Insurance fraud by psychiatric hospitals under probe

Authorities in Central China's Hubei province are investigating several private psychiatric hospitals over allegations they recruited patients without legitimate medical needs to siphon money from the nation's medical insurance system.

The hospitals are accused of luring patients — including the elderly — with promises of free long-term care, then systematically billing public insurance funds for treatments that were not medically necessary or never performed.

A joint task force has been established to conduct an in-depth investigation, according to a statement released on Wednesday.

The task force includes the provincial commission for discipline inspection, the Health Commission, the Department of Public Security, and the Healthcare Security Administration. Any verified violations will be "severely dealt with according to law and discipline," the statement said, adding that those responsible would be held accountable.

The provincial probe was prompted by an investigation published early on Tuesday by Beijing News, which alleged a widespread scheme involving private psychiatric hospitals in the cities of Xiangyang and Yichang.

According to the report, hospitals attracted patients with promises of "free" long-term hospitalization, then used their personal information to submit fraudulent insurance claims for fictitious treatments.

Hours after the report was published, authorities in Xiangyang and district-level authorities in Yichang announced they had launched comprehensive, citywide investigations.

The Beijing News report was said to be based on a monthslong undercover operation at two facilities: Hong'an Psychiatric Hospital in Xiangyang and Yiling Kangning Psychiatric Hospital in Yichang.

According to the investigation, hospitals aggressively recruited patients, including those with minor issues such as alcohol dependency, by offering hospitalization with no out-of-pocket costs. Hospital workers allegedly fabricated diagnoses and charged for high-cost treatments that were never administered.

In some cases, hospital employees were themselves listed on paper as hospitalized patients. Hospitals also allegedly used a "false discharge" system, cycling patients through paper-only discharges and readmissions to avoid triggering insurance audits for long stays.

"The more inpatients and the longer they stay, the higher the hospital's revenue," the report said, describing patients as "cash cows".

The National Healthcare Security Administration ordered a nationwide crackdown on Wednesday on the fraudulent use of medical insurance funds at psychiatric institutions.

Provincial healthcare authorities have been mandated to convene meetings with the heads of every psychiatric hospital — including departments within general hospitals — by the end of this week.

The administration requires all such institutions to immediately launch self-inspections. Institutions must submit written self-review reports and refund any illicitly obtained funds by March 15.

The NHSA announced that psychiatric institutions will be a key target for unannounced inspections this year. Facilities found guilty of serious violations or failing to adequately conduct self-correction will face severe penalties, including criminal investigation.