SHA REJECTIONS: HOW CLERICAL ERRORS ARE BEING MISLABELLED AS FRAUD AND UNDERMINING HEALTHCARE FINANCING IN KENYA A Real Case from Kigumo Sub-County Hospital

ELECTIVE CESAREAN SECTION AT KIGUMO SUBCOUNTY HOSPITAL

A patient (ENG) was referred to the High Risk Clinic for consultant follow-up due to a previous Caesarean section scar, necessitating a planned elective Caesarean delivery. She was booked for the Wednesday Elective Theatre Day at Kigumo Sub-County Hospital. The patient has been faithfully contributing to the Social Health Authority (SHA). The care pathway proceeded exactly as it should in a functional health system: The patient underwent a successful elective Caesarean section conducted by a consultant obstetrician-gynaecologist. She received appropriate inpatient care and was discharged on Day 4, well, breastfeeding, and clinically stable.
The hospital discharged her after confirmation that the procedure had been pre-authorised by SHA. All the required documents were submitted to SHA:
– Birth Notification
– Discharge Summary
– Hospital Invoice
Yet the claim was REJECTED by an automated AI system.
Reason for rejection:
“Attached documents do not support delivery – DATES NOT INDICATED ON THE INVOICE.”
The money was simply lost to the hospital.
The Critical Questions
Let us pause and ask the fundamental questions:
Was the patient treated?
Yes.
Did the patient receive quality care?
Yes.
Was the claim submitted properly with supporting documents?
Yes. Was there an error?
Yes — a clerical omission of a date on the invoice.
Was there fraud?
Absolutely not.

Insurance Principles: Admissible vs Inadmissible Claims
In any functional insurance system, claims fall into two categories after adjudication:
1. Inadmissible Claims
These are claims for services not covered by the insurance policy, such as excluded procedures.
2. Admissible Claims
These are claims for covered services, supported by clinical documentation.
Admissible claims may still contain clerical errors.
In standard insurance practice worldwide, such claims are:
– Returned to the provider for clarification
– Corrected
– Resubmitted and paid
Globally, more than 90% of such corrected claims are eventually reimbursed.
The SHA System: A Dangerous Departure from Insurance Norms
Under the current SHA system:
In our real life case there was no resubmission pathway for rejected claims.
Instead:
– Claims are rejected automatically by AI algorithms.
– There is no opportunity for correction or resubmission.
– Rejected claims are escalated to the Ministry of Health as suspected fraud.
This creates a perverse and deeply unfair system where:
– Clerical errors are labelled as fraud
– Hospitals lose legitimate revenue
– Healthcare workers are publicly portrayed as criminals

Evidence from Kigumo Sub-County Hospital
An internal analysis of claims from Kigumo Sub-County Hospital revealed:
KES 10 million worth of claims analysed
8.8% rejected purely on clerical errors
This translates to:
KES 880,000 lost due to correctable administrative mistakes.
These were not fraudulent claims.
They were valid medical services delivered to Kenyan citizens.
If this pattern is replicated nationally across:
– County hospitals
– Mission hospitals
– Private facilities
Then billions of shillings in legitimate healthcare claims are likely being lost annually.
An Additional System Failure: System Downtime
Rejected claims also occur when:
– The SHA system goes offline
– Documentation cannot be uploaded properly
– Claims are partially submitted
Providers then face automatic rejection without recourse.

The Hidden Consequences
This policy failure has cascading consequences across the healthcare system:
1. Hospitals Lose Revenue
Hospitals operate on thin margins.
Rejected legitimate claims directly threaten:
– Staff salaries
– Medicine procurement
– Equipment maintenance
2. Suppliers Are Not Paid
At the Kenya Healthcare Federation (KHF) meeting, suppliers raised a serious concern:
When hospitals are not reimbursed by SHA, suppliers are not paid either.
The entire healthcare supply chain begins to collapse.
3. Providers Are Branded Fraudulent
– Healthcare providers who deliver genuine care are publicly accused of fraud due to clerical errors.
– This destroys trust between government and healthcare providers.
4. Hospitals Are Quietly Withdrawing from SHA
Many private hospitals are already cutting their losses and refusing SHA patients.
SHA has responded by introducing “green labels” for compliant facilities, but this does not address the fundamental financial risk providers face.

The Ethical Paradox
– The citizen pays for SHA.
– In reality, SHA deductions are compulsory and made before salaries reach citizens’ pockets.
– Yet when SHA fails to pay providers, the citizen is shielded from this failure.
The result:
– The patient believes SHA is working.
– The politician claims success.
– The hospital quietly absorbs the loss.
Health providers have effectively become involuntary philanthropists, delivering healthcare and financing it when the insurer refuses to pay.
The Unanswered Question
If legitimate claims are rejected and never paid: Where does the money go? This question deserves full public and parliamentary scrutiny.

Policy Recommendations
To restore integrity to the Social Health Authority system, the following reforms are urgent:
1. Introduce a Claim Correction Window
All rejected claims must have a 30–60 day correction and resubmission period.
2. Separate Clerical Errors from Fraud
Clerical errors must never be categorised as fraud.
Fraud investigations should require clinical audit and intent assessment.
3. Establish an Independent Claims Appeals Tribunal
Providers must have access to independent adjudication when claims are rejected.
4. Audit the AI Claims Rejection System
The algorithm currently rejecting claims must undergo independent audit for fairness and transparency.
5. Publish National Rejection Data
SHA should publish:
– Rejection rates
– Reasons for rejection
– Total value of rejected claims
Transparency will build public trust.

A Call to Action
– Kenya’s healthcare system cannot survive if legitimate claims are systematically rejected and labelled as fraud.
– Healthcare providers are not adversaries of the state. They are partners in delivering universal health coverage.
– A system that punishes hospitals for clerical errors while withholding payment for real medical care is not insurance.
It is financial extraction from the healthcare system.
Our Position
– We reject the rejection of valid claims.
– We call upon the Ministry of Health, Parliament, and the Social Health Authority to urgently reform the claims adjudication system before irreversible damage is done to Kenya’s healthcare system.

Dr Simon Kigondu is the President of Kenya Medical Association