By Luke Anami

State-owned medical insurer National Hospital Insurance Fund (NHIF) has defended the use of capitation system — which enables payment of service providers in advance — saying it hedges the Fund from liabilities.

Addressing the media in Nairobi yesterday, NHIF Chief Executive Richard Kerich, said the system has so far saved the Fund more than had been estimated for the first three months of the civil service medical scheme.

“We received Sh2.1 billion in premium from Government at the beginning of this year’s civil servants medical scheme,” he said. 

Cheaper quotation

“While we expected to pay Sh375 million for group life and last expense, we actually got a cheaper quotation of Sh366 million.”

Kerich said the capitation payment system has been structured in such a way that the Fund shall be releasing the payments quarterly as opposed to a full year.

“So far, we have made the first payment to cover the month of January, February to March,” he said.

Kerich said on the outpatient scheme, the Fund had budgeted to spend Sh1.58 billion. To date, the actual amount paid is Sh635 million, leaving the Fund with more than Sh934 million for the next three months.

Members of a Parliamentary Committee on Health led by their chairman, Nyaribari Chache MP Robert Monda, last week questioned NHIF’s choice of service providers and whether those accredited could offer the services needed.

Also raising eyebrows was the NHIF’s decision to pay accredited hospitals and clinics in full even before they delivered their services.

MPs were worried unscrupulous operators may take advantage of the pre-payments by diverting funds to other purposes or lodging fictitious claims.

The legislators point out that some service providers have begun ambitious expansion plans using the pre-payments instead of spending the funds on medical services for beneficiaries.

The Sh635 million in advance payments, referred to as capitation, is supposed to benefit some 221,730 public servants for the first quarter beginning January 2012.

But Kerich said the capitation system has cushioned the Fund against liabilities it would otherwise have had to shoulder.

“NHIF does not expect any claims for the payment of outpatient claims from any hospital for the past three months,” he said.