In a recent case in Datong City, Shanxi Province, the director of a private hospital, Ai Mouzhong, and the hospital management personnel collectively defrauded over 9.7 million yuan of national medical insurance funds through fabricating hospitalizations, forging medical records, and inflating drug costs. Ai Mouzhong was recently sentenced to 13 years and 6 months imprisonment in the second trial.
It was alleged that in September 2016, Ai Mouzhong established a hospital limited company in Datong City and served as the legal representative. In early 2018, the hospital was approved to become a designated medical insurance hospital. Subsequently, Ai Mouzhong repeatedly organized hospital management personnel to devise fraudulent schemes, extensively embezzling medical insurance funds through falsifying medical procedures. By the end of 2020, the hospital involved had falsely reported an amount exceeding 9.7 million yuan.
The main tactics employed by the hospital to commit insurance fraud were as follows:
1. Falsely inflating hospitalization numbers by recruiting individuals to “occupy beds”. Both internal hospital staff and external “marketing teams” were instructed to recruit individuals from surrounding counties under the guise of hospitalization to facilitate medical insurance procedures and receive referral fees. Some employees and their family members were also required to “hospitalize” to artificially inflate medical visits.
2. Creating fictitious complete hospitalization processes with empty beds. Some recruited patients did not actually stay in the hospital; they only needed to leave their medical insurance cards at the hospital. The hospital would then fabricate false medical records, examination reports, and medication records to create an illusion of “hospitalization treatment” in order to extract medical insurance funds.
3. Overcharging for minor illnesses to reach the insurance reimbursement limit. For minor patients, the hospital artificially increased hospitalization costs by modifying medical records, extending hospital stays, falsely prescribing expensive medicines and therapy items, aiming to maximize the reimbursement to the coverage limit.
4. Financial fraud by falsely reporting drug costs and expenses. The reported drug usage by the hospital significantly differed from actual procurement amounts. An audit revealed that traditional Chinese medicine with a purchase price of only 7,700 yuan was falsely reported for over 400,000 yuan. Some drugs were also subject to “duplicate entries”, and price differentials were exploited through invoicing at a higher rate and settling purchases at a lower rate.
Additionally, the involved hospital tampered with drug purchase prices. According to testimony in the court verdict: “Most drugs have two prices: the price stipulated by the national medical insurance and the actual transaction price negotiated with pharmaceutical companies.”
The hospital was found to have a tightly coordinated internal division of labor, from marketing personnel attracting patients, to department medical staff fabricating data, and then to the medical insurance office uploading false information, establishing a complete chain of insurance fraud that seriously jeopardized the security of the medical insurance fund and disrupted the operation of the medical insurance system.
Following the second trial, Ai Mouzhong was ultimately sentenced to 13 years and 6 months in prison for committing fraud. The other defendants received prison terms ranging from 4 to 11 years for their involvement in the fraudulent activities.
Medical insurance funds are crucial for the Chinese people’s healthcare expenses, yet cases of individuals and hospitals looting medical insurance funds in China are rampant.
Just this year alone, seven cases of individual fraudulent insurance fraud have been officially disclosed. These cases include Li Mou from Shenzhen, Guangdong Province, who engaged in medical imposture and trafficking of medical insurance drugs for fraud; Yu couple, drug dealers from Beijing, who sold medical insurance drugs for fraud; Qiu Mou and Ke Mou from Xiaogan City, Hubei Province, who engaged in fraud by exploiting outpatient special disease treatment to sell medical insurance drugs; Hu from Shanghai, suspected of selling medical insurance drugs fraudulently; Tan Mou from Karamay City, Xinjiang Uyghur Autonomous Region, who issued false invoices for fraud; Gao Mou from Baicheng City, Jilin Province, who fraudulently reported third-party medical expenses paid to the medical insurance fund; and Zhang Mou from Tianjin, who engaged in medical imposture for insurance fraud.