PAC32-R-245(ii) B - 12/01/2017
Feidhmeannacht na Seirbhíse Sláinte
Rannán Gnóthaí Parlaiminte
Oifig an Ard-Stiúrthóra
Bloc D, 2 urlár
Ionad Gnó Gheata na Páirce
Sráid Gheata na Páirce
Baile Átha Cliath 8
Teil. (01) 635 2505
Facs (01) 635 2508
Rphost: [email protected]
Health Service Executive
Parliamentary Affairs Division
Office of the Director General
nd
Block D, 2 floor
Parkgate Business Centre
Parkgate Street
Dublin 8
Tel: (01) 635 2505
Fax: (01) 635 2508
Email: [email protected]
29th December 2016
Ms. Margaret Falsey,
Committee Secretariat,
Public Accounts Committee,
Leinster House,
Dublin 2.
Re: Patient Private Property Account
Dear Margaret,
I refer to your recent email and the accompanying transcript from the Committee meeting held on
the 25th of October 2016 where the HSE's Patient Private Property Account for 2014 was discussed
and the request from Committee to seek further information on this Account.
Please find attached for the attention of the Committee members a briefing note from our Chief
Financial Officer on the matter.
If any further information is required please do not hesitate to contact me.
Yours sincerely,
_______________________
Ray Mitchell
Assistant National Director
Parliamentary Affairs Division
Encl.
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Briefing Note for the Public Accounts Committee
Re:
This document is intended to brief the PAC on the 2014 Patient Private Property (PPP)
Accounts which were laid before the Houses of the Oireachtas in October 2016 and to
provide an update on actions taken in response to issues of non-compliance raised.
The HSE operates client PPP accounts on the basis of the Health (Repayment Scheme) Act 2006.
The Act allows the HSE to receive and hold client PPP funds, to use funds for the benefit of clients
and to invest funds on clients’ behalf. The 2006 Act requires the HSE to maintain PPP accounts
and to produce an annual set of financial statements for audit by the Comptroller & Auditor
General. The Act also places restrictions on the HSE as to how it can invest PPP funds. Such funds
must be invested with a financial institution regulated by the Central Bank of Ireland or with the
National Treasury Management Agency.
A statutory Instrument provided for under the 2006 Act was introduced in 2007 to allow the HSE
implement a charge to offset the running costs of the Patient Private Property Accounts Central
Unit (the central unit) which is based in Tullamore. The charge is limited to a percentage of the
interest earned for patients on their accounts held in the central unit. The collection of client
Department of Social Protection allowances is also provided for in a 2009 Statutory Instrument
issued by that Department.
As part of the suite of National Financial Regulations (NFRs) maintained by the HSE to document
the system of internal financial control, the HSE has implemented NFR 22 – Patients’ Private
Property. This NFR provides the following direction to management and staff on the operation of
the PPP system:
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Scope of the NFR, including the definition of Roles and Responsibilities of management
and staff, as well as Audit requirements;
Instruction on assessing Client Capacity – fundamental concepts and methods of
assessment;
Direction on the Receipt, Withdrawal and Usage of Client Funds;
Direction on the Receipt, Withdrawal and Usage of Deceased Client Funds; and
Controls and requirements over managing and sharing Information, Reporting and
Security.
A Patients’ Private Property Guidelines document is also in force to provide detailed instruction to
management and staff on the management of client funds at Care Centres. This document
focuses on providing instruction to front line staff in managing client funds, particularly in cases
where clients do not have full capacity to manage their own financial affairs.
Financial Statements – Preparation and Audit
The HSE has contracted an external accountancy firm to audit the PPP financial statements
prepared in respect of the 155 individual Care Centres and the PPP central unit. On the completion
of this annual audit the external accountancy firm provides a management letter to the Chief
Financial Officer to provide a commentary of the effectiveness of the operation of PPP accounts
and highlight any issues of non-compliance with PPP financial controls. A set of centre specific
management letters are also provided.
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The external accountancy firm also prepares the draft Consolidated PPP Accounts which are
reviewed by the Directorate of the HSE and submitted to the C&AG for statutory audit as provided
for under the 2006 Act. On the completion of his audit the C&AG provides a management letter to
the Director General of the HSE highlighting issues requiring attention.
Upon completion of the C&AG the Consolidated PPP Accounts are approved by the Directorate,
signed by the Director General and then forwarded to the Minister for Health, to be laid before
the Houses of the Oireachtas.
The HSE Audit Committee reviews the Consolidated PPP Accounts annually as well as monitoring
all PPP audit reports, including HSE Internal Audit reviews. The Audit Committee also monitors the
HSE response to internal and external audit Management Letters.
The internal and external auditors of the HSE have the right to unrestricted access to all premises,
vouchers, documents, books of account, and computer data and to any other information which
they consider relevant to their enquiries and which is necessary to fulfil their responsibilities and
obligations. Both internal and external auditors also have the right to direct access to any
employee or person responsible with whom it is felt necessary to raise and discuss such matters.
PPP Account Central Unit (based in Tullamore, Co Offaly)
The HSE has established a national co-ordinating unit for PPP, the PPP Account Central Unit (the
central unit) in late 2006. The central unit receives all payments from the Health Repayment
Scheme in respect of payments made to clients’ PPP accounts. The Health (Repayment Scheme)
Act 2006 requires certain payments to be made directly to such accounts.
Excess PPP Funds from individual Care Centres are also transferred to the central unit. The
majority of PPP funds are now invested in a central investment fund. The PPP funds are invested in
a Deposit Account with the National Treasury Management Agency on behalf of clients and
interest earned is assigned to individual client accounts weekly. The rate of interest payable
currently at November 2016 is zero owing to the current interest rate environment but the fund is
fully protected which contrasts with the Central Bank’s €100,000 Deposit Guarantee Scheme for
the commercial banking sector. The HSE Investment strategy for PPP funds is conservative to
minimise the risk of loss of funds and ensure that the sum invested is secure. The HSE Directorate
periodically reviews this investment strategy and Directorate approval is required prior to the
investment fund being moved from the NTMA.
Department of Social Protection (DSP) Allowances and Pensions (approx 2,500) are also received
by the PPP central unit weekly and lodged to each client’s central PPP account. The weekly
statutory charge levied on each client is deducted and monies are provided for each client to their
local Care Centre as requested depending on client usage.
The central unit also:
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Supports Care Centres nationally in managing Probate cases;
Provides ongoing support to Care Centres on other PPP issues;
Coordinates the preparation and audit of PPP National Annual Accounts;
Manages the investment of the PPP fund; and
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Leads on national PPP developments and liaises with external agencies on PPP matters
nationally.
The central unit manages 95% of the PPP fund nationally, with only 5% of the fund under the
control of local Care Centres.
Care Centres (155 units across Older Persons, Disabilities and Mental Health with
10,000 individual ledger accounts)
Local PPP administrators reporting to their local management and with support from the Finance
Division and central unit, maintain the local PPP accounts in line with HSE regulations. In this
respect they lodge and receipt monies, process requests for transfer of funds from the central
unit, effect transfers of surplus funds to central unit, engage with clients, next of kin, legal
personal representatives and other relevant third parties on PPP and perform all tasks necessary
to maintain probity of PPP accounts.
The system in place effectively provides two PPP accounts for clients. The Local Care Centre PPP
Account should be viewed as a type of Current Account because it does not earn interest. It is used
to hold day to day money requirements. The PPP Central Unit Account should be viewed as a type
of Deposit account because monies in it may earn interest.
Patients’ Private Property Historical Issues
€14.4m Retained Interest held by HSE requiring payment to entitled patients
Historically the former Health Boards did not allocate to clients interest earned on invested excess
PPP funds it held on behalf of clients. Interest earned was retained by the Health Boards to partly
defray the costs of operating the PPP system. This practice was based on previous legal advice.
Subsequent legal advice indicated that PPP was operated under an implied trustee relationship
with the clients and thus the HSE decided it was obliged to remit interest earned to those clients.
Client PPP funds currently being held by the HSE are being administered in compliance with this
requirement and any interest due for repayment is in respect of legacy PPP funds. At present the
HSE holds €14.4m in interest earned which is required to be allocated to entitled patients.
€2.368m of this figure relates to pre-2005 interest earned. The remainder of this interest figure
accumulated while the HSE was unwinding the legacy PPP investment system across the country.
This amount is currently managed by the central unit.
The central unit was established in the first instance to manage nationally the receipt of payments
to clients from the Health Repayment Scheme, where the HSE was obliged to receive same. Since
December, 2006 €120m in such funds was received by the HSE and managed in compliance with
interest payment requirements. The process of unwinding historical former Health Board PPP
investment funds was then commenced.
In August 2015 the central unit contracted an external accountancy firm to co-ordinate a survey
and a data collection exercise of 12 representative Local Care Centres to ascertain the scale of the
task in calculating the Past Interest Retained (PIR) due to entitled patients.
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A draft report was produced by the external firm detailing the availability of records, local systems,
data collection logistics based on the sample of 12 centres and a projected cost of completing the
calculation of PIR due for the remaining centres. A briefing document has been reviewed by HSE
management and recommendations agreed are now being encompassed into a wider
implementation plan.
The HSE has in October 2016 approved the commencement of the data collection required to
calculate the interest to entitled clients. There are numerous significant challenges after this
phase in completing the exercise of repaying retained interest, once calculated, to clients, or in
most cases, their estate, including:
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Identifying all clients and the value of PPP funds held at any time; and
Locating certain clients, or their estates to allow the HSE make payments.
It is expected that the data collection phase for the remaining local care centres will take
approximately 6-9 months. During that period the remaining 2 phases will be the subject of
detailed planning informed by the experience of the data collection phase.
These 2 phases can be summarised as phase 2:Finalising calculations of amounts due and phase 3:
Establishing who monies can be paid to and making those payments. It is difficult, pending
progress being made on phase 1, to estimate the likely timescales for the subsequent phases
however it is expected that phase 2 will take a minimum of 3-6 months and Phase 3 will take a
minimum of 1 year. At the end of Phase 3 it is expected that there will be some cases in respect of
which it will not be possible to determine who monies should be paid to e.g. where it has not been
possible to trace a next of kin. The HSE will engage with the relevant bodies as part of phase 3 to
determine the appropriate course of action in such cases.
Breaches of the Control Environment during 2014
No fraud was indentified during 2014. However, internal and external reviews indentified the
following breaches of the financial control environment during the year. An updated management
response in italics is added below each one listed;
1. Absence of segregation of duties at some care homes
At a number of Care Centres nationally a system of effective segregation of duties is not in place
due to the absence of sufficient staff to facilitate this. This includes tasks such as lodgements and
payments, maintenance of local PPP records and completing bank reconciliations.
Due to the size of many Care Centres across the country it is not economically feasible
for the HSE to assign extra administrative staff to such locations to ensure that full
segregation of duties can be guaranteed at all times. In such situations with smaller
units where this is not possible the HSE has implemented compensating controls. Such
controls include;
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Minimising the level of funds held locally so that only monies required for day to day
spending are paid to care centres by the central unit on a weekly/fortnightly/monthly
basis.
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Ensuring that all HSE managed DSP allowances/pensions are cashed through the
central unit and maintenance discharged by Electronic Funds Transfer direct to HSE
revenue accounts
Monitoring balances held locally and writing to care centres to seek surplus fund
transfers
Monitoring all fund request forms which list by individual patient the funds requested.
Any requests over €500 for individual patients require a separate request form as do
all requests for funds in respect of deceased clients
All investment funds held locally have now been taken into the central unit save for
less than €30k still to be validated
Over 95% of all dormant/inactive accounts have been moved to the central unit.
PPP as of this year now has its own section in the HSE’s Internal Control Questionnaire
which all senior managers must complete as part of an annual review of the
Effectiveness of the System of Internal Controls. This will assist in identifying any
locations of concern
All regulations and guidelines pertaining to PPP are currently being reviewed by a
Divisional Working Group reporting to the National Steering Group for Assisted
Decision Making(ADM). While the main purpose is to ensure conduciveness with the
new ADM Act it provides an opportunity to enhance other aspects of the
documentation
The HSE is currently drafting a set of national compensating controls to include
direction on the checks and reconciliations to be undertaken by management on PPP
financial processes where full segregation of duties is not possible. This issue is
featured in the Crowleys DFK 2016 Audit Plan to further identify the specific locations
and issues where the issue still presents.
2. Absence of full Bank Reconciliations
Local Care Centres are required to complete bank reconciliations on a monthly basis to reconcile
amounts in the bank account with the balances per the local records. The Audit of the 2014 PPP
accounts highlighted instances where full bank reconciliations were not completed at Care
Centres. This creates a risk that funds transfers are not being recorded correctly.
In all cases bank reconciliations were undertaken at each of the 155 local care centres.
However at a number of locations staff were unable to complete reconciliations fully
due to variances that they were unable to reconcile. The vast majority of these
variances relate to historical legacy issues. Aside from these legacy issues, the 2015
Management Letter identified only four care centres with bank reconciliation issues in
respect of 2015. None of the 2015 specific variances was more than €100 in any of
these 4 local care centres. These historical legacy issues have impact on the ongoing
operation of PPP bank accounts.
The PPP central unit, in the last quarter of 2015 has in conjunction with Crowleys’ DFK
commenced a detailed work plan on managing legacy issues including bank
reconciliation discrepancies many of which occurred over 20 years ago. The majority of
the legacy issues will be cleared out of local accounts by the end 2016.
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Other Control Weaknesses Identified during 2014
1. Non compliance with HSE procedures in relation to receipt of patient monies
In 2006 the HSE established a central unit for patient funds. Thereafter all State payments
received by individual patients were required to be lodged to one bank account controlled by the
central unit. The audit found that two care homes were not operating this system and State
payments such as pensions were lodged to the care home’s local bank account.
Cregg House – This care centre came under HSE management in late 2013. As such
State payments were lodged to the unit’s dedicated PPP bank account (not revenue
account).The central unit engaged initially with the unit to validate over €1.2m surplus
funds held locally and transferred same centrally in 2015. The central unit then, with
Cregg House, assistance processed over 120 completed DSP agency forms, with medical
certification, to facilitate central cashing of clients state payments. The payments
switched over to the central unit bank account in mid-Oct 2016.
Heather House – This applied to two clients where their DSP allowances were received
through the care centre’s local PPP bank account in error as the relevant Agency Form
should have referenced the PPP central unit. This bank account is operated separately
to HSE bank accounts. These allowances are now received through the central unit bank
account. It is the case that some care centres continue to receive some allowances on
behalf of clients who had this arrangement in place prior to the centralisation.
At both Care Centres, above, the audit issue identified has now been rectified.
2. Inadequate control over payments from client accounts
The procedures specify that all withdrawals from a patient’s bank account are authorised in
writing by the patient (or witnesses in cases where the patient is incapacitated). The audit
identified a number of instances where payments in relation to ‘comfort money’ or payment for
services to the patient (hairdressing etc) were not authorised by the patient. In addition, in some
instances a relative is given a specified per diem rate where a patient leaves the care home for a
number of days. In these cases, no authorisation from the patient is requested. The audit also
found that up to September 2014 one care home was deducting rent and long stay charges from
patient accounts.
Patient withdrawal of local comfort funds is the most common activity in PPP of which
there are thousands of transactions annually with no certification omissions/errors
present. The PPP CU in June 2015 issued an ‘Information Bulletin No 16’ P10 and P20
forms in respect of the withdrawal of client funds. This provided clear guidance to staff
as to when each form should be used to make monies available or pay client bills etc.
The 2015 Crowleys DFK Management Letter noted a significant improvement here and
further guidance will issue if required. A reminder on this matter will issue to all
locations end December 2016.
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3. Excess funds in local bank accounts
The PPPA Central Unit recommends that patient balances held in local care centre bank accounts
are maintained at between €200 and €800. Some care centres were not transferring excess funds
and in these centres individual patient account balances were up to €15,000. In other care centres
a review of patient balances was not conducted periodically to identify funds that should be
transferred to the central unit. As a result, individual patient balances in these homes ranged for
€2,000 to €3,000.
After each year’s external audit the central unit examines all local care centre fund
levels against the client numbers for each unit. Where the average balance exceeds
€800 the central unit writes to the care centre reminding them of the recommended
patient balances to be held for low, medium and high spenders and requests that
surplus funds measured against these limits be transferred to the central unit. This
exercise will be undertaken periodically to ensure that local balances are maintained at
a minimum. It is the case that some clients with capacity have signed the opt-out form
to continue to have their funds held locally so some large balances will be present
locally.
4. Patient accounts overdrawn
Three care centres had continued to pay ‘comfort’ money but had not requested funds (in relation
to the individual patient) from the central unit or from the Ward of Court office. Overdrawn
patient accounts at year-end totalled between €25,700 and €63,800 in these three care homes.
Care Centres will ensure that clients have access to their PPP funds in the exceptional
circumstance where client balances are not sufficient locally to fund purchases, once the
client has those funds available centrally, or from the Wards of Court Office. In such
cases, while the local client PPP account may be overdrawn, the HSE holds sufficient
funds for the client to support expenditure. While some of the overdrawn balances at
year-end relate to timing of fund requests from the central unit, others relate to
patients comforts which must be purchased while waiting comforts monies to be
provided by next of kin.
The PPP CU in last quarter of 2015 has in conjunction with Crowleys DFK commenced a
detailed piece of work on legacy issues and developed a specific work plan with agreed
accounting treatment for each type of issue Much of this work has been completed by
Dec 2016.
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