From Nation, page 9, issue 337, Oct 15, 2007
Translated by Zuo Maohong
Original article: [Chinese]
Two of Guangzhou's top hospitals-- The Sun Yat-sen University 2nd Hospital and its branch in Ruibao—have been suspended from the local health insurance system for forging medical histories and improperly handling patients in order to commit insurance fraud.
The above two hospitals are the first of their kind being suspended from both outpatient and inpatient medical insurance services since the implementation of medical insurance system in Guangzhou.
A professor with the University's School of Medicine who wishes to remain anonymous tells the EO that the case shows that insurance fraud has become severe enough to have infiltrated top-ranking hospitals. Some data suggests that 30 to 40 percent of hospital funds are involved in insurance fraud.
The Craft of Insurance Fraud
One of the earliest western medicine hospitals in China, the Sun Yat-sen University 2nd Hospital was recognized as "One of the 100 Civilized Hospitals" several times during the past several years.
But according to a source at the Guanzhou Insurance Center who wishes to remain anonymous, the Guangzhou labor department launched a dragnet investigating 800 medical insurance institutions from April to May this year, after which the two hospitals were discovered to have been involved in insurance fraud and forced to withdraw from the local medical insurance system for three months.
Despite the labor department's description of such fraud as "exceptional behavior of the minority", the professor with Guangzhou Medical College disagrees, saying that the situation has deteriorated. He adds that such fraud has become part of doing business for hospitals, since these so-called "hidden rules" of the game are easy to play, highly profitable, and mildly punished.
The EO's investigation revealed that exaggerating the number of hospital admissions is one major way hospitals conduct fraud, since the health insurance center foots bills based on this number.
The insurance center calculates the average costs for inpatients for each hospital. It divides the total number of inpatients who've stayed at participating hospitals for the previous two years by the total amount of income those hospitals have received from them and their insurers. By this methodology, the two hospitals respectively made 9,800 and 8,500 yuan per person per admission. Insured patients enjoy these deductibles every time they receive inpatient service from these hospitals.
A senior manager in the Guangdong labor and social security system who wishes to remain anonymous explains to the EO the main two ways the hospitals swindled insurers.
In one method, according medical insurance standards, an outpatient is only reimbursed for less than several hundred yuan a month, which dries up fast if they have sought even a few simple treatments, with follow up fees paid by them entirely. On the contrary, an inpatient only needs to pay 600 to 800 yuan, and the health insurance center is responsible for most of the follow up fees. Hospitals thus push to move outpatients to inpatient care in order to drive up revenues.
Beyond this, deductibles for treatments of certain diseases are fixed; for example, an appendicitis patient can be reimbursed for 1,500 yuan. Costs beyond this must be born by the hospital, but on the other hand they have the privilege to pocket the difference if the cost of treatment is lower than that. Thus, there is often an incentive for the hospital to divide one admission into two or even cases by discharging the patient when the fee reaches its ceiling and then admitting the patient anew. This allows for income at two or more factors higher than would otherwise be attainable for that patient.
The manager says that there are many other methods, such as excessive usage of assistant medicine, repeated drug usage, misuse of antibiotics, and so on. In December of 2006, specialists from five top provincial hospitals examined patients' medical histories at four municipal hospitals in Foshan, Guangdong province, and all four were found to be employing the above-mentioned strategies.
The Conflict
Analysts point out that systemic problems with health insurance provide possibilities to insurance fraud.
Although there are as many as 408 medical insurance institutions in Guangzhou, most patients flock to the handful of large hospitals when ill, where insurance deductibles are much higher than at the smaller hospitals.
The concentration of medical treatment consumption at top hospitals directly leads to a waste of medical care resources, and increases pressure to commit insurance funds, says Cui Renquan, director of Guangzhou Municipal
Labor and Social Security Bureau.
In spite of the deficiencies of the current system, the Bureau says the current way to calculate the amount of deductibles is "scientific, rational, and in accordance with the reality of present-day Guangzhou", adding that "health insurance policy-making is highly complex," and goes in line with model that China has adopted, which he says is prevalent internationally.
But the source at the University says that although China's health insurance system has gleaned much from those in developed countries, China"s poor credit environment is not suitable for this foreign model. The professor likens this to oranges?that flourish in the south Huai River, but?wane and sour?when planted in the North.
According to a survey by Guangzhou Public Opinion Research Center, 53.9 percent of those insured consider the insurance policy as beneficial only when they are "slightly ill", 25 percent think it"s not beneficial at all whether or not they are "slightly or seriously ill", and only 15 percent regard it as "always beneficial".
Translated by Zuo Maohong
