Psemas mess laid bare

The Finance Ministry was advised as far back as 2010 to urgently appoint a board of trustees to manage the government medical aid fund, but has done nothing.

20 March 2017 | Government


The Public Service Employees Medical Aid Scheme (Psemas) has made headlines since January, with accounts of massive fraudulent claims by local and foreign doctors, pharmacies and clinics, as well as the fact that roughly N$180 million is owed to service providers which the scheme cannot pay.

However, a report in possession of Namibian Sun indicates that the finance ministry knew as far back as April 2010 that there were major gaps in the fraud management system regarding claims managed by the fund administrator, Methealth. It had also received a list of suspect doctors, clinics and pharmacies that had submitted questionable and false claims, along with risk analyses. The ministry was also advised to urgently appoint a board of trustees to manage the fund effectively.

However, in the same year, Methealth Administrators was awarded a new five-year tender to continue administering the medical aid scheme and doing the claims processing and payouts. That tender has since been extended annually. Methealth has been administrating Psemas since a merger with NamHealth in September 2003.

The 2010 report, in excess of 100 pages with spreadsheets, graphs, statistics and a detailed list of service providers under investigation, appears to have been ignored.

Commissioned by the finance ministry in October 2008, South African-based Savvy Solutions was appointed as independent consultants to Psemas to “focus on forensic audit investigations aimed at identifying and curbing irregular claims activities within the scheme to reduce costs and financial losses from fraud.” They inspected Psemas services providers for the period 2007 to 2009.

It makes for bizarre reading.

A doctor in Rundu had issued 391 prescriptions for the drug Pegasys, a potent drug that treats Hepatitis B and C. His total Psemas claim for this drug was N$1 292 603.48 and he was paid out N$1 185 603.02. When the investigators compared the dosage to the need for the drug, it was found that he had prescribed more Pegasys than was needed on the entire African continent.

Celestone too, is a very popular medication. It is a steroid that is used for a number of diseases including rheumatic disorders such as rheumatoid arthritis and systemic lupus erythematosus, among others.

The report indicates that 66 894 prescriptions were issued for this medicine. The numbers speak for themselves when compared to the number for scripts for the rest of SADC, which in the same period totalled 64 632. In the case of Pegasys, a total of 1 205 scripts were issued in Namibia and in the rest of SADC, a mere 20. The costs run into millions of dollars.

“Pegasys and Celestone are both over- and incorrectly prescribed. A simple comparison to SADC reveals that Psemas has overpaid by in excess of N$10 million just for these two medicines,” the report states.

The Savvy Solutions investigators found that “the scheme appears to have limited internal controls and coherent risk management mechanisms at various levels.”

They specifically highlighted an alleged lack of control at Methealth Administrators and the absence of a board of trustees for the medical aid scheme.

“Apart from the required accountability, Psemas’s current governance structure appears inadequate to meet increasing challenges and risks faced by the scheme.

“This includes the absence of key management structures in the form of a board of trustees with active board committees or any other clearly defined structures that could provide ongoing strategic management of the scheme.

“A typical medical aid scheme is governed by a strong board of trustees with specialist technical committees … and the key areas where board committees play a crucial role to mitigate risks.”

The report states that there were no protocols with regard to special authorisations, no tariff guidelines on some benefits, including transport and an inconsistent application of the rules.

“Some doctors claimed for procedures they could not possibly have performed and one doctor received a payout of N$3 million for medication prescribed although records indicate that he only had the value of N$140 000 in stock,” the report states.

That was seven years ago and the situation has only deteriorated. By all accounts, the report was shelved in 2010 and no action was taken.

Dave van Heerden at Savvy Solutions would not comment, saying the investigation and its results were confidential.

“I cannot comment but, I can confirm that is our report and I stand by our findings,” he said.

At the time of Savvy Solutions’ report, Prime Minister Saara Kuugongelwa-Amadhila was the minister of finance and the current permanent secretary, Ericah Shafuda, was already in that position.

In 2011, Insight Namibia asked questions about the re-awarding of the Psemas tender to Methealth in view of the fact that the then finance minister’s brother, Tylvis Kuugongelwa, owned a 20% share in Methealth through Bombax (Pty) Limited. While reports indicated that the tender procedure had been above board, new questions have now arisen due to the finance ministry’s inaction since that time.

Telephone calls to Shafuda remained unanswered.

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