Comptroller and Auditor General of India

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Compliance Audit Paragraph on Irregular Purchase of Medicines & Equipment in Bihar
(CAG of India, 01-08-2013) CAG of India
Irregular purchase of medicines and equipment in violation of State Health Society's prescribed procedures resulted in excess payment of Rs 1.33 crore. This irregular purchase also resulted in imparting undue favours to those private suppliers.
Performance Audit of AYUSH Department in Uttarakhand (2011-2016)
(CAG of India, 02-05-2017) CAG of India
A performance audit on Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) covering the period 2006-07 to 2010-11 was included in the Audit Report (Civil) for the year ended 31 March 2011. The Report was placed before the State Legislative Assembly in December 2012. This follow up audit was conducted with the objective of assessing the implementation of recommendations made in the earlier Audit Report and other important audit findings. The follow-up audit was conducted from April to May 2016 through test-check of records of the offices of the Director, Ayurvedic and Unani Services, the Director, Homoeopathy, the Principal cum Superintendent, Rishikul Post Graduate Medical College and Hospital, Haridwar, the Superintendent, Government State Pharmacy, Haridwar and two out of four district level offices (Haridwar and Pauri) of Ayurveda and Homoeopathy audited earlier. The period covered in audit was from 2011-12 to 2015-16. The audit was conducted with reference to the four recommendations accepted by the Government in the exit conference (March 2012) against 27 observations included in the Audit Report 2011.
Performance Audit on Implementation of Healthcare and Academics Management Information System in Maharashtra
(CAG of India, 02-07-2019) CAG of India
The vision of providing health information infrastructure which would support daily operations of the hospitals and also facilitate decision making to bring fundamental changes in healthcare and academic management in medical colleges and hospitals in the State was largely under achieved due to ineffective implementation of the Healthcare and Academics Management Information System (HMIS). Of the 16 modules, one module was fully implemented, 10 modules were partly implemented and five modules were not implemented in all 16 hospitals out of 19 hospitals. The HMIS is largely under-used and manual system was continued in all the 16 hospitals. Non-availability of complete healthcare data centrally has been a hindrance for disease surveillance in the State and may have restricted the State’s intervention to reduce the disease burden. The implementation of HMIS was not adequately monitored which resulted in the vision of healthcare management through HMIS remaining unfulfilled.
Performance Audit on Functioning of Hostels for Backward Class Students in Maharashtra (2013-2018)
(CAG of India, 02-07-2019) CAG of India
The scheme of opening new Government Hostels for Backward Classes in all the taluka headquarters was envisaged in 2005-06. However, even after lapse of 10 years the Government hostels in 128 talukas were not opened. The population norms for opening of Government hostels in taluka headquarters were also not strictly followed. The intake capacity of the hostels shifted to new premises was also not revised and sanctioned resulting in deprival of benefit to students. As against 100 Government Residential Schools to be opened, only 83 schools were opened. There was short utilisation of funds against the grants released. Though the expenditure under plan heads was not commensurate with the demand and funds released by Social Justice and Special Assistance Department (SJSAD) in the last five years, the SJSAD continued to place demands for higher side every year without analysing the reasons for short utilisation of funds. Irregular expenditure of ` 14.16 crore without ensuring the fulfillment of conditions resulted in unfruitful expenditure of INR 24.78 crore due to non-imparting of computer training to the students. The hostels at regional levels having capacity of 1,000 students taken up in Nagpur, Mumbai and Pune remained incomplete. One unit of girls hostel at Latur though constructed in 2011 remained un-utilised. There was shortfall in supply of basic amenities in the Government Hostels and Government Residential schools. 42 girls hostels opened on the eve of Dr. B.R. Ambedkar Jayanti were found short of proper infrastructure. The structural audits of the hostels which were more than 30 years old were also not undertaken. The rate of ‘Pariposhan Aahar’ payable to aided hostels was not revised commensurate with Consumer Price Index since 2012 onwards. There was discrimination in providing meals to the students residing in old Government Hostels and in new Government Hostels.
Performance Audit of Public Health Infrastructure and Management of Health Services in Telangana (2016-2022)
(CAG of India, 02-08-2024) CAG of India
The Report contains significant results of the Performance Audit on Public Health Infrastructure and Management of Health Services in Telangana State, covering the period 2016-17 to 2021-22. The Performance Audit was carried out with a view to assess the adequacy of funding for health care, the availability and management of healthcare infrastructure and the availability of Drugs, Medicine, Equipment and other consumables. The Performance Audit also sought to examine the availability of necessary Human Resources at all levels, e.g., Doctors, Nurses, Paramedics etc., the implementation of various schemes of the Government of India including the assistance/grants/equipment received by the States and the State spending on Health and improvement of wellbeing conditions of people as per Sustainable Development Goal 3. Audit was conducted covering the period from 2016-17 to 2021-22 through a test-check of records in the Offices of the Secretary, Department of Health, Medical & Family Welfare; Managing Director, Telangana State Medical Services & Infrastructure Development Corporation; Commissioner, HM&FW and Mission Director, National Health Mission; Director of Public Health (DOPH); Director of Medical Education (DME); Commmissioner, Telangana Vaidya Vidhana Parishad, Director of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy; District Hospitals (DHs) in the State; other test checked healthcare facilities included Sub Centres (SCs), Primary Health Centres (PHCs), Urban Primary Health Centres (UPHCs), Community Health Centres (CHCs), Area Hospitals (AHs), Super Specialty Hospitals. Audit also covered Central Medicine Stores (CMSs); Hospitals of AYUSH; Pharmacies; Dispensaries and Government Medical Colleges with attached Teaching Hospitals in the test checked three Districts of Hyderabad, Mahabubnagar and Warangal. A Patients’ Survey, a Doctors’ Survey and a Joint Physical Verification of Health Institutions were undertaken during the course of the audit.
Performance Audit on Food Safety and Standards Act in Puducherry (2016-2019)
(CAG of India, 02-09-2021) CAG of India
For assessing the efficacy of the vigilance and enforcement mechanism, an audit of implementation of the Food Safety and Standards Act, 2006 covering the period 2016-17 to 2018-19 was conducted from April 2019 to August 2019 to derive an assurance that: i. Adequate human resources and infrastructure were in place for efficient implementation of the Act; ii. Regularity mechanism/processes in grant/renewal of licence to FBOs were in accordance with the provisions of the Act; and ii. Effective process for enforcement and monitoring were in place.
Idle Expenditure on MCH Building at Konark in Odisha
(CAG of India, 03-04-2021) CAG of India
Construction of Maternal and Child Health building without making plan for its operationalisation led to idling of the building, thereby rendering the expenditure of ₹ 5.96 crore incurred on construction of the building idle.
Compliance Audit on Procurement and Distribution of Drugs, Medical Consumables and Equipments by Odisha State Medical Corporation
(CAG of India, 03-04-2021) CAG of India
Odisha State Medical Corporation Limited (OSMCL) is an independent procurement agency for the Department of Health and Family Welfare (H&FW), Government of Odisha. The key functions of OSMCL are timely procurement of quality medicines, surgicals, equipment, instruments, furniture, etc., through fair, transparent and competitive bidding process. Audit of procurement and distribution of drugs by OSMCL for the period 2016-19 revealed the following: • There was inordinate delay ranging between five and seven months in the finalisation of annual procurement plans for drugs and medical consumables and six to 17 months in respect of Equipment, Instrument and Furniture (EIF). Delay in finalisation of procurement plan impacted the procurement process and supply of drugs and medical consumables to health institutions. (Paragraph 2.1.2) • Against the indented/ approved quantity of 692.97 crore units, OSMCL could supply 336.94 crore (49 per cent) units of drugs and medical consumables to health institutions during 2016-19. Non-supply of indented quantity resulted in non-availability of essential drugs in health institutions which resorted to local purchase at higher costs and stock out of essential and critical drugs. (Paragraph 2.1.3) • Out of 3,471 Purchase Orders (POs) placed for supply of drugs and medical consumables, 791 (23 per cent) POs were partially executed and 252 (7 per cent) POs were not executed at all, which led to less supply of drugs and consumables to the health institutions. (Paragraph 2.1.4) • Deficiencies in stock management led to expiry of 349 kinds valued at ₹4.18 crore during April 2017 to May 2019. Expiry of drugs was due to ineffective monitoring of indents, distribution, consumption, stock position of drugs through e-Niramaya software. (Paragraph 2.1.6) • Short supply of drugs and medical consumables by OSMCL led to the health institutions procuring these items locally incurring extra expenditure. During 2018-19, test checked health institutions had incurred extra expenditure of ₹98.12 lakh (44 per cent) in procuring medicines worth ₹2.24 crore. (Paragraph 2.1.7) • OSMCL could procure only 43 per cent EIF against the approved quantity during 2016-19. As of June 2019, 19 per cent of the procured EIF had not been installed and were lying unutilised with different indenting agencies. (Paragraph 2.1.8) • Quality test reports of 22 per cent drug samples were received with a delay ranging between 16 and 244 days due to which the drugs received remained quarantined without supply to health facilities. Instances of non-replacement of sub-standard drugs by the suppliers were also noticed. (Paragraph 2.1.10) • Monitoring of distribution of drugs and medical consumables through the online inventory management system (e-Niramaya) was not adequate and effective. Lack of monitoring at the level of H&FW Department/ State Drug Management Unit/ OSMCL/ health institutions ultimately resulted in shortage of essential drugs and wastage of government resources due to expiry of unused drugs, supplied in excess. (Paragraph 2.1.13)
Performance Audit of Integrated Child Development Services (ICDS) in Haryana (2005-2010)
(CAG of India, 04-03-2011) CAG of India
The Integrated Child Development Services (ICDS), a Centrally sponsored scheme, was launched in 197576 with the main objective of improving the nutritional standard and health status of children in the age group of zero to six years and to enhance the capability of mothers to look after the health of their children. Performance audit of the scheme in Haryana for the Period 2005-2010, brought out deficiencies in its implementation. Coverage of children and women beneficiaries under various components of the scheme was inadequate. About 44 per cent of the children in the age group of zero to six years were malnourished at the end of 2009-10. Huge funds were drawn in advance of requirement and were kept in bank accounts. About one fifth of the targeted Anganwadi buildings were not constructed despite availability of funds. Facilities such as drinking water and toilets were not available in 73 and 57 per cent Anganwadi Centres respectively. Non-testing of food to check adequate micronutrients, non-maintenance of records of referral services, etc. also indicated deficient implementation of the scheme.
Failure to Claim Refund of Customs Duty Exemption by the Firm
(CAG of India, 04-04-2018) CAG of India
Jawaharlal Institute of Postgraduate Medical Education and Research, Puducherry failed to claim refund of customs duty exemption availed by a firm on imported equipment resulting in loss of ₹ 1.08 crore.
Procurement and Maintenance of Equipment in PGIMER Chandigarh
(CAG of India, 04-04-2018) CAG of India
The Institute lacked an established procedure in the form of a Procurement Manual that could ensure effective procurement management and timely acquisitions of equipment based on a holistic and systematic assessment of requirements. This resulted in procurements being made on an ad hoc basis, rush of expenditure towards the end of the financial year and delays in progressing of procurement cases. The Institute also failed to effectively invoke contractual remedies available to it where the supplier did not fulfil their contractual obligations with delay in levy of penalty amounting to ₹ 72.77 lakh for delay in supply or installation of equipment and incorrect calculation of downtime and non-recovery of penalty of about ₹ 1.46 crore for excess downtime with reference to the contractual terms. This undermined both the deterrent effect of the penal provisions as well as the Institute’s ability to enforce due performance of the contract by the suppliers.
Improper Procurement Planning Resulting in Idle Equipment
(CAG of India, 04-04-2018) CAG of India
Improper planning in procurement of equipment by National Institute of Nutrition as well as failure to enforce performance on terms of supply order by supplier resulted in equipment worth ₹ 1.52 crore lying idle and equipment worth ₹ 2.13 crore not being put to optimal use for more than five years.
Public Private Partnership Projects in Health Sector in West Bengal (2009-2014)
(CAG of India, 04-07-2016) CAG of India
With increase in demand and expectations for improved health care services, coupled with resource constraints in the public sector, the Health & Family Welfare Department coordinated with the private sector in Public Private Partnership (PPP) mode of operation for delivery of quality health care services in West Bengal from 2001-02. In January 2006, the department published the ‘Policy for Public Private Partnership in the Health Sector’ outlining various ways in which the diverse segments of the private sector can be engaged with the government for expeditious achievement of desired health outcomes. A Strategic Planning and Sector Reform Cell (SPSRC) was also formed in April 2008 for framing policy options and strategic approaches in this direction. Apart from the SPSRC, the department has a PPP cell under it. The department started PPP projects in various aspects of health services like establishing of medical colleges and hospitals (MCH), setting up investigation/ diagnostic centres at various levels of hospitals, installation of pipe lines and supply of medical gases in bigger hospitals and MCHs, starting ambulance services for patients in need, starting fair price outlets of medicines, etc. Operations in the following five major PPP initiatives, selected on the basis of their significance in improvement in patient care and operational maturity, were subject to audit assessments vis-à-vis the critical success factors as prescribed in the PPP Policy. 1 Diagnostic 1) CT-Scan and Magnetic Resonance Imaging (MRI) facilities Services 2) Diagnostic units in Rural Hospitals/ BPHCs 2 Supply of Oxygen I.P. through Pipe Line System 3 Establishment and Operation of KPC (Kali Pradip Chaudhuri) Medical College and Hospital 4 Emergency Transportation (Ambulance) Services 5 Establishment of three Mechanised Laundry Units under PPP mode Records of five Medical Colleges and Hospitals (MCHs), Chief Medical Officers of Health (CMOHs) of five districts and seven hospitals in Kolkata and five districts in the State covering a period from 2009-1042 to 2013-14 were covered for this study. These units were involved in running the above PPP projects and were selected on the basis of random sampling. Besides, 28 Diagnostic units set-up at rural hospital/ BPHC level in four selected districts were also test-checked. The audit observations are discussed in the subsequent paragraphs.
Compliance Audit on Functioning of Govt Blood Banks in West Bengal
(CAG of India, 04-07-2016) CAG of India
The functioning of blood banks in the State has scope for improvement in many aspects. There is an emergent need for setting up more blood banks in the State and for enhancing the capacity of the existing ones to bridge the gap between requirement and actual supply. Moreover, the blood bank network was not distributed evenly among the districts with blood bank/ BSUs not being available in rural areas. It was also a matter of serious concern that 53 out of 58 blood banks managed by the State Government do not have valid licenses. The basic tenet of providing safe blood, blood components and blood products was also compromised due to the absence of quality assurance mechanism in most blood banks. Quality aspect was further undermined by irregular supply of Elisa Reader, cross matching of blood by staff other than Medical Officers, ineffective calibration of equipment, absence of AMCs, etc. Performance of the blood banks as regards component separation was sub-optimal. There were instances of losses/ wastages of whole blood units, blood bags, test kits and reagents due to deficient inventory management. There were significant deficiencies in the blood bank automation software leading to possibility of pilferage of bloods/ kits. In the absence of interconnectivity among blood banks, available blood stocks in one blood bank could not be utilised by others in need, leading to wastage of stock. Deficient maintenance of records on the particulars of sero-reactive donors leaves possibilities of carriers of such deadly viruses remaining unaware and untreated. Non-compliance of the rules and inadequate monitoring by Drug Inspectors resulted in several deficiencies. Human resources management also calls for attention as 32 per cent Medical Officers and 20 per cent Medical Technologists attached to 17 test-checked blood banks did not have training on blood transfusion. Department of Transfusion Medicine was not established in nine Government MCHs of the State, neither was the separate cadre for Blood Transfusion Service created.
Undue Favour Extended to Contractor in Construction of Nivedita Bhavan (Headquarter of WBSEB)
(CAG of India, 04-07-2016) CAG of India
West Bengal Board of Secondary Education extended undue favour to the contractor by allowing irregular price adjustment of ₹ 96.44 lakh in construction of its office building (Nivedita Bhawan).
Unfruitful Expenditure on Non-Functional Student Hostels in West Bengal
(CAG of India, 04-07-2016) CAG of India
Thirteen hostels for minority students involving an expenditure of ₹ 11.34 crore could not be made functional even after four to thirteen years of their sanction leading to non-percolation of desired social benefits.
IT Audit of Hospital Management Information System and Stores Management Information System in West Bengal
(CAG of India, 04-07-2016) CAG of India
Hospital Management Information System (HMIS) aimed at managing vital patient records encompassing all the administrative and functional aspects of hospital operations. Department also intended to collate critical health related data from the hospitals through HMIS. The department introduced another application named Stores Management Information System (SMIS) for managing drugs and equipment logistics. Both HMIS and SMIS were implemented in all government hospitals down to the level of State General Hospitals. While HMIS was developed using SQL Server 2000 as backend RDBMS with Visual Basic in the front end having a client server architecture, SMIS was a web-based application using MS SQL Server 2000 in the back end and VB.netin the front end. The IT Audit of HMIS and SMIS was conducted between April and July 2014 covering the period 2009-14 and 2011-14 respectively, which threw light on various issues of control and data integrity as well as instances of unauthorised manipulation of data. 1. The desired benefits of improvement of the efficiency of delivery of health care services through introducing HMIS and SMIS remained largely unachieved as the department failed to operationalise these applications in all the intended hospitals. Even where these applications were running, all modules and sub-modules were not put to meaningful use. 2. Security of the systems was compromised to a great extent owing to weak logical access controls, physical access controls and absence of password policy. 3. It was also a matter of concern that privileges of system administrator were being exercised by support personnel engaged by the maintenance vendor. Lack of supervisory controls was also evident from the instances of manipulation in the system without knowledge of the hospital authorities. 4. Deficient controls coupled with absence of security certificate, antivirus, audit trail and logs have rendered the system vulnerable to unauthorised intrusions. These vulnerabilities have resulted in possibility of defalcation of government revenue, as instances of unexplained short collection of revenue were observed in many occasions. 5. Ability of the department in continuing its operations in the event of an interruption remains questionable in the absence of business continuity and disaster recovery plans. This issue assumed significance in view of instances of non-maintenance of data back-up.
Performance Audit on Working of Burdwan University in West Bengal (2009-2014)
(CAG of India, 04-07-2016) CAG of India
The University of Burdwan (BU) has a jurisdiction spread over the districts of Bardhaman, Birbhum, Bankura and a part of Hooghly. The University has two faculties — Arts and Science -- encompassing 29 departments offering 38 post-graduate courses, six undergraduate engineering courses and seven diploma/ post diploma courses and three certificate courses. It has 163 colleges affiliated to it. The University also manages a professional college viz. University Institute of Technology within the University Campus. The performance audit undertaken between March and June 2014 covering the five year period 2009-14 brought forth deficiencies in the functioning of the University with respect to planning, management of funds, academic activities and oversight mechanism. 1. Absence of Perspective plan encompassing goals for teaching and learning, research and development and human resource planning impeded the overall functioning of the University. 2. There were several issues in respect of financial management. Adherence to due process was not ensured in Budget preparation. University obtained excess grants from the State Government by inflating the staff strength. Provident Fund was maintained without following crucial Government instructions such as creation of Pension fund, framing statutes for GPF, etc. Annual Statement of Accounts had not been prepared for the last 12 years indicating lax handling of financial affairs of the University. 3. The research activities of the University did not present an encouraging picture as research output was modest. The University also had deficiencies in the IT front as adequacy of IT infrastructure was not evaluated and policies for IT security not formulated. 4. There were shortages of class rooms, laboratories, etc. 5. The University‘s initiatives in enhancing access, relevance and quality of education were sub-optimal. There was only a marginal increase in intake capacity of the University in PG studies despite increasing demand. The University started only three new courses during last five years. Quality Assurance Cell meant for planning, guiding and monitoring quality assurance and quality enhancement was not functioning as mandated. 6. The University had noticeable shortage of manpower especially in teaching, leading to adverse teacher-student ratio which could affect the quality of learning. The recruitment process required streamlining as there was no regular system of reporting of vacancies and there were instances of flouting of recruitment norms. Adequate attention was not given to the capacity building of teaching staff. 7. Oversight was tenuous as the Inspector of Colleges, Faculty Councils for Post Graduate Studies and the State Government failed in discharging their mandated monitoring functions. Further, State Government was not fully cognizant of the state of affairs of the University as its representatives in the Court and the EC did not attend the meetings.
Compliance Audit on Procurement of Machines Equipments and Accessories for Dental Institute RIMS Ranchi
(CAG of India, 04-08-2022) CAG of India
The Rajendra Institute of Medical Sciences (RIMS), Ranchi is an autonomous medical institute of the Government of Jharkhand (GoJ) under the administrative control of the Health, Medical Education & Family Welfare Department (the Department). A Dental Institute, with a capacity of 50 annual intakes in Bachelor of Dental Surgery (BDS) course, was started from the Academic year 2017-18 in RIMS for which 176 types of dental equipment worth ₹ 37.17 crore was procured. On the request of the Secretary of the Department, audit of procurement of equipment for Dental Institute, RIMS was conducted between July 2019 and May 2020 for the period 2014-15 to 2018-19 to assess whether the tendering process was regular and equipment were procured economically. Main audit findings are summarised below: 1. Against an original proposal of ₹ 5.80 crore for procurement of dental equipment as approved by the Governing Council, the Director, RIMS submitted detailed budget of ₹ 9.29 crore to the State Government. However, RIMS procured dental equipment valued at ₹ 37.17 crore during 2014-19 which was 400 per cent of the budget. 2. In a tender invited in January 2016, technical and financial evaluation was not done on combined scoring pattern as per terms of the NIT giving weightage to the technical qualification and financial offers without recording any reasons. The purchase and technical committees approved the lowest rates from the rates quoted by technically qualified bidders without giving scores at any stage. Against this tender, 20 items valued at ₹ 18.52 crore were procured. 3. Though instructed by the Health Minister, the Director, RIMS neither crossverified the compliance submitted by the accused supplier nor surveyed the market price or procurement price of similar equipment in other medical institutions prior to payment of outstanding bill of ₹ 5.40 crore and further procured equipment valued ₹ 11.40 crore from the same supplier without obtaining the approval of the Health Minister. 4. The Finance and Accounts Committee did not decide the tenders though required under the Regulations of RIMS. Instead two different committees (Purchase Committee and Technical Committee) having no defined role in the Regulations were entrusted with the decision of tender by RIMS. 5. There was absence of uniformity and transparency in technical evaluation of bids besides arbitrariness in deciding technical qualification in favour of a bidder with respect to procurement of basic and advance dental chairs, mobile dental van and 15 other items valued at ₹ 25.70 crore. 6. RIMS incurred avoidable expenditure of ₹ 14.25 crore on procurement of dental equipment (Chairs, Mobile dental van and RVG) compared to the rates given in the budget estimates. 7. Attachments and accessories with basic dental chairs, advanced dental chairs and Mobile Dental Van were either missing or of lower specifications. Two out of ten supplied Radiovisiography systems were of different model. RIMS also failed to impose penalty of ₹ 2.37 crore for delayed supply. 8. Dental equipment worth ₹ 12.02 crore supplied to the Dental Institute was not found entered in inventory and was thus fraught with the risk of misuse. 9. Equipment worth ₹ 1.94 crore purchased (August 2016) for laboratory and the operation theatre (OT) was found lying idle in the store as laboratories and OT had not been set up as of May 2020. Disinfectants worth ₹ 17.85 lakh purchased in August 2016 for use in the OT had expired.
Performance Audit on TPA in Health Insurance Business of Public Sector Companies
(CAG of India, 05-08-2022) CAG of India
Health insurance business is the second largest line of business of the PSU insurers (the first being motor insurance) having gross direct premium of INR 1,16,551 crore during the five-year period from 2016-17 to 2020-21. However, the performance of PSU insurers in health insurance business is at present not profitable and they are incurring continuous revenue losses, which amounted to INR 26,364 crore during five years ended March 2021. In health insurance business, TPAs are engaged to have better expertise, specialization in provider interface, medical adjudication of claims and technologically driven customer services. The Compliance Audit was intended to ascertain whether the PSU insurers managed the health insurance portfolio in a sustainable manner and the performance parameters were optimal; the PSU insurers have laid down a system for empanelment of TPAs, enrolment of hospitals and monitoring of services rendered by TPAs; there existed a suitable system for processing and settlement of claims in line with IRDAI regulations, guidelines, rules, circulars, policies, and agreements with various parties and risk underwriting of health insurance policies was done in a prudent manner and appropriate internal control mechanisms were in place to protect revenue. Audit examined performance of health insurance portfolio of PSU insurers for the last five years i.e., from 2016-17 to 2020-21. Also, underwriting and claim settlement records of PSU insurers for three-years (i.e., from 2016-17 to 2018-19) were examined based on sample selection. Audit observed that the losses of health insurance business of PSU insurers either wiped out/ decreased the profits of other lines of business or increased the overall losses. The cumulative loss of `26,364 crore for last five years was on account of the following factors: • Efficiency was lacking in underwriting of group policies due to non-loading of premium for adverse claim experience and non-adherence to outgo calculator. Out of 3215 group health policies, test check of 188 group health insurance policies in Audit revealed undercharging of premium to the tune of INR 1,548.19 crore in 155 policies and excess discount of INR 9.28 crore in three policies. • PSU insurers were not giving due importance to past claim experience of the TPA, particularly the ICR, while allocating business to TPAs. TPAs continued to get same level or even higher level of business despite high ICR of above 100 per cent in the previous years. TPA-wise high ICR has driven up the overall ICR of the health portfolio leading to high losses. • IT systems of PSU insurers lacked appropriate validation checks and controls resulting in excess and inadmissible payment for claims. Ministry of Finance has laid down (September 2012/May 2013) guidelines for underwriting of Group policies as per which the Combined Ratio of Standalone Group policies shall not exceed 95 per cent and for group policies involving cross subsidy, the Combined Ratio shall not exceed 100 per cent. Audit noticed that the guidelines were not complied with by the PSU insurers and the combined ratio for group health insurance segment as reported by the PSU insurance companies ranged from 125-165 per cent. The comparative performance of PSU insurers in health segment was poor vis-à-vis private and SAHI insurers. The PSU insurers carried out empanelment of TPAs (except UIICL) but allocated business to non-empaneled TPAs also. Safeguards such as maintaining valid bank guarantees of TPAs and regular collection of claim records from TPAs was not prevalent. Resultantly, when fraudulent activities by a TPA came to light and their registration was cancelled by IRDAI, the PSU insurers could not carry out a proper investigation into claims settled by the TPA. PSU insurers incorporated HITPA as their joint venture with an objective to enhance customer experience and bring greater efficiency in health insurance claim processing. Despite, HITPA having comparable performance parameters and presence in major cities, the allocation of business to HITPA by the PSU insurers was minimal. PSU insurers took the initiative to have their own network of hospitals by forming PPN but even after 10 years, enrolment of hospitals under PPN coverage was inadequate. Data analysis by Audit revealed that NIACL and UIICL have settled claims more than once on different dates although the policy number, insured name, beneficiary name, hospitalization dates, illness code, hospital name and disease were the same. Audit pointed out 792 cases (INR 4.93 crore) of multiple settlements in NIACL and 12,532 cases of multiple settlements (INR 8.60 crore) in UIICL, as seen from the database. Audit observed that the systems and procedures for internal audit/ health audit were inadequate and number of audits carried out was insignificant to the targets fixed/the total number of claims settled, thus leaving scope for loss of revenue due to excess settlement of claims.

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