and bear any expenses related to these services.
b. The HIO must strictly comply with the GHS Law. The observance of legality by any public body in any case is a sine qua non for an organisation which will have to combat generalised abuses.
c. The HIO should understand that the abuses concern the HIO itself. The HIO's position publicly expressed that, due to the overall budget, abuses by one provider concern the other providers of the same category and not the HIO, is the main source of the problem of the non-decisive fight against abuses. To that end, controls should be stepped up and dissuasive penalties should be imposed.
d. The HIO must balance its Budget, starting from the 2022 Budget. If it fails to do so, the Council of Ministers and the House of Representatives will have to enforce it through the approval of its Budget.
