Sh24 billion feared lost after SHA system collapses

It has now emerged that the collapse of the multi-billion shilling health system could have gone down with about Sh24 billion.

The digital superhighway system, which cost the taxpayer Sh104 billion, crumpled, exposing the claims process to manipulation.

And now, in what signals a major claw back, the Social Health Authority (SHA) has been forced to revert to manual verification after realising suspected losses running into billions of shillings. the ministry decided to turn back to manual system for verification of claims.

“There are millions of claims made. We are looking at about an eighth of all claims submitted that are undergoing manual verification. They are about half a million claims are undergoing manual verifications,” said another insider who attended the meeting.

A leaked footage of a Wednesday virtual meeting by SHA, Digital Health Authority (DHA), and one of the consortia contracted to provide the digital system showed “inconsistencies and irregularities that alluded to wastages, fraud”, according to Margaret Macharia of the department's benefits, designs and architectural services.

“We are reviewing the claims manually to confirm what goes through the system. Those which were ready for payment have all undergone manual check,” she told the meeting.

The process involves more than 500,000 hospital claims.

Dr Tracy John, a team lead for the claims department, was also present, while SHA officials were from the finance and communication departments. Representatives from public, private and faith-based hospitals also attended the meeting, which opened at 11am and ended at 1.30pm.

And it seems it may take a long time before the integrity of the system is restored.

The digital superhighway was subcontracted to a private consortium led by a private communication provider, but it appears it has not delivered, one year later.

“The Ministry did not know the full extent of the problem until we realised the amount of money that was being received was not commensurate with the claims we have submitted,” said a source from the meeting.

According to the source, the digital system was open to manipulation both by insiders and the public.

“Though the digital superhighway has been in use, it was not properly designed. It had been open to manipulation and fraud. It has taken the ministry eight months to discover that the system is actually not functional,” said a source.

Hospitals are submitting claims through the SHA portal, but the movement of claims from submission to payment is manual.

“The claim adjudication process was supposed to be digitalised. This is why the government said it was to spend billions to avert fraud. However, the digitalisation by DHA has not taken off, leading to losses,” said a health provider who was at the meeting.

Reverting to a manual system will lead to delayed payments to providers, and could be a source of fraudulent deals, besides other human errors.

“They have to send people on the ground. People trusted with the claims are also questionable. This is because of human error and is also subject to manipulation,” said an official.

The manual system was used under the defunct National Health Insurance Fund (NHIF), which SHA replaced in October 2024. NHIF used quality assurance and benefits officers to verify claims manually, but a month ago, SHA management deployed all of them and closed branches countrywide.

The authority has now hired temporary personnel to manually verify the claims.

It was also revealed that SHA cannot authenticate claims using Artificial Intelligence and other digital technologies.

The meeting, according to Hazel Koitaba, director, beneficiary and provider management, was one of several others “to look at how to continue improving claims management, from how to make claim processing more efficient to reimburse revenues.”

During the meeting, providers complained that the SHA digital system was rejecting some claims.

And following the outcry on SHA fraudulent payments, Health Cabinet Secretary Aden Duale rejected about 12 per cent of the claims from both private, public and faith based.

On Sunday night, the ministry announced the rejection of Sh10.6 billion in hospital claims, with an additional Sh13.3 billion currently under review.

SHA has paid out approximately Sh53 billion to hospitals.

According to the Social Health Insurance Act, claims are processed every day, and payment should be made within 90 days.

Rural and Urban Private Hospitals Association of Kenya (Rupha) has called for the restoration of the digital system.

“We want the digital system that was provided. We do not want hard-working providers to fall victim to ghost hospitals,” said chairperson Brian Lishenga.

Dr Lishenga said the manual verification process would severely delay payments to hospitals, which were already struggling.

Further, Rupha pleaded with the ministry to reopen the SHA branches and post surveillance officers to aid in the fight against fraud.

John Nyangi, a health economist opposed to the manual system, said the ministry and SHA leadership must take responsibility for the failure of the digital superhighway.

“Responsibility means they should step aside, allow investigations to come in. EACC should move in like yesterday, and conduct thorough investigations, with support from the Auditor General, while the people responsible are out of office to allow fair and just investigation,” said Nyangi.

He regretted that during the expert input was ignored at the design level.

The system, he said, was hurriedly put in place despite numerous loopholes and hitches.

“This is an indication they had invested interests, reasons they did not listen to anybody, they should investigate, and recover public money and patients' money,” observed the expert.

Nyangi took issue with shutting down hospitals, saying it is not a solution to the recovery of money lost through fraud.

“Arrest the people culpable of fraud, charge them and allow health facilities to operate. They're hurrying to shut facilities is erasing footprints. After siphoning the money, they are shutting facilities; they should not shut hospitals,” said the expert.