Jubilee Insurance, Nairobi Hospital in debt row

Jubilee Health Insurance Limited #ticker:JUB and Nairobi Hospital are entangled in a dispute over multimillion-shilling claims, a standoff that has seen the hospital lock out clients insured by the country’s largest medical underwriter.

Nairobi Hospital claims that Jubilee has not settled a Sh357 million bill that has been outstanding for three years. The insurer, on the other hand, says the disputed amount is only Sh80 million and which the hospital is unable to justify.

Jubilee has been settling claims running into Sh1 billion per year at Nairobi Hospital.

“We would like to notify our esteemed clients that we are

currently experiencing service interruption at The Nairobi Hospital,” Jubilee said in a statement. “This is as a result of a dispute arising from the failure by the hospital to provide justification for some bills adding up to about Sh80 million, compared to an approximate business of Sh1 billion per year.”

The statement was in reaction to a letter by the hospital indicating that it would be suspended services for Jubilee card holders.

As the parties seek a resolution, Jubilee’s clients have been asked to seek medical services in other hospitals.

The insurer said that while it was keen on resolving the dispute, it was also focused on safeguarding client resources.

“We remain committed to bringing this issue to an amicable closure at the earliest in order to provide our customers with a seamless experience at The Nairobi Hospital,” said Jubilee which has the largest market share in medical business at 18.75 percent.

“We continue to maintain strong partnerships with all our other medical service providers and advise our customers to seek quality and seamless service from our expansive panel.”

The standoff is the latest between an insurer and a hospital in the medical business that has one of the highest incidences of fraud, including overcharging and unnecessary procedures, including superflous medical tests.

Nairobi Women’s Hospital, for instance, was earlier in the year found to be inflating bills and keeping patients for longer to maximise profits, causing insurers to cut ties with the facility.The impasse was later resolved.

Medical insurance had the second-highest loss ratio at 74.4 percent in the quarter ended December 2019 after motor private (77.1 percent), according to statistics from the Insurance Regulatory Authority (IRA).

In terms of underwriting results, medical insurers made a combined net loss of Sh75.1 million in the review period, narrowing it from a Sh1.1 billion loss the year before.

There was one fraudulent medical claim in the review period, IRA said. Medical insurers say the high loss ratio is partly caused by inflated claims and the high cost of drugs prescribed by doctors.

Jubilee, however, fared better in the review period and made an underwriting profit of Sh499.9 million in its medical business in which it paid claims amounting to Sh3.6 billion.

The company has previously said that its relatively better performance in medical underwriting was due to investments in ICT systems that curb fraud and aid in risk pricing and claims control.

The insurer has also been encouraging the use of generic drugs which it says are cheaper and just as effective as those manufactured by original patent owners.

Medical insurers have been raising premiums annually to keep up with rising costs of drugs and medical procedures, making the covers unaffordable for majority of the population.

Most people working in the formal sector access medical cover through their employers who negotiate collective packages for their employees.

Workers also get supplementary medical cover from the National Hospital Insurance Fund (NHIF) to which they make mandatory monthly contributions.