The World Bank

Document of The World Bank

Public Disclosure Authorized

Report No: ICR00003211

IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92182)

Public Disclosure Authorized ON A

GRANT

IN THE AMOUNT OF US$ 6.02 MILLION

Health Insurance Fund

FOR A Public Disclosure Authorized Pre-paid Health Scheme Pilot in Nigeria (P104405)

January 30, 2015

Health, Nutrition and Population Global Practice Africa Region

This document is being made publicly available after Bank approval. This does not imply a presumed

Public Disclosure Authorized outcome. This document may be updated following Bank approval and the updated document will be made publicly available in accordance with the Bank’s policy on Access to Information.

ABBREVIATIONS AND ACRONYMS

ANC Antenatal care CAPDAN Computer and Allied Products Distribution Association of Nigeria CBHIS Community-based health insurance schemes CHAT Choosing Health Plans All Together COHSAS The Council for Health Service Accreditation of Southern Africa CPS Country Partnership Strategy FFS Fee-For-Service FIRR Financial Internal Rate of Return GPOBA Global Partnership on Output-based Aid HBL Hygeia Better Life HCHC Hygeia Community Health Care HIF Stichting Health Insurance Fund HMB Hospital Management Board HNP Health, Nutrition and Population HWs Health workers ICR Implementation Completion and Results report IEC Information, education and communication IFC International Finance Corporation ILI Intensive learning ICR ILO International Labour Organization ISR Implementation Status and Results Report JCI Joint Commission International LHFMAA Lagos Health Facility Monitoring and Accreditation Agency LMW Lagos Market Women M&E Monitoring and Evaluation MDD Medical Due Diligence MDG Millennium Development Goal MILK Microinsurance Learning and Knowledge MRC Market Research Consultancy NPV Net present value NGN Nigerian Naira NGOs Non-governmental organizations NHIS National Health Insurance Scheme NSHDP National Strategic Health Development Plan OBA Output-Based Aid PAF PharmAccess Foundation PDO Project Development Objective PPF Project Preparation Facility

PSS Price Sensitivity Study QEA Quality at Entry QSA Quality of Supervision SOPs Standard Operating Procedures SPN Service provider network

UHC Universal Health Coverage

HNP Senior Director: Timothy Evans Practice Manager: Trina Haque Project Team Leader: Chris Atim ICR Team Leader: Samuel Mills ICR Author: Samuel Mills

iii

CURRENCY EQUIVALENTS

Exchange Rate Effective November 19, 2008

Currency Unit = Naira Euro 1.00 = US$ 1.34 US$ 1.00 = 128.00

FISCAL YEAR January 1 – December 31

NIGERIA

Pre-paid Health Scheme Pilot in Nigeria (P104405)

CONTENTS

Data sheet

A. BASIC INFORMATION...... VII B. KEY DATES ...... VII C. RATINGS SUMMARY ...... VII D. SECTOR AND THEME CODES ...... VIII E. BANK STAFF ...... VIII F. RESULTS FRAMEWORK ANALYSIS ...... VIII G. RATINGS OF PROJECT PERFORMANCE IN ISRS ...... XII H. RESTRUCTURING (IF ANY) ...... XII I. DISBURSEMENT PROFILE ...... XII 1. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN ...... 1 1.1 Context at Appraisal ...... 1 1.2 Original Project Development Objectives (PDO) and Key Indicators ...... 3 1.3 Revised PDO and Key Indicators ...... 3 1.4 Main Beneficiaries ...... 3 1.5 Original Components...... 4 1.6 Revised Components ...... 5 1.7 Other significant changes ...... 5 2. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES ...... 5 2.1 Project Preparation, Design, and Quality ...... 5 2.2 Implementation ...... 7 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization ...... 9 2.4 Safeguard and Fiduciary Compliance: ...... 11 2.5 Post-completion Operation/Next Phase ...... 12 3. ASSESSMENT OF OUTCOMES ...... 12 3.1 Relevance of Objectives and Design ...... 12 3.2 Achievement of Project Development Objectives (efficacy) ...... 14 3.3 Efficiency ...... 19 3.4 Justification of Overall Outcome Rating ...... 19 3.5 Overarching Themes, Other Outcomes and Impacts ...... 20 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops: ...... 20 4. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME ...... 21 5. ASSESSMENT OF BANK AND BORROWER PERFORMANCE ...... 21 5.1 Bank Performance ...... 21 5.2 Borrower Performance ...... 23 6. LESSONS LEARNED ...... 24

ANNEXES ...... 27

ANNEX 1. PROJECT COSTS AND FINANCING ...... 27 ANNEX 2. OUTPUTS BY COMPONENT ...... 28 ANNEX 3. ECONOMIC AND FINANCIAL ANALYSIS (INCLUDING ASSUMPTIONS IN THE ANALYSIS) ...... 39 ANNEX 4. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES ...... 43 ANNEX 5. BENEFICIARY SURVEY RESULTS ...... 45 ANNEX 6. STAKEHOLDER WORKSHOP REPORT AND RESULTS ...... 51 ANNEX 7. SUMMARY OF BORROWER’S ICR AND/OR COMMENTS ON DRAFT ICR ...... 55 ANNEX 8. LIST OF SUPPORTING DOCUMENTS...... 65 ANNEX 9. MAP ...... 67

Figures

FIGURE 1. NUMBER OF ENROLLEES BY MONTH, JULY 2009 - DECEMBER 2013 ...... 15 FIGURE 2. ACTUAL AND PLANNED ENROLLMENT ...... 31 FIGURE 3. AVERAGE NUMBER OF VISITS PER ENROLLEE PER MONTH, AUGUST 2009 – FEBRUARY 2014 ...... 31 FIGURE 4. NUMBER OF ANC VISITS PER PREGNANCY, SEPTEMBER 2009 – SEPTEMBER 2013 ...... 32 FIGURE 5. AVERAGE ASSESSMENT SCORES FOR HEALTH FACILITIES IN NIGERIA ...... 34 FIGURE 6. RE-ENROLLMENT RATE PER MONTH, SEPTEMBER 2011 - OCTOBER 2013 ...... 35

Tables

TABLE 1. BENEFITS PACKAGE OF CAPDAN ...... 4 TABLE 2. PDO INDICATORS AT PROJECT DESIGN ...... 10 TABLE 3. PLANNED AND ACTUAL PREMIUMS, SUBSIDY AND CO-PREMIUM LEVELS ...... 15 TABLE 4. RISKS AND MITIGATION MEASURES...... 29 TABLE 5. CAUSAL CHAIN FOR THE PREP-PAID INSURANCE SCHEME...... 30 TABLE 6. UTILIZATION OF OUTPATIENT AND INPATIENT SERVICES, AUGUST 2009 – DECEMBER 2013 ...... 31 TABLE 7. SERVICE PROVIDERS’ UTILIZATION CAPACITY ...... 32 TABLE 8. SERVICE PROVIDERS SAFECARE ANNUAL ASSESSMENT SCORES 2011 -2013 ...... 33 TABLE 9. HEALTH FACILITIES PHYSICALLY UPGRADED WITH PROJECT FUNDS ...... 36 TABLE 10. HCHC IT/ILO PROJECT ON ITC SOLUTIONS ...... 36 TABLE 11. SERVICE PROVIDERS FOR THE LMW & CAPDAN ...... 37 TABLE 12. SUMMARY OF ANALYSIS OF COSTS OVERRUN/UNDERRRUN ...... 40 TABLE 13. COMPARISON OF DISBURSED AND UNDISBURSED FUNDS BY TYPE OF EXPENDITURE ...... 40 TABLE 14. SUMMARY OF RESULTS OF THE CBA ANALYSIS ...... 42

A. Basic Information

Pre-paid Health Scheme Country: Nigeria Project Name: Pilot in Nigeria Project ID: P104405 L/C/TF Number(s): TF-92182 ICR Date: 01/30/2015 ICR Type: Intensive Learning ICR Lending Instrument: SIL Grantee: Health Insurance Fund Original Total USD 6.02M Disbursed Amount: USD 4.13M Commitment: Revised Amount: USD 4.13M Environmental Category: C Implementing Agencies: Stichting Health Insurance Fund (HIF) Hygeia Community Health Care Limited (HCHC) PharmAccess Foundation (PAF) Cofinanciers and Other External Partners: Nil

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/21/2006 Effectiveness: 05/15/2009 Appraisal: 06/20/2007 Restructuring(s): 06/25/2013 Approval: 11/19/2008 Mid-term Review: 09/30/2012 12/04/2012 Closing: 06/30/2013 04/30/2014

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Grantee Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Not applicable Implementing Agency/Agencies: Quality of Supervision: Moderately Unsatisfactory HCHC Moderately satisfactory PAF Satisfactory HIF Moderately unsatisfactory Overall Bank Overall Borrower Moderately Unsatisfactory Moderately Unsatisfactory Performance: Performance:

vii

C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at No Quality at Entry (QEA): None any time (Yes/No): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Moderately

Closing/Inactive status: Unsatisfactory

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Health 17 100 Non-compulsory health finance 83

Theme Code (as % of total Bank financing) Health system performance 100 100

E. Bank Staff Positions At ICR At Approval Vice President: Makhtar Diop Obiageli Katryn Ezekwesili Country Director: Marie Francoise Marie-Nelly Onno Ruhl Practice Manager/Manager: Trina S. Haque Eva Jarawan Project Team Leader: Chris Atim Carmen Nonay ICR Team Leader: Samuel Lantei Mills ICR Primary Author: Samuel Lantei Mills

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The Project Development Objective (as stated in the Grant Agreement) was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in Computer and Allied Products Distribution Association of Nigeria (CAPDAN) of the lkeja computer village in Lagos.

Revised Project Development Objectives (as approved by original approving authority) The project development objective was not revised.

viii

(a) PDO Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1 : Total number of people enrolled in pre-paid health insurance scheme Value quantitative or 0 22,500 22,500 4,884 Qualitative) Date achieved 11/19/2008 12/31/2013 01/24/2013 12/31/2013 Comments Number of enrollees increased steadily to a peak of 13,473 in December 2011 and then (incl. % gradually decreased to a low of 4,884 in December 2013 (21.7% of the target of 22,500). achievement) However, 38.6% (8,682) was achieved in April 2013 when enrollment was discontinued Indicator 2 : Provider network capacity Value quantitative or No baseline No target value Adequate Qualitative) Date achieved 11/19/2008 10/31/2013 Comments Provider network capacity refers to the ability of the entire HCHC network to adequately cater (incl. % to the needs of current and projected enrollee population demands. There was no target value achievement) in the operations manual. Number of service providers in compliance with the service quality standards specified by Indicator 3 : PAF Value At least 14 of the 15 quantitative or 0 15 service providers Qualitative) Date achieved 11/19/2008 01/15/2015 04/30/2014 Comments At project closing, all service providers were in compliance with the service quality standards (incl. % specified by PAF. 100 percent of target achieved. achievement) Indicator 4 : Monthly re-enrollment rates Value quantitative or 0 No target value 58% Qualitative) Date achieved 11/19/2008 10/31/2013 Comments The renewal rates increased from 48% in October 2010 - September 2011 to 58% in (incl. % November 2012 - October 2013. Factoring in an estimated outmigration rate of 24%, the achievement) adjusted renewal rate in October 2013 was 77%.

(b) Intermediate Outcome Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1 : Total number of visits to health facilities Value (quantitative 0 no target value 112,827 or Qualitative) Date achieved 11/19/2008 01/22/2015 12/31/2013 Comments This indicator was not in the project commitment paper (equivalent of the project appraisal (incl. % document) but was monitored during project implementation. achievement) Indicator 2 : Number of pregnant women who received antenatal care (ANC) services Value (quantitative 0 No target value 3,753 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper (equivalent of the project appraisal (incl. % document) but was monitored during project implementation. achievement) Indicator 3 : Number of deliveries in health facilities Value (quantitative 0 No target value 1,785 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl. % implementation. achievement) Indicator 4 : Average number of visits per enrollee per year Value (quantitative 0 No target value 3.8 or Qualitative) Date achieved 11/19/2008 10/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl. % implementation. achievement) Indicator 5 : Client satisfaction rate Value (quantitative No baseline No target value 72 percent or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl. % implementation. achievement) Indicator 6 : Service provider capacity Value No baseline No target value underutilized

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years (quantitative or Qualitative) Date achieved 11/19/2008 10/31/2013 Comments In a July 2011 study, of 15 health care providers 9 were determined to be of optimum capacity (incl. % (60%), 2 (13%) were underutilized, and 4 (27%) were over utilized. However, there was achievement) underutilization at the project closing due to the low enrollment levels. Indicator 7 : Number of service providers removed from the network Value (quantitative 0 No target value 0 or Qualitative) Date achieved 11/19/2008 04/30/2014 Comments No service provider was dropped as a result of poor quality of care. However, three service (incl. % providers left the networks mainly because of non-profitability. achievement) Indicator 8 : Annual average SafeCare quality assessment scores Value (quantitative no baseline No target value 79 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments Assessment scores for the five CAPDAN health facilities that were in assessed in 2011 as well (incl. % as 2013 increased by 24 points from 55 points in 2011 to 79 points in 2013. achievement) Indicator 9 : Number of health facilities constructed, renovated, and or/equipped Value (quantitative 0 No target value 16 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments This indicator was not in the project commitment paper but was monitored during project (incl. % implementation. achievement) Indicator 10 : Number of beneficiaries Value (quantitative 0 No target value 21,963 or Qualitative) Date achieved 11/19/2008 12/31/2013 Comments Unlike the number of enrollees at any given time, the total number of beneficiaries is the (incl. % cumulative number enrolled at one time or the other during the project period. achievement)

G. Ratings of Project Performance in ISRs

Date ISR Actual Disbursements No. DO IP Archived (USD millions) 1 10/30/2009 Moderately Satisfactory Moderately Satisfactory 0.72 2 06/28/2010 Moderately Satisfactory Moderately Unsatisfactory 0.72 3 03/22/2011 Satisfactory Satisfactory 1.17 4 12/27/2011 Satisfactory Satisfactory 2.27 5 07/01/2012 Moderately Satisfactory Moderately Satisfactory 2.67 6 11/30/2013 Moderately Unsatisfactory Moderately Satisfactory 3.24 7 05/14/2014 Moderately Unsatisfactory Moderately Unsatisfactory 3.45

H. Restructuring (if any)

ISR Ratings at Amount Restructuring Board Approved Restructuring Disbursed at Reason for Restructuring & Key Date(s) PDO Change Restructuring in Changes Made DO IP USD millions Level II restructuring – extension of closing date from June 30, 2013 to 06/25/2013 N MS MS 3.24 April 30, 2014 and reallocation of funds between grant categories. Approved by Country Director.

I. Disbursement Profile

xii

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

Country and sector background 1. Nigeria is the largest oil exporter, has the largest economy, and is the most populous country (174 million) in the Africa region. It is ethnically diverse and has more than 400 linguistic groups in 36 decentralized states in the federal republic. Lagos state, with a population of over 9 million, is the second largest populous state after Kano state. Nigeria, a lower middle-income country, has had a strong economic growth rate at about 6 to 8 percent annually in the last decade. However, 46 percent of the population live below the poverty line and 67 percent live on less than US$1.25 a day. The life expectancy at birth is 52 years.

2. Nigeria is not on track to achieve the health Millennium Development Goals (MDGs). Nigeria accounts for 13 percent of all under-five deaths worldwide and the under-five mortality rate in 2013 was 117 deaths per 1,000 live births, which is far higher than the MDG 4 target of 71 in 2015. The maternal mortality ratio has decreased from 1,200 maternal deaths per 100,000 live births in 1990 to 560 in 2013 but the average annual percentage decline is below the expected 5.5 percent needed to achieve MDG 5. According to the 2013 Demographic and Health Survey, while 61 percent of pregnant women had at least one antenatal care (ANC) visit (51 percent had the recommended 4 or more visits, slightly higher than 45 percent in 2008), only 36 percent delivered in a health facility (35 percent in 2008) and a mere 11 percent of women use modern contraceptives (same in 2008). Further, only 25 percent of children age 12-23 months are fully immunized (23 percent in 2008) and 25 percent of children under-five are underweight (23 percent in 2008). The HIV prevalence among adults aged 15 to 49 years is 3.2 percent and 19.8 percent of eligible children and adults are receiving antiretroviral treatment.

3. Health expenditure per capita is US$94 and out-of-pocket health expenditure (percent of total expenditure on health) is high at 66 percent1. The private and public health expenditures account for 4.2 percent and 1.9 percent, respectively, of gross domestic product. In 1999, the Nigeria Government established the National Health Insurance Scheme (NHIS), a social healthcare scheme. It was officially launched in 2005 but had only 1.2 million beneficiaries (almost all civil servants) in 2009. Health insurance remains rare among the poor and those in the informal sector.

Rationale for Bank assistance and link to Country Assistance Strategy 4. This project was to provide health insurance coverage to a low-income group in the private sector (that is not covered by the NHIS) who were not necessarily the poorest and could afford pay co-premium, thereby contributing to reducing out-of-pocket expenditure. The project was to contribute to Nigeria’s higher-level objectives such as the MDGs, commitment to establishing pro-poor financial protection systems including a Community-Based Social Health Insurance schemes (CBHIS) as outlined in the 2010 – 2015 National Strategic Health Development Plan (NSHDP) and the 2004 revised National Health Policy.

5. The project was consistent with the World Bank’s Country Partnership Strategy (CPS). Easy access to health insurance for all Nigerians was one of the key activities to be addressed in the 2010-2013 CPS pillar II: sustained improvement in access to, quality and utilization of human development services.

1 Source: 2014 World Development Indicators. World Bank.

The project was to also contribute to preventing poverty due to illness (by improving financial protection), one of the four strategic objectives of the 2007 World Bank’s Health Nutrition and Population (HNP) Strategy.

Nigeria Pre-Paid Health Scheme Project 6. The project subsidized the insurance premium for low-income employees and their families of small businesses in CAPDAN in Ikeja, Lagos. New enrollments were on a monthly basis and the enrollees were provided an identification card after payment of the co-premium for a full year. Apart from the annual co-premiums, the enrollees did not make any payment at the point of service (see Table 1 for benefits package). Each enrollee selected a preferred primary care provider among the Service Provider Network (SPN) and was eligible to access the provider after a maximum 30-day wait period.

7. The three main implementing agencies were Stichting Health Insurance Fund (HIF), PharmAccess Foundation (PAF), and Hygeia Community Health Care (HCHC). The International Development Association, acting as administrator of the Global Partnership on Output-based Aid (GPOBA), signed a grant agreement with HIF2 on October 23, 2008 to: manage the flow of funds from GPOBA for the project; submit semi-annual withdrawal requests to GPOBA; provide scheme oversight through its board of directors; publicize the project and lobby donors to fund further replication; select an external auditor to review the use of GPOBA funds; and enter into an implementation, monitoring and evaluation agreement with PAF.

8. The main functions of PAF3 (agreement signed on May 15, 2009) were: manage project implementation; independently verify outputs that will trigger disbursements to HCHC (bi-monthly audits of enrollment levels and co-payments; and semi-annual service provider quality assessment); conduct medical due diligence to determine upgrading needs for service providers and quality targets; work with HCHC to create and approve upgrading plans for providers; provide oversight for the upgrading of providers; facilitate the upgrading process by supporting training for service providers; financial management of project including regular reporting to HIF; manage payment to HCHC; manage reporting process with HCHC; and provide financial and operational reporting to HIF.

9. HCHC is part of Hygeia Nigeria Limited, the largest private health care provider in Nigeria. The main functions of HCHC, contracted by PAF on May 15, 2009, were: manage all aspects of the health insurance scheme, including enrollment, co-payment collection, claim processing, payments to providers, and data collection; draft upgrading plan for providers; manage provider upgrades (with oversight from PAF) and procure required goods and works; market the project to the target population; implement the project’s anti-fraud mechanisms including providing ID cards to all plan participants; work to prevent fraud by analyzing beneficiary utilization data; divulge all necessary information that PAF and HIF may need to verify revenues, costs and profits associated with this project.

2 HIF is a Dutch non-profit organization which provides targeted subsidies to stimulate demand for pre-paid health insurance schemes in Africa using donor funding and an output based aid approach. In 2006 it received 100 million euros from the Netherlands Ministry of Development Cooperation to implement health insurance scheme in four African countries, with Nigeria being the first.

3 PAF, founded in 2000, is also a Dutch non-profit organization with local offices in Nigeria and other countries. Its core functions include designing and implementing health insurance schemes and improving quality of care.

1.2 Original Project Development Objectives (PDO) and Key Indicators

10. The PDO (as stated in the Grant Agreement) was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in CAPDAN of the lkeja computer village in Lagos.

11. In the operations manual, the PDO is stated as: to increase access to quality basic health care in Nigeria by providing pre-paid health insurance plans to low-income small business employers (whose annual income is below 300,000 NGN) and their households and employees and their households whose businesses belong to the Computer and Allied Products Association (CAPDAN) in Lagos. The Grant Agreement PDO referred to only low-income employees but the operations manual indicated both employees and employers. Considering the Grant Agreement stipulated that “in the event that any provision of the operations manual shall be in conflict with any provision of this agreement, the provisions of this agreement shall prevail”, the ICR employed the PDO in the grant agreement in the assessment of the achievement of PDO (efficacy) (described in section 3.2).

12. The project commitment paper4 had no overall objective but had four specific objectives: I. Encouraging low-income Nigerian families to enroll in pre-paid health insurance plan as a way to access affordable primary and maternal care, as well as treatment for prevalent diseases; II. Increasing the utilization and efficiency of idle private sector capacity to meet the country’s healthcare needs, instead of constructing new public facilities; III. Establishing and strictly enforcing standards of care in the private health sector, thereby restoring confidence among insurance beneficiaries; and, IV. Demonstrating the viability and long-term sustainability of community health plans to encourage other HMOs to offer affordable and appropriately designed health insurance plans to low-income populations.

13. The key PDO indicator (in the operations manual5 and project commitment paper) was number of enrollees in the pre-paid health insurance scheme (target value of 22,500 beneficiaries).

1.3 Revised PDO and Key Indicators

14. The PDO and key indicators were not revised.

1.4 Main Beneficiaries

15. The main beneficiaries are the low-income small business employers and their families (whose annual income is below 300,000 Nigerian Naira [NGN] and whose businesses belong to the CAPDAN6

4 This is the equivalent of the WBG project appraisal document. 5 The Grant agreement indicated that April 2009 operations manual would outline the “project performance indicators and the procedures for the monitoring and evaluation of the Project”. There was no key outcome indicator in the grant agreement. 6 CAPDAN is a well-organized group that is registered with the Nigerian Government and represented by an elected secretariat. It represents approximately 2,000 registered small business owners who operate kiosks selling mobile phones, computer accessories and other electronic hardware. The average enterprise employs 3-6 people and has annual sales of about US$75,000. The median income for employees and employers in 2008 were US$1,019 (NGN120,000) and US$4,077 (NGN480,000), respectively, with a combined median of US$1,529 (NGN180,000).

in Lagos) together with their employees and their families. Of the estimated CAPDAN target population of 27,500, the project was expected to provide funding to subsidize access to the pre-paid health insurance plan service for 22,500 people. The insurance packages would provide the beneficiaries coverage for primary care, maternal care and treatment for high-risk diseases such as HIV/AIDS, malaria and tuberculosis through a SPN of clinics and hospitals.

1.5 Original Components

The project had the following components: a) Insurance Premium, Marketing and Upgrading Subsidies (total cost - US$4,574,000) Insurance Premium subsidies (US$4,143,000): Project was expected to subsidize health insurance premiums of enrollees from 85 percent in year 1 to 42.8 percent in the final year. Marketing subsidies (US$197,000): HCHC Limited, the implementing agency, was to be paid US$8.14 per new beneficiary enrolled to cover the education of the enrollees about the scheme, principles of insurances, the insurance package as well as extensive information, education and communication (IEC) outreach to the target population. Upgrading subsidies (US$234,000): HCHC had an established SPN of 10 primary care providers and 3 referral providers. However, two new medical service providers needed to be upgraded (to replace outdated medical equipment, improve physical infrastructure, install essential administrative systems, and training of health and administrative personnel) to join the SPN to expand access to care to CAPDAN enrollees.

b) Monitoring and evaluation (total cost - US$953,000) Stichting HIF, the GPOBA grant recipient, was to establish an implementation, monitoring and evaluation agreement with PAF to ensure a) accuracy of the financial and medical reports submitted by HCHC, and b) quality assurance (minimum standards of care at the provider level).

c) Project Management (total cost - US$261,000) Funding of the operating costs associated with project management by HIF.

Benefits Package

Table 1. Benefits Package of CAPDAN

BENEFITS EXCLUSIONS Primary and Outpatient Care High Technology Services (CT Scan, MRIs) Specialist Consultation Drug abuse / addiction Hospital care and admission (up to 5 days) Injuries from natural disasters, wars, riots,etc. Prescription drugs Epidemics (affecting >10 percent of the population) Laboratory Tests (Hematology, Family Planning (provided by other Microbiology, Serology, Clinical Chemistry) organizations) X-ray, Ultrasound Inpatient care is limited to 15 days, but exceptions are made on a case by case basis Minor Surgery Major/Complex Surgery Intermediate Surgery (including Cataracts) Cancer (chemotherapy, radiation therapy) Pre and post natal care and delivery (including Provision of spectacles, contact lens Caesarean deliveries )

BENEFITS EXCLUSIONS HIV/AIDS: counseling, testing, treatment, Ear-Nose-Throat (hearing aids, etc.) monitoring, provision of anti-retroviral drugs Eye examination and care Dental Immunizations (BCG, Measles, DPT, Oral Polio, Intensive care, dialysis Hepatitis B) Preventive Education (HIV, Hypertension, Pediatrics (congenital abnormalities) Diabetes, TB)

1.6 Revised Components

16. The amounts allocated to the project components were revised in June 2013 as follows: a reallocation of funds in the amount of US$547,516 from Category 1a (Insurance Premium Subsidies) to a new Category 6 (medical services) and c) a reallocation of funds in the amount of US$206,106 for the implementation of the exit strategy and for management cost from Category 1a (Insurance Premium Subsidies) to Category 1b (Marketing Subsidies), Category 2 (HIF Project Management), Category 3 (Monitoring and Evaluation), and Category 4 (Audit).

Original Revised allocation Components (US$ million) 1. Subsidy 4,574,000 3,871,126 a) Insurance Premium Subsidies 4,143,000 3,389,378 b) Marketing Subsidies 197,000 247,748 c) Upgrading Subsidies 234,000 234,000 2. HIF Project Management 261,000 288,118 3. Monitoring and evaluation 953,000 1,067,930 4. Audits 108,000 121,310 5. Unallocated 119,164 119,164 6. Medical Services 0 547,516 Total Baseline Cost 6,015,164 6,015,164

1.7 Other significant changes

17. The project closing date was extended from June 30, 2013 to April 30, 2014.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design, and Quality

18. Project preparation: An existing Lagos community health insurance program for Low-income market women (in 10 markets), which had been established by HIF, PAF and HCHC (the same

implementing agencies) informed the project design7. Consequently, the same SPN which had two years of previous experience with the Lagos market women scheme was enlisted in this project, and two new service providers were added and upgraded to expand access to health care for CAPDAN enrollees. Similarly, previously tested independent verification and monitoring processes were employed in this project.

19. HCHC undertook a market survey to identify 12 potential target groups for the project including the Lagos State Taxi Drivers Association, the Nigerian Association of Hairdressers and Cosmetologists, the Nigerian Union of Tailors, the Performing Musicians Association of Nigeria, and CAPDAN. The latter was selected as the target group for the project based on two key criteria: a) sustainability (ability to pay the full premiums when the subsidy ends based on their incomes and willingness of the employers to share the cost of the insurance premium), and b) geographic concentration (which was expected to facilitate marketing, enrollment, collections and customer satisfaction monitoring). Additionally, the findings of a target population study informed the project design.8

20. Project design: The project design was reportedly consistent with the six core concepts of Output- Based Aid (OBA) (described in detailed in section 3.1 on relevance of design). According to the project commitment paper, the annual premium of US$68.06 in the first year was comparable to those of similar schemes that the NHIS regulates. It was expected to increase gradually to $92.92 in the final year of the project (Table 3). To ensure sustainability of the project, the co-premiums of enrollees were expected to increase from 15 percent in year 1 to 57 percent in year 5. Although CAPDAN employers and employees indicated a willingness to pay NGN2,000 (US$15) per annum per individual with a gradual increase in the co-premium to cover the total insurance premium within ten years, HCHC and PAF thought that was not affordable. Instead they recommended an initial co-premium of NGN1,200 (US$9), or 15 percent of the total first year premium cost of US$60, to motivate enrollment of entire families.

21. HCHC was expected to pay 80 percent of the premiums (premium subsidies from GPOBA and co- premiums from enrollees) to services providers and retain the remaining 20 percent to cover its costs and profit. Considering that at project design, HCHC’s operating costs were higher at 26 percent, HCHC was expected to be more efficient in curtailing its operating costs.

22. Of the 80 percent of premiums that HCHC paid to service providers, 70 percent were capitation fees (fixed up-front monthly payments to cover primary care) and 30 percent were fee-for-service (for more complicated services which needed prior authorization of HCHC and after which the HCHC would reimburse the provider based on an invoice). Thus, the service providers were to bear the risk of the cost of primary care delivery exceeding the capitation payment while HCHC were to bear the risk of excess fee-for-service claims.

7 In January 2007, HCHC, PAF and HIF partnered to implement donor subsidized community health insurance schemes for low income Nigerian populations. This was to promote access to healthcare for low income groups and strengthening the capacity of enlisted public and private healthcare providers to deliver quality healthcare services. The Lagos market women program was financed by the Dutch Government. Apart from the Lagos market women program, the three agencies also run a community health insurance scheme for farmers in Kwara state.

8 Target population report CAPDAN, October 2008. The survey was carried out in May/June 2008.

23. In the project design enrollment was to be stopped in December 2012, 6 months before the original closing date of June 2013. Considering that in the project commitment paper a follow-on Phase II project was envisaged, setting a pre-determined date for stopping enrollment during Phase I would reduce the number of enrollees at project closure.9 As described in the section on achievement of project development objectives, this adversely contributed to the project not meeting the enrollment target.

24. Assessment of risks and mitigation measure: Some critical risks were identified during appraisal and remedial measures put in place, as described in Table 4 in Annex 2. Notably, the willingness to pay for increasing co-premiums by the enrollees was underestimated.

25. There was no formal quality at entry review for this project.

2.2 Implementation

26. Enrollment and registration started in June 2009 and enrollees started accessing care in July 2009. PAF regularly submitted semi-annual progress (verification) reports to HIF and noted any implementation constraints and recommended corrective actions. Additionally, the World Bank team produced Implementation Status and Results Reports (ISRs) which provided an update on implementation progress. A midterm review was undertaken in December 2012 and the project was restructured in June 2013.

Level II restructuring-delay in approval of extension of project closing date 27. The World Bank approved a Level II restructuring on June 25, 2013, which entailed: a) extension of closing date from June 30, 2013 to April 30, 2014 and b) reallocation of funds between grant categories (noted above). HIF put in a formal request on April 27, 2012 for the amendment of the grant agreement (but discussions started in June 2011 and HIF recommendations for restructuring were noted in the 2011 semi-annual progress) and on May 25 2012, a GPOBA Panel of Experts endorsed the proposal for restructuring and emphasized that the lessons learned in the initial phase of the project should be incorporated in the restructuring paper. This was discussed further during the midterm review in December 2012 and the restructuring was approved 6 months later. The long deliberative discussions focused on the viability and sustainability of the scheme, and the reputational risks in abruptly closing the project. Nevertheless, this delay created some uncertainty, and may have modestly affected the achievement of the target enrollment.

Joint review missions and midterm review 28. The WBG team and the implementing agencies (HIF PAF, and HCHC) undertook joint review missions. The findings were presented in Aide Memoires and 7 ISRs. The December 4-6, 2012 midterm review assessed implementation status, the pros and cons of the extension of the project closing date, and lessons learned. Key elements affecting implementation are described below.

Increased co-premium and decreased enrollment 29. The co-premium was expected to increase steadily from US$10.21 in 2009 to US$53.16 in 2013 (Table 3). During project implementation, the co-premiums were increased twice: in February 2011 from US$10.16 to US$11.33 and in January 2012 from US$11.33 to US$19.53. Although these were modest increases compared to the planned increases, the increase by US$8.20 in January 2012 negatively affected

9 In the project commitment paper, the scheme was designed as a 10-year program divided into two phases and enrollees were expected to be able to afford the full premium at the end of the 10 years.

enrolment with a downward trend until project closing (Figure 1). In addition to the increase in the co- premium, other measures implemented in 2012 to reduce costs (such as exclusion of meals from the package for inpatients, and reduction in HCHC enrolment staff) further contributed to the decline in new enrolments in 2012 (see Figure 1).

Discontinuing enrollment 30. A decision was made to discontinue enrollment from April 30, 2013, which contributed to the continuing downward trend in number of enrollees which began in January 2012 (see Figure 1 in section 3.2). As result of the delay in the decision to extend the closing date, HCHC limited its marketing and IEC activities to new enrollments. The number of HCHC enrolment staff10 was reduced by over 80 percent. The remaining enrolment staff catered to re-enrolment via text messages and phone calls. Additionally, monthly performance reviews of enrolment staff was curtailed to quarterly reviews.

Overutilization capacity of service providers 31. Maintaining optimum capacity utilization of the service providers was imperative to improve efficiency. A utilization capacity assessment in June/July 2012 revealed overutilization at Crystal Specialist Hospital (more than the recommended 85 percent utilization capacity), HCHC suspended new enrollments at the hospital and identified a new service provider in the vicinity to cater to new enrollees. Besides, Crystal hospital undertook an extension of the hospital to cater to the expanded CAPDAN enrollees.

Inadequate marketing subsidies 32. HCHC undertook extensive marketing outreach, which was costly and quickly exhausted the funds allocated to marketing subsidizes (details in Annex 2). These subsidies were output-based with a fixed amount (US$8.14) paid for each new enrollee. Some marketing activities was necessary to stimulate demand prior to enrollment, though. There were high fixed costs such as salaries of canvassers, which had to be paid irrespective of the number of enrollees. Instead of salaries, paying commissions to the insurance sales personnel would have reduced the marketing cost.

Excess medical payments 33. The medical payments for both capitation and fee-for-service exceeded the budget and a request for reallocation of expenditure categories was made to the WBG. The payment for fee-for-service were in excess11 due to the increased utilization of services (particularly maternity services and hypertension treatment). The list of fee-for-services is in annex 2. In 2012, HCHC realized the payment for the treatment of hypertension was higher than the actual cost of treatment and accordingly reduced the fee for hypertension and instituted a new hypertension treatment protocol. It is possible that the high fee for hypertension motivated service providers to unduly treat hypertensive cases. Besides, the high proportion of females of reproductive age in the target population contributed to the increased payment for maternity services. Nevertheless, some service providers experienced increased cost over and above the capitation payments.12 For instance, two Lagoon hospitals which reportedly experienced steep losses dropped out of

10 There were 20 full-time canvassers and 1 enrollment officer in 2011 11 Excess medial payments per enrollee increased from about US$6 per enrollee in 2010 to about US$30 per enrollee in 2013. 12 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014.

the provider network since the capitation fees were much lower that the regular fees that were charged to non-CAPDAN patients.13

Service providers that joined and exited 34. Eighteen service providers participated in the project. A map showing the location of the facilities is in Annex 10. Shortly after implementation commenced there were 10 service providers but three left the network (Lagoon Hospital Ikeja, Lagoon Hospital VI, and Topaz Clinic) mainly because of non- profitability. Eight new providers joined (see Table 11 in Annex 2). No service providers had to leave the network as a result of poor quality of care.

Training on family planning 35. Given the high fertility rate in Nigeria, service providers expressed concern that family planning services were not part of the benefits package. Accordingly, in November 2012 PAF and HCHC conducted a 1-day training for service providers on family planning counselling and referral of enrollees to public facilities where family planning commodities were free or subsidized.

Studies that informed implementation 36. A number of studies were carried out which informed implementation including; a) the project financed Market Research Consultancy (MRC) to conduct a Price Sensitivity Study (PSS) in 2011 which recommended a maximum co-premium of NGN4,000; b) HIF with funding from the Dutch Ministry of Foreign Affairs organized Choosing Health Plans All Together (CHAT) sessions in November and December 2011 to solicit the views of market traders on the benefit package – primary health care and maternity care were high priority; and c) a consultancy firm Milliman (from the Netherlands, India and New York) was contracted to carry out a costing study in 2011 which informed the decision to increase capitation fees from 475 Naira to 525 Naira effective January 1, 2012.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 37. M&E Design. As noted in section 1.2, the PDO was to provide affordable pre-paid health insurance plans to low-income employees in CAPDAN. The four specific objectives (in the June 2007 project commitment paper14) and corresponding indicators (in the operations manual15) are shown in Table 2. Instead of the overall PDO (in the grant agreement) and 4 specific objectives (in the project commitment paper), the PDO could have been better formulated as follows: to improve access to and quality of primary health care services among poor CAPDAN employees and families by increasing enrollment in pre-paid insurance scheme. Of the four specific objectives, measurable PDO indicators were specified in the operations manual for two of the objectives but the remaining two had no associated PDO indicators. Some more appropriate outcome indicators for this project are percentage of poor people who have received essential Health, Nutrition and Population services, percentage of people experiencing impoverishment due to out-of-pocket health care expenditures and percentage of people experiencing catastrophic health expenditures but these were not measured or data was not available.

13 The Lagoon Hospital Group, which is of part of the Hygeia Nigeria Limited, is pioneer of advanced medical care in Nigeria and caters to rich clients. Lagoon hospital is closest of the CAPDAN village and had the highest enrollees. 14 The project commitment paper is the equivalent of the WBG project appraisal document 15 The operations manual has a number of indicators in its annex A that were to be reported in the semi-annual progress reports.

38. For objective 1, the indicator 1) total number of people enrolled in pre-paid health insurance scheme is appropriate and has a baseline value of zero and a target of 22,500 people. The other relevant intermediate results indicators that were tracked in the semiannual reports (or project administrative data when available) but not in the ISRs were16 : 2) total number of visits to health facilities; 3) number of pregnant women who received ANC services; 4) number of deliveries in health facilities; 5) average number of visits per enrollee per month; and 6) client satisfaction rate.

39. Regarding objective 2, no indicator was provided in the operations manual. However, special studies were carried out to provide data on two indicators: 7) provider utilization capacity (ability of individual service providers to adequately cater to current enrollee population demands); and 8) network utilization capacity (ability of the entire HCHC network to adequately cater to the needs of current and projected enrollee population demands). For objective 3, there were two indicators in the operations manual but they were not consistently tracked: 9) number of service providers in compliance with the service quality standards specified by PAF (with a target of at least 14 of the 15 service providers meeting the pre-defined quality standards) and 10) number of service providers removed from the network for not complying with quality standards. The intermediate results indicator that was tracked was 11) annual average (and individual service providers) SafeCare quality assessment scores. While there was no indicator for objective 4 in the operations manual the l2) monthly re-enrollment (or renewal) rates was tracked in the semiannual reports.

40. The operations manual appropriately indicated that all the indicators were to be monitored in the semiannual progress report. The baseline values were zero for most of the indicators except for the annual average SafeCare quality assessment scores. Targets values were set for only two indicators: enrollment numbers and number of service providers in compliance with the service quality standards specified by PAF. Considering this was a pilot project, the absence of an impact evaluation in the project design is a missed opportunity as it would have provided concrete evidence, which would have contributed to the body of evidence on the efficacy and efficiency of community insurance programs.

Table 2. PDO indicators at project design

Objective Indicators in operations manual 1. Encouraging low income families of CAPDAN to Total number of people enrolled in pre-paid health enroll in the insurance scheme to have access to health insurance scheme care 2. Increasing the utilization and efficiency of idle No indicator private sector capacity 3. Establishing and strictly enforcing standards of care Number of service providers in compliance with the in the private health sector service quality standards specified by PAF Number of service providers removed from the network 4. Demonstrating the viability and long-term No indicator sustainability of community health plans

41. M&E implementation. HCHC regularly produced bi-monthly progress reports, which were verified by PAF. These fed into the semi-annual progress reports that PAF regularly submitted to HIF

16 There indicators have been included in this ICR in assessing the achievement of the PDO.

within two months of the closing date for the respective period. This conformed to the report format specified in the operations manual and covered the indicators numbered 1, 2, 5, 11, and 12 above while the remaining seven indicators were either presented in some of the reports or were in project administrative records. Further, each report had sections on implementation constraints and recommendations. The World Bank team also produced seven ISRs during project implementation (which was adequate for the duration of the project) and included sections on issues for management actions. However, the ISRs only monitored the following indicators: enrollment numbers, number of service providers in compliance with the service quality standards specified by PAF, annual average SafeCare quality assessment scores, re-enrollment rates, and number of health facilities constructed, renovated, and or/equipped. The latter is a World Bank core sector indicator. Two other core sectors that should have been tracked were: number of deliveries and number of pregnant women who received ANC.

42. M&E utilization. Based on the semiannual reports and findings from supervision visits, HCHC and PAF periodically provided feedback to the service providers as well as CAPDAN executives and employees. Nevertheless, the reports were not shared with the Lagos State Government, a major stakeholder regarding the sustainability of the project. The reports provided timely information, which informed the implementation of the project. The project produced a wealth of community health insurance data (including enrollment, co-payment collection, claim processing, payments to providers, and utilization data) which will be useful to the Government in its plan to expand health insurance coverage in Nigeria. It also informed the follow-on project designed by HCHC and PAF.

The overall quality of M&E is rated as modest.

2.4 Safeguard and Fiduciary Compliance:

43. Procurement The project components entailed minimal procurement activities such as the upgrading of two health facilities (minor renovations and equipment) and the recruitment of an external auditor. Nevertheless, initially HCHC had low procurement capacity (there was no dedicated procurement officer), it was not familiar with the World Bank procurement guidelines, and procurement filing was poor. However, it improved over time. HCHC staff worked very closely with the Bank’s fiduciary team, and made constant and regular recourse to the team to clarify procurement issues. Additionally, the World Bank procurement officer provided hands-on training, which enabled the HCHC project staff to substantially implement the procurement activities successfully up to project closure as reflected in the reports of Post Procurement Reviews carried out on the project.

44. Financial management HIF regularly submitted interim financial reports along with the semiannual progress reports. Annual external audits were carried out, as per the grant agreement, and all the external auditor’s opinions were unqualified. For most years, there were no serious internal control and accountability issues identified but there were a few administrative issues identified in the last two years; these were however addressed by November 2014, after project closure. The issues were non-provision of other supporting documents (apart from the semi-annual progress reports) for Categories 1 and 2 in line with the Disbursement Letter and non-replenishment of the Designated Account balance to agreed ceiling. This resulted in the Client using its own fund to pre-finance project activities.

45. Safeguards According to the project commitment paper and Integrated Safeguards Data Sheet, the project was classified as category C (i.e. minimal or no adverse environmental impact), but this classification was not appropriate. The project should have been properly classified as category B (potentially adverse environmental impacts) due to the healthcare waste generated from the increased utilization of services in the health facilities that participated in the insurance scheme. Nevertheless, during implementation safeguards issues were appropriately addressed.17

2.5 Post-completion Operation/Next Phase 46. HCHC has designed a follow-on unsubsidized project Hygeia Better Life (HBL) Scheme without financial contribution from HIF or the World Bank.18 It was designed based on lessons learned from this project as well as the one for the Lagos market women (LMW). HBL is unsubsidized and is open not only to CAPDAN and LMW but also to other urban poor groups, markets and communities. It has a reduced benefits package. Unlike this project which was marketed to individuals, HBL mainly offers a family package with a maximum of two adults and 6 children. The premium for a family of 1, 2 or 3 is NGN23,000 per annum as opposed to the NGN2,500 per individual in the previous project. There is a co- payment of NGN100 per visit. Service providers receive only capitation payments with no fee-for-service payments and there is a longer waiting period. The established HCHC administrative structures will be used for running the HBL. For instance, two Quality Managers and one Project Accountant previous project are involved in HBL.

47. The key performance indicators that can be used to monitor the implementation of HBL are total number of people enrolled in pre-paid health insurance scheme, re-enrollment rates, and annual average SafeCare quality assessment scores. A rigorous impact evaluation should be incorporated in the HBL design and implementation to capture evidence for the NHIS.

3. Assessment of Outcomes

3.1 Relevance of Objectives and Design

48. Relevance of objectives. The project’s overall objective of providing affordable pre-paid health insurance plans to low-income employees and their families in CAPDAN was highly relevant at project design and at the time of project closure. It was consistent with Nigeria’s health sector priorities and with the World Bank Group’s current country and sector strategies. The 2010 – 2015 NSHDP which is to contribute to financial protection from catastrophic expenditures, mentioned CBHIS being implemented jointly by HIF, PAF, and HCHC. The Presidential Summit on UHC in Nigeria on March 10, 2014 strongly recommended all levels of Government to make progress towards UHC19. Additionally, in the 2014-2017 World Bank Group CPS, the International Finance Corporation (IFC) proposed to support at least 2 states with CBHIS in the engagement area coverage and quality of health services for the second strategic cluster quality, effectiveness and efficiency of social service delivery at state level for greater social inclusion.

17 During an implementation support mission, the World Bank team visited three service providers (Blue Cross Hospital, Osuntuyi Medical Centre [Obanikoro], and St. Mary's Hospital) and noted that two had appropriately put in place some basic healthcare waste management processes such as a) sharp disposal boxes in areas of the hospital in which they are used; b) color coded mops; c) color coded waste bins; and d) posters indicating the basic cleanliness processes. 18 As noted earlier, a two-phase 10 year program was envisaged in the project commitment paper but during implementation it was realized that the scheme was not sustainable. 19 Almost a decade after launching the NHIS, financial risk protection is 4 percent of the population.

Further, enabling countries to achieve UHC is the main mechanism that the World Bank HNP Global Practice uses to achieve its goal of helping countries to end preventable deaths and disability through Universal Health Coverage. .

49. Relevance of design. Lessons learned in the implementation of CBHIS for LMW and in Kwara state for poor farmers informed the project design such as identifying an experienced local insurer, independent verification, and ensuring the provision of quality of care. The project design was in line with the six core concepts of OBA: I. providing insurance premium subsidies to low income employees and their families (the median income for employees in 2008 was US$1,019 [NGN120,000]; II. accountability for results (HCHC and service providers were to take performance and finance risks; this did not fully materialize since during implementation some service providers were reimbursed as a result of overutilization of services and HCHC was reimbursed for high marketing and administrative cost after restructuring. Thus, the risk was eventually transferred to the GPOBA); III. encouraging innovation and efficiency (hospitals had special desks for CAPDAN enrollees and the SafeCare initiative was launched); IV. using incentives to serve the poor (providers used the premium and upgrading subsidies to provide quality services to the poor); V. conducting output verification and monitoring of results (payment of subsidies to HCHC were contingent on verification of outputs by PAF); and VI. fostering sustainability (users were to pay lower monthly payments in line with affordability but as described later it turned out that the premium were only affordable up to US$11.33 despite careful selection of the target group; also the project experienced adverse selection with a high proportion of pregnant women and clients with chronic illnesses).

50. However, there were some drawbacks to the design. This was one of the initial health projects financed by the GPOBA when the World Bank HNP technical team20 were not involved with project preparation and may account for some of the foreseeable design drawbacks. A major flaw in the project design was limited consultation with the Lagos State Government which was necessary for the long term sustainability of the project. The first year premium subsidy of US$57.85 was 78% higher than the per capita public health expenditure (US$32.53) in 200821 indicating the government could not afford the scheme and raising the issue of sustainability from the outset22. Another factor which contributed to the low enrollment at project closure was the expectation that CAPDAN enrollees and employers and their families would afford US$53.16 in the final year of the project when the median income for CAPDAN employees was US$1,019. Additionally, enrollees were expected to pay increasingly higher co-premiums without a concomitant expansion of the benefits package. Having comprehensive benefits package at the outset guaranteed resistance from enrollees when the co-premiums were increased and indeed the increase in co-premium from US$11.33 to US$19.53 (a 72 percent increase) in January 2012 led to a precipitous drop in enrollment.

20 A team from GPOBA and IFC led the design and initial implementation of the project and the HNP team got involved from 2011. 21 Source: 2014 World Development Indicators. World Bank. 22 In 2012, the actual premium subsidy was US$39.76, which was higher than the 2012 per capital public health expenditure US$29.38

51. Regarding the results framework, the objective of the project was clear but the enrollment target was unrealistic given the drawbacks in the design noted above.23 The three subsidies (insurance premium, marketing and upgrading) in the project components were appropriate in achieving the project objective but the amount allocated to the marketing subsidies should have been higher given that the concept of health insurance was new to CAPDAN. The rating of the relevance of design is modest.

3.2 Achievement of Project Development Objectives (efficacy) 52. Although both the project commitment paper and the operations manual had no structured results framework, based on the project documents the ICR team developed the causal chain in Table 5 (Annex 2) and elaborated on the performance indicators in section 2.3 on the M&E design.

53. As noted earlier in section 1.2, the PDO in the grant agreement (to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees and their families of small businesses in CAPDAN) was the basis for assessing efficacy. However, no PDO indicator or target was mentioned in the grant agreement, which deferred to the operations manual. The key target in the operations manual and the project commitment paper is 22,500 enrollees at project closing. Thus, the ICR team considered the project’s achievement of this enrollment target and the affordability of the pre-paid health insurance plans to low-income employees and their families as the basis for the efficacy rating. Additionally to provide a fuller picture of the project’s achievements, the assessment of the three other specific objectives in the project commitment paper are described and rated separately below.

Enrollment in affordable pre-paid insurance plans and access to care 54. The achievement of this objective is rated modest.

Enrollment 55. Of the enrollment target of 22,500, only 4,884 (21.7 percent) was achieved at project closing. However, the total number of beneficiaries (i.e. cumulative number enrolled at one time or the other during the project period) was higher at 21,963. The number of enrollees increased steadily from 134 in July 2009 to a peak of 13,473 in December 2011 and then gradually decreased to a low of 4,884 in December 2013 (see Figure 1). The annual highest percentage of the planned target achieved was in 2011 when 81.7 percent of the target was achieved (13,473/16,500) (see Figure 2, Annex 2). The decline in enrollment began when the co-premium was increased from N1,450 to N2,500. A smaller increase, in February 2011, when the co-premium increased from N1,300 to N1,450 had no effect on the enrollment numbers. Given that enrolment was discontinued from April 30, 2013 (section 2.2), one could make the case that the ICR should use this date as the cut-off for assessment of the enrollment target. If so, 8,682 (38.6%) was achieved in April 2013. Thus, with either cut-off dates, the project only partly achieved the enrollment target.

Affordability of insurance Premium subsidies 56. The project appropriately targeted low-income employees of CAPDAN (the median income for employees in 2008 was US$1,019 [NGN120,000]) but employers with a median income of US$4,077 [NGN480,000] also enrolled in the scheme.24 The enrollees were expected to afford co-premium amount

23 The M&E design is described in detail in above. 24 The per capita income for Lagos state was estimated at US$2,900. Source: Renaissance Capital. Nigeria unveiled: thirty- six shades of Nigeria. Economics & Politics. Nigeria. May 7, 2013.

of NGN6,803 (57.2 percent of the total premium) in the final year of the project (Table 3). Despite the fact that CAPDAN was selected from the list of potential poor target groups based on its relatively higher income bracket, enrollment dropped precipitously when the co-premium was increased from NGN1,450 to NGN2,500 in January 2012. Thus, the annual planned co-premiums from 2011 (Table 3) were not affordable and the effort to optimize both enrolment and co-premium payments was not realized.

Figure 1. Number of enrollees by month, July 2009 - December 2013 In January 2012, co-premiums 14,000 increased from N1,450 to N2,500

12,000 In February 2011, co- premiums increased Enrollment 10,000 from N1,300 to 1,450 discontinued

8,000

6,000

4,000

2,000

- Jul-13 Jul-12 Jul-11 Jul-10 Jul-09 Jan-13 Jan-12 Jan-11 Jan-10 Sep-13 Sep-12 Sep-11 Sep-10 Sep-09 Nov-13 Nov-12 Nov-11 Nov-10 Nov-09 Mar-13 Mar-12 Mar-11 Mar-10 May-13 May-12 May-11 May-10 .

Table 3. Planned and actual premiums, subsidy and co-premium levels

2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 Planned Actual planned Actual planned Actual planned Actual planned Actual Enrollees 9,000 13,5000 16,500 19,500 22,500 Premium $68.06 $73.57 $67.97 $79.52 $74.22 $85.96 $79.30 $92.92 $79.30 N8,712 N9,417 N8,700 N10,179 N9,500 N11,003 N10,150 N11,894 N10,150

Co- 15.0 21.0 14.9 29.3 15.3 40.9 24,6 57.2 24,6 premium percent Co- $10.21 $15.42 $10.16 $11.93 $11.33 $35.19 $19.53 $53.16 $19.53 premium 1,307N N1,413 N1,300 N1,527 N1,450 N4,864 N2,500 N6,803 N2,500 amount Premium N7,400 N8,050 N7,650 N7,650 subsidy Exchange rate at design was EUR/USD 1.34; NGN/USD 128.00

Utilization of services 57. The enrollees had access to and readily utilized health services. The average number of visits per enrollee per month from August 2009 to February 2014 was 0.26, which is about 3.1 visits per enrollee

per year. There was an initial high use of services (0.43 per enrollee per month) which then dipped to 0.16 in March 2010, and finally picked up again and was generally above 0.20 (2.4 visits per enrollee per year) for the remaining period (Figure 3, Annex 2).

58. As shown in Table 6 in Annex 2, there were a total of 112,827 visits to the health facilities in 2009- 2013 (outpatient attendance constituted 97 percent). The most frequent illness treated was malaria (42,848) followed by upper respiratory tract infection (17,561) and hypertension (10,341). The least treated cases were tuberculosis (64) and HIV (38) presumably because there were public sector health programs that specifically addressed these diseases. A study carried out in 2013 by Microinsurance Learning and Knowledge (MILK) Project (financed by the Bill and Melinda Gates Foundation) revealed that enrollees utilized hypertensive services twice more than the uninsured and enrollees were four times more likely to participate in hypertension educational sessions.25 This indicates that enrollment in the insurance scheme might have contributed to the increased access to services.

59. Similarly, use of maternity services was appreciable. There were 4,218 registered pregnancies for a cumulative number of 21,963 enrollees. This implies that 19 percent of the enrollees used maternity services (although it is possible that some women were pregnant two or more times during the project period). Considering that ANC, delivery and Cesarean deliveries are among the list of services for which providers are paid fee-for-service (Annex 2), the high use of maternity services might have contributed to excess medical payouts noted earlier. There was an average of 4.8 ANC visits per pregnancy (Figure 4, Annex 2) which meets the WHO stipulated minimum of 4 visits per pregnancy.

60. The 44.7 percent of deliveries26 is higher than the 36 percent of institutional deliveries in Nigeria overall but lower than the 77.3 percent for Lagos; however, the Cesarean delivery rate of 26.2 percent (much higher than the WHO optimum range of 5-15 percent) is 13 times the reported national rate of 2 percent and higher than the 6.5 percent for Lagos. In some selected health facilities in the service provider network, Cesarean delivery rates for non-enrollees were over 20 percent indicating that the rates for enrollees and non-enrollees were similar and that these service providers have a higher propensity for Cesarean delivery.27

Utilization of private sector capacity 61. The achievement of this objective is rated substantial. The project sought to increase utilization and efficiency of provider capacity, that is, ensuring optimum capacity utilization and preventing overcrowding among the service providers in the network. The HCHC strived to maintain a sufficient balance between provider capacity and demand for services from enrollees thereby curtailing underutilization or overutilization of provider capacity and minimizing inefficiencies28.

25 Laura Budzyna, Taara Chandani and Barbara Magnoni. 2013. MILK Brief #24: "Doing the Math" - Health Insurance and Chronic Disease in Nigeria. http://www.microinsurancecentre.org/resources/documents/policyholder-value-of- microinsurance/milk-brief-24-doing-the-math-health-insurance-and-chronic-disease-in-nigeria.html 26 1,390 normal deliveries plus 495 caesarean / complicated deliveries divided by 4,218 registered pregnancies 27 Osuntyi Medical Center (25%), Orilele Agege Generla Hospital (23%), Crystal Hospital (21%), and Subol (25%). 28 There is a school of thought that public resources should not be used to subside under-utilized capacity in the private sector but this section is referring to optimizing capacity among the provider network that have signed service agreement with HCHC.

62. In July 2011, HCHC undertook a study of capacity utilization of 15 health facilities. Both provider capacity evaluation29 (ability of individual providers to adequately cater to current enrollee population demands) and network capacity evaluation (ability of the entire HCHC network to adequately cater to the needs of current and projected enrollee population demands) were assessed.

63. Of the 15 health care providers, 9 were determined to be of optimum utilization capacity (60 percent), 2 (13 percent) were underutilized (below capacity utilization in relation to the provider’s ability to accommodate more enrollees), and 4 (27 percent) were over utilized (Table 7, Annex 2). The results were better than those of Kwara state where only 3 out of 8 (37.5 percent) were of optimum capacity.30 Based on the findings, a ceiling of 3,000 enrollees was recommended for service providers in the project. In June/July 2012, a capacity evaluation exercise indicated that Crystal Specialist Hospital again had exceeded the recommended 85 percent utilization capacity.

64. Regarding network capacity in the Lagos service provider network31, the expected number of service providers is 11. Since there were 15 service provides in July 2011, the network capacity was deemed adequate.

Establishing and enforcing standards of care 65. The achievement of this objective is rated high. The quality of care of the service providers improved considerably over time. At project closing, all service providers were in compliance with the service quality standards specified by PAF (the target was at least 14 of the 15 service providers).

Quality of care assessment 66. In 2009 and 2010, quality of care was monitored by the progress made against an agreed upgrading plan per service provider. Subsequently, PAF launched SafeCare32 in 2011 to improve the quality and safety of healthcare services in low-resource settings by rating and benchmarking across healthcare facilities, provider networks and countries. Service providers are rated based on an elaborate scoring system presented in Annex 2.

67. For the service providers that were assessed more than once by PAF, the SafeCare quality assessment scores for 2013 were higher than those for 2012 except for the May clinic where the 2013 score was lower (Table 8 in Annex 2). The three most improved service elements were information management, risk management, and diagnostic imaging while the three least improved service elements were primary healthcare, laboratory, and support services. The Lagoon Clinic, VI and Lagoon Hospital, Ikeja were accredited by the JCI in May 2011 (the first such accreditations in sub-Saharan Africa).

29 The assessment employed three proxies for capacity utilization or adequacy: a) burden of enrollee utilization (utilization per enrollee; proportion of total hospital utilization), slack capacity available, and waiting time complaints 30 The insurance scheme in Kwara state was for rural farmers whereas CAPDAN catered to urban vendors 31 The methodology used assumed that all providers have the same propensity to attract enrollees and brand perceptions are at par among the providers within the network; all providers enlisted into the network are able to provide quality health care services; 3,000 maximum enrollee benchmark and a target population of 32,575 (for both CAPDAN and market women) were employed in the computation, 32 SafeCare was initially jointly launched in 2010 in Amsterdam by the Joint Commission International (JCI) of the U.S, the PharmAccess Foundation of the Netherlands and the Council for Health Service Accreditation of Southern Africa (COHSASA).

68. HCHC routinely carried out a semiannual quality assessment of all service providers and agreed on a quality improvement plan and subsequently followed up with its implementation. Service providers that made improvements in quality of care were awarded certificates of recognition. Further, a HCHC Community Relations Officer on a weekly basis obtained feedback from enrollees on the quality of care and shared this with the service providers. Moreover, PAF conducted trainings to build the capacities of HCHC and service providers. Some of the trainings were on: quality management for hospitals, management of common conditions such as hypertension, diabetes, pediatric and obstetric cases for doctors and nurses, family planning counseling, laboratory training, and customer service for front office staff of health facilities.

69. HCHC and PAF also periodically carried out Medical Due Diligence (MDD) to engage new service providers to take off some caseload from service providers experiencing overcapacity. For instance, in August 2012 MDD was carried out in six health facilities and two new service providers (Krown Hospital and Promise Hospital) were selected to join the network in December 2012. Similar exercises were carried throughout implementation.

70. As shown in Figure 5 (Annex 2), the assessment scores for the CAPDAN health facilities increased by 24 points from 55 in 2011 to 79 in 2013, which is much higher than the 13 percent improvement for other facilities in Nigeria.

Sustainability of community health plans 71. The achievement of this objective is rated modest. The indicator employed to assess the sustainability of the insurance scheme was the re-enrollment or renewal rate. As noted earlier, enrollees were unable to afford the planned higher co-premiums.

Re-enrollment or renewal rates 72. The insurance renewal rate gives an indication of the satisfaction of the enrollees with the insurance scheme and its continuous use and hence the sustainability of the scheme. Available data show that renewal rates increased from 48 percent in September 2011 to 58 percent in October 2013 (Figure 6) indicating that enrollees valued the product even during the time that the new enrollment had ceased and the project was winding down. Factoring in an estimated outmigration rate of 24 percent, the adjusted renewal rate in October 2013 was 77 percent. Apparently, adverse selection played a role here with pregnant women and enrollees with chronic illnesses more likely to re-enroll. For instance, the prevalence of hypertension among enrollees increased from less than 10 percent in 2009 to nearly 40 percent in 2013.

Other sustainability factors 73. Involvement of the Lagos State Government and the NHIS in the project design and implementation would have ensured sustainability of the scheme. Nevertheless, the Dutch Government through HIF financed the LMW insurance scheme and the existing healthcare and administrative structures benefited this project. HIF was to lobby and raise additional funds for a follow-on Phase II project for CAPDAN but did not materialized. HIF attributed this to the delay in the approval of the project restructuring. Nevertheless, the project produced an enormous database on community health insurance that informed the design of the follow-on CAPDAN project HBL Scheme which is unsubsidized, the expansion of the scheme in Kwara state and the new community insurance scheme in Ogun state.

Additional inputs and outputs that contributed to development objective 74. Other inputs and outputs that also contributed to the development objectives such as marketing subsidies, upgrading subsidies and claims processing are described in Annex 2.

75. Efficacy rating 76. The ratings for the four specific objectives in the project commitment paper are: enrollment and affordability is modest; utilization of private sector capacity is substantial; establishing and enforcing standards of care is high; and sustainability of community health plans is modest. As explained above, enrollment and affordability was the basis for assessing the efficacy. Thus, the efficacy is rate modest.

3.3 Efficiency

77. Administrative and operational efficiency. Available aggregate expenditure categories shows that of the total grant amount of US$6,015,164, 35 percent was undisbursed at the end of project. The insurance premium subsidy constituted the largest share at 78 percent of the total undisbursed amount followed by monitoring and evaluation at 9 percent. Although there was a cost underrun for the insurance premium subsidy, as noted above there was excess payments for capitation33 and fee-for-service payments34 for those enrolled as a result of adverse selection and there was US$83,077.97 cost overrun of the marketing subsidies.

78. Despite the above, project interventions increased efficiency in the areas of service quality and utilization capacity of service providers, as noted earlier. The project also leveraged other resources such as previously established service provider network and monitoring and evaluation processes. Additionally, ILO provided US$250,000 to improve the claims processing and managements system.

79. A cost benefits analysis resulted in a negative Net present value (NPV) of NGN100 million (US$781,250) and Financial Internal Rate of Return (FIRR) of 10 percent. The negative NPV came as a result of excess medical payouts by the HCHC, which resulted in significant net loss to the HCHC over the entire project period. Similar analysis was conducted at appraisal, which generated an 11 percent FIRR. However, NPV was not calculated at appraisal. This ex post analysis shows both NPV and FIRR, which provide a clear picture of the financial strength of the HCHC (see annex 3 for a detailed explanation of the analysis).

80. Efficiency is rated modest.

3.4 Justification of Overall Outcome Rating

Rating: Moderately unsatisfactory

81. The outcome rating (a measure of the project’s overall performance) is derived from the ratings for the relevance of objectives and design, efficacy (extent of achievement of the project’s objective), and efficiency. As noted above, the efficacy and efficiency were both modest. However, there were split sub- ratings within relevance: the relevance of the objective is high but the relevance of the design was modest.

33 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014. 34 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service.

Aggregate relevance was judged to be ‘substantial’ given the combination of high and modest ratings. Therefore, given two modest ratings for efficacy and efficiency and ‘substantial’ for relevance, the overall project rating for outcome is moderately unsatisfactory.

3.5 Overarching Themes, Other Outcomes and Impacts

Poverty Impacts, Gender Aspects, and Social Development 82. The project provided financial protection to some poor CAPDAN employees who would otherwise not have been able to afford the services they received.35 On the other hand, some well-off CAPDAN employers also unduly gained from the scheme although they were not the target beneficiaries.

Institutional Strengthening 83. The capacity of service providers was improved through the various trainings that PAF and HCHC provided. Further, the launch and successful implementation of SafeCare improved the quality of health services. This is likely to have restored some trust among enrollees of the healthcare system. A SafeCare Quality Workshop organized by HCHC, PAF and the IFC in June 2014 highlighted its success and was widely covered by the news media also raised public awareness of the insurance scheme.36 The Lagos State Ministry of Health expressed interest its scale-up in Lagos. Similarly, the Ogun State Minister who was in attendance, mentioned that the state was in the process of finalizing the design of a similar community health insurance scheme. Although PAF and HCHC had been in partnership prior to the initiation of this project, this project provided further opportunity for PAF to build the local capacity of HCHC. HCHC also benefited from procurement training from the World Bank team.

Other Unintended Outcomes and Impacts (positive and negative): 84. The huge actuarial and utilization data generated in the implementation of the project will be invaluable to the NHIS in the design of programs geared towards achieving universal health coverage.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops:

85. The methodology and findings of the beneficiary survey is presented in Annex 5. It had a small sample size of 10 beneficiaries who generally expressed favorable views on the project but were unwilling to pay higher co-premium. Further, summary notes on the stakeholder workshop held in April 2014 are in Annex 6. The findings of the borrower ICR were discussed including lessons learned. The buy-in from the Lagos State Government was considered critical to the sustainability of the new HBL scheme.

35 For instance, in one of the participating hospitals, the regular registration fee to see a doctor is NGN3,000 which is higher than the co-premium for NGN2,500 that enrollees paid for a whole year. Similarly, maternity services particularly caesarean deliveries would have been unaffordable for some enrollees. 36 It was attended by over 50 people including administrators of health facilities, representatives from Shell, the Federal Ministry of Health (MOH), Lagos State MOH, Ogun State, IFC and the World Bank.

4. Assessment of Risk to Development Outcome

Rating: Substantial

86. Although the objective of the project remained highly relevant at project closure, there is substantial risk that development outcomes will not be maintained.

Follow-on project 87. In the project commitment paper, the project was designed as a two-phase 10-year program with the GPOBA/World Bank financing the Phase I and HIF seeking additional sources of funds (public and private) for Phase II. However, the Phase II did not materialize as noted earlier.

Co-premiums and enrollment numbers 88. As described in detail in section 3.2, following the increase in co-premium from N1,450 to N2,500 in January 2012, enrollment declined steadily till project closing.

Quality of care 89. The launching of SafeCare during project implementation contributed to improved quality of care and the Lagos State government has requested PharmAccess to perform SafeCare assessments, train quality teams and develop Quality Improvement Plans for three healthcare facilities, namely General Hospital Epe, General Hospital Alimosho and General Hospital Apapa, as well as assist in the development of a Quality Policy for Public Sector Healthcare Facilities under the Lagos State Ministry of Health. Additionally, the implementation of HBL will entail enforcing standards of care.

Sustainability of community health plans 90. While re-enrollment figures were high during project implementation, this might not be maintained in the HBL scheme given that it is unsubsidized and therefore unaffordable to poor employees and their families.37 The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN also contributed to the limited sustainability. Further, the huge marketing costs incurred in the CAPDAN project may even be higher for the HBL.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry

Rating: Moderately unsatisfactory

Quality at entry: 91. The project was consistent with Nigeria’s development priorities in the health sector and the Nigeria CPS. The project appropriately targeted low-income CAPDAN employees and their families but

37 For instance, where a family of 3 will pay a premium of NGN20,000 ($156 using an exchange rate of N128=US$1) in the HBL scheme which is three times the NGN7,500 co-premium in the CAPDAN project. The former may not be affordable given that that the median income for CAPDAN employees is about $1,019. HCHC may want to partner with the Lagos State Government to provide some subsidy to the HBL scheme.

some CAPDAN employers (who were non-poor) also benefited. The project leveraged resources that the Dutch government had invested in an existing service provider network for the LMW program. It also employed a previously tested independent verification and monitoring process, which had been established by HCHC, PAF and HIF for the LMW program. Appropriate fiduciary (financial management and procurement) procedures were incorporated in the project design. Regarding safeguards it was classified as C instead of category B which would have allowed more appropriate measures to be put in place for healthcare waste management, but during implementation safeguards were proactively addressed. Regarding M&E design, there were no PDO indicators for some of the specific objectives and a rigorous impact evaluation should have been incorporated in the project design. Two flaws in the design were the planned increasingly high co-premiums (which was unaffordable) over the project period (without a concomitant expansion of the benefits package) and the unrealistically high endline target.

(b) Quality of Supervision

Rating: Moderately unsatisfactory

Quality of supervision 92. The World Bank-GPOBA team undertook joint review missions with the implementing agencies and submitted 7 ISRs, at least one per year. The ratings in the ISRs were largely appropriate. The World Bank ensured that during its last implementation support mission, a stakeholder workshop was held to disseminate the findings of the borrower ICR. The team also provided technical support for the costing and price sensitivity studies. Hands-on procurement was provided to HCHC staff and this contributed to resolution of procurement issues by project closure. In the annual external audits, the external auditor’s opinions were unqualified. However, there were shortcomings. For instance, outstanding financial management issues were only resolved in November 2014. It took over a year and half to approve the HIF request to extend the closing date, albeit, as noted earlier this was carefully discussed over a period. Nevertheless, this delay created some uncertainty and adversely affected the achievement of the target enrollment. A short deliberative period could have improved the rating for efficacy. When the project was restructured, the number of target enrollees could have been reduced. The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN contributed to the limited sustainability.

Rating: Moderately unsatisfactory

93. Given that both the rating for quality at entry and quality of supervision are both moderately unsatisfactory, the rating for overall Bank performance is moderately unsatisfactory.

5.2 Borrower Performance 94. The Government was not involved in the execution of the project and was therefore not assessed. The three main implementing agencies assessed were: Stichting HIF, as the grant recipient; PAF, as the monitoring agent; and HCHC as the local insurer.

(a) Implementing Agency Performance: HCHC

Rating: Moderately satisfactory 95. HCHC duly signed service agreements with each service provider and appropriately supervised and trained them. It adequately developed the upgrading plans, procured the required good and works for two service providers. Its staff had limited procurement capacity but eventually with training from World Bank procurement staff were able to fulfill the procurement responsibilities. Together with PAF, it appropriately supervised the service providers in ensuring they provided good quality care to enrollees and proactively monitored service provider capacity. However, the fee-for-service payments were high. HCHC selected CAPDAN as the target group following a market survey of 12 potential target groups. It carried out extensive marketing and IEC to enroll CAPDAN employees and their families but ended up overrunning the budget allocated to marketing subsidies. Although the target enrollment was not achieved, it must be pointed out that during project preparation, HCHC appropriately cautioned against the high co- premiums and together with PAF recommended for project extension in 2011. It reduced its staff, particularly the marketing staff, when the project closing date was in a limbo. It duly registered enrollees and provided them with ID cards. The service providers also maintained photos of the beneficiaries, crosschecked prior to providing services and reported impersonation to HCHC. HCHC then investigated and delisted the culprits accordingly. Claims processing was initially manual but with funding from ILO, automated claims processing for 5 service providers became possible. On time claims processing increased from 3 percent in 2010 to 52 percent in 2013. HCHC undertook studies and ably coordinated its work with PAF, but did not adequately coordinate with the NHIS and Lagos Sate Government during implementation.

(b) Implementing Agency Performance: PAF

Rating: Satisfactory

96. PAF regularly submitted semi-annual progress reports to HIF within two months of the closing date for the respective period and the reports conformed to the report format specified in the operations manual. The reports specified whether the quality standards of each service provider met the upgrading plans for each service provider, enrollment levels, status of implementation, enumerated constraints and recommended follow-on actions. PAF verified the enrolment levels and co-premiums more frequently than stipulated (monthly instead of bi-monthly) and reported verified number of first time enrollees (to trigger Marketing Subsidy) and people enrolled (to trigger insurance premium subsidy). PAF paid regular visits to HCHC, CAPDAN market and service providers to follow-up on implementation and to provide feedback. PAF together with HCHC determined the upgrading needs and service quality standards for each service provider, monitored the adherence and regularly trained both the service providers and HCHC. PAF launched and implemented Safecare in Lagos which contributed to the hallmark achievement of this project: the provision of high quality of care in the private sector. However, as noted above on HCHC performance, the major drawback was that only a fifth of the enrollment target of 22,500 was achieved. In its 2011 semi-annual reports, PAF appropriately highlighted and recommended extension of

project closing date. Similarly, during project preparation PAF cautioned against high co-premiums which as noted earlier contributed to the low enrollment levels. PAF ably coordinated its work with HCHC but did not adequately coordinate with the NHIS and Lagos Sate Government during implementation.

Rating: Moderately unsatisfactory

97. HIF provided inputs into the project design, which drew on the existing LMW program, which had been established by HIF. This allowed the project to leverage resources that the Dutch government had invested in the same service provider network. Additionally, HIF managed to engage the Dutch Government pay for the high expenditure on marketing in 2012. HIF ensured a number of studies were carried out which informed implementation. Further, semi-annual reports together with interim financial reports were timely submitted to the World Bank. The procurement issues identified earlier during implementation were largely resolved at project closure. Annual external auditors’ opinions were unqualified but there were still outstanding financial management issues which were only resolved in November 2014. Regarding M&E design, there were no PDO indicators for some of the specific objectives and a rigorous impact evaluation should have been incorporated in the project design. HIF followed up its request to the World Bank to restructure but the process took longer. Nevertheless, the restructuring request did not include a reduction in the number of target enrollees despite evidence that it was unattainable. HIF clarified that in the July-December 2011 semiannual report, it recommended a revision of the target and discussed this with the WBG project team. The limited consultation with the Lagos State Government in the design and implementation of the CAPDAN contributed to the limited sustainability. Besides, HIF was to lobby and raise additional funds for follow-on Phase II project for CAPDAN but at project closing this had not materialized. This led to HCHC designing an unsubsidized follow-on scheme. Nevertheless, HIF clarified that the delay in approval of the extension of the closing date “created great uncertainty for the implementing agencies and affected the lobbying process for mobilizing resources”.

(d) Justification of Rating for Overall Borrower Performance

Rating: Moderately unsatisfactory

98. Given that the ratings for HCHC and PAF are in the satisfactory range while the rating for HIF is moderately unsatisfactory, the overall borrower performance is moderately unsatisfactory when the overall outcome rating is considered.

6. Lessons Learned

• Integrating impact evaluation in the design of an innovative pilot project is critical for documenting lessons learned. If an impact evaluation had been carried out, it would have helped in understanding the counterfactual (i.e. what would have happened in the absence of the project), and particular questions, such as what premium level and benefit package could support the required outcomes, or whether the insurance scheme impacted health outcomes among the beneficiary population. This could contribute to the body of evidence on the efficacy and efficiency of community insurance schemes, and inform NHIS efforts on achieving universal health coverage.

• Coordination with multi-levels of Government in the design and implementation of community- based health insurance scheme is key to ownership and financial sustainability. In this project, the Lagos State Government and the NHIS were not involved in the design and implementation, which limited the opportunity for the government to participate in the follow-on project or scale up. In contrast, the Kwara state insurance program has been expanded since the Government was part of the process. Further, the involvement of government and other relevant stakeholder groups in decision-making around the insurance scheme could have been tracked to monitor participation.

• In-depth target group analysis during project preparation is necessary to inform the project design, including establishing the co-premium, selecting the appropriate target group, and minimizing adverse selection, moral hazard and other insurance risks. Although a target population study informed the project design, it was limited in scope. If extent covered by the 2011 price sensitivity study had also been carried out during project preparation it would have helped in the proper setting of the premium, co-premium, and informed the benefits package. The premium in the first year was twice the per capita public expenditure indicating the project was not sustainable from the outset.

• Reviewing the acceptability of premium rates and benefit packages for enrollment by low-income employees (and their family members) at design and during implementation is critical to increasing enrollment and renewal rates. The small increase in co-premium in February 2011 did not affect enrollment but the large increase in co-premium in January 2012 did adversely reduce enrollment in the scheme, compromising targeted outcomes. Expecting enrollment numbers to rise while continually increasing premium levels without any perceived additional benefits by the enrollees was not realistic.

• Rating service providers in the health insurance scheme network and monitoring progress against quality improvement plans, contributes to enhanced compliance with the service quality standards. The launch of the SafeCare initiative immensely contributed to the improvement in quality of care at both public and private health facilities in the service provider network. This was one of the main successes of this project. Service providers received targeted training in areas identified in a quality improvement plan. They were assessed on a semiannual basis and awarded certificates of recognition and two hospitals were accredited by the Joint Commission International (the first such accreditations in sub-Saharan Africa).

• Engaging expensive private hospitals for community based health insurance scheme can lead to excess payments by the health care management organization or lead to providers prematurely dropping out of the scheme. Two high-end hospitals which initially participated in the CBHIS had to drop out when they made huge loses but they were reimbursed with funds from the Dutch Ministry of Foreign Affairs. .

• Developing a low cost behavior change campaign and marketing strategy stimulates enrollment and re-enrollment. Investment in marketing by a properly trained dedicated team was critical for sharing knowledge with the enrollees about the insurance scheme. The project supported an extensive Information,

Education and Communication campaign that quickly exhausted the resources available, and made a request to re-allocate additional project funds to marketing subsidies. Such campaigns also require monitoring instruments to ensure they are effective in influencing community behaviors.

7. Comments on Issues Raised by Implementing Agencies

99. The full text of the comments by the implementing agencies is in Annex 7. The borrower ICR is also attached.

100. The implementing agencies; a) acknowledged that the design should have incorporated impact evaluation; b) clarified that they would have preferred a two-year extension of the project instead of 1 year; c) explained that the delay in approving the request for restructuring by the World Bank contributed to the low enrollment numbers; d) disagreed that the they had not adequately engaged with the Lagos State Government (the ICR author together with representatives of the implementing agencies visited the Lagos state Government in June 2014 and it was clear that prior engagement had been minimal); e) pointed out that the draft ICR report had incorrectly compared the total premium with the public health expenditure (this was rectified in the final ICR with the latter having have compared with the premium subsidies. However, the conclusion remained the same that the premium subsidies were unaffordable by the government); f) clarified the issues regarding discontinuing enrollment and Phase II extension.; and g) were concerned about the disbursement issues raised in the draft ICR (these issues were resolved in November 2014).

ANNEXES

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in US$ million equivalent)

Appraisal Reallocation on Disbursed Undisbursed Estimate 06/25/2013 (US$ million) (US$ million) Components (US$ million) (US$ million) 1. Subsidy 4,574,000 3,871,126 2,206,229.37 1,664,896.63 a) Insurance Premium Subsidy 4,143,000 3,389,378 1,770,197.35 1,619,180.65 b) Marketing Subsidy 197,000 247,748 280,077.97 (32,329.97) c) Upgrading Subsidy 234,000 234,000 155,954.05 78,045.95

2. HIF Project Management 261,000 288,118 249,987.05 38,130.95 3. Monitoring and Evaluation 953,000 1,067,930 883,365.15 184,564.85 4. Audits 108,000 121,310 52,836.70 68,473.30 5. Unallocated 119,164 119,164 0 119,164.00 6. Medical Services 547,516 551,071.98 (3,555.98)

Total 6,015,164 6,015,164 3,943,490.25 2,071,673.75

(b) Financing

Appraisal Actual/Latest Percentage of Source of Funds Type of Financing Estimate Estimate Appraisal (US$ million) (US$ million) GPOBA Grant 6,015,164 6,015,164 100

Annex 2. Outputs by Component

List of services that were fee- for- service

Specialist Consult Specialist Consult for hypertension Specialist follow up consult Admission fee Transportation Ambulance Physiotherapy visit ANC ANC - follow up visit Neonatal care: For opthalmia neonatorium, infections, mild to moderate sepsis, physiologic and other jaundice Uncomplicated Hypertension lab check Complicated Hypertension lab check Hypertension drug fee complicated Hypertension drug fee uncomplicated Diabetes fee Tuberculosis fee Sexually transmitted diseases Vaginal delivery Multiple/Assisted Vaginal delivery Caesarean section Evacuation of uterus (dilatation and currettage) Hysterectomy; in case of postpartum hemorrhage Repair vesico-vaginal/recto-vaginal fistula Herniorrhaphy: repair femoral hernia Cataract extraction Urethral catheterization Circumcision Ear piercing Ganglionectectomy Pterygium excision Surgical drainage of anal abscess Herniotomy In-grown toe nail Excision of any mass Hydrocoelectomy Marsupialisation (Bartholin’s Cyst) Excision of breast lump Varicocoelectomy Endoscopies (Proctoscopy, Sigmoidoscopy, Gastroscopy) Appendectomy Haemorrhoidectomy Incision and drainage of abscess for trauma cases Low fistulectomy Ileus - Only for children Unilateral salpingectomy

Uncomplicated fracture Orchidectomy Orchidopexy ECG HIV confirmatory** HIV viral load** Blood transfusion(regular)- per pint Blood transfusion (Rhesus neg)- per pint Histopathology Rhogam

Table 4. Risks and Mitigation measures

Risk Mitigation In-depth target group study A target population study which was carried out in May-June 2008 to inform the to inform the project design design (report was released In October 2008 around the time the grant agreement was signed) and contingency budget was also allocated to cater to subsequent changes in the design Affordability/Willingness CAPDAN employers/employees have a slightly higher income than the LMW so to pay by the enrollees. were expected to be able to pay higher co-premium. Besides, HCHC advised that instead of reduction in subsidy to zero at the end the 5-year period (as proposed in the concept note), a two-phase declining subsidy program would allow for a more gradual decline in the subsidy over a 10-year period. It was envisaged that HIF would find an alternative donor in Phase II. Market Uncertainty Should adjustments be necessary as a result of uncertain response of the target group, HIF was to submit a proposal to GPOBA detailing the changes. Low Enrollment or re- Extending marketing and education along with quality of care should stimulate enrollment enrollment. PAF and HCHC would modify the product pricing and benefits semiannually based on consumption data. Relatively New Product Both PAF and HCHC had previous experience, and PAF was to continuously monitor implementation and advise on appropriate corrective action. Fraud Rigorous monitoring by PAF and external audits were to mitigate the risk. Sustainability To mitigate the risk of beneficiaries’ inability to pay, the two-phase approach over a 10-year period noted above would give beneficiaries sufficient time to realize the long-term benefits of pre-paid insurance and inculcate willingness to pay the full premium. Regarding funding of phase two, HIF had a strong network of donors that would be lobbied during phase one.

Table 5. Causal chain for the prep-paid insurance scheme

Causal chain Performance indicators Outcomes Percentage of poor people who have received essential Health, Nutrition and Population services Percentage of people experiencing impoverishment due to out-of-pocket health care expenditures Percentage of people experiencing catastrophic health expenditures Intermediate outcomes Total number of people enrolled in pre-paid health insurance scheme Provider network utilization capacity Number of providers with optimum utilization capacity Number of service providers in compliance with the service quality standards specified by PAF Monthly re-enrollment rates Total number of visits to health facilities Number of pregnant women who received ANC services Number of deliveries in health facilities Average number of visits per enrollee per month Client satisfaction rate Number of service providers removed from the network as a result of poor quality of care Annual average SafeCare quality assessment scores

Outputs Number of Information, education and communication marketing outreach activities to CAPDAN Number of co-premiums collected Number of provider claims processed and payments to providers Number of health facilities constructed, renovated, and or/equipped Number of service providers trained Number of administrative personnel trained

Inputs Insurance premium subsidies Marketing subsidies Upgrading subsidies Training of service providers

Figure 2. Actual and planned enrollment

25000 22,500 19,500 20000 16,500 15000 13,500 13,473 9,000 9,140 8,802 10000 6,629 5000 1,187 0 2009 2010 2011 2012 2013

Actual Planned

Figure 3. Average number of visits per enrollee per month, August 2009 – February 2014

0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Feb 2014 Feb 2013 Feb 2012 Feb 2011 Feb 2010 Aug 2013 Aug 2012 Aug 2011 Aug 2010 Aug 2009 Nov 2013 Nov 2012 Nov 2011 Nov 2010 Nov 2009 May 2013 May 2012 May 2011 May 2010

Table 6. Utilization of outpatient and inpatient services, August 2009 – December 2013

Attendance/cases treated Number Total attendance 112,827 Out-patient attendance 109,111 In-patient attendance 3,716 Bed days 10,215 Diseases treated Malaria 42,848 Upper respiratory tract infection 17,561 Hypertension 10,341 Muscle pain / Myalgia 6,095 Diabetes 3,517 Enteric fever 4,038 Immunization 1,926 Musculoskeletal disease 458

Surgical procedures 64,023 Tuberculosis 64 HIV 38 Death 6 Maternity Cases ANC visits for 3,966 pregnancies 19,196 Normal Deliveries for 3,966 pregnancies 1,390 Caesarean deliveries / Complicated 495 delivery for 3,966 pregnancies

Figure 4. Number of ANC visits per pregnancy, September 2009 – September 2013

8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Feb-13 Feb-12 Feb-11 Feb-10 Aug-13 Aug-12 Aug-11 Aug-10 Aug-09 Nov-12 Nov-11 Nov-10 Nov-09 May-13 May-12 May-11 May-10

Note: Number of visits for pregnancies starting in May 2013, are reported in Feb 2014, when data from all 9 months are available.

Table 7. Service providers’ utilization capacity

Providers HCHC Ownership Categorization Under or enrollee overutilization population LAGOS Aniyun Medical Centre, Gbagada 1,349 Private Primary Health Optimum Centre Crystal Specialist Hospital, Akowonjo 10,035 Private District hospital Overutilized Heals Hospital, Isolo 462 Private Primary Health Underutilized Centre Lagoon Clinic, Ikeja 6,784 Private Primary Health Overutilized Centre Lagoon Clinic, V.I 635 Private Primary Health Optimum Centre Lagoon Hospital, Apapa - Private Referral Centre Optimum Lagoon Hospital, Ikeja - Private District hospital Optimum (referral)

Providers HCHC Ownership Categorization Under or enrollee overutilization population Lagos State University Teaching - Public Tertiary Optimum Hospital, Ikeja (teaching) hospital (referral) May Hospital, Ilasamaja 5,681 Private District hospital Overutilized Orile Agege General Hospital 637 Public District hospital Optimum Osuntuyi Hospital, Iju 3,292 Private District hospital Overutilized Osuntuyi Hospital, Obanikoro 1,554 Private Primary Health Optimum Centre Subol Hospital, Egbeda 1,531 Private District hospital Optimum Surulere General Hospital 234 Public District hospital Optimum Topaz Hospital, Surulere 381 Private Primary Health Underutilized Centre KWARA Afon General Hospital, Afon 2,555 Public District hospital Underutilized Ilera Layo Medical Centre, Aboto Oja 15,267 Private Basic Health Optimum Centre Lafiagi General Hospital, Lafiagi 10,294 Public Primary Health Overutilized Centre Ogo Oluwa Hospital, Bacita 10,959 Private District hospital Overutilized (PCP and referral) Ola Olu Hospital - Public Basic Health Optimum Centre (referral) Resource Access Centre, Iyana Bacita 1,235 Private Basic Health Underutilized Centre Shonga CHC, Shonga 10,423 Private Primary Health Overutilized Centre University of Ilorin Teaching Hospital - Public Tertiary Optimum (teaching) hospital (referral)

Table 8. Service providers SafeCare annual assessment scores 2011 -2013

Facility 2011 2012 2013 Adefemi Hospital 34 Aniyun Hospital 51 64 78 Blue Cross Hospital 70 Crystal Specialist Hospital 47 70 85 Hillstar Hospital 50 67 Krown Hospital 39 Lagoon Clinic, VI 77 Lagoon Hospital, Ikeja 63 Longing Medical Centre 70

Facility 2011 2012 2013 May Clinic 55 71 54 Osuntuyi Medical Centre (Iju) 57 86 90 Osuntuyi Medical Centre 66 90 90 (Obanikoro) Promise Hospital 33 St. Mary's Hospital 47 67 Subol Hospital 70 82 The four key dimensions for assessment are: a) management (management and leadership; human resource management; patient and family rights and access to care; management of information; and risk management), b) clinical (primary health care services; inpatient care; and operating theatre and anesthetic services), c) clinical support (laboratory services; diagnostic imaging service; and medication management) and d) technology (facility management services; and support services).

Figure 5. Average assessment scores for health facilities in Nigeria

90 79 80 76

70 66 62 60 55 49 50

Average assessment score assessment Average 20

0 Lagos Nigeria

First Assessment Second Assessment Third Assessment

The data for ‘Nigeria’ refers to SafeCare assessments done in other selected facilities in Nigeria. Source: SafeCare: international standards, local solutions. PowerPoint presentation. Sharing lessons learnt from the CAPDAN Program in Lagos. June 17, 2015

Figure 6. Re-enrollment rate per month, September 2011 - October 2013

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jul-13 Jul-12 Jan-13 Jan-12 Jun-13 Jun-12 Oct-13 Oct-12 Oct-11 Apr-13 Apr-12 Feb-13 Sep-13 Feb-12 Sep-12 Sep-11 Dec-12 Dec-11 Aug-13 Aug-12 Nov-12 Nov-11 Mar-13 Mar-12 May-13 May-12 Renewal rate without adjustment for migration Renewal rate adjusted for migration (assumed 24%)

Additional inputs and outputs that contributed to development objective Other inputs and outputs that also contributed to the development objectives such as marketing subsidies, upgrading subsidies and claims processing are described in Annex 2.

Marketing subsidies The allocated marketing subsidies of US$197,000 (US$8.14 per new beneficiary enrolled) proved to be insufficient to sustain the extensive IEC outreach and marketing activities to enroll and re-enroll the CAPDAN employers/employees in the scheme. These activities include a) sensitization of community members (such as distribution of posters, flyers and brochures, billboards), b) community marketing (community members as well as CAPDAN executives were involved in reaching out to those who had not enrolled as well as their families), c) telemarketing campaign (SMS notification and telephone calls to all enrollees that were due for renewal at the beginning of each month), d) medical outreach (including free blood pressure checks, screening for diabetes and referral, and health education), e) stakeholder meetings (with CAPDAN executives and Medical Directors of the service providers to update them on progress and to respond to questions and encourage them to do their part to encourage enrolment or re- enrollment) and f) enrollee forum to increase customer care (enrollees meet with HCHC staff and service providers). Additionally, HCHC undertook monthly (and later quarterly) performance reviews for all enrollment staff (review of past enrollment and re-enrolment figures, successes and challenges, and appropriate corrective action). It turned out that outreach for enrolment was more costly than re-enrollment which mainly entailed sending text messages and phone call reminders. In 2010, the Dutch government agreed to pay HCHC $50,000 to cover administrative cost in addition to the amount allocated to this project.

Upgrading subsidies A total of 16 health facilities were constructed, renovated, and or/equipped. Of the US$234,000 allocated for the upgrading of two new health facilities to join the service provider network, US$155,954 was spent in 2012 to upgrade Adefemi Hospital and Blue Cross Hospital (Table 9). Additionally, the 14 other health facilities that were renovated without project funds either through HIF fundraising or service providers using their own funds (presumably form profits made) are: Aniyun Hospital, Crystal Specialist Hospital, Hillstar Clinic, Krown Hospital, Lagoon Hospital (in Ikeja), Lagoon Hospital VI, Longing Medical Centre, May Clinics, Orile Agege General Hospital, Osuntuyi Medical Centre (in Iju), Osuntuyi Medical Centre (in Obanikoro), Promise Medical Centre, Subol Hospital, and Surulere General Hospital. The two lagoon hospitals together with Crystal hospital specifically constructed annexes to cater to the CAPDAN enrollees.

Claims processing During the project period, an electronic claims processing and managements system was introduced. A retrospective review conducted by PAF and HCHC in 2012 recommended continued improvement of medical filing and patient data management.

The percentage of claims paid on time to the service providers (less than 90 days between submission and date claim processed by HCHC data management department) increased steadily over the project period: from 3 percent in 2010, to 28 percent in 2011, to 34 percent in 2012, and to 52 percent in 2013. HCHC received a grant of US$250,000 from the International Labour Organization’s (ILO) microinsurance innovation facility in 2010 to augment the use of ICT in the claims processing and management system. The proposed solutions and the achievement are shown in Table 10. Five service providers (Crystal Hospital, Osuntuyi Hospital, St. Mary Hospital, Osuntuyi Hospital, and May Hospital) were selected for the initial rollout of the automation of claims processing and its implementation continued after the closing of the project.

Table 9. Health facilities physically upgraded with project funds

Provider Package Adefemi Hospital Defibrillator, pen torch, oxygen concentrator, suction machine, stop watch, thermometer, AVR, UPS (including transportation, installing/training and maintenance) Blue Cross Hospital Defibrillator, pen torch, autoclave, infant weighing scale, ultrasound scan machine, oxygen flow meter, stop watch/timer, angle poise lamp, rocking platform, AVR, UPS (including transportation, installing/training and maintenance)

Table 10. HCHC IT/ILO Project on ITC solutions

Proposed IT solutions What has been accomplished so far Enrollment enabled biometric The system is being implemented in 4 Providers out of the 5 identification & verification system: to selected for the pilot in Lagos. The system is been fully utilized tackle the problem with enrollee eligibility in 1 provider. The 3 other providers could not utilize the and the possibility of abuse by the enrollees system fully across all the system process flow due to during hospital visits. infrastructural challenges. A similar system is currently under-going testing, customization and modifications for scale up to Kwara State.

Optimization of financial and enrollment Synchronization of the enrolment and financial system has system: to allow premium payment in been done but advance payment capabilities were tuned-down advance before expiration of existing due to recent changes in premium contract.

Mobile payment system: to improve policy This could not be piloted in Lagos due to vendor capacity renewals due to restricted/inconvenient constraints but will piloted with the new HCHC scheme distribution channels (limited sales agents to cover all our existing target groups in Lagos).

Integrated insurer and providers’ HCHC procured and implemented a system in 2012 to (utilization and claims) system: to improve automate claims processing and increase efficiency. However, the processing and turnaround time for the system did not suit HCHC’s unique business requirements claims payment. due to its non-flexibility. HCHC is currently testing new systems based on the lessons learned. The new systems are being customized to suit HCHC’s peculiar business requirements and as to be piloted in 2014.

Table 11. Service providers for the LMW & CAPDAN

Facility Name When they Type of Category Exits as at Reason for exit joined the Provider of 31/10/2013 Network Provider Adefemi Hospital Apr 2012 Private/PCP III Aniyun Medical Centre, Sep 2009 Private/PCP III Gbagada Blue Cross Hospital Apr 2012 Private/PCP III Crystal Hospital Jan 2007 Private/PCP III Hillstar Hospital Apr 2012 Private/PCP III Krown Hospital Nov 2012 Private/PCP III Lagoon Hospital Ikeja Jan 2007 Private/PCP III Dec2011 Business-related Lagoon Hospital VI Jan 2007 Private/PCP III Dec 2011 Business-related Longing Hospital Apr 2012 Private/PCP III May Clinic Jan 2007 Private/PCP III Orile Agege General Hospital Jan 2007 Public/PCP II Osuntuyi Medical Centre, Iju Jan 2007 Private/PCP III Osuntuyi Medical Centre, Sep 2009 Private/PCP III Obanikoro Promise Hospital Nov 2012 Private/PCP III St Mary's Hospital Aug 2011 Private/PCP III Subol Hospital Dec 2010 Private/PCP III Surulere General Hospital Jan 2007 Public/PCP II Topaz Clinic Jan 2007 Private/PCP III May 2013 Complaints of tariff

SafeCare Certification definition

(6 - Accredication) Excellent quality systems in place: healthcare provider has a proven track record of continuous quality improvement, is in substantial compliance with the SafeCare standards, and meets the decision rules for accreditation by independent organization COHSASA.

(5 Safecare V) Demonstrates long-term commitment to continuous quality improvement, ready for accreditation program and self-sufficiency of continuous quality improvement. Very limited technical assistance required.

(4 Safecare IV) Strong quality systems in place, but high-risk areas still in need of attention. Limited technical assistance required.

(3 Safecare III) Medium quality strength, acceptable but vulnerable to changing environment. Focus on self-evaluation of quality improvement processes using quality indicators, guidelines and standard operating procedures.

(2 Safecare II) Modest quality strength, requiring medium technical assistance. Healthcare quality is still likely to fluctuate. Focus on the securing of quality systems and processes especially in high risk areas.

(1 Safecare I) Very modest quality, with continued need for periodic technical support. Focus on implementation of processes and quality systems and the availability of financial means to ensure availability of proper infrastructure and assets.

(0 Entry level) Poor quality however the organization has shown leadership commitment and a strong desire to provide safe health care and recognizes that significant improvements are needed to reach levels of consistent, efficient, safe quality care for each patient. It has fluctuating quality healthcare provision due to the unavailability of services at times.

Annex 3. Economic and Financial Analysis (including assumptions in the analysis)

The PDO was to establish a community health scheme that would provide affordable pre-paid health insurance plans to low-income employees (and their families) of small businesses in CAPDAN of the lkeja computer village in Lagos. To this end, the project interventions aimed at making the scheme financially viable and sustainable. This analysis focuses on the costs efficiency of the project, and it includes: (i) an analysis of operational and administrative efficiency, including analysis of cost overruns/underruns (ii) a cost-benefit analysis to ascertain the financial and economic viability of the scheme.

Administrative and operational efficiency. The project experienced seven months delay after the signing of the grant agreement to meet effectiveness conditions, and the over one and half year delay in the approval of the project closing date led to significant cost underruns at project closure. Available aggregate expenditure categories shows that of the total grant amount of US$6,015,164, 35 percent was undisbursed at the end of project. The insurance premium subsidy constituted the largest share at 78 percent of the total undisbursed amount followed by monitoring and evaluation at 9 percent. Although there was a cost underrun for the insurance premium subsidy, as noted above there was excess payments for capitation38 and fee-for-service payments39 for those enrolled as a result of adverse selection. Service providers experienced increased cost over and above the capitation payments40 due to increased utilization of primary care services (particularly maternity services and hypertension treatment)41. The medical payments for both capitation and fee-for-service exceeded the budget and a request for reallocation of expenditure categories was made to the Bank on June 25, 2013. On the other hand, there was US$83,077.97 cost overrun of the marketing subsidies. Various financial management supervision reports showed that project management did not provide detailed breakdown of expenditures incurred and at project closing there was inadequate documentation to support such expenditures. Tables 12 and 13 provide a summary of project the analysis of costs overruns and underruns.

38 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014. 39 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service. 40 The capitation rates were: N425 in 2009, N425 in 2010, N475 in 2011, N525 in 2012, N525 in 2013 and N525 in 2014. 41 It was envisaged that 70 percent of the payment to service providers would be capitation fees and 30 percent fee-for- service.

Table 12. Summary of analysis of costs overrun/underrrun

Amount Amount Amount Amount undisbursed Appraisal Amount Amount disbursed disbursed undisbursed Expenditure Reallocated Share of Estimate Disbursed Undisbursed ( Share of share of share of Category Amount (US$) Appraisal (US$) (US$) US$) Appraisal Reallocated Reallocated Estimate Estimate (%) Amount (%) Amount (%) (%)

Insurance 4,143,000.00 3,389,378.00 Prem Subsidy 1,770,197.35 1,619,180.65 42.7 52.2 39.1 47.8 Marketing 197,000.00 247,748.00 Subsidy 280,077.97 -32,329.97 142.2 113.0 -16.4 -13.0 Upgrading 234,000.00 234,000.00 Subsidy 155,954.05 78,045.95 66.6 66.6 33.4 33.4 HIF Project 261,000 288,118.00 Management 249,987.05 38,130.95 95.8 86.8 14.6 13.2 Monitoring 953,000 1,067,930.00 and Evaluation 883,365.15 184,564.85 92.7 82.7 19.4 17.3 Audits 108,000 121,310.00 52,836.70 68,473.30 48.9 43.6 63.4 56.4 Unallocated 119,164 119,164.00 0 119,164.00 0.0 0.0 100.0 100.0 Medical 0.00 547,516.00 -3,555.98 Services 551,071.98 #DIV/0! 100.6 #DIV/0! -0.6

Total 6,015,164.00 6,015,164.00 3,943,490.25 2,071,673.75 65.6 65.6 34.4 34.4

Table 13. Comparison of disbursed and undisbursed funds by type of expenditure

Expenditure category Amount Amount Share of Share of Disbursed Undisbursed total total (US$) ( US$) disbursed (%) undisbursed (%)

Insurance Premium Subsidy 1,770,197.35 1,619,180.65 44.9 78.2 Marketing Subsidy 280,077.97 (32,329.97) 7.1 -1.6 Upgrading Subsidy 155,954.05 78,045.95 4.0 3.8 HIF Project Management 249,987.05 38,130.95 6.3 1.8 Monitoring and Evaluation 883,365.15 184,564.85 22.4 8.9 Audits 52,836.70 68,473.30 1.3 3.3 Unallocated 0 119,164.00 0.0 5.8 Medical Services 551,071.98 (3,555.98) 14.0 -0.2 Total 3,943,490.25 2,071,673.75 100 100

Despite the above, project interventions increased efficiency in the areas of service quality and utilization capacity of service providers. As noted in section 3.2, the project implemented a number of measures that

improved service quality and utilization. For instance, the routine semiannual quality assessment of all service providers with issuance of certificates of recognition to service providers improved the quality of their services. Also, PAF carried out a number of capacity building interventions for HCHC and service providers. These trainings include quality management for hospitals, management of common conditions such as hypertension diabetes, pediatric and obstetric cases for doctors and nurses, family planning counseling, laboratory training, and customer service for front office staff of health facilities. In addition, utilization capacity of private service providers significantly increased. The project sought to increase utilization and efficiency of provider capacity and that ensured optimum capacity utilization, and also limited overcrowding in the participating facilities. The HCHC maintained sufficient balance between provider capacity and demand for services from enrollees thereby curtailing underutilization or overutilization of provider capacity and minimizing inefficiencies. The project also leveraged other resources such as previously established service provider network and monitoring and evaluation processes. Additionally, ILO provided $250,000 to improve the claims processing and managements system.

Cost-benefit Analysis. To estimate the economic and financial returns to the project, a cost-benefit analysis for a range of interventions was performed at appraisal. For that reason, the ICR team also performed similar analysis in order to determine the project’s financial viability and to compare with the appraisal estimate. The appraisal analysis was based on the project investments consisting of upgrading the providers’ facilities, marketing the insurance program, and maintaining equipment and building, and excluded interventions that were deemed to be difficult to quantify.

Methodology and key assumptions. (i) Costs: Project costs data, including procurement reports, financial management reports, monitoring and evaluation reports and physical progress reports produced by the project team were reviewed. The reviewed noted that.insurance co-payments per enrollee, administrative expenses, capitation fees, entitlement fees, and medical payouts were the main costs incurred by HCHC. These items form the basis for ascertaining projects costs, and were included in the analysis. For the purposes of this analysis, monitoring evaluation, audit and unallocated expenses were included in the HIF management costs category. Initial costs for running the scheme were assumed to be about 9 percent of total project costs (ii) Benefits: The analysis assumed that the benefit streams were cash inflows (revenues) accrued to HCHC, and considered insurance premium (co-premiums, and premium subsidy)as the revenues inflows to HCHC. Using an excel spreadsheet, a cash flow to the HCHC was derived, and was discounted at 12 percent rate. The discount rate was considered as a proxy for average opportunity cost of capital, based on the average bank lending rate in Nigeria. The discounted cash flow was sum up to ascertain the net present value (NPV) and financial internal rate of return (FIRR) for the project. The analysis covered the five-year period for the program services.

Results. Upon the basis of the above assumptions, the project generated a negative NPV of NGN100 million (minus $781,250) and FIRR of minus 10 percent. The negative NPV came as a result of the excess medical payouts by HCHC, which resulted in significant net loss to HCHC over the entire project period. As noted above, similar analysis was conducted at appraisal, which generated an 11 percent FIRR. However an NPV was not calculated at appraisal but the reasons for the exclusion of NPV from the analysis was not indicated in the project commitment document. This ex post analysis shows both NPV and IRR, which provide a clear picture of the financial strength of HCHC. Table 14 summarizes the results of the analysis and compare it to the appraisal estimate.

Table 14. Summary of results of the CBA analysis

Year 0 1 2 3 4 5 -840,000 Benefit 69,257 192,874 287,171 344,081 502,022 Costs -1,014,640 61,560 118,255 216,082 290,908 604,181 Cash flow -1,854,640 130,818 311,129 503,254 634,990 1,106,203 Discount factor 1.00 0.86 0.74 0.64 0.55 0.48 Discounted cash flow (1,854,640) 112,779 231,219 322,413 350,699 526,677 Cum discounted (1,741,866 (1,510,646 cash (1,854,640) ) ) (1,188,232) (837,534) (310,856) NPV (NGN100,365) IRR -10% Appraisal IRR 11%

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

The project had three task team leaders: Carmen Nonay for the design, and Fatou Assah and Chris Atim during implementation.

Names Title Unit Responsibility/ Specialty Lending

Carmen Nonay Task Team Leader GUROA Program Manager Olaf Smulders Consultant GUROA Consultant Lopa Shah Investment Officer IFC (CNGS5) Investment Officer Ioan Cleaton-Jones Contractor IFC (FFSFP) Health Specialist Kristine Schwebach Social Development Specialist GURDR Social Development Specialist Serigne Omar Fye Environmental Safeguard GURDR Environmental Safeguard Specialist Specialist Mary Asanato-Adiwu Senior Procurement Specialist GGODR Procurement Specialist Akinrinmola Oyenuga Akinyele Senior Financial Management GGODR Financial Management Specialist Specialist Hisham A. Abdo Kahin Lead Counsel LEGES Counsel Supervision

Senior Financial Management Akinrinmola Oyenuga Akinyele GGODR Financial Management Specialist Specialist Abiodun Elufioye Program Assistant AFCW2 Program Assistant Adewunmi Cosmas Ameer Sr. Financial Management GGODR Financial Management Specialist Adekoya Specialist Benjamin P. Loevinsohn Lead Public Health Specialist GHNDR Cluster Leader Senior Human Development Boubou Cisse Economist Economist Chris Atim Senior Health Specialist GHNDR TTL (later during implementation) Daniel Rikichi Kajang Senior Procurement Specialist GGODR Procurement Specialist Fatou C. Assah Program Coordinator GFMDR TTL (first part of implementation) Iain Menzies Water & Sanitation Specialist GWASE Task Team Leader Indira Konjhodzic Country Program Coordinator AFCNG Senior Operations Officer Leslie Villegas Infrastructure Specialist GUROA Infrastructure Specialist Mary Asanato-Adiwu Senior Procurement Specialist GGODR Procurement Specialist

IFC Scott Douglas Featherston Task Team Leader Principal Investment Officer (CMGCS) Ubaldo Daniel Coila Quispe Operations Analyst GUROA Operations Analyst Ugonne Margaret Eze Team Assistant AFCW2 Team Assistant Yogita Mumssen Task Team Leader GWADR Program Manager

(b) Staff Time and Cost

Stage of Project Cycle Staff Cost US$ Thousands

Lending 130,812.59 Supervision/ICR 489,835.12

Annex 5. Beneficiary Survey Results

Findings from beneficiaries assessment, April 2014

Introduction and Methodology A survey was carried out to assess the perception of the beneficiaries of a health pre-paid scheme implemented between 2009 and 2013 in April, 2014. The beneficiaries of the scheme were members of the CAPDAN and their families. The survey was carried out as part of the ICR of the project.

The study area comprised the computer village, Ikeja and health facilities located in Akowonjo, Ojodu, Ogba and Ikeja area of Lagos State. The beneficiary survey was done on a predetermined, small sample size of 10 enrollees stratified into two sets. The first consist of those enrollees that were only registered under the original HYGEIA CAPDAN Scheme while the second set is made up of enrollees that were registered on the HYGEIA CAPDAN scheme but have transited into enrollees under the HBL Scheme. A total of ten enrollees registered under five of the health facilities under the scheme were interviewed. Theses health facilities include; Blue Cross Hospital, Crystal Specialist Hospital, St. Mary Specialist Hospital, Krown Hospital and Longing Medical Center.

The beneficiary questionnaire was administered on the 10 enrollees to elicit information on beneficiaries’ socio-demographic characteristics, respondents’ experience of HYGEIA scheme and perception of co- payment and premium for the scheme. Other information elicited includes beneficiaries’ perception on the quality services from their respective health facilities and beneficiaries’ satisfaction with the transition from subsidized product to a non-subsidized product.

Analysis of responses Socio-demographic characteristics of beneficiaries interviewed and their household A total of 10 questionnaires were analyzed. The respondents were four men and six women. All the respondents were Christian and were monogamously married with 9 being educated to the tertiary level. Nine of the 10 respondents originally sold computers and allied products in computer village; two have subsequently changed their line of business. One of the respondents was related to the person selling computers and allied products. Five respondents disclosed their monthly income and expenditure. On the average, the monthly income stood between N60,000 and N70,000. However, a respondent reported a monthly income of about N500,000.

Experience with HYGEIA Scheme It was found that most of the 10 respondents registered for the HYGEIA CAPDAN scheme in 2011 (3 respondents) and 2012 (4 respondents). One respondent claimed to have been registered in 2009 while 2 respondents originally registered in 2010. Nine beneficiaries renewed their enrollment but a respondent did not renew in a particular year for what he termed inconsistency of services. Eight respondents have other household members enrolled (mostly spouses and children).

Knowledge of co-payment Eight respondents that registered between 2011 and 2012 remembered the actual co-payment made correctly. The other respondents could not correctly disclose the amount of co-payment made for their first enrollment but the amount paid for more recent renewal and the amount paid for the HBL scheme.

All respondents that were registered before 2011 were aware that the co-payment amount was increased except for a particular enrollee that claimed she paid N2,500 from 2011 until 2013. All 10 respondents were happy with the amount of co-payments for the HYGEIA-CAPDAN scheme. Though no respondent was aware of the actual cost of premium of the product, 8 respondents knew the product was subsidized. Knowledge of the subsidy source varied among respondents with 9 respondents claiming it was the World Bank or some foreign aid, while one particular respondent believed it was Lagos State government.

Awareness of HBL Scheme Out of 6 respondents that were aware of the HBL scheme, only 3 agreed to encourage their friends and or households to enroll under the HBL scheme. The key reason given was the price increment for the HBL product without corresponding increase in the scope of services.

Services from Health Facilities When asked about the frequency of respondents’ attendance at their various health facilities in 2013, 6 respondents were able to remember and offered approximates. The highest attendance stood at 6 visits while the lowest was 1 visit in that year. Most of the visits to the health facilities were for basic healthcare and maternity care (family planning, ANC and post natal care). Only 2 out of the 10 respondents reported having cases that were not covered by the HYGEIA scheme, such as dental services and hormonal profile tests.

Quality of services Seven out of 10 respondents were happy with the waiting time at the health facilities. The dissatisfied clients linked the long waiting time to the high patronage recorded their health facilities. Three respondents (each attending a different hospital) claimed they were given negative treatment because they were under the HYGEIA-CAPDAN scheme at their health facilities. One respondent disagreed with being satisfied citing poor attitude of staff in a particular hospital. The complaint was about the poor attitude of staff (with the exception of the doctors and nurses) that did not show adequate care about HYGEIA scheme patients. Another respondent complained about the low quality of drugs given to HYGEIA scheme patients in some of the health facilities.

Beneficiaries’ satisfaction with the transition from subsidized product to a non-subsidized product HYGEIA-CAPDAN only enrollees None of the 5 HYGEIA CAPDAN-only patients was completely willing to pay more to enjoy the current services being enjoyed in their health facilities. All of the enrollees considered the cost of the new family package arrangement for HBL as being high.

HBL enrollees Only 1 enrollee out of 5 claimed that he was properly briefed or got adequate information on the HBL. All the other 4 HBL enrollees said they were not properly briefed but were only told the new fees to pay for the new product. Aside the difference in price that was obvious to most respondents, they were oblivious to other information on the new product. Despite the fact that HCHC had an information sharing mechanism through which the market leaders would inform their constituents, the survey showed that not all beneficiaries received the required information.

Enrollee’s suggestions on the improvement of the Scheme 1. More information should be shared with enrollees on all products

2. The quality of services rendered under the scheme, especially the quality of drugs should be improved 3. The current price of HBL should be reviewed downwards to N5,000 4. Enrollees should be allowed to see more experienced doctors during consultation 5. The scope of the services of the HBL scheme should be increased 6. Private admission services should be included in scheme for enrollees able and willing to pay 7. The hospital admission allowed under the scheme should be increased to twice a year.

Findings from provider assessment, April 2014

Introduction and Methodology A survey was carried out to assess the perception of the service providers (health facilities) of a health pre-paid scheme implemented between 2009 and 2013 in April, 2014. The respondents were top staff of the 15-member provider network approved to provide health services for the members of the CAPDAN. The survey was carried out as part of the ICR of the project.

Five HYGEIA pre-paid health insurance scheme providers were located in Dopemu, Ikeja, Ojodu and Ogba areas of Lagos State respectively. The providers’ survey was done on a predetermined sample size of five HYGEIA pre-paid health insurance scheme with the highest number of enrollees. The provider questionnaire was administered on the 5 services providers to elicit providers’ general information and their perception and views on the pre-paid health insurance scheme. Information was also collected on payment, the impact of the HYGEIA scheme on the providers, the administration and management and providers’ perception of the transition from subsidized product to a non-subsidized product.

Analysis of Responses

General The respondents were either the provider’s Medical Director or Hospital Administrator. All were men. Three of the 5 health facilities were listed as service providers for the HYGEIA-Lagos Women Market Association/CAPDAN pre-paid health insurance scheme in 2012. The other 2 were listed in 2009 and 2011 respectively.

Providers’ perception and views on pre-paid health insurance scheme All the facility managers saw the HYGEIA CAPDAN scheme as a good concept. One provider did not report an increase in out-patients attendance in the health facility since the HYGEIA scheme enrollment. This is because it built a separate facility to take care of community pre-paid clients. The increase in enrollees for the 4 other facilities ranged from 15 percent to 400 percent during the reporting period. The providers agreed that patients under the scheme accessed health services at every visit to the facilities. Two of the respondents gave instances when patients paid for procedures not covered by the scheme, such as fibroid surgery. Four respondents reported abuse of the health insurance scheme by CAPDAN clients. The two main areas of abuse by enrollees were frequent facility visits for minor ailments and collection of drugs for relatives not enrolled in the scheme.

One of the providers saw a rapid increase in HCHC clients, albeit most of them came from the LMW program. Other providers enumerated the following as benefits of the scheme: (a) increased service utilization; (b) improved capacity; (c) infrastructure upgrade; (d) improved quality of care; and (e) increased financial benefits. There were systems in place to guide procedures such as Standard Operating Procedures (SOPs) & Policies after the advent of CAPDAN. Quarterly inspection from HYGEIA with the support of the Lagos State Hospital Management Board (HMB) has improved operational performance. All respondents averred that HYGEIA CAPDAN clients were not treated differently from others.

Reimbursement The respondents affirmed that all facilities were reimbursed monthly for capitation and Fee-For-Service (FFS) by HCHC. The reimbursements for capitation were in line with the agreements reached with the

service providers. One of the providers insisted that there were delays in the reimbursement for FFS occasionally. However, the provider confirmed that it was eventually paid.

Premium Payment and Capitation All the providers were of the view that CAPDAN enrollees were able to make the co-payment premium of N2,500. Two providers responded that its enrollees may be persuaded to pay the new premium. Three providers were of the opinion that enrollees may not be able to afford services when subsidy is removed.

The capitation to providers by HYGEIA CAPDAN was generally considered unsatisfactory while opinion was split on the tariff for FFS. Three of the 5 providers considered the FFS fee for services paid unsatisfactory, while the remaining 2 considered it satisfactory.

Impact of HYGEIA CAPDAN Scheme on Providers None of the providers interviewed had designated clinic days for CAPDAN enrollees; clients could visit the provider at any time. They affirmed that the SafeCare intervention and HYGEIA Care Coordinators have contributed tremendously to improved quality of services in their facilities. The HYGEIA Care Coordinators have contributed by: (a) explaining policy and providing leadership directions; (b) conducting on-the-job training; (c) monitoring the services and auditing of case notes; and (d) reducing waiting time and ensuring quality improvement. Four of the 5 providers agreed that the scheme’s partnership with local health authorities such as the Lagos Health Facility Monitoring and Accreditation Agency (LHFMAA) have also contributed to improved regulation, monitoring & accreditation.

Administration and Management Courtesy of the scheme, all the providers had approved 2012 and 2013 work plans. They also had registers for cases handled & services provided. The providers conducted clinical staff internal performance assessments; however, the periodicity varied from one to four times in the last 12 months. Providers reported that Health Workers (HWs) performance was assessed externally by SafeCare. Additionally, there was a review of HWs credentials in 2012 and 2013. The scheme provided training for HWs in the facilities under its jurisdiction. The HWs in these facilities were trained in ANC, HIV/AIDS, diabetes care and customer care and relations. Other training on post-natal care, institutional delivery, immunization, family planning, infections prevention & control, hypertension care, medication management and record keeping were conducted for HWs.

All the service providers reported having clinical guidelines and pathways used by the health workers in these facilities. They had complaint boxes or registers and designated staff handling complaints from enrollees. Complaints were actually lodged by CAPDAN clients in 3 of the 5 service providers. The main complaints were poor staff attitude and waiting time for clients. The periodicity and number of providers at staff meetings varied from one facility to the other in the last 12 months, from twice every month through once a month to once in 3 months. All the providers reported that they reviewed patients’ opinions and complaints in the staff meetings. Similarly, the providers held quality of care management meetings but the periodicity varied from one to the other.

Transition from Subsidized Product to a Non-Subsidized Product All the service providers indicated that they received adequate information on the Hygeia Better Life (HBL) scheme and that they knew the difference between Hygeia CAPDAN and HBL. The differences between Hygeia CAPDAN and HBL mentioned were that: (i) the enrolment fee for CAPDAN was per

head but HBL was a family package; (ii) capitation for CAPDAN was higher when compared to that of HBL; (iii) CAPDAN premium was highly subsidized but HBL premium was not subsidized; and (iv) CAPDAN was restricted to computer village but HBL was for urban poor people.

Providers’ suggestions on the improvement of the Scheme • Improvement on the quality of services provided under the scheme, especially with the drugs • Proper information dissemination among enrollees especially on all products • Aggressive marketing to increase coverage • HBL registration should be individualized • The scope of services of the HBL scheme be increased

Annex 6. Stakeholder Workshop Report and Results

MINUTES OF MEETING

State/Location: Title of Meeting: HYGEIA Office, Apongbon, Lagos CAPDAN ICR Stakeholders’ Workshop Prepared by: ICR Consultants Date: 28th April, 2014 Attendees: Adetoro Tayo-Adetoro (HCHC) Dr. Peju Adenusi (HCHC) Adetoye Adebunmi (HCHC) Ajiboye Ayodeji (PharmAccess – PAF) Omoboriowo Emmanuel (Service Provider - Crystal Pieter. Walhof (PAF) Specialist Hospital) Dr. Adesola Taiwo (Service Provider - Adefemi B P Lekhart (World Bank) Hospital) Daniel Coila (World Bank) Dr. Chris Atim (World Bank) Olaseinde Gbenga (CAPDAN) Olalekan Oladunjoye (HCHC) Ogunfolaji Sunday (CAPDAN) Dr. Funke Ijimakin (PAF) Dr. Okunola Olumide (IFC) Olabosipo Daniel (PAF) Marissa Popma (HCHC) Fleur Henderson (HIF) Ogundipe Oludare (HCHC) Demola Luwaji (Service Provider - Blue Cross Dr. Chukwuemeka Chiedu (HCHC) Hospital) Dr. Henry Gbelee (St. Mary Specialist Hospital) Segun Oguntoyinbo (ICR Consultant) Gbenga Adedayo (ICR Consultant)

Objective of Meeting: Presentation and Discussion of the HYGEIA CAPDAN Pre-paid Health Insurance Scheme draft ICR. Business: The meeting was chaired and declared open by Dr. Peju Adenusi (HCHC) at 11am

1. Introduction: Self introduction was done by all participants.

2. Introduction of the World Bank Group: Dr. Chris Atim of the World Bank gave a brief of the World Bank group involvement on the CAPDAN project. He gave a brief on the design, expectations and implementation as well as the implementing partners. He specifically noted that original target enrolees (low income earners) which was revised during the implementation from 24,000 to 22,500. The outputs were related to the key performance indicators of the project. The borrower’s ICR shall feed into the Bank’s ICR which shall be completed within 6 months. He informed that the Bank’s ICR shall have additional or more pronounced sections on efficacy, efficiency, lessons learnt and sustainability.

Daniel Coila (GPOBA) briefed the meeting on the importance of the output-based grant for the CAPDAN project and the interest of GPOBA on its implementation. GPOBA is particularly interested in the replicability, the accountability of the implementing partners, the achievement of targets, M&E and the sustainability of the project. He identified the distinction between the Bank’s rating of a project and that of GPOBA; GPOBA’s emphasis is on the replicability of the project in the other parts of the nation and Africa at large through focus on the lessons learnt during the implementation of the project.

3. A short recap on CAPDAN project was presented by Marissa Popma (PAF), Dare Ogundipe (HCHC) and Dr. Dupe Oludipe (SafeCare). The presentation highlighted CAPDAN overview & objectives, implementing partners, product, funding mechanisms, achievements, introduction of the new Hygeia Better Life product, quality of care, risks and mitigation. Though the project is shutting down by the end of April, 2014, the already registered enrolees will continue to enjoy services till their contract ends.

Achievements – the achievements highlighted include number of low income families enrolled with a peak in the number of enrolment towards the end of 2011; renewal rates was shown to be above 60 percent throughout the project years; utilization increased as shown by the number of visits per enrolee. Another key achievement highlighted during the presentation is improved healthcare quality. The improved healthcare quality was linked to the multidisciplinary approach of the SafeCare methodology used to achieve the healthcare facility standards in all the facilities in the network. The improved healthcare quality led to zero maternal death in all the CAPDAN health facilities from inception of the project till June 2013 despite the over 1,698 deliveries were recorded. Other achievements highlighted in the presentation are improved patient experience (as revealed by MyCare assessment); capacity building of providers and equipment upgrade of two providers (it was emphasized that some of the other service providers on the scheme enjoyed upgrade from other funding sources outside of the current CAPDAN pre-paid health insurance project funding).

Risks and mitigation: a major highlight was on the excess medical payout experienced during the implementation of the project. Mitigation includes the introduction of biometric solutions which was pilot tested in three health facilities. Other mitigating factors include the introduction of waiting period for maternity cases, family pricing for the new product and setting of limits for the services. On the delay in bill settling noticed at the early stage of the project, the capacity building for the HMOs was seen to have led to improvement in bill settlement by HCHC.

Discussions on the short recap of CAPDAN project: • From November 2013 to March 2014, over 1,000 enrolees were registered on the unsubsidized product Hygeia Better Life (HBL) • Quality improvement assessment would have benefited from a ‘before’ and ‘after’ comparison • The trend in enrolment juxtaposed against increase in co-payment over time could be one of the lessons learnt during the implementation of the scheme. Discussions suggested that (a) slight increase in co-payment made no difference to increased enrolment. However, a marked increase affected enrolment negatively. A small surge post price increase was explained by increased enrolment arising from the systematic transition from CAPDAN to HBL • Adverse selection: mitigation factors employed by the project reduced adverse selection. • Rural-urban equity was discussed in the context of the data from the scheme • A key lesson may be the effectiveness of technology on the operations of the project to increase efficiency and reduce costs. Examples were given of biometrics solutions piloted with 3 providers and an automated process for processing of claims

4. Findings of ICR assessment: Segun Oguntoyinbo (Consultant)

ICR draft presentation: The focus of the presentation of the draft ICR was on the lessons learnt during the project implementation and the exit strategy – transition from a subsidized to an unsubsidized product. The lessons learnt were discussed in 3 parts: (a) those that informed project design, (b) those that influenced project

implementation, and (c) those that can impact on the design of future project. These include: state support at onset, design of unsubsidized product yyyand evaluation. The presentation also emphasized the role of the World Bank in project oversight, proposed arrangements for future operations of project; migration strategy for migration to new product; migration marketing and sales approach, etc.

Discussions on the ICR draft presentation (responses in italics): • Although the CAPDAN project shall formally end in April 2014, all enrolee contracts shall be fulfilled till expiration • Though a dip in income for providers is foreseen as a result of a lag phase in new product uptake, there is no contractual agreement on compensation of providers. The dip is expected to be made up when adequate number of enrolees come on board • Capitated product will be introduced soon. • Dr Olumide Okunola (IFC) informed that the WB shall spend about $1billion buying results. Attention shall focus on the CAPDAN ICR and those of other output-based projects • Dr. Chris Atim of the World Bank requested that the ICR detail more of the lessons learnt. • The non-inclusion of Impact Evaluation in project design was a missed opportunity. • The buy-in of the State government from the inception was considered pertinent for a new project. • Benefit package calibration if considered will introduce ‘value for money’ to the beneficiaries. • The World Bank wants clarification on the reasons behind the set targets for enrolees and the actual.

5. Findings of Beneficiaries and Providers Perception of project (Gbenga Adedayo): Perception of beneficiaries/providers presentation: The presentation was made in two parts; perception of beneficiaries on the scheme and perception of providers on the scheme. The presentation focused on the findings from the analysis from the key variables for both beneficiaries and providers.

Discussion on beneficiaries/providers presentation: • Data from the beneficiaries and providers assessment should be anonymized in the ICR. • A small number of enrolees were interviewed as this was a dip-stick survey. Besides, a similar in-depth by care with 600 respondents has been carried out • Collaboration of the State government on the technical level should be emphasized in the ICR. • The unsatisfactory nature of the responses of providers on capitation and fee for service was clarified by the contributions from HCHC • Dare Ogundipe (HCHC) suggested that for the community based projects like this, there is need to find providers with similar cost profile that will match the target population. 101. CAPDAN executives thanked all stakeholders for the CAPDAN project and expressed interest in the HBL product. Dr Adenusi wrapped up this session by explaining the complexity of the business and stated that it is a delicate balancing act keeping all scheme stakeholders happy.

6. Next Steps: • The World Bank is proposing a ‘lessons learnt’ workshop for the first week of November in Abuja, in partnership with the NHIS.

• Similarly, a quality workshop is proposed for June in Lagos to coincide with the Bank’s ICR.

7. Closing: The meeting came to a close with lunch at 2.30pm.

Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR

Comments from Implementing agencies on draft World Bank ICR report October 17th, 2014

1. Impact evaluation The report states that the program would have greatly benefited from rigorous impact evaluation. We agree with this conclusion. This evidence based approach was and is in line with our practice in other health insurance programs in Nigeria and elsewhere in Africa and included in our initial discussions. Unfortunately, the final design that was agreed between the World Bank and the implementing partners could not include such an Impact Evaluation. The GPOBA Commitment Paper of June 2007 only refers to impact and feasibility analysis without being specific about the objectives and methodology for the study or the party or parties responsible for commissioning and carrying out such a study.

2. Project redesign The CAPDAN program was an innovative and experimental one (as mentioned several times in the GPOBA Commitment Paper of June 2007). During the course of the program’s implementation, design flaws and imperfections were identified and addressed. During a meeting of parties in Lagos on 4-7 July 2011 (see attached minutes of the meeting), a major redesign was discussed, including reallocation of funding, program extension and revised enrollment targets. At the time, the World Bank made it clear that no such redesign would be possible and that the project should retain its original design and targets (even though this is explicitly stated in the Commitment Paper as a risk mitigation measure). An extension of the program for one year only was deemed acceptable at the time (rather than the requested two years). It is a fair question whether a learning mission such as the CAPDAN program should have been held so rigidly to its original design and targets, rather than to allow further experimentation that could have provided additional learnings.

3. Enrollment One of the main indicators for the project, as discussed in the report, is the enrollment into the CAPDAN program. The World Bank focuses on the actual achieved enrollment upon completion of the project, which it concludes was adversely affected by the uncertainties surrounding the World Bank’s postponed decision about extension. Discussions between the parties about extension were commenced in July of 2011 and the final decision was only communicated by the World Bank in June of 2013. At that time, a year before the end of the extension that was granted, enrollment and re-enrollment into the CAPDAN program had already been stopped in order to limit the financial exposure of the implementing parties. As stated in the ICR report, the uncertainties surrounding the extension had led the implementing parties to curtail marketing and sales efforts. The ICR report takes the enrollment at the end of January 2014 as its measure of achievement, while it would be fair to use the enrollment figure at the moment that enrollment and re-enrollment were

stopped at the end of April 2013 (enrollment: 9,001) as this is the actual close-out date of the CAPDAN program. Enrollees only remained eligible for services for one year after enrollment ended. At its peak, enrollment into the CAPDAN program was close to 70% of the entire target group. This is an exceptionally high level of enrolment in a voluntary health insurance scheme, especially in the Nigerian context. The report also points to the fact that, at the program’s peak, re-enrollment rates were high (77% adjusted for migration). This points to a high demand for health insurance, demand that was severely affected by growing uncertainties surrounding the program’s future from year three of implementation onwards.

4. Co-premium An issue that is connected to enrollment is the increase in co-premium paid by the enrollees. In the original design it was envisaged that enrollees would bear more than half of the cost of premium by the end of the first phase in 2013. As the program progressed it became increasingly clear that such a goal was not realistic given the ability and willingness to pay for health insurance by the majority of the target group, despite the gradual increase in co-premium over a period of 10 years. The report cites studies commissioned by the implementing partners in 2011 into pricing and package composition to get a better understanding of the balance between coverage and contributions. Despite pressure to adhere to the original design, the World Bank and the implementing partners agreed to limit the co-premium increases to maintain affordability. An analysis conducted by PharmAccess in 2011 (see attached powerpoint presentation) indicated that, due to attrition and migration, the enrollment within the CAPDAN group would decline anyway because of the group’s limited size. It can be argued that enrollment had reached near saturation levels by 2011.

5. Government engagement The ICR report criticizes the implementing partners for not engaging the government in the design and monitoring of the program. The GPOBA Commitment Paper of June 2007 aims at sustainability being achieved through an increased contribution to the premium by the enrollees in the program. The idea being that this particular target group, being somewhat better off than other poor groups, would be able to afford the full cost of the premium after a period of ten years. The document contains an endorsement letter from the Federal Ministry of Health for the CAPDAN project dated 19th of February 2007. In addition, the document states that the CAPDAN target group was not likely to benefit from NHIS initiatives any time soon. The only mention of proposed government engagement is one proposed by the World Bank to explore with Government of Nigeria the possibilities of establishing an equalization fund for cross-subsidizing health insurance premiums for the poor. No mention is made of engagements with NHIS or the Lagos State Government. It would appear that such a requirement has been added post-hoc to the ICR. Over the years, the implementing partners have actually engaged with Lagos State Government and the NHIS on multiple occasions to discuss our health insurance programs. The approach taken has not been significantly different from the successful engagements with Kwara and Ogun State governments. Engagement with Lagos government and NHIS has taken considerable time to achieve, but unfortunately did not during the program lead to a co-financing partnership . Currently, the relationship with Lagos State Government is good and joint initiatives in areas of healthcare quality (SafeCare) are being discussed. PharmAccess regularly attends the Lagos State Health Insurance Implementation Committee. PharmAccess and HCHC have also participated in constructive engagements with NHIS and State Governments organized by the World Bank Group.

6. Sustainability The original design of the CAPDAN program was for sustainability to be achieved over a 10-year period as enrollees would take on an ever greater proportion of the premium payments until they were able to finance the entire premium. This was an innovative and experimental approach to sustainability for Community Based Health Insurance. During the implementation, it became clear that this approach would not work for the majority of the target group (see section on co-premium). The report mentions that the first year’s premium of $68.06 was slightly more than twice the per capita public expenditure ($32.53) in 2008 (please mention the source) indicating the government could not afford the scheme. To compare the Total Premium with Government Health Expenditure is incorrect. When comparing, it should be Premium Subsidy compared with Government Health Expenditure. To evaluate the design, it should be taken into account that over the course of the program the premium subsidy would become close to the available State Government Expenditure. Mainly due to continuation of excess medical expenses on fee for services this was not achieved. This also was true for the other Lagos Health Insurance Schemes which showed even higher excess medical expenses, which demonstrate that sustainable financing of health expenditure in urban settings like Lagos poses a great financial risk. In rural settings however we have seen that sustainable financing of health expenditure is likely. Actually, CAPDAN was the financially best performing urban scheme showing the lowest rates of excess medical expenses. This was shared with the Lagos State Government Health Commissioner.

7. Medical expenditure The ICR report points to fact that the cost of medical services outstripped the allocation for these costs within the premium. To calculate such an allocation, data is required for the costs and usage of care by a specific target group, which were unavailable at the start of the project. At the time of proposal writing, such calculations had to be done within clear limitations. The surplus payments within the CAPDAN program were quite limited to start with and only increased substantially as enrollment dropped and adverse selection increased, limiting and skewing the risk pool. The report points to measure taken by HCHC to curtail medical costs, especially for chronic ailments. The report states that ‘excess’ (a judgmental term where we assume it is should be ’excess’) capitation and fee-for-service payments were done by HCHC. By their very nature, capitation fees cannot lead to excess medical payouts, as they are fixed reimbursements per member for a given period (e.g. monthly). Actuarial analysis conducted by Miliman (an international firm of actuaries) actually led to (slight) increases of the capitation fees so as to fairly reimburse healthcare providers in the program for their primary care services.

8. Discontinuing enrollment and phase-out strategy The ICR report states that the discontinuation of enrollment may have led to mistrust of the scheme among the target group. There is, however, no evidence to suggest that this has actually happened. The exit plan that was developed was aimed at avoiding reputational damage to all partners. This was achieved through stakeholder meetings (e.g. CAPDAN executives, Medical Directors, enrollee forums). The ICR report talks of a poorly executed phase-out strategy. It remains unclear on what evidence this classification is based. HCHC, PAF and the World Bank agreed upon an exit plan, which included engaging the stakeholders (CAPDAN executives, Medical Directors, enrollee representatives) and developing a migration phase program (to HBL). These plans were executed as agreed and stakeholders were engaged and carried along. Whereas potential negative publicity could have taken place after the announcement of the end of the program the opposite was the case. In our view the phase out was managed very well by all partners including the World Bank. The ICR criticizes HIF for delaying for about 8 months (after PAF had indicated the need for change) before submitting such a request to the World Bank. This observation is not correct. Based on lessons learned from implementation, the HIF (in collaboration with PharmAccess and HCHC) started a discussion with the World Bank (Fatou Assah, TTL CAPDAN) about a review of the CAPDAN project. On 4-7 July 2011 (not August 2011), at the Supervisory Mission in Lagos, the HIF presented these changes that it thought were crucial to ensure effective implementation. On Monday, September 12, revised changes (based on the outcome of the Supervision Mission in July 2011) were sent to the TTL CAPDAN. The approval process by the World Bank took one year and nine months, which disrupted an effective implementation and phase-out strategy of the program.

9. Phase II extension The report criticizes HIF for not recruiting additional donors to fund the second phase of the CAPDAN program. Clearly, this would lead to enhanced sustainability of the program. However, due to the uncertainties surrounding phase one due in large part to the long delay by the World Bank in approving the revised program and the refusal to accept revised enrollment targets as well as the effects on enrollment (as discussed in the section on enrollment), it is not reasonable to assign this solely to HIF as there were too many uncertain project outcomes and no foreseeable partnership with the Lagos State Government.

10. Finances The ICR report is based on figures for disbursed funding (cash advances) only, while relevant figures are those for realized expenditure. Please see attached overview of expenditures. On page 42 it is mentioned that various financial management supervision reports and audit reports showed that project management did not provide detailed breakdown of expenditures incurred We assume that the above refers to World Bank project management, financial management supervision reports and internal audit reports not available to us. and at project closing there was inadequate documentation to support such expenditures. In case this reflects to us please provide us more detail when and how this occurred. We would like to state that HIF, PAF and HCHC have always provided the requested information and reporting during the entire program. No notice of any breach was provided by the World Bank to us. As agreed in the action plan of late September 2014 we are preparing the supporting documents of Categories 3-7 for the final due diligence audit by the FM at project closing.

Comments on draft World Bank ICR report by Consultants who prepared the borrower ICR October 17th, 2014 It is a complicated task to comment on the Bank’s ICR which scores Bank and Implementing Agency’s performance as ‘Moderately Unsatisfactory’ respectively. The justification for Bank’s assessment is detailed clearly. I think what is important are the lessons learned going forward. Again these are clearly detailed in the report. For us, three of these stand out: (a) the project design ought to have aligned reduced subsidies (increased premiums) to increased services; (b) M&E design should have included impact evaluation (clear and documented development & intermediate objectives and the indicators to measure them in the approved project documents), establishing baseline levels and setting performance milestones; and (c) slow restructuring of project against an announced freeze of new enrollment (project closure). This is all water under the bridge now. Opportunity lies in using the lessons learned from this project implementation to bear on the design and implementation of the new product. Nevertheless, unless there has been further reconciliation of figures between the Bank and the Project, some slight inconsistencies in the Project ICR and Bank’s ICR data. These are detailed below:

Page 9/72: IO Indicator 4: This ICR report gives an average of 2.4 visits per enrollee but project ICR has a different utilization figures recorded for this: 3.1 visits per enrollee in 2011 increased to about 4 visits per enrollee in the first half of 2013 Page 9/72: PDO Indicator 3 figure should be 14 and not 15. There were 15 service providers in the project as at the end of 2013 but only 14 were in compliance with the service quality standards specified by PAI (OnTrack Assessment) (please see ‘ Table 9 – Summary of Finding from Project Monitoring Indicators’ in CAPDAN ICR Report submitted). This was based on the reported data/information in the semiannual progress reports. Page 28/72: ‘Figure 2: Actual and planned enrollment’ figures in the graph is different from what we found during the preparation of the CAPDAN ICR report.

The borrower ICR is attached. . Comments from Implementing agencies on draft World Bank ICR report January 13, 2015

ICR reviewer Samuel Mills Senior Health Specialist

Amsterdam, 13 January 2015

Subject: Response to CAPDAN ICR draft report dated December 18 2014, Pre-Paid Health Scheme Project TF 092182

Dear Samuel, Thank your for sharing the 2nd ICR draft report and giving PAI and HIF the opportunity to respond. You have done a massive job in providing this extensive report on such a comprehensive program with so

many levels of input, output, outcomes and impact. We are very appreciative of your support, time and collaboration during this process. After reviewing carefully the second ICR draft report we acknowledge that all data corrections have been adopted but also feel there are still some fundamental outstanding concerns and we would kindly request to take these comments into consideration for the final draft. We will first discuss the six most important factual observations and conclude this letter with a description of the broader outcomes of the Pre-Paid Health Scheme plus our main conclusions.

1. Finances On page 22/23 it is mentioned for both PAF (5.2(b)) as well as HIF (5.2(c)) that “further, outstanding disbursement issues were only resolved in November 2014 (6 months after project closing) due to inadequate financial documentation”. This does not reflect the sequence of events. HIF and PAF did report on expenses in a timely manner during the full project period. Reports and withdrawal applications were approved, no comments were given. Not until Q3 2013 was a first question raised: could HIF (and PAF) report on cash transfers instead of realized expenses. PAF, supported by Deloitte Accountants, argued that the way PAF prepared the financial documentation for this program was the proper way to do this for such an insurance orientated program (with prepayments). The FM of the World Bank argued that it did not match the World Bank policies. On September 29 2014, we agreed on an action plan to resolve these differences. According to this action plan HIF (and PAF) delivered on their part of the action plan in 7 separate ‘responses’ which were only reviewed and approved by the FM Saidou Diop during his visit to Amsterdam from 13-17th November 2014. On a yearly basis HIF (and PAF) submitted subsidy statements. Annual external auditor’s (Deloitte) opinions on these statements were unqualified. After the closing date of the program (April 30, 2014) Deloitte performed the last audit on the program. Policies within the World Bank did not allow reimbursement of all costs concerning this audit. Therefore the final audit fees and personnel charges of HIF, PharmAccess and HCHC after April 30, 2014 related to the closure of the program were not reimbursed (due to the several layers of reporting HIF/PAF could not report earlier) The PAF scoring has been downgraded from satisfactory to moderately satisfactory because of above mentioned delay of the financial review. Something for which PAF nor HIF nor HCHC can be held accountable for. 2. Project redesign and enrollment targets The report states that the restructuring request did not include a reduction in the number of target enrollees despite the evidence that it was unattainable (page 23). The CAPDAN program was an innovative and experimental one (as mentioned several times in the GPOBA Commitment Paper of June 2007). During the course of the program’s implementation, design flaws and imperfections were identified and addressed. During a meeting of parties in Lagos on 4-7 July 2011 (see minutes of the meeting), a major redesign was discussed, including reallocation of funding, program extension and revised enrollment targets. At the time, the World Bank made it clear that no such redesign would be possible and that the project should retain its original design and targets (even though this is explicitly stated in the Commitment Paper as a risk mitigation measure). An extension of the program for one year only was deemed acceptable at the time (rather than the requested two years) but revised enrollment targets was a taboo. Hence we didn’t include revised enrollment targets in the amended agreement (restructuring proposal) in April 2012. It is a fair question whether an innovative pilot program as the CAPDAN program should have been held rigid to its original design and targets, rather than to allow adjustment of the design and testing models that could have provided additional learnings. The enrollment indicator is the main indicator of this program and carries more weight and the rigid attitude regarding enrollment target has influenced the end scoring of both HIF and PAF.

3. Impact evaluation The 2nd draft ICR report still states that the program would have greatly benefited from rigorous impact evaluation. We agree with this conclusion and this evidence based approach was and is in line with our practice in other health insurance programs in Nigeria and elsewhere in Africa and included in our initial discussions. Unfortunately, the final design that was agreed between the World Bank and the implementing partners could not include such a long term impact evaluation parallel to the implementation of the program. The GPOBA Commitment Paper of June 2007 only refers to impact and feasibility analysis without being specific about the objectives and methodology for the study or the party or parties responsible for commissioning and carrying out such a study and to include a budget header for this research. We would appreciate if the report is adjusted to reflect that at the start the GPOBA Commitment Paper could not include a rigorous impact evaluation as is the case in other HIF/PAF programs. 4. Enrollment One of the main indicators for the project, as discussed in the report, is the enrollment into the CAPDAN program. The World Bank focuses on the actual achieved enrollment upon completion of the project, which it concludes was adversely affected by the uncertainties surrounding the World Bank’s postponed decision about extension and the fact that we were not allowed to change the enrollment target. Discussions between the parties about extension were commenced in July of 2011 and the final decision was only communicated by the World Bank in June of 2013. At that time, a year before the end of the extension that was granted, enrollment and re-enrollment into the CAPDAN program had already been stopped in order to limit the financial exposure of the implementing parties, which is necessary because of the financial commitment to policyholders and clinics that any insurance program needs to take into account. And also to manage expectations at target group level. As stated in the ICR report, the uncertainties surrounding the extension had led the implementing parties to curtail marketing and sales efforts. The ICR report takes the enrollment at the end of January 2014 as its measure of achievement, while it would be fair to use the enrollment figure at the moment that enrollment and re-enrollment were stopped at the end of April 2013 (enrollment: 9,001) as this is the actual close-out date of the CAPDAN program when the marketing program was stopped. Enrollees remained eligible for services for one year after enrollment ended. At its peak, enrollment into the CAPDAN program was close to 70% of the entire target group. This is an exceptionally high level of enrolment in a voluntary health insurance scheme, especially in the Nigerian context. The report also points to the fact that, at the program’s peak, re-enrollment rates were high (77% adjusted for migration). This points to a high demand for health insurance, demand that was severely affected by growing uncertainties surrounding the program’s future from year three of implementation onwards. Notot mention the client satisfaction rate of 72%. Finally it is important to mention that we started the phase out strategy (April 2013) to avoid reputational damage for World Bank. HCHC and PharmAccess. In a face to face meeting with Mrs. Marie Francoise Marie-Nelly (Country Director World Bank Nigeria, September 2013), she made very explicit that she was happy the program extension now facilitated the adequate and professionally executed risk mitigation measures at the final stage of the program in order to protect the interests of beneficiaries, continuity of clinics and local partners and reduce potential reputational risk. Phasing out a project is a delicate process, especially in the business of health insurance. Insurance is a business of trust and this trust could be broken if the scheme, that the low income groups in the Computer Village of Lagos have learned to appreciate, would close abruptly. Moreover, this group of people will then no longer be protected against health risks which pose a great threat to their lives and livelihoods. Therefore, the project implementers have been developing a phase-out strategy to mitigate the above mentioned risks. This phase-out strategy was mainly focused on replacing the scheme’s dependence on subsidies with a new feasible, sustainable and low-cost

insurance product of which the cost will be fully borne by its enrollees. By offering the target population the possibility to transition from the World Bank supported program into a new affordable insurance program the risk of loss of trust amongst the target population will be reduced and the risk of reputational damage mitigated. It is logical that, as the result of a transition phase, the enrollment numbers have declined. Hence, we strongly advise not to rely only on the end reference date (January 2014). 5. Government engagement The ICR report criticizes the implementing partners for not engaging the government in the design and monitoring of the program. The GPOBA Commitment Paper of June 2007 aims at sustainability being achieved through an increased contribution to the premium by the enrollees in the program. The idea being that this particular target group, being somewhat better off than other poor groups, would be able to afford the full cost of the premium after a period of ten years. The document contains an endorsement letter from the Federal Ministry of Health for the CAPDAN project dated 19th of February 2007. In addition, the document states that the CAPDAN target group was not likely to benefit from NHIS initiatives any time soon. The only mention of proposed government engagement is one proposed by the World Bank to explore with Government of Nigeria the possibilities of establishing an equalization fund for cross-subsidizing health insurance premiums for the poor. No mention is made of engagements with NHIS or the Lagos State Government. It would appear that such a requirement has been added post-hoc to the ICR. However with hindsight, we agree that it would have been good to have engaged more with the Lagos State Government at an earlier stage. However the situation in Lagos State at the time was not comparable with the situation in Kwara as mentioned in the report. In Kwara State the governor was one of the initators from the onset together with of the HCHC which led after 8 years to a full agreement to finance the premium subsidies and was selected as a top 10 winner of the 2014 OECD “Taking development innovations to scale” award. Over the years, the implementing partners have actually engaged with Lagos State Government and the NHIS on multiple occasions to discuss our health insurance programs. The approach taken has not been significantly different from the successful engagements with Kwara and Ogun State governments. Engagement with Lagos government and NHIS has taken considerable time to achieve, but unfortunately did not during the program lead to a co-financing partnership. Currently, the relationship with Lagos State Government is good and joint initiatives in areas of healthcare quality are developed. Lagos State has requested and has already funded PharmAccess to perform SafeCare assessments, train quality teams and develop Quality Improvement Plans for three healthcare facilities, namely General Hospital Epe, General Hospital Alimosho and General Hospital Apapa, as well as assist in the development of a Quality Policy for Public Sector Healthcare Facilities under Lagos State Ministry of Health (LSMOH). A MoU between PharmAccess-SafeCare and Lagos State will be signed in the coming weeks. PharmAccess regularly attends the Lagos State Health Insurance Implementation Committee. PharmAccess and HCHC have also participated in constructive engagements with NHIS and State Governments organized by the World Bank Group. 6. Phase II extension The report criticizes HIF for not recruiting additional donors to fund the second phase of the CAPDAN program. Clearly, this would lead to enhanced sustainability of the program. However, due to the short duration of the Phase I, the local policy uncertainties since the start of phase one, in combination with the difficulty for the World Bank in approving any program redesigns, we feel it is not reasonable to assign this solely to HIF as there were too many uncertain project outcomes and no foreseeable partnership with the Lagos State Government. And in general this type of program requires a longer term commitment, in order to develop appropriate policies, allow for development of adequate structures, adopt new strategies, and build trust in these new institutions.

7. Broader outcomes of the Pre-Paid Health Scheme and conclusions The Pre-Paid Health Scheme Project CAPDAN has a couple of important broader outcomes which unfortunately didn't fall within the scope of the ICR: 1. The established financial leverage through investments in the participating private clinics in Lagos 2. The continuous and measurable quality improvement in the clinics which is an important return on the investment 3. The contribution to policy development and capacity building for access to quality healthcare in combination with health insurance to NHIS, Lagos State and state wide insurance schemes by using the lessons learned and data we have collected over the years. This has led to deepening of understanding and contributed to the acceleration of developments in Nigeria to the introduction of the UHC Declaration in March 2014. In addition the CAPDAN Pre-Paid Health Scheme was highly appreciated by beneficiaries, HCHC, and providers and most importantly also NHIS and Lagos State, which has recently announced its policy change into the direction of State -wide supported Health Insurance. A survey was carried out to assess the perception of the beneficiaries of the pre-paid health scheme implemented between 2009 and 2013 in April, 2014 and the beneficiary rating was satisfactory and beneficiaries had good experiences in using the product. In the overall ICR rating this appreciation is not reflected. Moreover the overall quality of the health care system in the neighborhood has improved dramatically. Experiences with the new non-subsidized scheme of Hygeia are still rather recent. However we are quite confident that this non subsidized product could be very appropriate. When time comes such a commercially viable product for low income working class may be complemented with subsidized products supported by the Nigerian federal and state governments. Last but not least, we believe GPOBA and World Bank Group have been – together with the Dutch Government - instrumental in a very early stage of development, where health insurance for the informal sector was completely unknown and untested in Nigeria, in laying the foundation for the current developments towards UHC in Nigeria. Substantial credit is given by Nigerian public and private stakeholders to this initiative. We believe this 2nd draft ICR report is too modest in this respect and could give a higher appreciation to the teams from World Bank Group, GPOBA and its partners for achieving this contribution and recognition. Taking all our comments into account, please be assured that we are impressed of the diligence and quality of the work provided in the ICR. We would like to thank you for this. Yours sincerely, On behalf of PharmAccess

Jan Willem Marees, director finance Fleur Henderson, manager AHME

On behalf of Health Insurance Fund

Pieter Walhof, director Kwasi Boahene, director advocacy

Cc: Chris Atim (World Bank Senegal), Olumide Okunale (World Bank Nigeria), Leslie Villegas (World Bank Washington), Dr. Peju Adenusi (HCHC)

Annex 8. List of Supporting Documents

1. Amendment to GPOBA grant agreement, June 2013 2. Approval of extension of closing date, June 2013 3. Declaration of project effectiveness, May 2009 4. Financial management supervision report, May 2010 5. Framework agreement between PharmAccess foundation and Hygeia Community health Plan Ltd, May 2009 6. GBOPA panel of experts meeting minutes, June 2007 7. GBOPA panel of experts meeting minutes, Nov 2006 8. GPOBA commitment document (concept note/proposal), June 2007 9. Grant agreement between IDA (World Bank) and Stichting Health Insurance Fund, October 2008 10. Health Insurance Fund request for extension of closing date, April 2012 11. Health Insurance Fund, interim financial report, July – Dec 2012 12. Health Insurance Fund, operations manual, April 2009 13. Health Insurance Fund, semi-annual progress report, July – Dec 2010 14. Health Insurance Fund, semi-annual progress report, July – Dec 2012 15. Implementation support (supervision) mission report, May 2010 16. Implementation support (supervision) mission report, Nov 2010 17. Midterm review report, Dec 2012 18. Procurement plan, Nov 2008 19. Restructuring paper June 2013 20. Safeguards data sheet may 2007 21. Service level agreement between PharmAccess foundation and Hygeia Community health Plan Ltd, May 2009 22. Target population report CAPDAN, October 2008 23. FMOH (2010): National Strategic Healthcare Development Plan (2010-2015) 24. Nigeria health care policy 25. Health Insurance Fund, semi-annual progress report, Jan– June 2010 26. Health Insurance Fund, semi-annual progress report, Jan– June 2011 27. Health Insurance Fund, semi-annual progress report, July – Dec 2011 28. Health Insurance Fund, semi-annual progress report, Jan– June 2012 29. Health Insurance Fund, semi-annual progress report, Jan– June 2013 30. Health Insurance Fund, semi-annual progress report, July – Dec 2013 31. Health Insurance Fund, semi-annual progress report, Jan– April 2014 32. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2010-2014 33. SafeCare annual assessment scores (2011 -2013) 34. Guidelines for SafeCare Clinic Standards, 2012 35. Nigeria Pre-Paid Health Scheme Project (CAPDAN): Recommendations of Health Insurance Fund for Nigeria Pre-Paid Health Scheme Project, April 2012 36. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2013 37. Program agreement Computer and Allied Product Association in Nigeria(CAPDAN), March 2014 38. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2010, July 2010 39. PAF Nigeria Pre-paid Health Scheme Project, Work plan 2013-4, July 2010

40. HCHC PAI General Framework Agreement, April 2011 41. OBA Principles for CAPDAN Project: final version, April 2012 42. Risk and responsibility allocation: final version, April 2012 43. Annual External Auditor’s reports 44. Aide memoires for missions 45. Financial review report 46. Implementation Status and Results Reports, sequences 1-7 47. Concept Paper On Community-Based Health Insurance Scheme (CBHIS) In Ogun State 48. Concept Paper on Hygeia Better Life 49. 2010-2013 World Bank’s Country Partnership Strategy 50. 2014-2017 World Bank’s Country Partnership Strategy 51. Borrower implementation completion report, April 2014 52. Renaissance Capital. Nigeria unveiled: thirty-six shades of Nigeria. Economics & Politics. Nigeria. May 7, 2013.

Annex 9. Map