Audit of the Control Framework for the Interim Federal Health Program

Final Report
Internal Audit and Disclosures Branch
Citizenship and Immigration Canada
April 21, 2004

Table of Contents

• Executive Summary
• Introduction
  • Audit objective
  • Audit scope
  • Audit approach
  • Environment and background
• Audit Findings and Recommendations
  • Line of enquiry 1: Governance and strategic direction
  • Line of enquiry 2: Risk management
  • Line of enquiry 3: Procurement/contract
  • Line of enquiry 4: Project management
• Conclusion
• Appendix: Management Action Plan

Executive Summary

The Interim Federal Health (IFH) Program is a health-care program managed by Citizenship and Immigration Canada (CIC). The majority of IFH program beneficiaries are refugee claimants at various stages of the claims or appeals processes. The program covers emergency and essential medical, dental, vision and prescription costs. The total number of claims paid by the program in 2002–03 was 699,068, and the total approved funding was $50.6 million. Authority for the program comes from a 1957 order-in-council.

The IFH program was transferred to CIC from Health Canada in 1995. Accountability for the program rests with the assistant deputy minister, Operations, and since 2002, it has been managed by the Medical Services Branch. The medical director of the IFH program oversees the direction and operation of the program. Claims are adjudicated and paid by a private sector firm under contract with CIC—currently, FAS Benefit Administrators Ltd. of Edmonton. Complex adjudications and special requests are determined by IFH program management staff in the Medical Services Branch. For claims processed through FAS, the claim submission and eligibility confirmation process is largely manual.

Overall, Medical Services Branch management exercised due diligence in managing the IFH program. The program parameters appear comparable with the coverage granted to Canadian residents through provincial and municipal health and social assistance programs. Program operations and costs are tracked and monitored.

Within this context, the audit identified several areas where opportunities exist to strengthen the mandate and operation of the program. The more significant of these opportunities are as follows:

• CIC should request an update on the IFH program authority.
• A formal process should be established for recording executive management involvement in the review and approval of key definitions and decisions regarding the IFH program.
• The Medical Services Branch should develop and implement a succession plan for IFH program management.
• The IFH program’s technological implementation plan should be finalized and approved. The plan should include the ability to provide client eligibility start and cancellation dates to the benefit administrator electronically.
• CIC should invest more in data mining within the IFH program. Analysis of health-care needs by age, gender, country of origin or other possible client-base segments would better position CIC to do the following:
  • predict and support the resources the program will require each year;
  • detect abuse of the program; and
  • reassess program coverage and affordability.

Data mining could also be used to establish norms for service standards—for example, the average number of provider visits per year per claimant, or the average number of prescriptions per year per claimant. This would help the management team better monitor and review program performance.

Introduction

Audit objective

The overall objective of the audit was to examine the control framework for the delivery of IFH program services, including the framework that governs program expenses. This included ensuring that due diligence was exercised when managing the IFH program and the contract with FAS Benefit Administrators Ltd.

Audit scope

The audit included reviewing the IFH program’s systems, procedures and associated control framework used to validate, authorize and make payments to FAS.

The audit scope did not include an examination to determine the appropriateness of the service eligibility stipulated by the rules of the IFH program. It also did not include verification of the claims processed and related payments to service providers by FAS or a review of FAS’s databases.

Audit approach

The audit was conducted in accordance with the Government of Canada’s Policy on Internal Audit and aligned with the elements of sound management outlined in the Management Accountability Framework (MAF) developed by the Treasury Board Secretariat. In applying the MAF concept to the IFH program activity, four lines of enquiry were identified and used as the audit framework:

• Governance and strategic direction
• Risk management
• Procurement/contracting
• Program management

The IFH program was examined relative to these four lines of enquiry, and audit observations and recommendations are presented for each.

The following key audit activities were undertaken:

• The nature of the program was discussed with IFH program representatives, including the monitoring processes, control framework and key risks. The IFH program databases related to claims information and the gathering of information for risk identification were examined.
• Key systems and processes were mapped and analysed.
• Appropriate audit tests were conducted to determine whether IFH program systems were working as intended. Tests were conducted on
  • the administration fee claimed by FAS;
  • the sample methodology used by IFH program staff to select its claims for review; and
  • the verification procedures used by IFH program staff on these claims.
• Any control deficiencies identified were analysed for cause and effect.
• The findings were discussed with IFH program representatives.

Environment and background

The Interim Federal Health Program is a non-insured national health-care program managed by Citizenship and Immigration Canada. The program provides essential and emergency health care to indigent refugees [Note 1] who have no other source of health-care coverage. [Note 2] This coverage is similar to, but not as extensive as, provincial health-care programs. The program also provides limited coverage for health services such as dentistry, vision care and pharmaceuticals, as needed.

Authority for the program comes from the 1957 order-in-council, P.C. 157-11/848.

The IFH program was transferred to CIC from Health Canada in 1995. At present, it is managed by a small team in the Medical Services Branch. The team comprises a medical director and two administrative assistants. The Director General’s delegated authority for the day-to-day operations of the IFH program rests with this team.

Before being moved to the Medical Services Branch, the IFH program was managed through the CIC Departmental Delivery Network (DDN) and was headed by a contract employee. In January 2003, the position of medical director was created, and the DDN contract employee was appointed to that position. According to Medical Services Branch managers, this move addressed an important concern of CIC senior managers regarding the management of the program.

The medical director oversees the operation of the IFH program and adjudicates special request claims. FAS, a private sector firm, adjudicates regular claims and pays all claims in accordance with a clearly defined statement of work, which is included in the contract. The details of the nature of the contractual arrangements are discussed later in this report.

Although an assessment of the benefit administrator’s control framework was outside the scope of this audit, meetings were held with key FAS personnel, a tour was taken of the company’s facilities, and external auditor management letters for the last two years were reviewed. No issues were raised in the management letters regarding claims processing or invoicing routines. Audits are a fact of life for FAS, as its other clients perform annual audits of compliance over their claims administration.

For quality assurance purposes and in recognition of the largely manual paper-based front end, FAS performs random and ongoing accuracy testing on IFH program claims. Errors are tracked, and the nature of the errors is identified. This provides reasonable assurance that FAS staff pay attention to the accuracy of data entry and claims processing. New staff are provided with specific training on the IFH program and are closely supervised for an extended period.

Health-care services for refugees at the Laval and Toronto detention centres are provided by on-site medical teams under direct contract with CIC and accountable to the IFH program’s medical director. This means that claims for those individuals are not processed through FAS. Claims processed through FAS are submitted on paper (i.e., read off photocopies) and entered into the system. This manual processing provides more opportunity for errors (which FAS must detect and resolve) than the use of electronic capture and transmission of eligibility and invoicing data.

Medical and financial activities are tracked and reported by the Corporate Services Directorate. As recorded in Treasury Board Submission 830313 of January 2003, the approved funding for the IFH program for 2002–03 was $32.745 million (annual reference level), $10.250 million, (one-time resource allocation) and $7.6 million (additional resources approved under the same submission), for a total of $50.6 million.

The IFH program is relatively small compared to CIC’s overall activity and funding of $992 million for 2002–03. For that reason, the reports to Parliament have provided little detail on the IFH program’s specific activities. However, CIC’s Report on Plans and Priorities for 2003–04 provided information on plans to establish two steering committees to strengthen the governance of the IFH program and to enhance CIC’s capacity to carry out medical surveillance to prevent public health crises.

The Treasury Board approves the funding for the program on an annual basis or, when additional funds are required, through Treasury Board submissions. Oversight is also provided by the parliamentary Standing Committee on Citizenship and Immigration.

Audit Findings and Recommendations

Line of enquiry 1:
Governance and strategic direction

In examining and assessing governance and strategic direction, the audit criteria used to measure success were drawn from and aligned with the corresponding element from the Treasury Board Secretariat’s MAF, which reads as follows:

“Departmental research and analytic capacity is developed and sustained to assure high quality policy options, program design and advice to Ministers.”

The IFH program operates under a 1957 order-in-council (OIC), which authorized the Department of National Health and Welfare

As noted, the authority supporting the IFH program is over 40 years old. In 1994, a project team from CIC and Health Canada recommended that the OIC be amended to more accurately define the client groups and the extent of health coverage to be provided. This has not yet occurred.

The audit raised the above issues with Medical Services Branch management. They indicated that senior management had considered the issue in the past but had rejected amending the OIC. The Department has been defining the parameters of the IFH program in the absence of a formal review of the OIC and has been able to operate without problems in spite of this. Management indicated that updating the OIC is a priority and that resources will be dedicated to this activity in the current year.

Management noted that IFH program funding is subject to review and challenge by the Standing Committee on Citizenship and Immigration. For example, during a committee hearing on October 28, 2003, the funding levels for 2003–04 were discussed. The committee questioned the funding increases, and the Department explained that the program is entirely guided by demand. For that reason, funding fluctuates from one year to the next. The Department went on to explain that the funds could not be used for anything other than reimbursing medical costs for the recipient population.

In addition, as noted earlier, the Treasury Board approves IFH program funding on an annual basis through Treasury Board submissions.

In an effort to increase collaboration and scrutiny surrounding the program, CIC recently established the Interim Federal Health Advisory Committee. The committee, which reports to the assistant deputy minister, Operations, through the director general, Medical Services Branch, provides advice and has no decision-making authority. Committee members are drawn from CIC and several public health and refugee organizations. They also include a representative of the Treasury Board Secretariat.

In January 2004, the Medical Services Branch prepared the Interim Federal Health Program 5‑Year Report (1998–2003). The program results were reviewed and analysed, as was the historical and projected growth of the claimant base. The operational enhancements made to the program were explained and opportunities for additional enhancements in the future were identified.

At the program level, the accountability structure is such that the IFH program medical director reports to the director general, Medical Services Branch, who in turn reports to the assistant deputy minister, Operations.

We are satisfied with the level of oversight as it relates to program funding. However, management should update the program authority.

Recommendation 1
The assistant deputy minister, Operations, should seek to renew and update the IFH program authority.

Management response
Management agrees with the recommendation.

Line of enquiry 2:
Risk management

In examining and assessing risk management, the audit criteria used to measure success were drawn from the corresponding element of the Treasury Board Secretariat’s MAF, which reads as follows:

“The executive team clearly defines the corporate context and practices for managing organizational and strategic risks pro-actively.”

Specifically, the audit examined whether risks to the IFH program’s efficient and effective operation have been identified and documented, and whether potential unintended consequences have been considered.

Evidence indicates that CIC management has duly performed appropriate risk-identification and management activities. Various branch documents discuss program risks, their possible consequences and mechanisms through which these risks could be avoided or mitigated.

• In 1994, a project team from CIC and Health Canada reviewed and analysed the program and presented the Non Insured Health Benefits Review, Analysis and Recommendations to the Treasury Board. The review recommended a number of significant changes that affected program efficiency and effectiveness, including that the 1957 OIC be amended to more accurately define the client groups and the extent of health coverage to be provided.
• In 1997, a report entitled The Interim Federal Health Program: Citizenship and Immigration Canada: Report on First Year Operations was prepared. The report included a presentation on the future risks of the IFH program and again advised on the benefit of updating and clarifying the OIC.
• In 2003, a document entitled Technological Updating Plans was prepared. This document identified some of the operational risks and constraints of the existing approaches to processing and outlined automation plans that could be adopted.
• In 2004, the Medical Services Branch conducted an examination of the program and prepared the Interim Federal Health Program 5‑Year Report (1998–2003). The results for the five years were analysed and prepared for senior management and Treasury Board review. The risks to program viability were discussed or mentioned, including
  • the definition of the benefits covered;
  • changes in the number of refugee claimants;
  • increases in health-care costs, including the expense of new drugs such as those for HIV and tuberculosis;
  • the time frame for the Immigration and Refugee Board’s processing of refugee claims;
  • the claim administration fees; and
  • the possibilities for additional automation of the claim adjudication and payment process.

CIC management has also looked to internal audits for independent assessments of IFH program performance. In 1998, an audit of the benefit administrators was performed (Audit of FAS Benefit Administrators). Recommendations concerning the procedures for stale-dated cheques, remuneration of the benefit administrator and the selection of claims for the quality assurance process were made and accepted by Medical Services Branch management.

In 2002, the Medical Services Branch asked the Internal Audit and Disclosures Branch to conduct a client service survey of the IFH program. Provisions of the Privacy Act prevented this survey from being conducted.

Most health claim forms, including the Sun Life forms used by federal public servants, contain a member certification and authorization, which permits the health-care provider to check the accuracy of the information given in support of each claim. Refugees are not asked to provide this authorization when they enrol in the IFH program. An explicit statement of this nature would permit quality assurance activities to be conducted relative to confirmation of the services received and improve refugee and provider perceptions of the IFH program. It would also help reinforce that these benefits are intended exclusively for refugee claimants.

Recommendation 2
CIC should revise the eligibility document (Form IMM 1442) to include an explicit statement of agreement allowing for the necessary exchange of information to assess and manage the IFH program.

Management response
CIC has embarked on a major revamping of its e-business systems, with the objective of replacing them with an integrated Global Case Management System (GCMS) by December 2005. Because of the extensive work required for this exercise, the Department has restricted further system development. Form IMM 1442 is a system-generated document. Therefore, any changes to this form will be made once the GCMS is implemented.

As an intermediate step, employees responsible for issuing eligibility forms could use a stamp bearing the appropriate wording to confirm that services were rendered according to the mandate of the IFH Program with regard to the eligibility form issuance. Senior management has approved this action.

Line of enquiry 3:
Procurement/contract

In examining and assessing the procurement/contracting process, the audit criteria used to measure success were drawn from the stewardship element of the Treasury Board Secretariat’s MAF, which reads as follows:

“The departmental control regime (assets, money, people, services, etc.) is integrated and effective, and its underlying principles are clear to all staff.”

The most recent contract for benefit administration covered the three-year period from February 1, 2000, to March 31, 2003, and had two one-year options. Thought should be given to extending the renewal option periods so that when a top-performing benefit administrator is in place, that relationship can be extended.

Procurement/contracting has two elements. One is the selection of the contractor, and the other is the planning and direction of the work, which are built into the contract specifications.

On the first element, evidence indicates that government contracting policy has been followed. IFH program management drew on contracting expertise both within and outside CIC. It developed the contract specifications and discussed them with the CIC Materiel Management procurement advisors. The information was then forwarded to Public Works and Government Services Canada (PWGSC) to be handled through the competitive bidding process.

In terms of the second element, the contract and the accompanying contractor responsibilities and statement of work appear to be well thought-out and clearly defined. The different types of transactions to be handled by the benefit administrator (contractor) have been identified, and varying payment rates have been agreed upon.

We discussed with management one contracting issue that appeared to have the potential to put the IFH program at risk. The issue was the lead time and the effort it would take to move benefit administration to another contractor. This is not something that could safely be done in a short time. Significant planning and testing is required to have all health-care providers change from dealing with the existing administrator to dealing with a new administrator and to become accustomed to the new administrator’s procedures, rates and systems. Management informed us that they were already aware of this issue and had taken the appropriate steps to deal with it.

The second and final renewal option for the contract with the current administrator will expire in a year, on March 31, 2005. The Medical Services and Administration branches have already initiated steps for the contracting process. A transition period allowing for the handover of claims administration to another company has been built into the work plan for the contracting process. PWGSC has already been notified of this plan.

Recommendation
None.

Line of enquiry 4:
Project management

In examining and assessing project management, the audit criteria used to measure success were drawn from the stewardship, people and accountability elements of the Treasury Board Secretariat’s MAF, which read as follows:

The application of these criteria was assessed through reviews of management reporting, CIC quality assurance practices, handling of requests for exceptions, program continuity and the benefit administrator’s quality assurance practices.

Management reporting

A comprehensive set of management reports was found to be prepared monthly. These reports include statistics on

• the number and dollar amount of claims processed each month and year-to-date;
• a breakdown of claims by type of service;
• monthly and year-to-date fees paid to the administrator; and
• monthly and year-to-date amounts paid to health-care providers for the Toronto and Laval detention centres.

These reports were tested and found to be current, accurate and complete. Management reporting for the program is fully integrated with the Medical Services Branch control framework. The IFH program reports are prepared by the Corporate Services section of the Medical Services Branch, and summary figures for the IFH program are included in the branch financial reports.

Recommendation
None.

Quality assurance

The IFH program conducts a quality assurance review on claims processed by the benefit administrator. From April 1, 2003, to January 31, 2004, 2,198 claims were reviewed. Anecdotal evidence obtained from FAS, the benefit administrator, corroborated the performance of the medical director’s quality assurance review process. Records of the data fields examined and the results of the claims review are not maintained. As a result, success rates and error patterns cannot be determined or tracked over time. Similarly, corrective management actions taken to address any concerns are not documented.

The quality assurance process would be more valuable if historical results could be reviewed and compared. This information would be useful in assessing the contractor’s performance and, if documented, could be used as a performance incentive for the contractor. Positive results could lead to contract extensions or performance rewards, and negative results could entail contract penalties or termination. Also, Medical Services Branch management should consider consulting a statistician concerning the number of claims to be reviewed. It may be sufficient to review fewer claims.

Recommendation 3
The Medical Services Branch should ensure that the claims review process and its results are documented.

Management response
Funding will be requested in the Treasury Board submission to support additional human resources that will allow for the data capture of the quality assurance process currently in place.

Continuity of program management

The IFH program medical director is the key resource, and succession and effective back-up of this position in the event of a prolonged absence, retirement or movement to another position should be carefully reviewed. Currently, support staff and one of the medical officers in the branch fill in for the medical director when that person is out of the office for extended periods. Consideration should be given to identifying a medical officer to be trained in all aspects of the IFH program in support of the medical director’s position.

Further, safeguards need to be in place to protect the medical director from involvement in too many aspects of a transaction. Specifically, the medical director is in a position to influence or effectively control all aspects of the transaction, including

• setting contract fees to be paid to service providers;
• determining the procedures and groups of people that will be covered by the program;
• approving individual program exceptions; and
• performing quality assurance.

Program management continuity has two key aspects: documentation of decision making, and formal succession planning.

The medical director’s involvement in program direction, transaction approvals and program oversight creates a situation where only one person is fully knowledgeable about the program operations and where program operations are subject to in-depth scrutiny from that same person. Having at least one additional medical practitioner involved in the operations would provide back-up and consultative support to the medical director. Operational responsibilities might also be aligned so that the practitioners could provide second opinions for each other. A process should be established to record senior management involvement in the review and approval of key definitions and decisions regarding the IFH program (for example, decisions regarding the specific medical procedures to be covered).

Documentation would provide the medical director with the assurance that his or her decisions are within the parameters delegated to his or her office and that exceptions, outside of these parameters, are duly approved by the director general.

Recommendation 4
The Medical Services Branch should develop and implement a succession plan for the IFH program.

Management response
In its 2004–05 business plan, the Medical Services Branch has committed to developing a succession plan that will take into consideration the IFH program.

Recommendation 5
The Medical Services Branch should establish a formal process for documenting the program’s decision-making process.

Management response
As part of its IFH management process, Medical Services Branch management has created an advisory group that will allow for the official tracking of decisions on the program. Senior management agreements and discussions will be officially recorded.

IFH program eligibility and automation

Currently, health coverage may be issued on an emergency basis for one month when refugees first present themselves to CIC. Beyond that, health coverage eligibility is usually provided for periods of one year or less. The one-year period can be extended for a second year if necessary. As part of the renewal process, refugees must present themselves annually to a local CIC office. Coverage may not be required for full-year periods because claimants may become financially viable at any time, through employment or qualification for provincial health-care coverage.

CIC’s Field Operational Support System (FOSS) contains eligibility status information. However, when changes in status occur, FAS’s system is not updated. Consequently, if coverage is discontinued during the year, the claim payment system would not be informed, and claims would continue to be paid.

Management information on eligibility indicates that FAS’s system showed 97,000 IFH program recipients in 2002–03. At the same time, government-sponsored, privately sponsored and unsponsored new refugees in 2002–03 totalled 46,357. (The total number of new refugees in 2001–02 was recorded as 51,919.) With continued growth close to 100,000 identified users or recipients, eligibility management, inflows, outflows and renewal all need to be closely examined. Management should ensure that individual needs and circumstances are taken into account when granting eligibility in the second year.

Management has prepared plans to update the technological platform of the IFH program. Central to this update is a secure download of eligibility dates from FOSS to the benefit administrator’s adjudication system.

The technology plan does not currently include the option of providing IFH program managers in Ottawa with read-only access to the FAS claim payment system. Such access would enable them to do their own research on the medical histories of people who requested services outside of the IFH program parameters. It would also enable them to perform ad hoc queries and generate exception reports.

CIC should increase investment in data mining within the program. Analysis of health-care needs by age, gender, country of origin or other possible client-base segments would better position CIC to

• predict and support the resources the IFH program will require each year;
• detect abuse of the program; and
• reassess the coverage and affordability of the program.

Also, norms for service standards could be established (for example, the average number of provider visits per year per claimant, or the average number of prescriptions per year per claimant). Management could then compile and review exception reports.

Normative (benchmark) information may be difficult to obtain outside the program. Tracking expenditures over time within the program by type of care, recurrence and country of origin may be the best option available. The development of normative information would enable CIC to better anticipate and prepare for the associated demands and costs.

Recommendation 6
CIC should consider reassessing eligibility periods to take individual needs into account.

Management response
This capability currently exists because the eligibility period can be modified to suit individual needs. An instruction in the IFH section of the IR 3 Reference Manual (Section 4.6 B) 5), a reference tool for all CIC officers, describes extension procedures. Any deviations are corrected on a case-by-case basis. The Medical Services Branch will communicate with the CIC employees concerned to remind them of the importance of applying IFH eligibility re-issuance limitations based on individual needs.

Recommendation 7
CIC should consider finalizing and obtaining approval for its technological implementation plan and amending the plan to include read-only access to FAS’s claim system for IFH program managers in Ottawa.

Management response
The Medical Services Branch has already developed a draft technological plan. The final version will be presented to senior management for approval. It will also include a time line for each step to be taken, with expected implementation by April 1, 2005. These changes are expected to be in place by the time the request for proposal (RFP) process to select a new benefit administrator has been completed. Therefore, one of the conditions being assessed under the current RFP is the administrator’s capacity to incorporate the changes anticipated in the technological plan.

In addition, the Medical Services Branch will seek approval from CIC’s Information Technology Security staff for read-only access to FAS’s health claims system.

Recommendation 8
CIC should consider increasing investment in data mining within the IFH program in an effort to best focus existing resources and to predict and prepare for future demands.

Management response
CIC agrees and will increase investment in data mining within the IFH program.

Conclusion

Overall, the Medical Services Branch’s management exercised due diligence in managing the IFH program. The program parameters appear comparable with the coverage granted through provincial and municipal health and social assistance programs. Program operations and costs are tracked and monitored.

To foster the IFH program’s continued success, CIC and the Medical Services Branch should consider the recommendations made in this report. The application of updated program authorities, reassessed eligibility permissions and time frames, documented quality assurance reviews and continuity plans, increased use of technology and enhanced program analysis will better position the Medical Services Branch to support and manage the IFH program in the future.

Appendix:
Management Action Plan

Time frames:

1–6 months = Short term
6–12 months = Medium term
More than 12 months = Long term

Footnotes