National Healthcare Security Administration interprets new regulations on medical insurance fund supervision: drawing a "red line" against insurance fraud

Health insurance funds are the people’s “medical treatment money” and “life-saving money.” Safeguarding the safety of health insurance funds is of great significance. The Implementation Rules for the Measures on Supervision and Administration of the Use of the Health Insurance Fund, released by the National Healthcare Security Administration, will take effect on April 1, further detailing the “red lines” for fund supervision.

Why issue the implementing rules? What do the rules cover? On March 31, the National Healthcare Security Administration held a press conference to explain the rules and address public concerns.

Improving the level of fine-grained supervision of the fund

“Over the past five years, healthcare security departments at all levels have recovered about RMB 120 billion in health insurance funds, and the work of fund supervision has achieved significant results.” Huang Huabo, Deputy Director of the National Healthcare Security Administration, said. At the same time, reforms to health insurance payment methods and the advancement of the long-term care insurance system have also brought new regulatory issues, and problems and difficulties faced in law-enforcement practice for health insurance fund supervision also need to be addressed.

The implementing rules to be implemented this time consist of 5 chapters and 46 articles. They provide more detailed provisions on aspects including fund use, supervision and administration, and legal responsibilities. This is a further improvement to the Measures on Supervision and Administration of the Use of the Health Insurance Fund, providing a more operational legal basis for fund supervision.

For example, with regard to regulatory challenges that arise in health insurance payment method reform—such as high-code and fraudulent upcoding, splitting hospital stays, and shifting costs—the implementing rules specify the identification of fund losses, the identification of the timing of fund losses, and the calculation methods for fund losses.

Health insurance fund supervision involves multiple links, including handling agreements, administrative penalties, and criminal accountability. Huang Huabo said that, in response to “blockages” such as overlapping responsibilities and poor handoffs, the implementing rules clarify the boundaries of authority and responsibilities and the handoff procedures, improving the efficiency of health insurance fund supervision and the level of legalization.

In terms of penalties, the implementing rules adhere to a principle of balancing leniency and severity, eliminating the “one-size-fits-all” approach. They specify the standards for not imposing penalties in minor cases and the handling approach of exercising caution in punishing first-time violations. If an individual commits an offense for the first time, the harmful consequences are minor, and corrections are made promptly, administrative penalties may not be imposed.

Focus on cracking down on two major categories of fraud for insurance purposes

Gu Rong, Director of the Fund Supervision Division of the National Healthcare Security Administration, introduced that the implementing rules will focus on cracking down on problems of defrauding insurance using methods such as “transporting people from one vehicle to another,” “reducing or waiving fees,” and “giving away things like rice, noodles, and cooking oil with drug purchases,” as well as issues such as trafficking in drugs and illegal buying and selling of “returned drugs.”

The implementing rules clarify that designated medical and pharmaceutical institutions may be deemed to be committing fraud against health insurance if they, through methods such as persuasion, false advertising, illegal fee reductions, or providing additional goods or services, induce or guide others to receive treatment or purchase drugs under another person’s name or in a falsified manner.

For insured persons, if they knowingly participate in activities organized by others that involve the use of health insurance funds, and accept gifts of goods and reductions in fees or the provision of additional services, they may be punished for fraud against health insurance.

Regarding the chaos involving “returned drugs,” the implementing rules make clear definitions. For example, if insured persons resell drugs, medical consumables, medical service items, or other items that have already been paid for with health insurance funds, it may be determined as reselling drugs.

How are professionals who traffic in “returned drugs,” such as drug dealers, recognized as insurance-fraud offenders? Gu Rong said that, for individuals who, over the long term or on multiple occasions, purchase and sell basic medical insurance drugs from and to unspecified trading counterparts, it can be determined that the purpose is to defraud health insurance.

“When an insured person holds more than ten health insurance vouchers at the same time and goes to a designated medical or pharmaceutical institution to receive treatment and get prescriptions, and after the staff of the designated medical or pharmaceutical institution finds obvious abnormalities, they still do not verify identity information or act as a ‘helper,’ it can also be determined as fraud against health insurance.” Gu Rong said that drug traceability codes can serve as a basis for healthcare security departments to enforce the law and collect evidence.

In addition, the implementing rules further detail and clarify common circumstances in which individuals illegally or in violation of regulations use health insurance funds, including repeatedly receiving benefits, receiving benefits that belong to others, renting out one’s own health insurance vouchers to obtain unlawful gains, and fabricating facts to fraudulently obtain various health insurance benefits.

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Responsible editor: Shi Xiu zhen SF183