8 January 2013

Kenya: Audit Clears Clinix in NHIF Investigation

THE Efficiency Monitoring Unit has cleared the controversial Clinix and Meridian over their provision of medical cover to civil servants.

An EMU report prepared in November recommended that the National Hospital Insurance Fund negotiate with the two service providers to pay all monies owed to them.

EMU, which is under PM Raila Odinga's office, said the NHIF caretaker board did not follow due process in terminating their contracts last year.

It recommended that action be taken against former NHIF acting Chief Executive Officer Adan A Adan for instead accrediting 77 unlicensed and unregistered health providers to serve civil servants and members of the disciplined forces.

The facilities were gazetted on June 11, 2012 shortly after the suspension of the NHIF board and the appointment of the caretaker board.

EMU reported that the caretaker board did not consult Medical Services minister Anyang' Nyong'o or the Medical Practitioners and Dentist Board.

On Meridian and Clinix, EMU has said the NHIF, to avoid litigation, should consider "amicably resolving the issue of contract termination and unpaid claims through direct informal negotiations or alternatively through arbitration."

Their contracts were terminated last June last year following a public uproar that they had listed "ghost clinics." By the time the contract was cancelled, Clinix had been paid Sh202 million while Meridian had received Sh116 million. EMU said that Clinix is owned by two shareholders including Pharma Ltd in the British Virgin Island, a tax heaven.

Meridian was founded by Dr Peter Wambugu in 1996 and is owned by its management team and TBL Mirror Fund, a Dutch venture capital firm.

After the scandal erupted, the government suspended the entire NHIF board and its Chief Executive Officer Richard Kerich. A caretaker board was appointed with Adan as the acting CEO.

In August, Nyong'o appointed Simeon ole Kirgotty, then Director of Administration at the Ministry of Medical Services, to take over from Adan.

The NHIF had raised Sh4.3 billion from salaries that the government wanted to cover health care for 220,000 civil servants and security officers in 2012.

The EMU report said NHIF only paid the bills for the first quarter from January 1 to March 31, 2012. It wants NHIF to now pay the providers for the second quarter that was from April to June 2012.

EMU dismissed claims of "ghost facilities" saying that in January 2012 Clinix had 16 registered outlets while Meridian had 12,according to the Medical Practitioners and Dentist Board.

The report said that the NHIF caretaker board claimed there were ghost clinics "based on perceptions of some general managers" who felt that the Strategic Business Unit created by Kerich was overshadowing them.

"Clinix had Service Level Agreement with third party providers in accordance with the provisions of the contract where members were to access services where Clinix had no facilities and were in the process of opening them," EMU said.

The NHIF was also negotiating with the Kenya Association of Private Hospitals and the Christian Health Association of Kenya on its capitation rates.

"The private hospitals rejected the premium offer by NHIF except the two firms Clinix and Meridian who accepted the rate of Sh2,850," EMU noted.

The NHIF contract with Clinix and Meridian stipulated that payments should be upfront upon signing of the contract and subsequent every quarter upon submission of returns

The EMU expressed reservations on the quorum of the Board members who sat on June 6 and terminated the contracts, saying that Clinix and Meridian were competitively procured in 2008 through open tendering.

It however faulted the drafting of the contracts, especially that of NHIF and Clinix. EMU said it received one contract for Clinix was for three years and another for one year.

"The team could not comprehend who might have altered the Clinix contract duration and which one of the two was used as the basis of the transaction and further if other contracted health providers did not have two contracts," EMU said.

It recommended "appropriate action" be taken against the NHIF corporation secretary and the general manager for the inconsistent drafting of the contracts.

EMU also said the list of entitled members contained names who might not be civil servants or members of the disciplined forces. It has also noted that the control of user rights in the IT department was poor.

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