About the Bill
The National Health Insurance Fund (Amendment) Bill, 2021 (National Assembly Bill No. 21 of 2021) is a National Assembly Bill that is currently before the Senate. It is sponsored by the Leader of Majority Party of the National Assembly.
The Bill was published on 11th May, 2021 and was read for the first time in the National Assembly on 8th June, 2021. It was then committed to the Departmental Committee on Health. You can read the Committee’s report here.
The Bill was read for the second time on diverse dates in August, 2021 and the Committee of the whole House was done on 28th and 29th of September, 2021.
The Bill was then passed at third reading on 29th September, 2021. It was then transmitted to the Senate for consideration since it is a Bill that concerns county governments.
According to the Original Bill’s Memorandum of Objects and Reasons, the Bill seeks to amend the National Hospital Insurance Fund Act (No. 9 of 1998) to establish the National Health Scheme and to enhance the mandate and capacity of the National Hospital Insurance Fund to facilitate and deliver the Universal Health Coverage.
Major highlights of the Bill
As one thumbs through the Committee’s report, one will notice that there was considerable interest from stakeholders. Ten stakeholders submitted their memoranda. These were the Ministry of Health, the National Hospital Insurance Fund, the Kenya Medical Practitioners, Pharmacists and Dentists Union, the National Gender and Equality Commission, the Central Organization of Trade Unions, the Federation of Kenya Employers, British-American Insurance Company Limited (BRITAM), the Kenya Association of Private Hospitals, and the Kenya Union of Nutritionists and Dietitians.
The purpose of this blog post is not reproduce the report here but to list some of the salient features of the Bill as passed by the National Assembly.
The Senate will consider the Bill and will propose amendments to the Bill.
Therefore, we are quick to issue a disclaimer that there will be further changes to the current version since the process is ongoing.
Now, let us get to the major highlights of the Bill.
First, let us get this out of the way. It is health insurance, not hospital insurance.
As you will note, the Bill’s title is National Health Insurance Fund (Amendment) Bill and not National Hospital Insurance Fund (Amendment) Bill.
This has arisen out of the amendments in the Bill which seek to replace “Hospital” with “Health”. These amendments are to be seen reflected in clauses 1, 2, 3, 4, 5, 6 and other provisions in the Bill.
In summary therefore, the thrust of the amendments is to replace “hospital insurance” with “health insurance” which an observer would say is broader.
Let us get out of this straitjacket of a child and a beneficiary.
The National Hospital Insurance Fund Act has this long definition for a child. In its description, it extends to “children above 18 years”.
The Bill gets out of this rut by defining a child to mean a child of a contributor including a posthumous child, a stepchild, an adopted child and any child to whom the contributor stands in loco parentis, and who has not attained the age of eighteen years.
Then the definition “beneficiary” describes the scenarios that strictly speaking wouldn’t fall under the definition of a child.
Expanded definition of “employer”.
In the Act, “employer” has been defined as to “include Government”. However, in the Bill, an employer includes the national government and national government entities, and county governments and county government entities.
Clause 7 of the Bill provides for this amendment.
It is health care provider. Not hospital.
The Bill deletes the definition “hospital” and replaces it with “health care provider”.
It is defined to mean the whole or part of a public or private institution, building or place, duly registered healthcare professional, whether for profit or not, that is operated or designed to provide in-patient or out-patient treatment, diagnostic or therapeutic interventions, nursing, rehabilitative, palliative, convalescent, preventative or other health service.
Clause 7 provides for this amendment.
Expanded sources of funds for the Fund.
In the Act, the National Hospital Insurance Fund (renamed National Health Insurance Fund) has limited sources of funds.
Section 3 (2A) of the Act provides for contributions and other payments required by the Act as the only source of fund.
Clause 8 of the Bill expands the sources as follows:
— contributions under section 15
— such monies as may be appropriated by the National Assembly, for indigent and vulnerable persons
— gifts, grants or donations
— funds from the national government, county governments and their respective entities, or employers for the administration of employee benefits
— funds from post retirement funds for provision of medical cover to retired employees, where the contributor has elected to do so
A tweak in the National Health Insurance Fund Board.
Clause 9 of the Bill proposes to amend section 4 of the Act (providing for Establishment of Board) to alter the composition of the National Health Insurance Fund Board.
— consists of 10 members (including the chairperson)
— chairperson appointed by the President
— PS for Health
— PS for Treasury
— PS or Director of Personnel Management
— Director of Medical Services
— one person nominated by the Federation of Kenya Employers
— one person nominated by the Central Organisation of Trade Unions (COTU)
— one person nominated by the Kenya National Union of Teachers (KNUT) and the Kenya Union of Post Primary Education Teachers (KUPPET)
— one person nominated by the Kenya Medical Association
— one person nominated by faith-based healthcare organisations
— consists of 9 members (including chairperson)
— chairperson appointed by the President
— PS Health
— PS Treasury
— one person nominated by the Kenya Health Professions Oversight Authority (new)
— one person nominated by the Federation of Kenya Employers
— one person nominated by the Central Organization of Trade Unions
— one person, not being a Governor, nominated by the Council of County Governors (new)
— two persons, not being public officers, appointed by the Cabinet Secretary (new)
— Chief Executive Officer
We got more work for you, dear Board.
Section 5 of the Act provides for the objects and functions of the Board.
Clause 10 of the Bill proposes to amend section 5 of the Act to provide for additional functions to the Board.
— to facilitate attainment of Universal Health Coverage with respect to health insurance
— to administer employee benefits as provided under the Act on behalf of employers in respect of their employees
May the force be with you.
Clause 12 of the Bill proposes to amend section 6 of the Act providing for the powers of the Board to provide for an additional power to the Board to determine the contributions to be made by contributors to the Fund.
Remuneration of members of the Board.
Section 9 of the Act provides that the Board, in consultation with the Minister, shall pay members of the Board such remuneration, fees or allowances for expenses as the Board may determine.
Clause 13 of the Bill deletes section 9 and replaces it with the following new section:
The chairman and members of the Board, other than the chief executive officer, shall be paid out of the moneys of the Fund such sitting allowances or other remuneration as the Board may, in consultation with the Salaries and Remuneration Commission, determine.
The amendment clarifies that the allowances or remuneration shall be paid from the Fund and it invokes the powers of the Salaries and Remuneration Commission.
We need your papers, CEO.
Section 10 of the Act provides for the Chief Executive Officer. However, it is not fairly detailed.
Clause 14 of the Bill deletes and replaces section 10 of the Act to provide for the qualifications for one’s appointment as a chief executive officer and tenure of office.
First, on qualifications. The person should have at least a Bachelor’s degree from a university recognized in Kenya; have at least 10 years’ experience at a senior management level with skills in health insurance, health financing, financial management, health economics, healthcare, administration, law or business administration; and to meet the requirements of Chapter Six of the Constitution.
Second, on tenure of office. The chief executive officer shall serve for a term of 3 years and shall be eligible for reappointment for a further and final term of three years.
Yes, we need you as our Corporation Secretary.
Clause 15 of the Bill proposes to insert a new section to provide for a Corporation Secretary. The Act does not provide for a Corporation Secretary.
Common seal of the Board.
Clause 17 of the Bill proposes to delete and replace section 12 of the Act with a new section.
The amendment doesn’t do much expect to align the provision with good drafting practice.
A child to register as a member of the Fund.
Clause 18 of the Bill proposes to introduce a new section to provide that a child shall register as a member of the Fund.
It further provides that the Cabinet Secretary may, in consultation with the Board, make regulations for the better carrying out of subsection (1).
These are your duties, national government.
Clause 19 proposes to amend section 15 of the Act to provide for the liabilities of the national government and national government entities, county government and county government entities, and employers.
It provides that the national government shall be liable as contributor to the Fund in respect of all public officers, state officers and employees working in the national government and national government entities.
These are your duties, county governments.
Clause 19 provides that each government shall be liable as a contributor to the Fund in respect of all public officers, state officers and employees working in the county government and county entities.
And to you other employers, these are your duties.
Clause 19 provides that any other employer shall be liable as a contributor to the Fund in respect of its employees, subject to paragraph (2) (e).
National government to be liable as a contributor for the indigent and vulnerable persons.
Clause 19 also proposes to amend section 15 of the Act to provide that the national government shall be liable as a contributor to the Fund on behalf of the indigent and vulnerable persons identified as such by the relevant government body.
Special contribution by the self-employed.
Clause 19 of the Bill also proposes to amend section 15 (2) (b) to provide that a person whose income is derived from self-employment shall pay to the Board a special contribution irrespective of whether the contributor is a sole beneficiary or not.
The distinction of a sole beneficiary or not is not there in the Act.
Contribution by the unemployed.
Clause 19 also proposes unemployed persons shall be required to pay their contributions to the Board at such rate as may be determined by the Board.
Matching contributions by the national government or county government.
Clause 19 also provides for “matching contribution” by national government or national government entity and county government or county government entity.
To digress a little bit [As one reads the clause, there is a safeguard to employees. A person liable to pay a matching contribution is required to pay such contribution in their capacity as an employer and shall not deduct such contribution from the salary or other remuneration of the employee.]
End of digression.
However, for any other employer, the amount will be one that will be required to “top up” the employee’s contribution.
Top up by other employers.
Clause 19 provides that other employers shall top up the employee’s contribution depending on the person’s total income as the Board, in consultation with the Cabinet Secretary, may determine.
The amount should not exceed the highest rate of special contribution prescribed for persons whose income is derived from self-employment.
Want to receive an enhanced benefit? Then you may make additional voluntary contribution.
Clause 19 of the Bill also provides a person who wishes to receive an enhanced benefit may make additional voluntary contribution to the Scheme.
Contribution to the Fund made mandatory.
Clause 19 has also proposed an amendment to provide that the contributions made to the Fund shall be mandatory. This applies to persons whose income is derived from salaried employment, unemployed persons and persons whose income is derived from self-employment.
NHIF Card? No, that is not my horse.
When one reads section 16 (3) paragraphs (b) and (c) of the Act, an employer has been given the duty to obtain a NHIF Card for an employee and to retain its possession. Through the proposed deletion of these two paragraphs, the responsibility is removed from the employer.
No, you can’t hunt your employer for NHIF contribution the employer has made.
Clause 20 also proposes to amend section 16 (4) which prohibits an employee from recovering a sum deducted from his or her salary or other remuneration in accordance with the provisions of the Act.
It provides as follows:
No sum deducted from the salary or other remuneration of an employee by his employer in accordance with the provisions of this Act shall be recoverable from the employer by that person after a stamp to the value of that sum has been affixed to a card issued to that person and duly cancelled:
Provided that nothing in this subsection shall affect the responsibility of the employer for the safe custody of that employee’s card.
The proposed amendment deletes the proviso that talks about custody of the NHIF card and makes the provision elegant in the following manner.
No sum deducted from the salary or other remuneration of an employee by his or her employer in accordance with the provisions of this Act shall be recoverable from the employer by that person once the contribution has been remitted to the Fund.
Failed to pay contribution to the Fund? Drawing more employee blood in NHIF deductions as an employee? Then the fine is not 50,000 but 1 million.
Clause 20 finally enhances the penalty in section 16 (6) of the Act.
The provision provides as follows:
Any person who—
(a) fails without lawful excuse to pay, within the time and in the manner prescribed by this Act in relation to him, any standard contribution which he is liable as an employer to pay under this Act; or
(b) knowingly makes any deductions from the salary or other remuneration of any person employed by him, purporting to be a deduction in respect of any standard contribution, other than a deduction which he is authorised to make by this Act,
commits an offence and is liable on conviction to a fine not exceeding fifty thousand shillings.
The proposed amendment increases the fine from a fine not exceeding 50,000 shillings to a fine not exceeding 1 million shillings.
Penalty for delayed remittance of standard or matching contribution.
Clause 21 of the Bill proposes to amend section 18 of the Act to provide that if a standard or matching contribution which a person is liable to remit under section 16 has not been remitted by the day on which the payment of the standard or matching contribution is due, the person shall be liable to pay a penalty equal to the lending rate of interest of the amount of the contribution as may be published by the Central Bank of Kenya from time to time.
There is a proviso:
The penalty shall not be imposed on state agencies if the delay or non-remittance is caused by delay in disbursement from the National Treasury or delay in disbursement of any funds appropriated by the National Assembly.
In section 18 (1) (b) of the Act, the penalty in case of standard contribution is two times the amount of that contribution payable by that person for each month or part thereof during which the contribution remains unpaid, and any such penalty shall be recoverable as a sum due to the Fund, and when recovered, shall be paid into the Fund.
Failed to pay standard contribution for your employee? Then we will slap you with health treatment costs of your employee.
Section 18(2) (a) provides that if an employer fails to pay a standard contribution in respect of any person employed by him that employer shall be liable to pay the penalty prescribed in subsection (1).
Clause 21 of the Bill goes further.
It provides that if the scenario above happens, then the employer shall be liable to pay the penalty in subsection (1) that is the penalty that is equal to the lending rate of interest of the amount of the contribution as may be published by the CBK and the costs incurred by the employee when seeking treatment from a contracted health care provider during the period when the contribution is due.
Reduced penalty for late payment of special contribution.
Section 19 subsection (2) of the Act provides as follows:
If a special contribution which any person is liable to pay under this section is not paid on or before the day on which the payment is due, a penalty equal to five times the amount of the contribution shall be payable by that person for each month or part thereof during which the contribution remains unpaid, and any such penalty shall be recoverable as a sum due to the Fund and when recovered shall be paid into the Fund.
The penalty, therefore, for late payment of special contribution is five times the amount of the contribution.
Clause 22 of the Bill proposes to amend section 19 subsection (2) of the Act to reduce the penalty to fifty percent of the contribution.
Board to prescribe mode of identification of a beneficiary. And Board may also ask for information or documents on payments of standard and matching contribution.
Clause 24 of the Bill seeks to delete and replace section 21 of the Act with a new section.
It provides that the Board shall prescribe the mode of identification of a beneficiary, taking into account the existing legal framework for national registration.
It further provides that the Board may require a person who is liable to remit a payment for a standard and matching contribution under section 16 to furnish such information or particulars, or to produce such documents, as the Board deems necessary for that purpose.
Proposed establishment of a centralized healthcare provider management system.
Clause 25 of the Bill proposes to insert a new section 21A. It provides that the Board shall cause to be developed a centralized healthcare provider management system.
The system shall be installed and used by all empaneled providers for the purpose of management of claims, payments and data collection.
The clause further provides that the Board may publish guidelines on the use of the centralized healthcare provider management system by empaneled and contracted health care providers.
Payment of a benefit to an empaneled or contracted health care provider.
Clause 26 of the Bill amends section 22(1) of the Act to provide that the Board shall pay from the Fund, a benefit to an empaneled or contracted health care provider for an expense incurred by the provider, for the provision of health care services through the centralized healthcare provider management, to the number beneficiaries determined by the Board.
It further provides that the benefits payable from the Fund shall be subject to such limits, regulations and conditions as the Board may prescribe in consultation with the Cabinet Secretary.
The Board will be required to determine and approve the applicable tariffs payable to the Fund and payable out of the Fund to empaneled contracted health care providers for an expense incurred by the provider for the provision of healthcare services tot he number of beneficiaries determined by the Board.
The Board shall use the approved risk spreading mechanism on benefits of outpatient, inpatient and work injury benefits.
What happens when a beneficiary has a private health insurance cover?
Clause 26 lastly provides that where a beneficiary has a private insurance cover:
— the private health insurance shall be liable for payment up to the limits the beneficiary is covered
— the Fund shall pay the daily rebate, for inpatient
— the Fund shall cover the outstanding bill where private insurance cover’s limits for various benefits have been exhausted subject to the Fund’s applicable limits with respect to each benefit
Contributor’s statement of account.
Clause 27 of the Bill amends section 23 of the Act to provide that the Board shall upon request avail a statement of accounts to a contributor, or a person who is liable to remit under section 16, with regard to their contributions.
Abolishment of National Hospital Insurance stamps.
Clause 28 of the Bill proposes to repeal section 24 of the Act which provides for the offer for sale of National Hospital Insurance stamps.
The section provides as follows.
24. (1) There shall be offered for sale to the public in such quantities and at such times and places as the Board may consider necessary for the implementation of this Act, National Hospital Insurance stamps at such prices as the Board may from time to time determine.
(2) For the purposes of this section, the Board shall cause stamps to be printed of such design, which may be varied from time to time, as it may deem fit.
Knowingly made false statement when obtaining payment of benefit? The penalty is now stiffer.
Clause 29 of the Bill amends section 25 subsection (1) to enhance the penalty for knowingly making false statement for the purpose of obtaining payment of any benefit under the Act.
Removal of health care provider’s name from the register to be notified in various ways.
Clause 29 of the Bill proposes to amend section 25 of the Act to provide that the Board shall cause the name of every health care provider removed from the register to be notified in the Gazette, at least two newspapers of national circulation and at the official website of the Fund.
Further, a health care provider who would have been removed from the register shall not be entitled to receive any benefit from the Fund.
Regulation on the amount and rates of contributions payable into the Fund.
Clause 30 of the Bill proposes to amend section 26 of the Act to provide that the Board may, in consultation with the Cabinet Secretary, prescribe in regulations the amount and rates of contributions payable by contributors into the Fund.
Board to publish list of empaneled health care providers in the Gazette.
Clause 33 of the Bill proposes to amend section 30 of the Act to provide that the Board shall, in consultation with the relevant accreditation bodies, publish in the Gazette, the list of empaneled health care providers for the purposes of the Act.
Revocation of empanelment of a health care provider.
Clause 33 of the Bill further proposes to amend section 30 of the Act to provide that the Board may, at any time, revoke any empanelment under the section.
Also, there are safeguards on fair administrative action where empanelment of a health care provider has been revoked.
Enhanced penalties for willfully delaying or obstructing an inspector, among others.
Clause 35 of the Bill proposes to amend section 31 subsection (3) of the Act to enhance the penalties for the offence of wilfully delaying or obstructing an inspector in the exercise of his powers under the section; or refusing or neglecting to answer any question or to furnish any information or to produce any document when required to do so under the section.
An inspector gave false information? We have enhanced the penalties.
Clause 35 of the Bill also proposes to amend section 31 (6) of the Act to enhance the penalties.
The subsection provides that any inspector who, without any lawful excuse, gives false information in respect of the existence or non-existence of any fact in any hospital or other premises or places inspected under this section, commits an offence and is liable on conviction to a fine not exceeding ten thousand shillings, or to imprisonment for a term not exceeding twelve months or to both.
Assets of the Fund not to be liable to attachment.
Clause 41 of the Bill proposes to amend section 42 of the Act to provide that despite any other written law, the assets of the Fund shall not be liable to attachment under any process of law.
Enhancement of general penalty from 50,000 shillings fine to 1 million shillings.
Section 45 of the Act provides for general penalty.
Clause 43 of the Bill proposes to enhance the fine for general penalty from a fine not exceeding 50,000 shillings to a fine not exceeding 1 million shillings.
The Insurance Act shall not apply to the Fund.
Clause 44 of the Bill proposes to insert e anew section 45A to provide that the Insurance Act shall not apply to the Fund.
As at the time of writing this post, the Bill had been submitted to the Senate for consideration.
As indicated earlier in this post, the current version of the Bill will change in the event the Senate passes amendments to the Bill during the Committee of the whole House. It will be important therefore to track the progress of the Bill.
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