NHIF crackdown on fake claims saves insurer Sh2 billion

A crackdown on fake claims by rogue hospitals last year has saved the National Hospital Insurance Fund (NHIF) Sh1.9 billion, an audit report shows.

This is amid concerns that hospitals are inducing pregnant women to deliver through caesarean section to inflate claims at the national insurer.

The Sh1.9 billion saved represents a decline in payments by 14 per cent, as membership contributions rose to Sh23.6 billion last year, according to the latest financial reports from the government run medical insurer.

NHIF attributes the turn around to introduction of a two-tier claim authorisation model in which patients seeking specialised services have to make a pre-authorisation request. This is aimed at minimising loopholes used by unscrupulous medical facilities to make fake claims.

Terminal illnesses

“Paid claims reduced in the period July to December 2017 from Sh13.518 billion to Sh11.622 billion due to claims re-engineering process and introduction of second tier scrutiny of claims,” says the report.

It is believed this loophole was created in 2015 when NHIF introduced outpatient cover, benefits for terminal illnesses like cancer as well as major surgeries. Hospitals took advantage and began billing the insurer for procedures not done or inflated bills without the knowledge of patients.

“The average inpatient claim in the NHS scheme during the period was Sh20,663. In addition to this, 18 per cent of the inpatient claims were zero-day claims which had an average cost of Sh16,063,” says the report.

“Overall, the scheme recorded an enhanced financial performance, realising a Sh3.1 billion surplus in total revenue savings in the same six-month period,” it says.

While NHIF collected Sh23.6 billion through member contributions and premiums, it spent Sh17.3 billion in benefit expenditure and a further Sh3.2 billion in administration. During the period under review inpatient and surgery benefit payments declined the most.

Characteristically, over the entire 2017, nearly half of all payments in claims and pointedly also the highest paid out claims -- a staggering Sh12.7 billion -- went to the inpatient benefits package. Total pay-out between January to December 2017 amounted to Sh30.1 billion.

Surgeries came a far second in the year with Sh3.8 billion going to settle major surgeries and a further Sh500 million to cater for specialised surgeries. The national insurance scheme spent a further Sh513 million towards coverage of minor surgeries.

Maternity cover

The insurer spent up to Sh1.4 billion in paid claims for renal dialysis in 2017. Perhaps owing to the few members seeking organ transplants, the organisation doled out a paltry Sh40 million towards meeting kidney transplants.

Maternal cover payments followed closely with caesarean-section deliveries raking in Sh1.2 billion in settled payment claims and another Sh860 million for normal delivery.

“There are fears that emergency deliveries are outstripping NHIF’s budgets as facilities engage in unscrupulous behaviour such as inducing women to undergo the C-section delivery for financial windfall,” NHIF Chief Executive Geofrey Mwangi said.

A further Sh691 million went to cancer treatment through chemotherapy claims, while Sh368 million and Sh196 million went towards meeting CT (computed tomography) scan and radiotherapy claims respectively.

On the other hand, the social health insurer spent Sh367 million for eye-related treatment claims and Sh351 million towards dental services claims.

The report notes that of the insurance claims made in the year, the main members were the highest beneficiaries of the scheme, with spouse and children utilisation being “relatively low”. However, the average cost per claim for a child stood at Sh21,663 which was higher than for the spouse (Sh21,461) and main member’s Sh20,034.