3 August 2010

Kenya: NHIF Seeking Hospitals to Run Outpatient Scheme

The National Hospital Insurance Fund (NHIF) is looking for hospitals to host its outpatient scheme, setting the stage for a reduction in insurance premiums paid to private providers by companies and individuals.

Lack of cash had prevented the fund from rolling out outpatient services, leaving private health insurance providers to shoulder the entire bill.

But the fund on Monday began the search for hospitals to help it roll out the new service, buoyed by increased members' contribution.

"NHIF is seeking reputable, well established and qualified health facilities to provide members with the outpatient primary healthcare services," said the fund's CEO, Mr Richard Kerich, in a press notice.

The new rates, which will be effected from September 1, will see minimum contribution rise from Sh320 a month to Sh2,000 per month for people earning a monthly gross salary of Sh100,000 and above.

Those earning more than Sh50,000 will pay Sh1,000 a month.

The outpatient services are expected to have a major impact on the cost of health insurance in Kenya as NHIF will now pay for additional medical services, including the cost of drugs.

It previously only paid for the cost of bed.

Major winners will be private medical insurance companies and firms offering group medical insurance covers as their payment burden will be reduced.

NHIF will offer comprehensive primary health care except in high cost hospitals.

As a result, the insurers are expected to reduce the cost of policies and pass the gains to the employers.

"We are waiting to be informed what diseases NHIF will pay for and in which hospitals before we make our reviews. Comprehensive care will definitely reduce our burden of payment and will lead to revision of premiums," said Ms Lydia Kibaara-Nzioki.

Under the proposed outpatient service, the fund will pay the entire bill in mission, faith-based, government and private hospitals.

It will pay a portion of the bill in high cost hospitals, which sources familiar with the plan say could go up to Sh2,500 per visit, depending the on procedures a member will be subjected to.

But NHIF will have bias for primary healthcare services, which include the cost of consultation, laboratory and medicine.

For example, if a patient has an eye problem and requires spectacles, NHIF will pay the doctors fees and medicine but will not pay for the glasses.

That bill will be paid by the private medical insurer if that patient is insured or out of pocket.

Previously, the whole cost would have been paid by the private medical insurer, meaning that the new scheme will result in major savings for the nascent medical insurance industry.

The rising cost of medical services had prompted health insurance providers to increase premium payments and the rollout of co-payment systems, where the insured pay part of the bill.

This is expected to ease the claims burden resulting from rising cost of medical services in high end hospitals.

Insurers say premium costs have been increasing by an average of 20 per cent yearly over the three-year period in line with the pace at which the cost of medical services has been rising.

The cost of medical services have increased five-fold since 1990, pushed by a steady rise in doctors' fees, food, medicine and equipment, according to the insurers.

Some insurance companies had stopped offering outpatient services for new clients, saying rising claims were eroding profit margins

Private medical insurance providers reckon that outpatient services account for between 65 and 80 per cent of their members' hospital bills.

Others such as Resolution Health have stopped offering outpatient cover for patients attending top-end hospitals.

But the new scheme is a major threat to medical insurance companies that depend on individual medical insurance business for the bulk of their revenue.

An official from Association of Kenya Insurers who cannot be named because he is not an official spokesperson said individual medical insurance policy holders could bolt out in favour of NHIF cover that is now comprehensive and does not have exclusions common with private insurers.

But there is an option for such companies to bundle their insurance policies with those of NHIF that do not have exclusions to broaden the benefits and retain their customers.

NHIF said new benefits will be on "unlimited basis" at a cost highly discounted compared to the premiums for private medical insurers.

The benefits include general consultation with doctors, unlimited laboratory test, drugs and medicines, unlimited approved X-rays, and ENT services.

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