'Cooperated with them to cheat': Mental hospitals exposed for using healthy people in insurance scam

Mental hospitals face backlash over fake patient insurance scam. (Image credit: Reuters)

• Psychiatric hospitals in China accused of insurance fraud
• Healthy people registered as patients to claim insurance funds
• Authorities in Xiangyang and Yichang have launched investigations

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In central China, several psychiatric hospitals have been accused of a scam for registering healthy people to defraud public medical insurance. A Beijing News investigation revealed that many patients at a privately-run psychiatric institution in Xiangyang, Hubei, show no abnormal behaviour and receive minimal treatment.

According to the report, healthy individuals stayed there because they were offered “free hospitalisation, free living costs.”

In China, patients usually pay a portion of medical expenses, with public insurance covering the rest.

The report claimed that patients are exploited as cash cows, with hospitals using their data and inventing treatments to claim insurance funds. When the reporter posed as a relative of a patient and checked with over 10 psychiatric centres, all of them told him that they would not charge the patient anything and that he was only required to pay a small amount for living costs.

According to the investigation, when the reporter pretended to be a patient's relative, all 100-plus psychiatric hospitals he contacted offered free treatment, asking for a normal living cost.

In early December, the reporter joined Xiangyang Hongan Psychiatric Hospital as a nurse. Opened last summer, the facility accommodates about 50 patients.

A senior nurse told him that most patients have no symptoms.

The reporter found that a 90-day inpatient stay at the hospital costs 12,426 yuan (US$1,800), with 500 yuan (US$70) covering medication and more than 6,000 yuan (US$900) for multiple treatments.

However, the patient told the reporter that he only took the medicine and had never received the listed treatments.

A doctor at the hospital told the reporter that medical equipment is limited. Many psychiatric institutions in Xiangyang reportedly claim to the medical insurance authority that they charge patients 130 yuan (US$20) per day for treatments.

Hospitals in Xiangyang and nearby Yichang reportedly paid staff 400–1,000 yuan (US$60–145) per recruited patient, while patients faced abuse, phones confiscated, and limited family contact.

On February 3, the health authorities in both Xiangyang and Yichang confirmed to the media that an investigation was underway.