Controversy over BPOMAS contract

SHARE   |   Tuesday, 23 February 2016   |   By Ditiro Motlhabane

Government has been accused of favouritism after repeatedly extending the contract for the administration of Botswana Public Officers Medical Aid Scheme (BPOMAS) to Associated Fund Administrators (AFA). This dates back to the inception of the scheme in 1990.
The controversial extension of the contract which expires in five weeks’ time, for a further two years, has infuriated captains of the medical aid service market who have registered their concerns with the Ministry of Health. They stopped short of accusing government of giving AFA - their competitor - unfair advantage and monopoly in the contract.
Chief executives from Metropolitan Health - Lesego Pule, BoMaid - Dennis Alexander and Symphony Health - Rose Tatedi wrote to the Minister of Health late last year noting the timeline constraints which could be caused by failure to float the tender which expires on 31 March 2016, and calling on government to facilitate a fair and equitable process. The terms and conditions of the contract requires BPOMAS to give the current provider six months' notice of termination should they fail to retain the contract. AFA continues in the contract for administration of the scheme after they were granted an extension in the first quarter of 2012 for three years. The contract expired in March 2015 but has been extended by a further 12 months to March 2016. "(We) wish to register our concern with the non-floating of the tender that may lead to another extension that may prejudice us as potential bidders," the CEOs wrote at the end of last year.
In response Dr Alfred Madigele said government had extended the AFA contract by two years (to March 2018) because BPOMAS is at a crucial and sensitive point with respect to its financial performance. He said the scheme is at an early stage of implementing a turnaround strategy, and most of the current members of the management committee are still new. He pleaded with the complainants to understand the risk associated with the system and/ or management change where financial performance is sensitive. But the medical aid service providers would have none of that. They told Dr Madigele that they are not convinced that the reasons for the extension of the AFA contract are weighty enough to warrant such a favour. In their view the medical aid industry is in a mature state and therefore issues of contracting should be dealt with from that perspective. "Whilst we note and appreciate the contents of your letter, in particular reasons advanced for the extension of the contract with the current provider, we submit that we are not in agreement with these as presented," the CEOs declared, in a written response.
The chief executives, therefore, demand a commitment from the ministry on the time frame of the AFA contract extension, to which Dr Madigele said he had instructed that it be the last to level the playground for all interested stakeholders. He said prior to expiry of the extension on 31 March 2018 the ministry will undertake appropriate public ender process that will culminate in the appointment of an administrator for BPOMAS. Therefore, it is expected that the tender will be floated by August 2017, accommodating "the proposed amendments to the (BPOMAS) scheme rules and terms and conditions of the contract" as alluded to by the assistant minister.
The source of unhappiness among the medical aid service providers is that since inception in 1990 BPOMAS has been administered solely by AFA. For the first time, the tender was floated in 2010 but was later withdrawn. Following a pre-tender meeting of December 14, 2011 then Board chairperson Kolaatamo Malefho announced cancellation of the BPOMAS tender on 21 December 2011. At the time Malefho promised that “the tender will be re-advertised during the first quarter of 2012,” saying the cancellation was to input concerns raised by bidders over Terms of Reference, scope of work and the timing. Bidders had complained about ambiguities and lack of clarity in the tender documents. Other bidders were BOMAID/BOFA, Gurugroup, Momentum Botswana and AFA Botswana. The tender was never re-advertised.
BPOMAS is a closed scheme, which provides medical aid cover to public service employees as well as employees of parastatals that were previously government departments who opt to remain members of the scheme. All public servants are eligible to join BPOMAS and are entitled to 50% subsidy from government. BPOMAS enjoys membership estimated at over 350 000, controlling over 75% of the medical aid service market. The affairs of the scheme are managed by a management committee, which comprises 12 appointees. The Chairman of the committee is the Permanent Secretary in the Ministry of Health. BPOMAS is a member of the Board of Healthcare Funders of Southern Africa (BHF).
AFA Directors are Sesae Mpuchane (Chairperson), Keith Hollis, Blackie Marole, Lebang Mpotokwane and Tim Rametse, with Duncan Thela appointed Managing Director in June 2013 after taking over from Tatedi. The capital shareholding structure of AFA is 50% Matseno (Pty) Ltd, 25% Medscheme (Pty) Ltd and 25% Medtrack Limited. Matseno is a company owned by the local investors, Medscheme is owned by South African investors while Medtrack, on the other hand, is owned by United Kingdom investors.
AFA was established in 1990 as a fund administration company. The company offers medical aid administration and disease management. AFA assesses and processes claims using Information Technology (IT) systems that are programmed to auto adjudicate and pay claims in accordance with the Rules and Guidelines of BPOMAS, as well as AFA’s internal control processes. The IT systems currently handle more than 300 000 transaction lines per month. Payment‐runs are made every week and payments done through electronic fund transfers or cheque and corresponding remittance statements sent via electronic means and/or post. The Company prepares and submits monthly Management Accounts, annual audited financial statements, including related reports with clear analysis of income generated, expenditure and recommendations where necessary, to the administered medical aid scheme.
In addition, AFA invests excess funds of the administered schemes in near cash or cash vehicles and/or consults with contracted Asset Consultants to determine the most appropriate investment vehicle(s).

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