Financial management of the General Health Insurance Company: the most significant errors were detected by the SAO in the area of the prevention fund
Press release on Audit No 20/24 – 16 May 2022
The Supreme Audit Office (SAO) focused on the General Health Insurance Company of the Czech Republic (VZP), mainly in the period between 2018 and 2019. The auditors looked into how the VZP spent money collected from the public health insurance premiums. They also examined how the VZP used money from the basic fund, the operational fund and the prevention fund, for all of which it is laid down by law, what exactly can be funded and how. For the audit, the SAO selected a sample of money and assets worth more than CZK 22 billion. Finally, the SAO also examined how the Ministry of Health (MoH) fulfilled its obligations towards the VZP.
The audit revealed that in several cases the VZP acted in a non-transparent and discriminatory manner in the area of the prevention fund. It also paid for projects that were not supposed to be covered by the prevention fund. Furthermore, the VZP has failed, over a long period of time, to manage some of its claims.
The most significant weaknesses were found by the auditors in the prevention fund. For the years 2018 and 2019, the VZP paid almost CZK 59 million to a supplier, who provided remedial holidays by the sea for children, however the VZP should have excluded this supplier from the public tender. For example, the supplier breached the terms of the tender specifications. The supplier also provided false information in the tender, which the VZP found during an inspection prior to the conclusion of the contract. The VZP nonetheless concluded a contract with this supplier. The VZP thus acted in a non-transparent manner and discriminated against other bidders.
Furthermore, the VZP financed with the prevention fund at least two pilot projects amounting to more than CZK 1.3 million which, according to the law, were not to be covered by the fund. These projects produced scientific publications, reimbursement calculations and an app called IBD assistant. In addition, under the IBD assistant project, the VZP paid CZK 182,000 for 53 persons who were clients of other insurance companies. In addition to healthcare, insurance funds can only pay for health services that have a demonstrable preventive, diagnostic or therapeutic effect. In this case, research and development was covertly funded by the VZP.
The auditors also focused on the so-called Basic Health Insurance Fund. It is the financially most important fund, with more than CZK 227 billion managed by the VZP in 2020 alone. It is mainly used to cover medical services provided to insured persons. By checking a sample of reimbursements, the SAO found only a few partial weaknesses. For example, between 2010 and 2019, the VZP unduly paid CZK 672,000 to health centres for death-related benefits for 362 living insured persons.
However, the auditors also described a systemic problem of the poor management of claims by the VZP. For example, the VZP did not enforce premiums and penalties amounting to more than CZK 13 million from eight debtors. It also recorded extinguished and unenforceable debts as old as 25 years. In 2019, these were claims worth almost CZK 20 million against 275 insurance payers. This is a long-standing issue which the SAO had already raised during its audit in 2010.
Some of these problems could be avoided if the VZP had a sufficiently functioning internal control system to detect irregularities and errors in a timely manner.
At the same time, the SAO verified that the MoH fulfilled its obligations to the VZP and carried out a total of nine inspections at the VZP between 2018 and 2020.
Communication Department
Supreme Audit Office