'Cooperated with them to cheat': Psychiatric hospitals in China admitted healthy people to siphon insurance funds

One ‘healthy’ patient who stayed for 90 days was billed 12,426 yuan (around 1.6 lakh) for treatments that the patient claimed never took place.

Several privately run psychiatric hospitals in central China have come under scrutiny after an undercover investigation alleged that healthy individuals were being admitted and used to fraudulently claim money from the country’s public medical insurance system.

In China, patients pay only a portion of their medical bills, while public insurance covers the remaining cost. (Representative image/Unsplash)

Citing the undercover report by the Beijing News, the South China Morning Post reported that many patients housed in psychiatric institutions in Xiangyang, Hubei province, showed little or no signs of mental illness and received minimal treatment despite being registered as long-term patients. The report said healthy individuals were drawn in with promises of “free hospitalisation” and minimal living costs.

Notably, in China, patients pay only a portion of their medical bills, while public insurance covers the remaining cost. Once admitted, hospitals allegedly used patients’ personal information to fabricate treatment records and claim reimbursements from insurance authorities.

What did investigators find?

During the investigation, a reporter posing as a patient’s relative contacted more than 10 facilities in Xiangyang and found that all offered free or low-cost stays while encouraging long-term admission.

“What we hope is that your relative can live here for a long period of time,” a hospital staffer reportedly told the undercover journalist.

The reporter later joined Xiangyang Hongan Psychiatric Hospital as a nurse, where he observed that many patients had either very mild symptoms or none at all. Some elderly patients treated the institution as a low-cost nursing home.

A nurse quoted in the report admitted he was himself listed as a hospitalised patient despite working normally. “I do not need to take any medicine or receive any treatment,” he said, adding, “I cooperated with them to cheat the insurance authority.”

Billing records reviewed during the investigation allegedly showed inflated treatment charges. One patient who stayed for 90 days was billed 12,426 yuan, including more than 6,000 yuan for treatments that the patient claimed never took place.

Alleged misconduct inside hospitals

The report also alleged misconduct, including physical abuse of patients, confiscation of mobile phones and restrictions on contact with families. Staff members were reportedly paid commissions ranging from 400 to 1,000 yuan for recruiting new patients, while hospitals received fixed daily reimbursement fees from insurance authorities.

Medical reform expert Xu Yucai told the Beijing News that psychiatric hospitals were able to exploit the system partly due to their closed-door operations and the vulnerability of patients, who may struggle to understand or challenge treatment claims. Another reason, he said, is that patients lack self-care and the ability to understand what is going on.

“They cannot properly evaluate whether they have received any medical treatment or not,” he said.

Health authorities in Xiangyang and nearby Yichang said that investigations into the allegations had been launched.