SHA hasn't paid healthcare centres Sh5.5b since February, say workers

Kenya's newly established Social Health Authority (SHA) is facing significant legal and operational challenges, with healthcare facilities alleging Sh5.5 billion in unpaid claims since February. This financial distress, a direct consequence of delayed reimbursements, is severely impacting service delivery, leading to drug shortages, unpaid staff, and disrupted patient care across public, private, and faith-based health facilities. The situation highlights critical issues in the transition from the National Hospital Insurance Fund (NHIF) to the SHA under the Social Health Insurance Act, 2023, and raises serious questions about the efficacy of the new healthcare financing framework, public finance management, and the legal recourse available to aggrieved providers. Legal professionals must navigate a complex landscape of statutory interpretation, administrative law, and potential constitutional challenges as the country strives for universal health coverage amidst these systemic hurdles.

The Kenyan healthcare sector is grappling with a burgeoning crisis as healthcare facilities across the nation report a staggering Sh5.5 billion in unpaid claims from the Social Health Authority (SHA) since February. This alleged non-payment, highlighted by healthcare workers, has precipitated a severe disruption in service delivery, manifesting as acute shortages of essential drugs and medical supplies, inability to pay staff, and the suspension of critical laboratory tests due to lack of reagents.

This development is not merely a financial dispute; it represents a significant impediment to Kenya's ambitious pursuit of Universal Health Coverage (UHC) and underscores the profound challenges inherent in the ongoing transition from the National Hospital Insurance Fund (NHIF) to the SHA. The financial instability threatens the operational viability of numerous health facilities, jeopardizing the constitutional right to the highest attainable standard of health for millions of Kenyans.

This article delves into the legal and regulatory framework governing healthcare financing in Kenya, analyzing the implications of these payment delays under the Social Health Insurance Act, 2023, and other pertinent statutes. It will explore the potential legal avenues available to healthcare providers and consider the broader ramifications for public finance management and the future of healthcare access in the country.

Kenya's healthcare financing landscape has undergone a significant transformation with the enactment of the Social Health Insurance Act, 2023 (SHIA), which commenced on November 22, 2023. This Act repealed the National Hospital Insurance Fund Act, 1998 (Cap 255), effectively replacing the NHIF with the Social Health Authority (SHA) as the primary body responsible for managing social health insurance. The SHIA aims to establish a comprehensive scheme for social health insurance, providing financial protection and equitable access to healthcare services, thereby expanding health insurance coverage to all Kenyans.

The SHA is mandated to manage three distinct funds: the Primary Healthcare Fund, the Social Health Insurance Fund (SHIF), and the Emergency, Chronic and Critical Illness Fund. Its core functions include registering beneficiaries, receiving contributions, enrolling and contracting healthcare providers, and crucially, making payments to these contracted facilities from the established funds. The transition, however, has been fraught with difficulties, including reported funding gaps, reimbursement delays, and infrastructural issues, leading to widespread confusion and distress among both patients and providers.

Beyond the SHIA, the Public Finance Management Act, 2012 (PFM Act), provides the overarching legal framework for the effective management of public finances by both national and county governments, emphasizing transparency and accountability. Additionally, the Health Act, 2017, establishes a unified health system, regulates healthcare services and providers, and outlines the government's responsibility to develop mechanisms for an integrated health insurance system and policies for universal health coverage. These legislative instruments collectively form the legal bedrock upon which Kenya's healthcare financing and service delivery are intended to operate.

The alleged Sh5.5 billion in unpaid claims by the Social Health Authority represents a critical failure in the operationalization of the Social Health Insurance Act, 2023, and has significant legal implications for all stakeholders. Under the SHIA, empanelled healthcare providers are required to lodge claims with the Claims Management Office for services rendered to SHIF beneficiaries, after which the SHA is obligated to pay these claims based on prescribed tariffs. The reported delays, extending since February, suggest a potential breach of these statutory obligations and contractual terms between the SHA and healthcare facilities.

Healthcare providers facing non-payment may explore several legal avenues. Firstly, they could pursue claims for breach of contract, as their engagement with SHA is predicated on contractual agreements for service provision and reimbursement. The terms of these contracts, including payment timelines and dispute resolution mechanisms, would be central to such actions. Secondly, judicial review could be sought against the SHA for administrative inaction or failure to perform its statutory duties, particularly its mandate to consider and make payments to contracted providers. Arguments could be made under Article 47 of the Constitution of Kenya, 2010, which guarantees the right to fair administrative action, and Article 35, which ensures access to information, especially regarding the status of claims and payment processes.

Furthermore, the issue of unpaid claims implicates the broader principles of public finance management as enshrined in the Public Finance Management Act, 2012. This Act mandates prudent and transparent management of public funds. Delays in payment by a public entity like the SHA could be seen as a failure to adhere to principles of fiscal responsibility and efficient resource utilization. The Act empowers the Cabinet Secretary for Finance to issue guidelines to national government entities regarding financial matters and monitoring their implementation. The Controller of Budget also plays a crucial oversight role in ensuring that government spending is lawful and adheres to budgetary allocations.

The transition from NHIF to SHA has been particularly challenging, with reports indicating that legacy NHIF debts, estimated to be in the tens of billions, have not been fully resolved, further exacerbating the financial strain on providers. This overlap of old and new liabilities creates a complex legal quagmire, as providers may have claims against both the defunct NHIF and the new SHA. The SHIA establishes a Dispute Resolution Tribunal, which is intended to hear and determine disputes, complaints, or appeals arising under the Act. However, the effectiveness and efficiency of this tribunal in resolving high-value, systemic payment disputes remain to be seen, especially given the scale of the current arrears. Recent legal challenges have also questioned the legality of SHA's operations and financing structures, arguing that some functions are being undertaken without proper parliamentary authority, which could further complicate the payment landscape.

The ongoing crisis of unpaid claims by the Social Health Authority poses a significant threat to the stability of Kenya's healthcare system and its journey towards Universal Health Coverage. For legal practitioners, this situation presents a complex array of potential actions, ranging from contractual disputes and administrative law challenges to broader constitutional petitions. Attorneys representing healthcare providers must meticulously review the terms of their clients' contracts with the SHA, assess the nature of outstanding claims (whether originating from NHIF or SHA), and strategically determine the most effective legal recourse, whether through the established Dispute Resolution Tribunal or the High Court.

Moving forward, it is imperative for all stakeholders to closely monitor the operationalization of the Social Health Insurance Act, 2023, and any subsequent regulations or amendments. The resolution of legacy NHIF debts and the establishment of transparent, efficient, and timely payment mechanisms by the SHA are critical to restoring confidence and ensuring the sustainability of healthcare services. The government, through the Ministry of Health and the National Treasury, must demonstrate a clear commitment to fiscal discipline and accountability under the Public Finance Management Act, 2012, to prevent further deterioration of healthcare access and uphold the constitutional right to health for all Kenyans. The legal community has a vital role to play in advocating for robust governance and ensuring that the promise of accessible healthcare is not undermined by systemic inefficiencies.