The SAO audited the Czech Industrial Health Insurance Company

PRESS RELEASE on Audit No. 13/22 – June 23, 2014

The Supreme Audit Office (SAO) scrutinized the Czech Industrial Health Insurance Company (CIHIC) and its management with public funds collected under the law within the period 2009–2012. Auditors also scrutinized the acquisitions of other health insurance companies. The CIHIC was established in 1992 under the name “Metallurgical Employees’ Health Insurance Company”, which successively merged three other employees’ health insurance companies: AGEL, the Czech National, and METAL-ALIANCE health insurance companies. In 2012, the total amount of collected insurance payments exceeded CZK 16,600 million and health care costs made more than CZK 16,000 million. By the end of 2012, the number of persons insured with the CIHIC was 1 171 395.

There are no legally defined criteria for merging of health care insurance companies, namely for assessing the purposefulness of such process with respect to public interests. When comparing 2010 and 2011 expenses with total operating expenses of the individual health care companies in previous years, there was a proclaimed decrease.

Since 2006, health care insurance plans, which were suggested by the Metallurgical Employees’ Health Insurance Company (later the CIHIC), have not been approved by the Chamber of Deputies in due time or at all. It means that during the period when its health care insurance plan was not approved, the CIHIC’ management of its funds was provisional.

During the control of payments for selected health care operations it was revealed that the CIHIC had made agreements with health care providers about settlements and reference periods, which differed from the reimbursement regulation decree of the Ministry of Health. Such procedures are enabled by the legal regulations in spite the risks involved in the practice. Such extent of using this procedure was not noticed during previous SAO’s auditing operations. The CIHIC also made individual provisions concerning further increases in reimbursements with some health care providers beyond the scope of previously concluded agreements.

Health care insurance companies are allowed to conclude any kind of price agreements without limitations or special conditions, which the SAO finds high-risky. This procedure, which is allowed by the effective statutory instruments, lacks transparent rules and enables the health care insurance companies to take rather subjective approaches to individual health care providers.

The auditors also revealed that the CIHIC had repeatedly used its basic funds to cover health care operations, which at the time were not included into the list of marked operations mentioned in the decree of the Ministry of Health.

The CIHIC implemented the project of systematic integrated health care, which required increasing of payments to general practitioners for administrative (not health care) operations by CZK 36.5 million, which violated the law. The CIHIC originally drew the amount from the basic fund and later entered the record on the operational account. The SAO considers this practice problematic as utilising basic funds for various projects is not supported by the law.

When collecting insurance payments, the CIHIC applied approaches similar to the health insurance companies, which had earlier been audited by the SAO: For example, inspections of insurance payments received were made in rather large periods, which the SAO finds problematic as it decreases the rate of successful collection of debts. The CIHIC also failed to use all methods of debt collection that were defined by the law.

Communication Department
Supreme Audit Office

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