The US has asked those mentioned in the Sh5 billion loss claims in the health ministry to step aside until they are cleared.
US Ambassador Robert Godec said his government was concerned over escalating cases of corruption, and would wish to see those culpable held accountable.
"There are positive steps put in place by the Government, and recently we have seen people convicted and some asked to step aside, but I cannot understate the magnitude of this problem," he said.
Mr Godec, who was in Kisumu to meet various stakeholders to seek their views in the run-up to 2017 General Election, said corruption had come up as a major challenge in the country.
He said the US was funding a number of healthcare programmes in Kenya and needed to be assured that American taxpayers money is spent on what it is meant for.
"I am deeply concerned with the corruption reported in the Ministry of Health. I have spoken to Government officials on this and I have urged that immediate independent investigations be done," said Godec.
He said the US will closely monitor its programmes in Kenya.