- MPs have summoned NHIF management to appear before it.
- Muchere is fraud risk management expert who had worked at National Treasury as internal auditor.
Image: NHIF
A petitioner has claimed that the National Hospital Insurance Fund lost Sh21 billion to a racket involving faceless officers.
Bernard Muchere, a fraud risk management consultant, claims NHIF books of accounts were manipulated, resulting in the Sh21 billion loss.
He said the ‘fake’ claims were engineered through Incurred But Not Reported claims by NHIF.
IBNR is a reserve account used by insurance companies to compensate for claims that have not yet been reported.
According to Muchere, the system does not raise suspicion and can only be flagged by experts.
He claims it was created with the help of an actuarial firm- Kenbright Actuarial and Financial Services and backdated to 2019-20.
Muchere is a former internal auditor at the National Treasury.
"I can conclusively state that the IBNR reserves were fraudulently created to siphon NHIF funds,” Muchere told the Public Petitions Committee chaired by Vihiga MP Ernest Ogesi.
Ogesi said the committee will get to the bottom of the "serious" allegations.
He summoned NHIF top management and Kenbright Actuarial and Financial Services to appear before it.
NHIF has since been renamed Social Health Insurance Authority after recent law amendments.
Muchere, a former auditor at the National Treasury, earlier this year, wrote to Parliament claiming the national health insurer incurred Sh21 billion loss in fake claims in 2021-22 financial year.
“During the preparation of the financial statements for the F/Y ending 30th June 2022, NHIF management created IBNR claims aggregating to over Sh21 billion backdated to the 2019/2020 financial year (inclusive of cumulative IBNR claims for the previous financial year,” he said in the petition.
“The unbudgeted claims were charged on NHIF members' contributory schemes causing a huge financial crisis that made NHIF unable to pay hospital bills for genuine contributors.”
In arriving at his conclusion, the auditor relied on National Health Insurance Fund Act, 2022, Public Finance Management Act, 2012, Constitution of Kenya and Cap 446 of the State Corporations Act.
“In the audited financial statements for 2020/2021, 2019/2020 and the preceding financial years, IBNR reserves were non-existent, they propped up in the financial year ending June 2022,” the petition said.
“This brings to question, the authenticity of the arbitrary cumulative figures of Sh19,972,497,763 purportedly brought forward from the financial years preceding 2021/2022 and the source of data, the basis for the IBNR claims.”
The dubious payments include Sh9.7 billion from the National Health Scheme, Sh4.01 billion from the National Police Service and Kenya Prisons Service, Sh2.9 billion from civil servants scheme, Sh2.3 billion meant for Linda Mama programme and Sh780.7 million from parastatal scheme.
Others are Sh683.92 million from EduAfya scheme, Sh525.3 million from county scheme, Sh190.2 million from retirees’ scheme, Sh31.3 million from HISP- OVCs and Sh6.5 million from HISP- OPPSD.