Questions persist about system’s effectiveness, contract
Cayman Islands National Insurance Company managers and board members are expected to meet with two government ministries Wednesday over burgeoning concerns surrounding the current contract for the public hospital’s “swipe card” system, known as CarePay, and the Jamaica-based company that operates it.
Legislators previously raised concerns about the system’s operating costs, which include a 4 percent payment to AIS Cayman Ltd. on each insurer-approved transaction. The 4 percent charge on the value of each claim was split between CINICO, which was responsible for paying 1.5 percent of it, and the Health Services Authority, which would pay 2.5 percent.
“It’s just like a credit card – if you have a $1 charge, Mastercard or Visa puts 96 cents of it into your account and retains 4 cents,” CINICO Chief Executive Officer Lonny Tibbetts said Tuesday.
However, lawmakers were incredulous last month when it was revealed that in addition to the 4 percent charge per transaction, the government had apparently handed over $2.4 million at the start of the contract that Mr. Tibbetts described as a “capitalization fee” and an additional US$1.372 million in implementation costs.
Mr. Tibbetts said he was not chief executive at CINICO when those decisions were made and that he joined the entity in December 2010 when the contract was being finalized.
“If AIS [Advanced Information Systems] managed to negotiate a contract [like that] … that’s in their remit and the powers-that-be at the time,” he said.
In addition, Mr. Tibbetts said Tuesday that although some areas of the CarePay system had come on line earlier, the full implementation of the system did not occur until May 2012 – some 18 months after the initial contract was agreed.
Other issues to be reviewed in the meeting with officials from the Ministries of Health and Finance Wednesday were expected to include questions about the beneficial ownership of the Jamaican company’s local branch, AIS Cayman Ltd.
Finance Minister Marco Archer raised this issue in Finance Committee last month when the discussion of who was profiting from the AIS contract arose.
“I want to find out who the ultimate beneficial owner of this company is,” Mr. Archer said. “There’s a lot of money being paid for this company and we don’t know who it’s going to.”
Mr. Archer promised to respond by late Tuesday to queries sent to him about the CarePay contract.
One of the supposed benefits of the CarePay contract, according to financial statements issued by CINICO in the 2010/11 budget year, was that it would reduce the Cayman Islands Health Services Authority’s bad debts. Those are debts that have not been paid for more than a year.
According to the annual report attached to the financial statements for that year: “[The swipe card system] would streamline the whole process at both the Cayman Islands Health Services Authority and [the] Cayman Islands National Insurance Company and significantly reduce the Cayman Islands Health Services Authority’s bad debts.”
But bad debts projected at some $40 million in 2010 were anticipated to balloon to $70 million by June 2015, according to government budget records.
Last week in the Legislative Assembly, Health Minister Osbourne Bodden attempted to explain the myriad problems the public hospital system faced in collecting these debts, one of which was that the CarePay card system hadn’t worked as initially intended.
The swipe card payment system was not able to collect patient deductible payments for services outside of regular business hours, Mr. Bodden said. In other words, if someone used hospital services and their insurance company paid just 80 percent of the bill, the hospital would not have immediately known that if the visit was made after hours. “This was the issue that the real-time software was expected to correct,” Mr. Bodden said.
Most public healthcare system patients who are insured through CINICO do not have to pay deductibles on health services. However, some owe payments for hospital services, and most other private insurance companies charge deductibles for hospital services.
Health Ministry Chief Officer Jennifer Ahearn said that while it had always been the intention to extend the swipe system to private sector insurers as well, that had never happened. Minister Bodden did not state how much cash had been lost by the public health system because of the swipe card after-hours deductible collections.