AI system flaws push SHA into chaos, MPs say in explosive report

National Assembly Health Committee chairperson Dr James Nyikal chairs sittings /HANDOUT

According to the report, the situation has caused financial paralysis in hospitals, leading to the denial of care to vulnerable patients seeking services under the Social Health Authority.

The report tabled in Parliament by the Health Committee reveals that SHA’s AI-driven claims processing system is rejecting some legitimate claims as fraudulent.

It has emerged that the system flags genuine admissions as fraudulent and operates without adequate human oversight.

“The increasing reliance on AI-driven claim processing and approvals without sufficient human oversight has led to unjust denials, causing significant financial strain on facilities,” the committee, chaired by Seme MP James Nyikal, said.

Besides the AI-driven hitches, the probe further established systemic issues, including network access issues and coding that delay authorisations.

“SHA's heavy reliance on automation without adequate human oversight results in frequent errors,” the MPs said.

The probe further established that patients admitted during system downtime were flagged by AI as fraudulent, putting hospitals at risk of nonpayment.

“Pre-authorisation processes are impractical, requiring all doctors to log in simultaneously,” the report states.

The committee reported frequent SHA system downtimes, occurring up to four times a month, disrupting hospital operations.

“Patients are often admitted physically but entered in the system later, creating audit and compliance issues,” the committee report states.

Biometric verification challenges were also highlighted, particularly for patients without national IDs or those with faint fingerprints.

The committee, which visited 11 hospitals across five counties, documented repeated cases where legitimate claims were flagged as ‘fraudulent’ by AI, even with complete patient records.

Facilities reported instances where claims were rejected due to minor errors, such as mismatched ID numbers, missing attachments, or data inconsistencies.

“We have instances of groundless rejection of claims and punitive rejection processes. Claims remain unprocessed for unreasonably long periods, with some remaining under surveillance without clear justification or timelines,” one of the hospitals reported.

For the government, as stated by Health CS Aden Duale, the system has saved taxpayers hundreds of millions of shillings that risked being lost to fraudulent claims.

The CS said investigations had uncovered irregular payments to the tune of Sh10.6 billion, crediting the same to new safeguards embedded within the system.

Recently, while pitching for AI during a Senate meeting, Duale said the AI and machine learning tools detect abnormal claim patterns, inflated billing, and duplicate submissions.

MPs, however, state that the system, without human oversight, is doing more harm than good.

They argue that in some cases, rejections were issued months after submission of claims, pushing hospitals out of the legal 90-day window for appeal or correction.

There were cases where doctors were locked out of approvals due to geo-fencing technology, which requires them to be within one kilometer of the facility to authorise treatment.

The report highlights that behind the technical failures are people being turned away from health facilities.

St Elizabeth's Swindon Hospital, one of the 11 the MPs visited, was listed with zero beds in the SHA system; hence, it cannot admit inpatients under the SHIF cover.

It emerged that beds were removed from the database of some facilities, a situation MPs want corrected in 60 days.

Teenage mothers without IDs cannot register in the system, denying them and their newborns care.

There is also inconsistent coverage for prisoners, indigent persons, and patients with chronic diseases.

Because of the AI rejections and delayed approvals, hospitals are starved of funds.

The 11 sampled hospitals had debts exceeding Sh2.1 billion, including unpaid SHA claims and inherited NHIF arrears.

MPs found that some facilities have received as little as 51 per cent of the claims they submitted.

St Mary’s Hospital Mumias suspended operations after staff went unpaid for over three months.

Nyeri county hospital lost Sh16 million after the SHA system erroneously paid another facility.

The committee has called for an immediate overhaul of SHA’s digital governance system.

It wants human verification for all AI-flagged claims within 45 days, and geo-referencing restrictions that delay emergency approvals removed.

The report paints a health system in crisis that goes beyond technological hitches.

The committee says there is poor coordination between SHA, the digital health agency and medical regulators. It also pointed out the absence of ambulance and referral funding.

MPs also took issue with the benefits package that doesn’t cover ICU stays beyond 12 days or multiple fractures in one incident.

They cited lack of transparency in SHA payment systems as reimbursements are often issued in lump sum.

SHA also operates without a claims management office, leading to inconsistencies in use of funds, with no clear path for handling disputes.

MPs thus want the National Treasury to allocate Sh10 billion to settle all verified NHIF arrears to ease the financial strain on hospitals.

The committee has also recommended that SHA CEO Mercy Mwangangi enforce a 90-day claims settlement rule.

"Rejected claims shall include clear justification and allow for resubmission through the digital portal,” MP said, directing the CEO to submit a compliance report to Parliament by March.

The lawmakers further want all pending SHA reimbursements settled immediately to prevent service disruptions.

They want an audit of errors in the digital system including bed capacity and facility names.

“This will prevent wrongful claim rejections and misdirected payments.”

The committee has further recommended a review of the benefit package and tariffs to remove existing ICU limits.

They want the cover extended to high dependency units, neonatal ICUs and increase ICU reimbursement to Sh44,000 from Sh28,000.

MPs also want the Health ministry to establish a national transplant programme for kidneys, bone marrow, and other critical organs.

INSTANT ANALYSIS

MPs noted contradictions between the actual cost of care and SHA reimbursement rates, with some packages failing to meet the true cost of care (Sh30,000 for caesarean deliveries, 12-day ICU limits, laboratory tests are limited to five tests for outpatients, and restricted outpatient benefits at level five facilities). They hold that these benefit packages and tariffs undermine comprehensive and quality service delivery, discouraging providers from offering specialised care.