Private Hospitals will continue offering services to patients using the National Hospital Insurance Fund (NHIF) cover until March 31, 2021.
The decision was reached after a temporary deal between the Kenya Association of Private Hospitals (KPHA) and Ministry of Health officials to allow room for talks.
Speaking after a closed-door meeting on Monday, Health CAS Mercy Mwangangi said the two parties had agreed that no services would be halted.
"People should not be worried. We are coming up with ways in which payment will be done," she said.
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KPHA chair Abdi Mohammed, who was also part of the meeting, said the parties would come up with a plan that would be beneficial for both of them.
"Both NHIF and private hospitals have to be sustainable. We will continue with the old contracts as we start the conversation of the new contracts," Abdi said.
NHIF Chairman Lewis Nguyai said contracts between the insurer and other providers would be signed after March and effected from July 1, 2022.
Private facilities had threatened to turn away patients to protest NHIF's treatment on claims' settlement.
KAPH secretary-general Timothy Olweny lamented that the insurer had revised downwards the amount of money it pays for claims lodged by private facilities.
He added that the insurer had slashed funds for surgical services and dialysis.
Head Renal society of Kenya John Gikonyo expressed relief following the agreement, observing that dialysis treatment was quite an expense in the country.
"We hope as negotiations continue, issues will be addressed so that kidney patients don't pay out of pocket," he stated.