Dear All,

Here is the CAG report on ECHS of March 2015. Possibly many of you might have already read it. I had just glanced through it , on a first look, plan to go through it later in detail. However there are certain glaring faults, negligence, commissions and omissions, even by major hospitals like R&R, Base Hosp Delhi and many service hospitals, ECHSs. I have reproduced some of the relevant parts from the CAG report, to give one, some idea about how damning, some of the points are. This is Not to condemn but to further improve the working of the ECHS. Most of us will agree, that by and large ECHS is indeed doing a great job in looking after the Veterans.

The link for the complete report is given at the end of this page.

Regards,

Col A S Rajan

1. The ECHS is Not supposed to charge the Veterans for the Smart cards, which is how ever being done from the initial commencement of the scheme.

2. Shortage of medicines to ECHS is primarily due to both AFMSD at Delhi and Mumbai, not supplying or being unable to met the supplies to the extents 0f 63 % to 76%   NA by the Mumbai depot and whereas in case of AFMSD Delhi Cantt. the percentage of NA medicines ranged from 30 to 45 per cent, as shown in Table 5. Since AFMSDs are the major source for supply of drugs and consumables for the Scheme, shortage in supply of medicines up to the extent of 76 per cent by the two AFMSDs, denied the benefits envisaged in the concept of the Scheme to the ESM.

3. Non disposal of life expired medicines/drugs As per the terms of the supply orders (SO) placed by DGAFMS and other Direct Demanding Officers (DDO) for procurement of medicines/drugs, if the drugs are lying unconsumed, the DDO will inform the vendor three months in advance. The vendor is liable to replace such medicines. In case the vendors do not replace the stock, the DDOs are empowered to make recovery of the cost of medicines from their pending bills. We however, observed that despite the provision in SO for replacement of shelf life expired medicine, AFMSD Delhi Cantt. and Polyclinic at Lodhi Road, New Delhi were holding life-expired medicines/drugs worth `73.44 lakh (March 2015). From the documents, it could not be ascertained whether AFMSD/PC had taken up the matter for replacement of these medicine, in time, with the supplier. As a result, the expenditure on procurement of medicine worth `73.44 lakh had become wasteful. MD, ECHS stated (October 2015) that reply had been sought from DGAFMS

4.Diversion of ECHS funds/stores for Service personnel by Service hospitals As per the procedure for procurement of drugs and consumables for ECHS, medical stores procured for ECHS should be accounted for separately by the Service hospitals and utilized for the benefit of members of ECHS only. PERFORMANCE AUDIT OF EX-SERVICEMEN CONTRIBUTORY HEALTH SCHEME 19 However, we noticed at Army Hospital Research & Referral (AHRR) Delhi Cantt. and Base Hospital, Delhi Cantt. that separate accounting for issue of medicines/stores to ECHS beneficiaries was not being done by the Service hospitals and the stores meant for the ECHS beneficiaries were utilized for treatment of regular Service personnel. Non maintenance of accounting documentation to delineate the expenditure on ESM and the regular service personnel was not only in violation of the laid down procedures, but also had an impact on the services to be provided to the ESM under the Scheme. Illustrative cases as observed in the test check are summarized as follows: x AHRR, Delhi Cantt. procured test kits/reagents for its pathological laboratories worth `42.94 crore during 2012-13 to 2014-15. This included procurement for ESM from ECHS funds worth `37.84 crore and for service personnel from DGLP funds worth `5.06 crore. While the expenditure on procurement of these drugs for ECHS beneficiaries and service personnel was in the ratio of 7.5:1, we observed that the ESM and service personnel registered for treatment in AHRR during the three year period of 2012-13 to 2014-15 was in the ratio of 1:3. This disproportionately higher expenditure from ECHS funds (7.5:1) against the correspondingly lower patient ratio (1:3) was suggestive of the fact that the medicine and consumables meant for ECHS beneficiaries was unauthorizedly being used for other than ESM. x We observed that during the period April 2011 to March 2015, quantity 5,603 nos. consisting of eight types of medicines of oncology costing `13.79 crore were procured by AHRR, Delhi Cantt., from ECHS funds. Out of this, 5,553 nos. costing `13.68 crore were issued by the hospital for treatment of regular service personnel. While accepting the audit point, AHRR stated that the medicine was issued to Service personnel in life threatening conditions. It was however added that they would try to adhere to the laid down procedure. x In AHRR we observed that stents procured from ECHS funds were utilised for treatment of regular service personnel. Between April 2013 to December 2014, 116 stents were issued for treatment of regular service personnel. While no separate account was being maintained to keep track of such issues, Audit found from the available documents that only 84 out of 116 stents had been returned to ECHS stock up to December 2014. Thus, due to non adherence to the laid down procedure, the stores procured under ECHS were not being accounted for. MD, ECHS in reply to the draft report stated (October 2015) that DGAFMS would reply on these issues. Report No. 51of 2015 20 2.3.10

5.x Charging of ECHS patients at higher than non-ECHS rates As per the general instructions issued by MD, ECHS in October 2011, the empanelled hospitals were required to give a certificate of undertaking that “Hospitals shall not charge higher than the ECHS notified rates or the rates charged from non-ECHS patients”. We observed from medical bills of empanelled hospitals at Lucknow, Dehradun, Varanasi and Jabalpur that the accommodation charges claimed by the Hospital and admitted by the respective SHQ were more than the rates being charged by those hospitals from non-ECHS patients. Charging of higher rates by the hospitals was despite the undertaking given by the empanelled Hospitals. On this account a sum of `26.78 lakh was overpaid to the hospitals,

Ex-servicemen Contributory Health Scheme was envisaged to provide health care on cashless basis to all the Ex-servicemen and their dependents on the lines of CGHS. During the review we however observed that the Scheme was beset with deficiencies as given below: The enrollment of beneficiaries had various shortcomings including beneficiaries being charged for the smart card and instances of multiple enrollments of beneficiaries, ineligible beneficiaries and higher than entitled room types being allowed to beneficiaries. Many polyclinics, starting point for treatment of ESM are over-burdened with respect to their designed capacity. The supply of medicines to the polyclinics was inadequate. The MIS system was not functioning with reference to identification of beneficiary and for their pathological reports. ECHS lacked internal controls for verifying the cases of EIR, resulting in acceptance of referrals even after large delays of up to 584 days as against prescribed time limit of 48 hours. ECHS neither enforced the conditions of MoA nor penalized the hospitals indulging in overbilling. Claims were raised by empanelled hospitals and paid by ECHS for the overlapping period in which the same beneficiaries were admitted in other empanelled hospitals. There were delays in dissemination of revised rates resulting in overpayments. BPA responsible for online processing of claims was functioning without an MoA since inception in 2012. In absence of MoA, no performance parameters were enforceable on BPA. In 90 per cent of the delayed cases, BPA was also responsible for delay. These delays resulted in forfeiture of discount of `34.10 crore due to payment to the hospitals beyond prescribed period of 10 working days. Due to inadequate post audit of bills by the Regional PCsDA/CsDA, inflated bills of the empanelled hospitals could not be detected. The infrastructure created in terms of polyclinics was not being optimally utilised due to lack of manpower, equipment and medicines. Resultantly, polyclinics were forced to function as point of referral only to the empanelled facilities. CHAPTER-III: CONCLUSION PERFORMANCE AUDIT

1. Checks for unique enrollment of beneficiaries as per the entitlement followed by periodical verification/renewal to weed out ineligible beneficiaries should be enforced. 2. ECHS should ensure that rates and conditions prescribed by CGHS are scrupulously followed while processing the medical bills. Necessary internal controls need to be put in place. 3. Revised rates notified by CGHS should be implemented with immediate effect. MoA with the hospitals should include a specific clause about applicability of revised rates as notified by CGHS. 4. Workable and sufficient deterrents need to be incorporated in the MoA to discourage the hospitals from raising inflated bills, refusal of cashless service and non-adherence to other provisions of the MoA. 5. Provisions need to be included in the MoA to penalize the hospitals for raising EIR after the prescribed period of 48 hours. In no case, EIR should be accepted after the discharge of patients. 6. Strict adherence to the provisions of accounting of medicines/drugs procured for ECHS and Service hospitals separately and utilization for ECHS beneficiaries should be ensured. 7. Possibility may be explored to introduce a clause in MoA for availing discount on MRP of the medicines being provided by them to the patients. 8. Measures for authentication of beneficiaries should be put in place. All modules under MIS application at ECHS Polyclinics be made operational.