Private hospitals protest over ‘secret’ SHA claims compensation formula

Private and rural hospitals have demanded full disclosure of the new Social Health Authority (SHA) hospital claims reimbursement formula, warning that the lack of transparency is alarming and could erode trust in the system.

Under the Rural-Urban Private Hospitals Association (RUPHA), the healthcare providers demanded that SHA makes known to them the disease weights model—which determines how much a doctor or hospital can charge, or be paid for a particular service—for outpatient treatments.

Failure to do so, they said, would allow the national health insurer unchecked powers and arbitrary changes to the prices, which could severely affect the hospitals, and make it fundamentally difficult to budget for the cost of services.

“If the formula remains undisclosed, it can be altered at any time, meaning reimbursements could fluctuate unpredictably. Providers may be forced to prioritize treating conditions that yield higher returns while neglecting others,” warned Dr Brian Lishenga, the chairman of the association.

The model in question that SHA has kept a secret only applies to outpatient treatments under Primary Health Care but excludes inpatient services and chronic conditions such as cancer and kidney disease.

“What this means is that, for instance, if I treat a patient for malaria and pneumonia in the outpatient department, then the claims are logged in the system, I will not be paid what is in the claim, SHA will use their formula and decide what to pay me,” Dr Lishenga explains.

Repercussions 

He argues that it is then likely that healthcare providers may start preferably treatment opting to treat certain conditions because they would be trying to make their reimbursement more predictable.

“Care will be expensive because for those whose conditions will not be having any returns to the providers where will they get treated?” he asked.

He adds: “Assume pneumonia will fetch me more money than malaria, then the probability that I will concentrate on pneumonia cases is very high since I am not getting any return on malaria. This will reduce the quality of health care that Kenyans are getting. I wonder why the government decided to go that route with the health care system.”

But Medical Services Principal Secretary Harry Kimtai says there was no cause for alarm—and that there was no secrecy.

 “It is not that we are keeping this as a secret. We just do not want a repeat of what happened with NHIF where a hospital logs claims for services that they did not offer then they reap from the authority. We are just taking precaution, this is not about punishing the hospital owners,” Mr Kimtai said.

He mentioned that each disease has a weight and it is going to be standard in all facilities.

“There is no facility that is going to earn more for treating disease X than the other. Let us work with this for the betterment of Kenyans. We rely so much on what we get instead of concentrating on services. We have a responsibility to give Kenyans the best care,” Mr Kimtai said.

Unpaid claims

The new case of secrecy of the outpatient claims reimbursement, Dr Lishenga says, is only one of the many problems facing private hospitals, top among them being the unpaid Sh30 billion claims, some dating back to the defunct National Health Insurance Fund, which was replaced by SHA.

The government has insisted that it only owes the facilities about Sh9 billion after paying Sh10 billion which amounts to half of the undisputed claims last year.

“They have refused to pay for SHA reimbursement on time, the NHIF debts are still pending and now they are doing this with the outpatient treatment, is this really a country that values the health of its citizens,” Dr Lishenga said.

He said that SHA should not have the sole responsibility of coming up with the disease weight formula.

“If it is a must that it is the formula, then, any adjustments should be subject to the Benefit and Tariff Committee for transparency and fairness,” Dr Lishenga says.

Under the defunct NHIF, healthcare providers were paid based on the actual cost that they incurred during treatment and they could predict what they would be paid based on the claims they logged.

“We were never worried about NHIF payment but this one, we would be forced not even to give services because one might incur a cost that is even higher than what you would be reimbursed. I wonder what we are getting into as a country,” Dr Lishenga questioned.

This is not the first time that the providers have had issues regarding the SHA policies on outpatient services.

It is the same system that has made access to outpatient care in major public hospitals more difficult due to the rigid implementation of the SHA Act, which discourages walk-in patients in Level 4, 5 and 6 facilities. 

And patients are bearing the brunt, as the lower-level facilities where they are supposed to receive outpatient care have inadequate drugs and equipment and are understaffed.

 Another hurdle for patients is that lower-level hospitals are not staffed or equipped to handle the more complex outpatient cases traditionally seen at higher-level facilities.

The current infrastructure lacks digital patient records, diagnostic tools and specialised equipment, further complicating treatment.

For many Kenyans, the shift to lower-level hospitals creates unnecessary hardship.

Level 2 and 3 facilities, traditionally used for basic and preventative care, are now expected to handle a wide range of outpatient cases.

“Without the specialised infrastructure and patient records required for effective treatment, many of these hospitals are ill-equipped for the influx. As a result, patients are experiencing delays in receiving care, inadequate treatment, and a general sense of frustration,” said Dr Lishenga.