Former NHIF officials face fresh probe over alleged Sh828 million fraud

Top officials of the defunct National Hospital Insurance Fund (NHIF) are facing fresh investigations over a massive overpayment scandal amounting to more than Sh828 million.

The National Assembly's Public Investments Committee on Social Services, Administration, and Agriculture has now called on the Ethics and Anti-Corruption Commission (EACC) to look into the alleged financial mismanagement and irregular payments made under the National Health Scheme Benefit.

The probe, led by Navakholo MP Emmanuel Wangwe, is set to be tabled at the National Assembly.

The report flags significant discrepancies within the defunct NHIF, revealing that Sh828,729,148 was overpaid out of a total expenditure of Sh29.9 billion under the scheme.

This discovery has raised serious concerns about corruption and mismanagement of public funds.

"This is massive corruption. The committee recommends that the EACC undertake further investigations into all the persons who facilitated the overpayment of more than Sh828 million. The EACC should bite hard," Wangwe said.

The committee has also urged swift legal action against those found culpable.

"I want to call on the EACC to investigate the fraudulent claims and ensure that offenders are held accountable within three months," Wangwe stressed, pointing out troubling cases of inflated medical costs, including for procedures like C-sections, major surgeries, and overseas treatments.

A major focus of the investigation is the role of NHIF's accounting officers, board members, and staff in financial irregularities.

The report calls for the recovery of misappropriated funds at the prevailing Central Bank of Kenya lending rates, which would help mitigate the damage caused by the overpayments.

Systemic weaknesses

The committee's findings suggest that NHIF's internal processes were riddled with weaknesses, which made it easy for hospitals to exploit the system.

According to the report, some hospitals manipulated NHIF systems by using single case codes to claim multiple benefits, taking advantage of the lack of integration between notification and pre-authorization systems.

Additionally, hospitals disguised fictitious claims by consolidating multiple treatment sessions, such as dialysis or chemotherapy, into a single invoice.

Wangwe also highlighted an example of a hospital in Kikuyu Town, which claimed to have performed more C-sections than the country's largest referral hospital, Kenyatta National Hospital.

This raised red flags about the integrity of NHIF's monitoring systems.

"Instances like these point to systemic weaknesses within the NHIF's benefit designs, which allowed hospitals to exploit loopholes," Wangwe explained.

The committee's report has called for a thorough investigation into the role of NHIF officials in facilitating these fraudulent activities.

As the committee prepares to present its findings to Parliament, MPs have emphasised the importance of implementing the recommendations without delay.

Kwanza MP Ferdinand Wanyonyi called for urgency in ensuring that the committee's proposals are not sidelined.

"We must ensure our proposals are not shelved. This committee must keep tabs on implementation, especially within the specified three-month window," he said.

Increased workload

Nandi Hills MP Bernard Kitur also raised concerns about the increasing workload of the National Assembly's Implementation Committee, suggesting the creation of a sub-committee to focus on the growing number of recommendations.

"The current committee is overwhelmed, and we risk losing track of critical recommendations. EACC must move with speed and investigate the financial mismanagement and those involved must face the full force of the law," he said.

The committee's focus on swift action has turned the spotlight on the EACC and the Directorate of Public Prosecutions (DPP), as Kenyans now wait for concrete steps to be taken against the individuals implicated in the scandal.

The report on the NHIF overpayments is part of a larger audit of four key institutions, including the National Social Security Fund (NSSF), the Kenya Marine and Fisheries Research Institute (KEMFRI), and the Kenya Broadcasting Corporation (KBC).

These audits span from the Financial Year 2013-2014 to 2024 and highlight significant losses of taxpayer money due to corruption, misappropriation, and non-compliance with the Public Finance Management (PFM) Act.

"We cannot allow corruption and mismanagement to continue unchecked. The report must serve as a turning point for our institutions, and we are determined to see action taken swiftly and decisively," MP Wangwe concluded.

The committee has recommended a comprehensive review of internal controls within the newly formed Social Health Authority, as well as the other affected institutions, to prevent future financial mismanagement.