The National Health Insurance Fund (NHIF) is on the spot in yet another financial crisis after it was revealed that it is unable to account for Sh400 million in excess insurance cover for police officers.
Auditor-General Nancy Gathungu has noted the ex-gratia payment in the accounts of the Interior ministry, whose mandate includes the National Police Service, for the 2018/19 and 2019/20 fiscal years.
Due to the ministry’s failure to address the issue, the audit query has reappeared in the audited accounts for the fiscal year 2020/21, which are currently before parliament.
Following the controversy, the National Assembly’s Public Accounts Committee (PAC) summoned NHIF Chief Executive Officer Peter Kamunyo and Inspector General of Police (IG) Hillary Mutyambai to explain how the funds were spent.
The summons come after Interior Principal Secretary Karanja Kibicho told the PAC, chaired by Ugunja MP Opiyo Wandayi, that despite requests for the appropriate documents proving the expenditure, the NHIF boss has not yet explained how the monies were spent.
NHIF has not been able to provide documents justifying the expenditure, including a list of recipients, according to Kibicho, despite Kamunyo previously claiming that the money was used to pay for police who sought medical care after exceeding their medical cover.
“We have been struggling to get information from NHIF to prove the expenditure of the funds. We would appreciate it if this committee intervenes because you are the people in charge and we don’t understand why NHIF would be unable to address small things like [providing] information,” Kibicho told PAC.
Gathungu has mentioned the Ministry of Interior as an example of NHIF’s failure to comply.
For the length of the contract, the Sh200 million ex-gratia money were allocated every financial year above and above the contract price.
The ex-gratia payment was intended to help police and prison officers who had reached their annual coverage limits but still required medical attention.
The cash was refunded at the end of the contract time if not used, according to the contract instrument signed by the Interior Ministry, National Treasury, and NHIF.
The contract further stated that any request for excess loss coverage must be approved by the IG. This means that NHIF cannot use the funds without the consent of the Inspector General.
The cash was refunded at the end of the contract time if not used, according to the contract instrument signed by the Interior Ministry, National Treasury and NHIF.
The contract further stated that any request for excess loss coverage must be approved by the IG.
This means that NHIF cannot use the funds without the consent of the Inspector General.
Mutyambai did not authorise the expenditure, according to NHIF. This comes after it was revealed that Kibicho and Mutyambai were irritated by Kamunyo’s refusal to react to their requests for clarification.
In February 2021 Mutyambai advised Kamunyo in a letter to the NHIF chief that any explanation on the expenditure of the amount must include the beneficiary’s name, medical institution, amount, member’s name, and the date of medicine, job group, rank, and total excess of loss cover.
Kibicho informed PAC that the government has chosen to withhold the NHIF’s insurance premium as part of the recovery measures.
NHIF was not a recognised insurance business under the Insurance Act when the Sh4.79 billion medical insurance contract with the police was signed.
Any insurance provider operating in the country must be registered with the Insurance Regulatory Authority, according to Section 19 of the Insurance Act (IRA).
However, National Treasury Cabinet Secretary Ukur Yattani exempted NHIF from that portion of the law in a gazette notice dated April 17, 2020, thereby permitting the fund to engage in commercial insurance activity.
The government required NHIF to provide medical coverage to civil officials, police officers and jail personnel last year.
