Chinese Regulators Continue Enforcement Actions Against Medical Insurance Fraud

In recent years, fraud against China’s state-run medical insurance program has been one of the major focus areas for both criminal and administrative enforcement. Data published on August 5, 2025 by the Supreme People’s Court (最高人民法院) indicates that a total of 1,156 first-instance criminal cases relating to medical insurance fraud were adjudicated in 2024, a year-on-year increase of 131.2%.¹ This is nearly as many cases as were adjudicated in total (1,213) from 2021 to 2023.² On the administrative side, the National Healthcare Security Administration (NHSA, 国家医疗保障局), the government agency with primary responsibility for China’s state-run medical insurance program, disclosed earlier this year³ that 2,008 entities were verified to have engaged in medical insurance fraud in 2024. A total of US$3.9 billion (RMB 27.5 billion) of medical insurance funds were recovered in 2024 through these criminal and administrative enforcement actions, a 47.5% increase over 2023.⁴

This update will provide an overview of recent criminal and administrative enforcement actions targeting medical insurance fraud.

Criminal Enforcement

On August 5, 2025, the Supreme People’s Court of the People’s Republic of China released Model Cases on Strictly Punishing Fraud Crimes Against Medical Insurance Program in Accordance With the Law (最高人民法院发布人民法院依法严惩医保骗保犯罪典型案例). These model cases followed on the publication of model cases by the Supreme People’s Court and the Supreme People’s Procuratorate in March 2024, and further clarify the principles and guidance used by China’s procuratorates and courts when prosecuting and judging cases of criminal medical insurance fraud. For companies operating in China’s healthcare sector, these cases provide valuable insight into the views of Chinese regulators and courts.

We have prepared a summary of select cases highlighting common fact patterns in medical insurance fraud investigations:

Administrative Enforcement

Individuals and institutions engaged in medical insurance fraud may also be exposed to administrative liability, including fines, suspension of eligibility for medical insurance reimbursement, and revocation of professional qualifications. Administrative penalties are sometimes imposed in addition to criminal penalties.

On July 6 and July 26, 2025, respectively, the NHSA published 18 model cases relating to medical insurance fraud. These cases described misconduct by pharmacies, pharmacists, healthcare providers, and other individuals. Two of these cases are notable for implying that medical representatives were involved in insurance fraud by facilitating illegal reimbursement of medical claims:

1. A medical representative printed blank prescriptions and purchased falsified corporate seals for a hospital. The medical representative then worked with pharmacy personnel to use these falsified prescriptions to purchase pharmaceutical products at the discounted price available through medical insurance, without the involvement of patients.

2. A medical representative brought patients to a pharmacy and had them purchase prescription immunology medicine. After the patients purchased one dose of medication at the discounted price available through medical insurance, pharmacy personnel would then sell a second dose to the patients, again at the discounted price. However, pharmacy personnel would give the second dose of medication to the medical representative, who would reimburse the patient for the cost.

The NHSA did not disclose the administrative penalties imposed on these medical representatives, if any, but noted that issues identified in these cases had been referred to other regulatory authorities.

The fact patterns presented in these cases appear to align with the enforcement targets described in the Notice on Carrying Out Self-Examination and Self-Correction of Illegal Use of Medical Insurance Funds by Medical Insurance Designated Institutions in 2025 (Notice, 国家医疗保障局关于开展2025年定点医药机构违法违规使用医保基金自查自纠工作的通知), which was published by the NHSA in January as the basis for local regulators’ enforcement actions. In the Notice, the NHSA summarized typical patterns of misconduct found in medical insurance fraud, particularly in oncology, anesthesiology, and critical care matters. The Notice also analyzes issues found in retail pharmacy cases (including direct-to-consumer pharmacies), such as pharmacies colluding with medical representatives to fabricate prescriptions, and selling drugs in excess of patients’ actual needs.

Other Investigations

Recent news reports describe both continuing and potentially new areas of focus for regulators. Multiple ongoing enforcement actions appear to target current and former employees of both multinational and domestic manufacturers who may have promoted the sale of oncology and immunology products for off-label indications. Off-label promotion has the potential to result in funds from the state-run medical insurance program being used to pay for off-label treatment, in violation of the terms under which the medications are added to China’s National Reimbursement Drug List.⁵

Patient assistance programs (PAP) are a potentially new area of enforcement focus. An August 2025 news report discussed a court judgment which stated that a domestic manufacturer provided kickbacks to patients in return for the patients purchasing excessive quantities of drugs that were covered by state-run medical insurance. Other media reports indicated that this misconduct was likely related to a PAP run by a domestic manufacturer. This PAP was unusual in that it provided benefits to patients for a medication that had already entered the state-run insurance reimbursement system, meaning that patients could already purchase the drug at a discounted price. The theory of the enforcement action appeared to be that the benefits provided under the PAP were excessive and may have encouraged patients to purchase more medication than necessary, resulting in excessive use of public insurance funds.

Takeaways

Medical insurance fraud remained a top priority for Chinese regulators in 2025, including multiple investigations of employees from both domestic and multinational pharmaceutical companies. Companies may wish to review their training and compliance programs, particularly with respect to off-label promotion and interactions with retail pharmacies. PAPs for pharmaceuticals that have already been approved for reimbursement may be another area meriting additional scrutiny.

For questions on this or any other subject, please reach out to the authors or any of their colleagues in Arnold & Porter’s Life Sciences or White Collar Defense & Investigations practice group.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.