Opinion: State health cover sinking under fraud

PHOTO:COURTESY

Fraud perpetrated by hospitals is making the Government-sponsored police and teachers’ medical scheme difficult to administer and unrewarding to its beneficiaries.

The corruption is being carried out by the health providers through double billing, unwarranted admissions and hospitals exaggerating costs by carrying out unnecessary tests, according Aon General Manager Edwin Kegonde.

Aon is the insurance brokerage firm that in 2015 won a tender by the Teachers Service Commission to administer the teachers’ health insurance scheme, and last year won a similar tender from the National Police Service Commission.

The health cover for both the police and teachers is jointly provided by a consortium of three insurers – AAR, Jubilee and UAP.

Aon is an intermediary between the insurers and beneficiaries and administers the day-to-day activities of the schemes.

“Currently, 85 per cent of police and teachers are covered under this scheme. We have come to realise that a number of health providers we contracted are engaging in fraud. The cover is being paid for by public funds and that is why we will be striking out hospitals that we suspect are perpetrating the fraud,” said Mr Kegonde.

He also blamed some beneficiaries for shunning low-priced hospitals and going to the more expensive facilities, therefore increasing costs.

“Some of the police officers and teachers complain that when they attend some hospitals that we have listed, they are denied health care. This is not true. The expensive hospitals we have listed are to be approached only for referral cases, not primary health care,” said Mr Kegonde.

The alleged corruption has raised credibility issues for the medical scheme that covers hundreds of thousands of teachers and police officers. It has also cut into the profits of the associated underwriters.

AAR, one of the leading local insurers, two weeks ago announced a dip in full-year profits from Sh285 million in 2015 to Sh218 million in 2016, blaming an upsurge in claims in the health cover segment.

In the financial statement, the insurer said that despite recording a full year growth in gross written premiums, a surge in claims especially from health cover, decimated its profits.

AAR Managing Director Caroline Munene attributed the company’s lower performance to the spiraling cost of healthcare, which many insurance companies have been unable to contain.