The National Hospital Insurance Fund (NHIF) Chief Executive Officer Geoffrey Mwangi and finance director Wilbert Kurgat were on Friday evening arrested by detectives from the Directorate of Criminal Investigations (DCI).
The two were summoned to the DCI headquarters and arrested shortly after their arrival.
The two and other senior NHIF officials have been linked to a Ksh400 million saga.
The sum was paid out for a medical scheme for civil servants, police and prison officers to two bidders against an order by the Public Procurement Administrative Review Board.
Britam Life Assurance Company (K) Ltd and Pioneer Assurance Company Ltd were awarded the tender, despite being the highest bidders.