FRAUD: PREVENTIVE MEASURES AND PENALTIES - World...

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……………….. State Primary Health Care Development Agency PERFORMANCE BASED FINANCING (PBF) CONTRACT FOR THE PURCHASE OF HEALTH SERVICES No ______________ THIS CONTRACT is dated ……………….. BETWEEN: The State Primary Health Care Agency (“SPHCDA”) represented by its Executive Chairman Dr. /Mrs. /Mr.…………………………………………: And ....................................................... General Hospital, herein referred to as the “facility” or “HF” Represented by: Mrs. / Mr.: …………. Head of ………………….. General Hospital Version date 15 October, 2011

Transcript of FRAUD: PREVENTIVE MEASURES AND PENALTIES - World...

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……………….. State Primary Health Care Development Agency

PERFORMANCE BASED FINANCING (PBF) CONTRACTFOR THE PURCHASE OF HEALTH SERVICES

No ______________

THIS CONTRACT is dated ………………..

BETWEEN:

The State Primary Health Care Agency (“SPHCDA”) represented by its Executive Chairman

Dr. /Mrs. /Mr.…………………………………………:

And

....................................................... General Hospital, herein referred to as the “facility” or “HF”

Represented by: Mrs. / Mr.: …………. Head of ………………….. General Hospital

Mrs. / Mr.: ………. Chair …………………….Facility RBF Ctee

Version date 15 October, 2011

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IT IS AGREED as follows:

1. Principles of Performance Based Financing

1.1 The present contract is a performance contract between the SPHCDA and the Health Facility in the context of the State Performance Based Financing (PBF) program.

1.2 The goal of PBF is to increase the provision of quality Basic Health Services to the population by increasing health facilities’ decisional rights on the management of their own operations.

1.3 The Performance Based Financing strategy emanates from National Strategic Health Development Plan and NEEDS and Vision 20/20/20. The SPHCDA reserves the right to amend the applicable policies that serve as the basis of its support to the health centres prior to the expiry of the present contract.

1.4 The Performance Based Financing User Manual (as published by FMOH/NPHCDA) serves as the principle reference document for all mechanisms agreed to herein and shall be referred to for further details and interpretation.

2. Duration of the Contract

2.1 This purchase contract is valid from …………….. for period of 12 months until ……………….

2.2 This contract may be revoked by the SPHCDA unilaterally at anytime, in case of fraud, or continued underperformance. The annexes and Business Plan (as stipulated in Section 13 herein) form an integral part of the present contract.

2.3 The SPHCDA reserves the right to re-negotiate the service fees each 3 month period, however, the SPHCDA can also decide to keep the fees at their current levels. If such amendment is not produced on the last working day of the end of the quarter, the current fee set will be used for the following quarter. After re-negotiation, an amendment with a new set of negotiated fees will be produced, including a new business plan.

3. Purpose of the Contract

This contract defines the rights and obligations of both parties within the context of the PBF system: The Health Facility, as the provider of health services and the SPHCDA, the purchaser of Health Services.

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4. Performance Payments

4.1 The SPHCDA shall make Performance payments to the HF according to a fee –for – service / case based provider payment mechanism, which is also conditioned on the quality of care. The services that are purchased and corresponding unit fees are listed in Annex 1.

4.2 The payments received by the Health Facility under these terms may be used as incentives in the form of salary bonuses to its staff members and as reinvestments in activities, equipments, commodities or infrastructure that contribute directly to the attainment of improved performance targets and enhanced quality of care to the population.

4.3 The maximum that the HF may budget for worker’s bonuses is 50% of its profits. Violation of this basic rule may lead to the termination of the present contract by the SPHCDA.

4.4 Any bonus payments by the facility to its workers shall be spread over a period of three months, in the sense that each entitlement is received monthly by the workers.

4.5 In consideration of the fact that non-medical staff are in general over-supply, and essential medical staff in undersupply, it is agreed that it is up to the HF management, and its Facility RBF committee, to decide on how many of the non-medical staff it needs to incentivize to keep basic hygiene, the waste disposal according to applicable norms, and cleanliness of the premises.

4.6 The HF may decide to forfeit bonuses for a limited period and to invest in its infrastructure or equipment. The HF may choose to invest part of its earnings in expanding its health workforce through local labor contracts, and invest also in fringe benefits to attract and retain qualified health staff.

5. Organs of the Health Center

5.1 The Health Facility shall be jointly represented by the Head of the Facility and the Chairman of the Facility RBF Committee.

5.2 The Health Center in-charge shall put in place an Internal Management Committee to review individual staff performance and distribution of the funds generated through PBF and the present contract. This Internal Management Committee shall use (a) the indice tool for integrated financial management and performance bonus payments; (b) a motivation contract written with each employee in which its ‘part’ (proportion) of each quarterly bonus budget is indicated; and (c) minutes to document its proceedings. See the latest PBF manual for further details.

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6. Mission of the Health Facility 6.1 The Health Facility must ensure that funds generated through PBF are managed in the

general interest of the health centre and, in general, contribute to the improvement of public health in the community.

6.2 In doing so, the health facility (HF) hereby commits to undertake the following:a. Develop strategies designed to achieve the overall goals of Performance Based Financing

at HF and community level;b. Avoid any activities in contradiction with national health policies and/or accepted

medical ethics;c. Inform the Primary Health Care (PHC) Department at the Local Government Authority

of any change in HF personnel, technical skills and equipment at the facility that which could hamper its capability to render the Services remunerated by the present PBF contract;

d. Ensure the permanent availability of all data recording registers and all management tools at the HF, and ensure that such documents are accessible to the SPHCDA, LGA PHC department and research companies during the execution of the present contract;

e. Report in writing any case of fraud or attempted fraud committed by HF staff members to the SPHCDA and the PHC Department;

f. Ensure complete transparency and access to information relating to the use of funds generated through PBF and all others sources;

g. Distribute part of the revenues generated through PBF and the present contract its staff in the form of “bonuses” and in accordance with set guidelines. The indice tool will assist to direct resources to core essential medical staff;

h. Allocate part of the revenues generated through PBF and the present contract to operational expenditure (other than personnel remuneration and trainings).

7. Procurement and Prescription of Drugs and Medical Consumables

7.1 The Heath Facility shall procure all drugs and medical consumables with PBF - Certified Distributors. The State Agency of the Pharmaceutical Council of Nigeria (PCN), in collaboration with the SMOH will issue a list of 3 to 4 PBF - Certified Distributors in the State. The HF shall, at all times, be expected to conform to the list of Certified Distributors as updated from time to time by the State PCN. In choosing the distributors, availability of drugs, best price and quality should be the guiding principles.

7.2 The facility shall only procure essential drugs (as listed in the approved essential drug list) and medical consumables in generic form. Procurement of non-essential (not listed in the essential drugs list) of non-generic drugs (expensive brands drugs whilst cheaper generic drugs are available) is not allowed. Non-compliance with this obligation may lead to the termination of the present contract by the SPHCDA.

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7.3 Procurement of drugs and or medical consumables from non- PCN/PBF - Certified Distributors will be considered a violation of the purchase contract and may lead to immediate termination of the present contract by the SPHCDA.

7.4 The facility shall keep records of drugs and consumables procurement accessible at the pharmacy, and in-depth audits will need to show a match of stock-in and stock-out.

7.5 The facility shall ensure that all drugs and medical consumables prescribed in the HF are prescribed through a prescription, which shall be maintained and accessible at all times for control at the pharmacy. Prescriptions should indicate (a) the name and age of the patient; (b) the date; (c) clearly legible listed generic drugs with quantities; (d) name and signature of the prescriber. Prescription of drugs should strictly follow protocols (types of generics and recommended quantities) as mentioned in the treatment guidelines. Irrational use of drugs leads to a high cost to the population. Systematic non-adherence to these treatment guidelines could therefore lead to loss of this purchase contract.

7.6 Drugs and medical consumables available at the health facility should be clearly listed and accessible at the public notice board and at the pharmacy and should: (a) list the unit price; (b) list the number of items for a typical course, and (c) the unit price (the ‘retail price’) should not exceed the whole sale price + a reasonable markup as negotiated with the community and ratified by the Facility RBF Committee.

7.7 The existence of informal drug schemes managed by the facility or by its staff is strictly forbidden under this contract and it may lead to immediate termination of the contract by the SPHCDA.

8. Quantity audits and provisional PBF invoices

The SPHCDA verification teams shall conduct monthly or bi-monthly Quantity audits by reviewing all entries made in the designated registers. They will compare their review with the provisory monthly invoice as prepared by the HF management (see annex 2). Such monthly quantity control shall be conducted not later than the 15th day of each month, or in some instances bi-monthly depending on local conditions.

9. Data Collection Registers

9.1 For the purpose of the present contract, each PBF Data Collection Register and its contents/entries register constitute a financial records document and will be treated as such. Non-adherence to strict registration norms herein, non-completeness or non-legibility of the data in the columns, will lead to non-remuneration of the concerned services.

9.2 The Facility shall adhere to the norms for Primary and Secondary Register Column Headers as described in the applicable Performance Based Financing Manual. In the event pre-printed PBF registers are not available, the health facility shall design hand-

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written registers using the available office stationery according to the above mentioned norms. .

9.3 All numbering, in all registers, from the first day of the PBF contracting, shall start with a ‘1’, and continue for the remainder of the calendar year. The following calendar year, the numbering should start with a new ‘1’, etc. The end of the month should be clearly indicated through a line. The numbering should continue into the following month, until the end the calendar year.

9.4 Routine Health Management Information System (HMIS) data shall align with data from the PBF registers.

10. Quality audits

10.1 In order to ensure that the services performed by the HF meet satisfactory quality standards, specific Quality Indicators (as described in the latest PBF manual) will be assessed every quarter by the LGA PHC department.

10.2 The results of these Quality Audits will be factored in the calculation of the overall performance of the HF and the final PBF invoice as follows:

a. 25% of the total claimed earnings over the preceding months shall be added as “quality bonus” if the quality score for that quarter is 100%.

b. If the HF’s quality score is 49% or less, the quality bonus is automatically ‘0’ for the evaluated quarter.

c. A quality score between 50% and 99% will be prorated as follows: Quality Bonus = % Quality Score * (total earnings for all contracted services over the past three months).

10.3 The quality audits shall be counter-verified regularly by an independent third party to be determined by the SPHCDA. If fraud is detected with the quality score, the present purchase contract may be terminated immediately by the SPHCDA.

11. Validation of the Quarterly Consolidated PBF invoices

11.1 The LGA PBF Steering Committee shall, on a quarterly basis, validate the Health Facility’s monthly PBF invoices and the quality score obtained.

11.2 The LGA PBF Steering Committee shall determine the amount earned by the Health Facility on the basis of the scores obtained in both the quality and quantity controls conducted respectively by the LGA PHC Department and the SPHCDA verification teams as described in Section 9 herein.

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12. Terms of payment

The amount of each Quarterly Validated final PBF invoice shall be paid into the Health Facility bank account not later than 60 days after the quarter in which they were earned. For that purpose, the Health Facility shall operate autonomously its own bank account in which the funds will be transferred. Guidance on the management of the bank account is available in the PBF manual.

13. Utilization of funds received through PBF, and through all other sources

13.1 The utilization of funds earned through PBF, and through all other sources, and the present contract shall be at the discretion of the Health Center Management Committee within the limits fixed in Section 4 of this contract.

13.2 Against this background the health center, shall ensure that all documents are well secured. All payments made to staff and other beneficiaries should be clearly signed or thumb printed. Fraud in financial management will be dealt with according to applicable State Laws. Fraud in financial management may lead to immediate termination of the present contract by the SPHCDA.

14. External Counter-verification and Misreporting

14.1 A third party organization shall be contracted by the SPHCDA to conduct random counter-verifications at community level (the so-called community client satisfaction surveys) on a periodic basis in order to confirm the Facilities results. In that event, the Health Facility hereby agrees to grant full access to the relevant records as may be required.

14.2 In case of any irregularities discovered in the course of such counter-verification (including, but not limited to, inaccurate reporting and “ghost” patients), the Health Facility shall be subject to the penalties as detailed in the PBF user manual and annex 3 of this contract.

15. Business Plan

Within three months upon the signature of the present contract, the HF shall submit a Business Plan for the following twelve months of activities (see format in the PBF manual). The Business plan will outline the strategies considered in order to increase the quantity and the quality of its services. The Business Plan shall then be reviewed and approved by the SPHCDA and form an integral part of the present contract. The absence of Business Plan or the non-compliance with its strategies may lead to the termination of the present contract by the SPHDCA.

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16. Care for the Indigents

16.1 The Health Facility may allocate a maximum number of 5% of the curative consultations of the previous month under the reimbursement-category ‘new outpatient consultation for an indigent patient’ for the current month. When allocated to this category the patient shall not pay any fee. Patients allocated under the ‘new outpatient consultation for an indigent patient’ cannot be allocated under ‘new outpatient consultation’ (see annex 1).

16.2 The monthly sum of the number of ‘new outpatient consultations’ and the number of ‘new outpatient consultations for an indigent patient’ shall form the monthly new outpatient consultations provided by the Health Facility. However, a ‘new outpatient consultation for an indigent patient’ client or ‘new outpatient consultation’ client can consume other PBF services. In this case, the additional service shall also be counted under the additional PBF service.

16.3 The reimbursement for a ‘new outpatient consultation for an indigent patient’ category is based on the cost of an average curative care consultation in the Nigerian context according to modern treatment guidelines. The reimbursement is also based on the principle of cross-subsidization: this means that in case the treatment for the indigent client surpasses the actual treatment costs incurred by the HF, that the HF ‘cross subsidizes’ this treatment from other sources of income.

16.4 The ‘new outpatient consultation for an indigent patient’ category is meant for indigents, the poorest of the poor. This category shall be recorded using a separate register, and any other such tools that the facility management, its Facility RBF committee, or its indigent committee have put in place.

16.5 The appropriate use of the ‘new outpatient consultation for an indigent patient’ category will be verified through the routine verification and through the community client satisfaction surveys.

16.6 A specially designated Indigent Committee shall meet regularly to review the appropriateness of the post-identification mechanisms. This indigent committee is drawn from three members of the Facility RBF Committee and select members of the community not related to any of the health facility staff. This indigent committee reviews each month the appropriateness of the allocations (ref PBF user manual).

17. Sub-contracting for defined services in the minimum service package

17.1 The Facility may sub-contract with select providers for defined services in the MPA will be allowed. The sub-contracts – including the proposed services - will need to be proposed in the business plan, vetted by the LGA PHC department and approved by the SPHCDA. Sub-contracting can be with public, private non for profit and private for profit providers.

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17.2 All sub-contracted services shall be verified by the SPHDA verification teams, and counter-verified by an independent agency through community client satisfaction surveys in the same manner as non sub-contracted services. The Health Facility, as principle contract holder, shall use the approved sub-contracting template (see PBF manual), shall be responsible for the filing and accessibility of all signed sub-contracts, and ensure secondary registers are in conformity with applicable norms in the same manner as the primary registers.

17.3 The Facility, as principal contract holder, is responsible for the appropriate quality standards of care in the sub-contracted facility which is under its direct supervision. It may use up to 25% of the earnings of its sub-contracted facility for its own administration costs provided that it is agreed upon in the sub-contract document between both facilities.

Done at …………………………….. On …………./…………/20…

For The State Primary Health Care Agency

Mrs. / Mr. ______________________________

Signed ______________________________

And

Chairman of the GH RBF Committee Head of the Health Facility

Mrs. /Mr./Dr _____________________ Mrs/Mr/Dr_____________________

Signed ______________________ Signed ______________________

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Annex 1: list of Complementary Package of Health Services for the PBF purchase contract.

Note: fees are valid for the first three months only and subject to possible re-adjustment by the SPHCDA. Previous fee/subsidy levels are not a guarantee for future fee levels. Annex 2: Provisory Monthly PBF Invoice

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Annex 3: Fraud

FRAUD: PREVENTIVE MEASURES AND PENALTIES

Possible FraudThe introduction of PBF increases the risk for fraud as some providers or administrators inflate results to earn more money.

Verification and counter-verification procedures mitigate the risk for fraud through measuring the difference between claimed (& paid for) performance and actual performance. This requires special attention to measures to detect fraud and to penalties applied in case of certified fraud.

Fraud in PBF systems can be either intentional, or non-intentional. Intentional fraud relates to falsifying documents related to a service activity, falsifying register information, claiming services that had not been delivered, referring to acts of care that the user did not benefit from etc. Unintentional fraud (which is a rare occurrence) can be an error made by a verifier – due to lack of comprehension of the indicators- on a quality checklist or it can be a misinterpretation of indicators by different verifiers (an effect known as ‘inter-observer variability’).

To avoid fraud - intentional or unintentional - there is need for incentives for good behavior, correct reporting and scoring, and disincentives for fraud. In all cases, possible fraud need to be substantiated quantitatively (the numbers and facts) but also qualitatively (a written explanation as to what actual happened) as sometimes a case of non-intentional fraud can be based on a mis-interpretation of an element of the quality checklist due for instance to a different sampling of a patient file, or be caused by different interpretations of the same event by different verifiers. However, once fraud is established based on quantitative proof, and supported by qualitative elements, strong actions needs to be implemented to discourage future fraudulent behavior.

Fraud preventionThe following preventive measures are implemented to decrease the risk of fraud, intentional or unintentional:

Separation of functions, which helps to minimize fraud by avoiding conflicts of interest; Good quality ex-ante verification both of the quantity (SPHCDA) and quality (LGA-PHC

departments); A clear manual, clear contracts and good training in the rules of the game; An effective reward and punishment system (and application of punishments in case of

certified fraud); Good governance for PBF at the LGA level; Regular community client satisfaction surveys with feedback of the results at all levels.

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If rules are transparent and known to all and actions are taken swiftly when fraud is detected while communicating such fraud and its consequences to all stakeholders, then the likelihood of fraud will be minimized.

Penalties for FraudWhen fraud is certified, the following actions are taken:

Related to ex-post verification of the quantity (community client satisfaction surveys):

If more than 5% (up to 10%) of the sample cannot be traced back in the community. This means that either the client exists but did not receive the service OR that the client does not exist. Verification is done through mobile phones and/or through household visits with certification that client does or does not exist – as confirmed by the village head:

o : First offence: retention of 20% of total PBF earnings from a next payment while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the health facility RBF committee with copy to the LGA chairman with automatic inclusion in a next round of community client satisfaction surveys, publication of fraud on public website;

o Second offence : retention of 50% of total PBF earnings from a next payment while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the health facility RBF committee with copy to the LGA chairman with automatic inclusion in a next round of community client satisfaction surveys, publication of fraud on public website;

o Third offence : stop of the purchase contract until administrative action has been taken (replacement of the head of the health center by a suitable candidate whose candidacy is endorsed by the SPHCDA).

Box 1: Penalties in case of more than 5% (up to 10%) untraceable clients

If more than 10% of the sample cannot be traced back in the community:o First offence : retention of 50% of total PBF earnings from a next payment while

remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the health facility RBF committee with a copy to the LGA

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First offence: retention of 20% of PBF earnings, no performance bonuses staff and repeat counter-verification

Second offence: retention of 50% of PBF earnings, no performance bonuses staff and repeat counter-verification

Third offence: stop the purchase contract, replace head of health facility.

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chairman with automatic inclusion in a next round of community client satisfaction surveys, publication of fraud on public website;

o Second offence : stop of the purchase contract until administrative action has been taken (replacement of the head of the health center by a suitable candidate whose candidacy is endorsed by the SPHCDA).

Box 2: Penalties in case of more than 10% untraceable clients

Related to ex-post verification of the quality for health centers (quality counter-verification of HC): both the LGA – PHC department and the health facility are penalized as follows:

If the discrepancy is larger than 10% and no qualitative explanation can be given for this discrepancy (average across the sampled services according to the protocol):

o First offence : related to the LGA-PHC department : retention of 50% of LGA-PHC

department performance earnings while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the Director of the LGA-PHC department with copy the LGA chairman with automatic inclusion in a next round of quality counter-verification. Written warning to the responsible verifier;

related to the health facility : retention of 20% of the total earnings from a next payment while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the health facility RBF committee with a copy to the LGA chairman.

o Second offence : related to the LGA-PHC department : retention of retention of 50% of

LGA-PHC department performance earnings while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the Director of the LGA-PHC department with copy the LGA chairman with automatic inclusion in a next round of quality counter-

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First offence: retention of 50% of PBF earnings, no performance bonuses staff and repeat counter-verification

Second offence: stop the purchase contract, replace head of health facility

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verification PLUS exclusion of responsible verifier from performance bonuses and from quality checklist assessments for a period of one year;

related to the health facility : retention of 30% of the total earnings from a next payment while remaining earnings cannot be spent on individual performance bonuses PLUS warning in written to the health facility RBF committee with a copy to the LGA chairman.

o Third offence : Related to the LGA -PHC department: stop of the performance contract for

the duration of one year (or until - for the SPHCDA - a satisfactory solution has been found) PLUS offering of quality supervision contract to another PHC pending resolution of the conflict.

Related to the health facility : stop of the purchase contract until administrative action has been taken (replacement of the head of the health center by a suitable candidate whose candidacy is endorsed by the SPHCDA).

Box 3: Penalties in case of more than 10% unexplained discrepant results in quality counter-verification of health centers

The ex-ante verification for the hospital quality is done by a multi-organizational team led by the SPHCDA, consisting of Hospital Board staff, third-party hospital staff and technical partner agencies. The actual scoring for results is done by the SPHCDA with the others in observer status (i.e. not responsible for the actual scoring).

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First offence: LGA-PHC department retention of 50% of performance earnings, nil bonuses staff and repeat counter-verification. Health facility: retention of 20% of performance earnings, nil bonuses staff.

Second offence: LGA-PHC department: LGA-PHC department retention of 50% of performance earnings, nil bonuses staff and repeat counter-verification plus exclusion of offending verifier from pool of verifiers. Health facility: retention of 30% of performance earnings, nil bonuses staff.

Third offence: LGA-PHC department: stop the performance contract for the duration of one year. Health facility: stop the purchase contract.