What you need to know:
- On Thursday, NHIF Chief Executive Officer, Dr Peter Kamunyo, failed to explain to MPs the whereabouts of the cash that is owed to the Interior ministry.
The National Hospital Insurance Fund (NHIF) is on the spot over missing Sh200 million that was to be refunded after lapse of police and prison officers medical cover.
On Thursday, NHIF Chief Executive Officer, Dr Peter Kamunyo, failed to explain to MPs the whereabouts of the cash that is owed to the Interior ministry.
The excess of loss amount was part of the Sh4.79 billion comprehensive medical cover awarded to NHIF on September 26, 2017, to cushion the members of the National Police Service who might exhaust their cover limits.
The insurance cover was for a two-year period – from October 1, 2017 to September 30, 2019. But it was extended from October 1, 2019 to June 30, 2020.
According to the tender documents signed by the Interior ministry, the parent ministry for police and prison officers, National Treasury and NHIF, the amount was refundable at the end of the contract period.
The failure to refund the money has been flagged by Auditor General Nancy Gathungu in the 2018/19 financial accounts report for the Interior ministry.
The audit report further cites the Interior ministry adversely over its failure to account for the money that the NHIF has failed to refund.
On Thursday, when he appeared before the Public Accounts Committee (PAC) of the National Assembly, Dr Kamunyo could neither explain why the money had not been refunded nor provide a breakdown of how it was expended if indeed some officers exceeded their cover limit.
“Your failure to comply as required by the law led to the Ministry of Interior being cited adversely,” Ugunja MP Opiyo Wandayi told Dr Kamunyo on Thursday.
Dr Kamunyo, who would later be dismissed by the committee to get the required information, had claimed that the money had been used and that there was a balance of Sh5 million.
He however, did not provide proof of the expenditure to the committee, a move that saw the committee members Aden Duale (Garissa Township), Joseph Ngugi (Gatanga), Dr Wilberforce Oundo (Funyula) and Dr Eseli Simiyu (Tongaren) question the CEO’s sincerity.
“Just tell us where the money is or provide a breakdown of how it was used if indeed the limit was exhausted,” demanded Mr Duale.
Ms Gathungu notes that failure to show proof of the expenditure makes it not possible to determine whether the NPS got value for money that was due for refund at the end of the comprehensive medical cover contract.
Dr Kamunyo was also taken to task by the committee for failing to respond to inquiries from Interior Principal Secretary Karanja Kibicho and Inspector-General of Police Hillary Mutyambai for details on the excess of loss cover amount.
This was critical as it would enable Dr Kibicho and Mr Mutyambai to adequately respond to audit queries before the watchdog committee.
Mr Duale said: “Why haven’t you been responding to correspondences from Dr Kibicho and Mr Mutyambai? Dr Kibicho coordinates principal secretaries’ meetings that include your PS (Health). Mr Mutyambai represents the police - your clients.”
He added: “If you cannot respond to one of your bosses and clients, who are raising serious accountability issues, what of the common person who is a member of NHIF? This is not right."
Gap in response
This came after Dr Kamunyo told the committee that he had only responded to Mr Mutyambai through a phone call. but not to Dr Kibicho.
Mr Ngugi reminded him that official communication must be in writing.
Mr Wandayi noted that the CEO acted contrary to what is required of him by the law.
"As a corporate institution, there are some tenets that need to apply and one of them is courtesy. It would have cost you nothing to respond to the letters. This is basic corporate governance etiquette," he said.
Dr Kamunyo’s claim that he was waiting for the contract to end so as to provide a detailed report on the cover were rebuffed by Dr Oundo.
“NHIF needed to provide a comprehensive report on the cover every six months as per the tender documents. It is a manufactured story for you to tell us that the information was required after the expiry of the contract,” Dr Oundo said.
In his May 5, letter to the NHIF boss, Dr Kibicho requested to be furnished, by May 6, with a detailed report on the expenditure.
In submitting the report, Dr Kamunyo was required to include the principal’s name, beneficiaries’ name, the hospital or medical institution, amount paid, date, job group of the officer concerned, personal number of the principal and the total excess loss cover during the contract and the extension period.
“Failure to submit the report, the State department for Interior shall deduct the amount of excess of loss paid from future premiums that are due for payment,” Dr Kibicho warned.
But this was never acted on by the NHIF.
Prior to Dr Kibicho’s letter, Mr Mutyambai had on February 19 the same similar information so as to respond to the audit queries.
Appearing before the watchdog committee on May 10, the Interior PS threatened to withhold further payment of insurance premiums to the NHIF until the Sh200 million is refunded.
“As a ministry we have written to NHIF but it has completely refused to respond to our inquiries,” Dr Kibicho said after confirming to the committee that efforts to have the money recovered had hit a brick wall.
“In the meantime, we will use other measures including withholding the Sh200 million premium due to them until they respond,” he said.
Dr Kibicho however, told the committee that the ministry will have no problem if NHIF provides evidence to show how the money was used as stated in the contract document.
Previously, NHIF was not allowed to engage in the provision of commercial insurance services to public entities and private companies as provided for under section 19 of the Insurance Act.
However, through a Kenya Gazette notice of April 17, 2020, National Treasury Cabinet Secretary Ukur Yattani exempted NHIF from the provisions of the law, effectively allowing the public insurer to engage in the insurance business.
Section 19 of the Insurance Act states that any insurance service provider operating in the country must be registered with the Insurance Regulatory Authority (IRA), the industry regulator. NHIF is not a member of the IRA.
In 2012, the government mandated NHIF to provide a medical cover for civil servants and members of the disciplined services - the police and prison officers.
The government cited the high cost of private insurance and lack of structures to provide a medical cover of such a magnitude.