Hospitals, SHA clash over claims payment terms in new contracts

Social Health Authority plans to launch the new provider contracting cycle on September 18, 2026. [File, Standard]

Wrangling has emerged over the contracting of hospitals, with facilities opposing clauses they say could leave them carrying the financial burden when the Social Health Authority (SHA) delays payment.

Contracted hospitals have raised concerns over the 2026/29 provider contracts drafted by the SHA, particularly provisions on payment of claims, deductions and obligations placed on healthcare providers.

Hospitals have strongly disagreed with a clause where SHA commits to pay claims within 90 days, but makes the obligation subject to the availability of resources in the relevant Fund and appropriation of Funds by the National Assembly.

“The Authority’s obligation to pay is at all times subject to the appropriation of funds by the National Assembly, the availability of resources in the relevant Fund, and the Public Finance Management Act,” reads a section of the 60-page contract.

This comes amid plans by SHA to launch the new provider contracting cycle on September 18, 2026, at the Kenyatta International Convention Centre (KICC) in Nairobi.

The association of hospitals have requested to have the launch of the contracting cycle 2026/29 extended to October 1, 2026.

In a letter to SHA Chief Executive Officer Mercy Mwangangi, the associations including Christina Health Association (CHAK), SUPKEM, Kenya Association of Private Hospital (KAPH) and Rural Urban Private Hospitals Association of Kenya (RUPHA), said they need more time to review the document.

The hospitals had only been given two days to review the contract, which would be extended by only three days.

The proposed contracts introduce materially revised terms, obligations, and risk allocations across the Primary Health Care Fund (PHCF), Social Health Insurance Fund (SHIF), Emergency, Chronic and Critical Illness Fund (ECCIF) and the Public Officers Medical Scheme Fund.

“The deadline of Thursday, September 10, at 11.59 pm, falling, as it were, on the same day as the final sensitisation session for Level 3, and Level 2 facilities did not, in our respectful view, afford our members sufficient time to give the proposed contracts the diligence they deserve,” noted the associations.

“A hurried review risks generating comments of lower quality, or facility level decisions taken without a full understanding of the obligations, assumed, with resultant defaulting on the contractual obligations,” they added.

The association has a membership of more than 3,000 SHA contracted hospitals.

One hospital association official described the proposed agreement as a “straightjacket” for healthcare providers.

“If I can say it in one word, or a couple of words, it is a straightjacket for hospitals. The type of jacket mad people are tied with,” said a provider, who falls under the associations.

The official further poked the clause requiring hospitals to provide services and take full responsibility while SHA's payment obligation remained subject to availability of funds.

“You cannot move your hands, you cannot go to social media, you cannot discuss the contract in public, you take full liability, yet you are told on availability of funds,” he said.

The dispute comes even as SHA pride of high registration of Kenyans, with 32.3 million on boarded, ever since independence, registration that is aimed at realising Universal Health Coverage (UHC).

A total of Sh203.7 billion has been collected since operationalisation of the scheme in October 2024, and Sh178.4 billion paid to hospitals.

Additionally, under 2025/26 financial year, SHA disbursed Sh21.36 billion to counties, a sharp increase from Sh12.7 billion, in previous year.

Allocations for ECCIF and PHCF is from the exchequer, and appropriation of funds by the National Assembly.

Under 2026/27, The National Treasury allocated Sh19.1 billion to PHCF, and Sh4 billion to ECCIF.

Contrary, SHIF is funded by individual contributions, capped at 2.75 percent of income, for salaried people, with proxy means testing for informal sector.

Also, the Fund is funded by monies appropriated by the National Assembly, for indigent and vulnerable persons and gifts, grants, innovative financing mechanisms and donations.

With the collections, hospitals question why SHA insists on paying them on availability of funds.

Nevertheless, under the new contract set for signing today, hospitals shall not charge a penny to patients, registered and who are paying under SHIF.

This is even with delayed reimbursement of SHA claims.

“No charge within entitlement,” adds a section of reads a section of the contract.

“The Healthcare provider shall not levy any charge in the Beneficiary for Services that is within the Benefit Package, within the applicable Tariff and within any applicable benefit limit and Pre-Authorisation,” reads the SHIF contract in parts.

Hospitals are also not allowed to have a deposit, admission bond, guarantee or pre-payment from a beneficiary who eligibility and Pre-Authorisation are confirmed.

Alternatively, on availability of funds, RUPHA secretariat suggested to have SHA allow hospitals suspend services when funds are unavailable, rather than being required to continue providing services on credit.

“We are suggesting when there are no funds, stop giving hospitals the lee way to give credit, allow hospitals to stop service, ‘hadi siku pesa zitapatikana ndio tuendelee (until money is available to allow them continue operating)’,” said the RUPHA secretariat.

Hospitals have in the past accused SHA of failing to pay their claims on time, resulting in disruption of services.

Last year, a section of hospitals were forced to withdraw SHA services, following delayed payment of SHA claims, an issue that also affected the smooth operation of services in public hospitals.

Contacted about SHA payment claims, RUPHA secretariat accused SHA of not sharing information about payment of claims.

SHA said they only provide hospitals with information, only four months late, as at the last quarter.

“We do not have information on monthly payments, like how much is pending, how much has been paid, and how much is pending. All this information is limited to us,” said the secretariat.

“Some hospitals are reported not to have received a single shilling from SHA from July, some from end of May- payment is mixed. There is no clear pattern of who is being paid, who has not been paid, and how the payment is being done” added the secretariat.

In an interview with The Standard, RUPHA secretariat called for publication of SHA claims payments, as it was being done last year, for accountability.

“It is clear just share what has been paid, and what is pending, and challenges. The aggregate of summarised bridge the trust a bit more,” said the secretariat.

In the new contract, SHA will also not pay interest on claims.

“No interest shall accrue or be payable by the Authority on any sum payable by the authority on any sum payable under this contract,” adds Clause 16.4.2 of the contract.

Hospitals have also raised an issue with the failure to have interest.

“It is a sensible way. If you do not have money, why are you forcing people to spend on your behalf, and take no liability?” Questioned the association official.

“These are the things we are agitating about. There are things in there, taking away business rights, purely, taking it away,”

The hospitals are also challenging a claims auditing provision which they say could result in deductions being applied beyond individual claims found to have errors.

The hospitals' concern is that where a sample of claims shows errors, SHA can extrapolate the error rate to a wider batch and deduct the corresponding amount.

“These are deductions that they are saying they are assuming that your hospital will always be 10 per cent problematic,” the official said.

He said the issue could result in hospitals losing a portion of their claims without what providers consider adequate and timely recourse.

The providers are also questioning the flow of information on claims payments.

According to the official, hospitals do not have sufficient monthly information showing how much has been paid, how much is pending and which claims remain under processing.

“Some hospitals are reported not to have received a single shilling from SHA from July, some from end of May. It is mixed. There is no clear pattern of who is being paid, who has not been paid, and how the payment is being done,” he said.

The providers are calling for regular publication of claims-payment data, including amounts paid and outstanding.

“It is clear, just share what has been paid, what is pending and the challenges. The aggregate of summarised data bridges the trust a bit more,” he said.

The official said hospitals were not opposed to recognising the government's funding challenges, but wanted SHA to retain responsibility for money owed to providers.

“We are saying we acknowledge the realities of the country, however make that commitment, do not escape through that clause. Make a commitment that this is still my liability, even if it is not on availability of funds,” added the official.

SHA has reported wrangling since its operationalisation in October 2024.

But at the recently held Health Summit attended by President William Ruto, SHA was presented as making progress in expanding health coverage and payments, with at least 32.3 million people registered, the highest ever since independence.

Shockingly, some of the hospitals that have raised concerns over the authority were also represented at the summit.

According to a section of hospital representatives, the presentation of SHA during the summit was ‘asymmetric.’

“When you paint half a picture, it only tells the half story. It does not give full picture. The statistics shared by SHA are all cherry picked. When you look deeper into it, there are many problems,” said the official.

“When you say you pay most amount of money, what period are we discussing? There are periods that are very less, there are periods where they have over-compensated. You do not just pick a statistic that favours your statement, and carry it forward, as if nothing is wrong,” he added.

The official also questioned why county governments were raising concerns over SHA while the authority maintained that the scheme was functioning.

He further questioned the level of remittances to SHA.

Of the 32.3 million people registered under the scheme, the official questioned why only about 5 million were actively contributing.

The concerns over contributions have also featured in discussions between the national and county governments.

Two weeks ago, during an Intergovernmental Budget and Economic Council (IBEC) meeting chaired by Deputy President Kithure Kindiki, governors raised concern over county employees being dropped from SHA services when payments are not made by the ninth of every month.

During the Health Summit, however, Council of Governors chairperson Ahmed Abdullahi praised SHA, saying the scheme was working and had improved healthcare across counties.

Abdullahi said governors were contented with the scheme and that any governor with an issue should raise it individually with SHA management.