NHIF on the spot over unused road rescue plan
The National Hospital Insurance Fund (NHIF) is paying approximately Sh1.2 billion annually to a private firm for road accident evacuation services that could be benefitting less than 3,000 Kenyans over the same period.
Under a contract that NHIF entered into with a firm linked to the Kenya Red Cross Society, the insurer deducts Sh30 per month from its active members and remits it to Emergency Plus Medical Services (E-Plus), which receives about Sh1.2 billion annually irrespective of the number of evacuations it undertakes. As a result, each member pays Sh360 per year for emergency road evacuation services that appear to only serve a small fraction of members, leading to otherwise avoidable revenue loss.
Due to lack of awareness about the availability of road accident evacuation services, road users involved in crashes are routinely evacuated from crash scenes in private cars or by ambulances from nearby health facilities or those procured by county governments.
Those evacuated using personal cars are exposed to life-threatening or life-long complications arising from mishandling at the scene and thereafter.
NHIF now finds itself in a quagmire after a recommendation for it to terminate its contract with E-Plus, the investment arm of the Kenya Red Cross. Experts have warned that if NHIF opts for this route, it could lose in excess of Sh1.4 billion in penalties for breach of contract, meaning that it is damned if it upholds the contract and damned if it terminates it.
According to an audit commissioned by the board, NHIF members are not getting value for the money they pay E-Plus because of the low uptake of the evacuation service and the use of capitation mode of payment rather than billing for services offered. “Utilisation for the Emergency Road Evacuation benefit in the first annual contract cycle was relatively low since only 2,520 evacuations were done out of a total covered membership of 2,317,351 active members in the first quarter,” the board report states.
That means less than one per cent of the members utilised the evacuation service, which means the capitation model of paying E-Plus is not prudent use of resources.
The audit attributed low uptake of the service to low member awareness and failure by E-Plus to undertake a public education campaign.
It also questioned why the NHIF management changed the contract from an open tender to direct procurement and opted for capitation instead of the fee-for-service model under which a service provider bills charge based on services rendered.
At one point, the audit shows, NHIF paid a staggering Sh719 million for the service although only 1,931 members benefited.
“From the aforesaid, NHIF notes that in spite of several commitments by the service to improve uptake of this benefit through enhanced member education, there is demonstrable reluctance by E-plus to undertake aggressive continuous member education,” says the report.
Yesterday, NHIF chief executive Peter Kamunyo told People Daily that the Emergency Road Evacuation Service had benefitted more than 50,000 Kenyans since its inception in 2014.
“Although the service has had some challenges here and there, it has benefitted a large number of helpless Kenyans. Forget about the politics involved and give credit where it is due,” he said.
However, in a letter dated March 11, 2022, the CEO had indicated that an audit report had unearthed some serious concerns about the scheme that needed to be addressed. “The board, after deliberations and noting that the utilisation was low, resolved to pend the contract for provision of the emergency road evacuation services. The board further guided that the management should prepare a board paper clarifying the notice period and the termination clause of the procurement contract,” Kamunyo said in a letter he addressed to former board chair Lewis Nguyai.
In the same letter, Kamunyo told the board that terminating the arrangement would be detrimental to NHIF as that would be tantamount to breach of contract. “Management however notes that by the time the Board passed the resolutions, there was already in place an implied contact between the Fund and E-Plus to ensure continuity of services to our members,” the letter said. “As a result, services had already been extended to NHIF beneficiaries and the same invoiced for, for the period from October 2021 to date.”
Nguyai was axed as NHIF board chair on Christmas eve when President William Ruto appointed former Cabinet Secretary Michael Kamau to the position for a period of three years.
Finding itself in a dilemma over the contract, NHIF has questioned in several correspondences with E-Plus why access and utilisation of the evacuation services has remained “extremely low” despite the hundreds of millions of shilling paid to E-Plus annually.
The matter is made more complex by the fact that E-Plus contract is yet to be formally extended although it continues to offer the service.
In a letter dated March 1, 2022, E-Plus managing director Susan Ng’ong’a said: “We note with concern that we have not received the final contract for execution despite follow-ups. We also note that our invoices have also not been paid. Today, we are starting the sixth month of operation without contract and without payment.”
Ng’ong’a went on to warn that it had been become untenable for the firm to continue pre-financing the services without the payments as well as the contract extension. “All NHIF beneficiaries are eligible for the road ambulance services with air rescue services being applicable only for the enhanced scheme beneficiaries as per the contract terms,” says a contract document seen by People Daily.
Eyes are now on the current board, under its newly-appointed chair, to offer a way forward and resolve the outstanding issues, pay dues accumulated since March last year and ensure that deserving Kenyans get evacuation services given the high number of road accidents on Kenyan roads.