The National Hospital Insurance Fund’s (NHIF) revelations in the media that it faces challenges meeting its obligations to health providers due to fraudulent claims is a wake-up call to the medical insurance sector in general.
Though initially seen as the ideal insurer given its non-selectivity of patients, low premiums and absence of a “profit” motive, this current scenario demands a pause and re-evaluation of the strategies to mitigate fraudulent claims.
Regardless of the premiums collected, if fraud is not addressed no insurer will run a profitable venture. For a long time there has been more talk and less action from those concerned, but Jubilee Insurance’s new initiative to spearhead the fight against the vice is commendable.
As the leading private medical insurer, it is noble of Jubilee Insurance to captain this long overdue move and other insurers like the NHIF should join them. From the onset, the sustainability and operational vehicle of the project needs to be thought out. Should it be funded by a levy fund on the medical premiums collected and overseen by the Insurance Regulatory Authority (IRA) or as a membership fee levied by the Association of Kenyan Insurers (AKI)?
Though the former could be straightjacketed by the confines of bureaucracy given the IRA is a government agency, the flip side is that it can attract more support from external partners and is also a neutral body to “whip” those not toeing the line.
For starters identifying the root cause and scale of the vice could be a nice point. Has any of the insurers collected views from the sector on why medical businesses become unscrupulous?
As a health industry observer, two possible common issues stick out. Where two businesses anticipate unfair behaviour from the other, each is more likely to engage in deceitful practices to offset the other party’s fraud.
It is not easy to know what comes first, but the insurance industry needs to acknowledge that delayed claims settlement is a big driver of such behaviours. Similarly imposing unreasonable prices for services offered to contractors also doesn’t help.
An ongoing survey doesn’t offer good news: most insurers do not meet their timelines.
Doctors must also insist on professional fees for services rendered and avoid strong-arm tactics from insurers that force them to take lower fees.
The insurers are in turn forced to do this because they undercut prices of premiums for their clients.
In the long run a vicious never-ending cycle of undercutting premiums, fraudulent claims and losses that lead to further undercutting to attract or retain clients is set in place.
Big insurers by premiums and client numbers face logistical and administrative challenges, but adoption of technology should mitigate this. The current administrative structure is heavily manual and accommodates too much paperwork despite availability of easier and quicker and efficient technology.
It wouldn’t be a bad idea either for the industry to sponsor a tech innovation challenge to see what solutions could come from “outside the box”.