The National Hospital Insurance Fund (NHIF) is probing 80 healthcare facilities for alleged fraud, with investigators estimating up to Sh10 billion may have been lost through inflated billing and fictitious claims. The fund’s manager for Benefits and Contracting revealed hospitals routinely exploit insurance systems by inflating procedure classifications, such as billing a simple wound cleaning as a complex tendon repair. "We’ve seen cases where a hospital admitted all 10 staff members as patients to generate revenue," the official said.
Another tactic involves misclassifying minor procedures as major surgeries. For example, a laparotomy—a surgical incision to access the appendix—is often billed alongside an appendectomy, even though the latter alone suffices. "A patient’s record once showed a leg amputation, yet they were walking unaided," said Julia Ouko, NHIF’s principal Health Contracting officer. Patient impersonation, where individuals with similar names share insurance cards, also contributes to fraudulent payouts.
Financial data shows NHIF payouts for major surgeries rose from Sh1.7 billion in 2016/2017 to Sh5.6 billion in 2017/18, while minor procedures increased from Sh269.9 million to Sh667 million during the same period. Although the fund has not disclosed exact figures for fraudulent claims, the Directorate of Criminal Investigation is probing allegations of Sh10 billion in losses linked to collusion between hospitals and NHIF staff.
"The expansion of benefit packages—from four in 2015 to 13 today, including Edu Afya for students—has coincided with a surge in suspicious claims," said an NHIF official. The fund has suspended seven facilities over fraud allegations, but these decisions are under judicial review. Investigations continue into whether procedures listed on bills were actually performed and if minor surgeries were misrepresented as major ones.
