Govt ‘pays’ N$1b to ‘ghost’ medical aid members

A draft report of auditing firm Deloitte states that the government should investigate why the state appears to have paid around N$1 billion to ‘ghost’ medical aid beneficiaries from 2020 to 2022.

Methealth Namibia, the private company that has run the government’s Public Service Medical Aid Scheme (Psemas) since 2010, disputed the report, saying it contains inaccuracies.

Deloitte investigated the medical aid funds’ processes, controls and claims from April 2020 to March 2022.

The draft audit report, which is dated June 2023, found that the government paid N$1 billion for medical aid services to non-existent members who do not appear on the Ministry of Finance’s beneficiary system.

“We strongly suggest that the Ministry of Finance [and Public Enterprises] ought to investigate and understand why such a significant proportion of settlements (of 18% in 2020/21 and 15% in 2021/22) appears to involve members who do not exist on its Psemas members’ list,” Deloitte said in the report.

The report said Psemas paid N$2,8 billion in benefits from April 2020 to March 2021.

Of this amount, N$516 million involved beneficiaries who do not exist.

Psemas also paid N$3,6 billion from April 2021 to March 2022.

Of these amounts, N$556 million was paid to ‘ghost’ members.

The state medical aid scheme caters for over 297 000 civil servants, including about 5 000 pensioners and their relatives.

BITTER PILL

Last month, Deloitte defended the draft report, saying it had temporarily withdrawn it to provide additional context, but the report has now been finalised and submitted to authorities.

The firm’s country leader and director of risk advisory, Melanie Harrison, said: “We didn’t get the figures horribly wrong. It’s a bit of context that is added to the report.”

This week, the auditing firm told The Namibian it has submitted another report to the ministry.

“The final report has been issued to the authorities. I also would like to state that the section you are referring to in the report was merely done to assess the data quality between the ministry of finance and Methealth, and we found there to be data quality issues that the two parties need to work on.

“This is not a finding, but merely an observation that the data between the two parties is misaligned,” Harrison said.
She added: “The new report has comments included from the ministry of finance and Methealth.”

Finance ministry spokesperson Wilson Shikoto last month said the ministry was going through the findings.

“Deloitte’s primary objectives were to assess compliance with the terms and conditions specified in the Psemas rules and benefits structure, and to provide recommendations for potential enhancements,” he said.

“Following the completion of the audit by Deloitte, the ministry, Methealth, and Deloitte are currently in the process of validating the findings. Once this is complete, a decision will be made regarding the appropriate course of action moving forward.”

THREATS AND WARNING SHOTS

Methealth, which administers over 297 000 Psemas beneficiaries, was initially awarded a tender in 2010 to administer Psemas for four years.

But for the last eight years, no new tender was awarded, and Methealth has been administering Psemas on an annual extension basis.

Methealth has been warning The Namibian not to publish this report since last month.

“Should you proceed with any publication without any assurance that the report/statements you are basing your publication on is indeed conclusive, having been notified of the potential reputational and economic implications to Methealth as highlighted in our previous communications to you, we shall take such conduct as a deliberate, negligent and malicious act against Methealth and our legal rights remain strictly reserved,” Methealth chief executive Florian Amulungu said yesterday.

He said the Deloitte draft report used by The Namibian included inaccurate information.

Amulungu has not provided the correct information, despite being asked to do so since last month.

He said the draft report needed management comments, and contained information that was inaccurate and lacked proper context.

Amulungu pointed to an 8 August workshop chaired by the minister of finance and public enterprises, Iipumbu Shiimi, which agreed on the new information from both parties.

“As also alluded to in my letter to the executive director of finance dated 12 July 2023, we shall not condone a draft report to be used against Methealth which subsequently may cause the company serious reputational and economical [sic] damages,” he said.

Amulungu added: “I am therefore putting it on record that we object to the publication of such a draft report . . . We disputed the figures and gave them the correct information. After a due process, they will issue a final report.

“I am confident that Deloitte will do the right thing. I was assured that Deloitte has retracted the report because of incorrect information.”

Amulungu has been at the helm of Methealth since 2016.

“Imagine losing billions of dollars of taxpayers’ money. They would have fired us if that was the case,” he said.

CONTROVERSIAL SCHEME

In 2019, The Namibian reported that Psemas was losing on average more than N$900 million per year to fraud, abuse, waste and collusion.

National budget documents show that the government has allocated N$2,7 billion to the scheme for the current financial year.

Between 2016 and 2021, Psemas has received about N$7 billion from the government and has an annual budget of more than N$2 billion.

According to its 2019/20 accountability report, the ministry found that there were over 36 000 ghost beneficiaries on Psemas.

In addition to that, the ministry also discovered that about 32 000 Psemas members were not contributing to the medical aid fund, but were enjoying full benefits.

Two years ago, deputy finance minister Maureen Hinda-Mbuende warned government employees abusing Psemas that her ministry would initiate criminal proceedings against perpetrators.

“You will have someone who is based in Windhoek, but his or her medical aid card is being used by someone who is at Keetmanshoop or Rundu, while at the same time the card is being used in Windhoek,” she said at the time.

In 2011, Insight Magazine Namibia raised concerns about the renewal of the Psemas contract to Methealth, a company partly owned by prime minister Saara Kuugongelwa-Amadhila’s late brother, Tylvis Kuugongelwa, who owned a 20% stake in Methealth.

This has raised concerns about a potential conflict of interest, as his sister was the finance minister which was the political head of the medical aid fund.

– This report was produced by The Namibian’s Investigative Unit. Send us story tips via your secure email to investigations@namibian.com.na