As living standards continue to rise, so does the demand for healthcare. The aging population has led to a surge in healthcare fraud benefits and payments, creating a "scissors gap" between income and expenditure, burdening social finance and individuals, and hampering the pursuit of comprehensive health. However, another significant factor driving healthcare costs is medical insurance fraud. This involves deliberately providing false information or withholding facts when obligated to explain, leading medical insurance agencies to make erroneous decisions and misallocate funds based on false information.
These fraudulent activities undermine the core principles of "fairness" and "sustainability" within the social security system, redirecting medical resources and preventing their equitable distribution to those who desperately need them. Such practices not only negatively impact the overall medical system and economic growth,but also foster unfair competition, encourage malicious profit seeking, and disrupt market order. Furthermore, they directly compromise the stability and longevity of the medical insurance fund, thereby increasing the financial burden on the insurance system.
To bolster the stability and longevity of the medical insurance fund, the National Medical Security Administration, established in 2018, has joined forces with both administrative departments and insurance agencies to intensify inspections and audits. This concerted effort aims to safeguard the rational use and integrity of the fund. These endeavors have borne fruit, significantly enhancing medical security supervision, elevating standards, and affording insured individuals safer, more convenient, and efficient healthcare services.
However, medical services possess aunique nature, and misuse of medical insurance funds persists in China, exhibiting intricate fraud schemes, methods, and characteristics. The situation remains dire in terms of preventing and controlling fund security. According to the "2022 Statistical Express Report on the Development of Medical Security" released by the National Health Insurance Administration, a staggering 398,000 institutions were found in violation, leading to the handling of 39,253 insured individuals and the recovery of approximately 18.84 billion yuan in medical insurance funds[1]. Therefore, it is of utmost importance to refine the governance of medical insurance fraud to fortify the security of medical insurance funds.
The medical insurance fund, a vital safeguard for public health, is closely intertwined with the welfare of the people and the sustainability of the healthcare system. Given its significance, the Party Central Committee and the State Council have emphasized the need for rigorous supervision and management. This study delves into the intricate factors and critical paths leading to medical insurance fraud, leveraging empirical analysis of cases from the National Health Insurance Administration of China. Drawing on fraud triangle theory and existing literature, we propose an analytical framework to comprehend these frauds, and use fuzzy set qualitative comparative analysis to identify patterns and mechanisms underlying their occurrence.
1.1 Medicare fraud: Subjects and Causes
Medical insurance fraud primarily involves four key entities: designated pharmacies, designated medical institutions, patients or insured individuals, and the government department responsible for overseeing basic medical insurance (hereinafter referred to as the medical insurance authority). The fraud schemes are primarily categorized into single-entity and multi-entity frauds. Single-entity frauds refer to those perpetrated by a single actor without the active collaboration of other entities. Through a comprehensive review of the literature and case studies, it is evident that designated medical institutions occupy a pivotal position in fraud. Specifically, under the modern direct reporting platform for medical expenses, patients, insured individuals, and medical insurance authorities find it challenging to perpetrate fraud independently without the involvement of designated medical institutions. Consequently, medical insurance fraud has gradually shifted towards composite subject behavior [2].The governance approach towards medical insurance fraud has accordingly evolved, transitioning from a single-entity focused strategy to a more comprehensive, multi-entity approach.
In analyzing the causes of fraud, domestic research,primarily focuses on the payment mechanisms and management models of medical insurance, as well as the compensation and supervision frameworks for medical expenses. Jiang Xinwang and Huang Jinsong (2005) observed that the third-party payment model influences the cost consciousness of patients and doctors, leading to discordant behaviors among these stakeholders[3]. This often manifests in collusive behaviors aimed at defrauding insurance, which becomes a preferred course of action. He Wen and Shen Shuguang (2020) examined the moral hazards faced by medical service providers from the perspective of medical insurance payment[4]. They argued that different payment methods exert various impacts on the interests of service providers due to their inherent operational mechanisms and principles. Composite payment methods are seen as effective in mitigating these moral hazards, thus advocating for a mix of payment methods rather than relying solely on a single approach. Wu Haibo (2014) criticized the dual role of the government in managing and executing medical insurance funds, highlighting the resulting high pressure, low efficiency, and inadequate supervision under the current "official establishment, official management, and official supervision" model [5]. Finally, Fan et al. (2020) identified the core paths of hospital fraud, attributing them to individuals, organizations, systems, and policies through a rigorous process of literature coding, analysis, comparison, classification, and integration [6].The fraud methods in the special medical insurance sector have also undergone a transformation, evolving from explicit to increasingly covert forms[7].
1.2 Theoretical perspective: fraud triangle theory
American auditor W. Steve Albrecht introduced the "fraud triangle theory" to explain the genesis of fraud in commercial economic activities. This theory attributes fraud to three key factors: stress, opportunity, and self-rationalization
[8].Nowadays, the fraud triangle theory finds widespread application finds in auditing and the study of economic crime. Although fraud, defined as the intentional use of deception, lies, or other unethical means to secure improper or illegal benefits, differs from health insurance fraud in its manifestations, it essentially constitutes a breach of contract motivated by profit.
Similarly, Medicare fraud is a multifaceted issue resulting from a confluence of factors. These include unethical tactics employed by healthcare providers to maximize financial gains, dishonest behavior by insured individuals seeking additional healthcare benefits, and negligence or misconduct by insurance providers during the review and payment of medical expenses. The interaction of these factors ultimately leads to Medicare fraud. Therefore, in the quest to prevent and combat medical insurance fraud, we can draw insights from the fraud triangle theory to analyze its underlying causes and mechanisms, thereby implementing targeted measures to mitigate its occurrence.
Given the public welfare nature of medical insurance, it is imperative to delve into fraudulent behaviors by harnessing the fraud triangle theory and insurance contract theory. The insurance contract theory underscores that individuals are the ultimate arbiters of their own interests; however, information asymmetry and bounded rationality may skew their comprehension of insurance terms, potentially leading to erroneous behavioral decisions
[9]. Essentially, basic medical insurance serves as a security contract between the insured and the medical insurance agency,while also constituting a payment agreement between medical institutions and the insurance agency. This contractual framework underlies the mechanism of social mutual assistance. Nevertheless, numerous enrollees erroneously view their health insurance cards as personal property, exercising complete control over them. In the absence of a thorough understanding of Medicare policies and regulations, they may unwittingly commit fraudulent violations in pursuit of personal gain
[10].
1.3 Analytical Framework
Currently, the majority of research on insurance fraud in China focuses primarily on case studies, qualitative inductions, and theoretical analysis, neglecting the integration of theoretical frameworks with empirical evidence. Consequently, our comprehension of the multifaceted causes and pathways leading to insurance fraud remains limited, hampering our ability to grasp its underlying mechanisms and develop effective governance strategies from both theoretical and practical perspectives.
To address this gap, this study aims to qualitatively explore the primary factors driving medical insurance fraud in 31 representative provinces (autonomous regions and municipalities directly under the central government) in China. Drawing from the "fraud triangle" theory, we will delve into the intricate reasons and mechanisms underlying medical insurance fraud, providing valuable insights for enhancing the supervision of medical insurance funds and fraud governance.
By incorporating the insurance contract theory, we will delve into the causes of medical insurance fraud through the lens of three key dimensions: pressure (profit-seeking psychology), opportunity (imperfections in regulation and law), and self-rationalization (insufficient cognition). This integrated approach will enhance our understanding of medical insurance fraud, paving the way for more targeted and effective governance strategies.
(1)"Stress Factor"
The survival pressure imposed on designated institutions, coupled with individual economic considerations, serves as the internal impetus for fraudulent activities. Notably, the economic status of individuals significantly influences their capacity to bear medical expenses, thereby indirectly shaping their insurance behavior. As financial pressure mounts, individuals facing the burden of medical expenses are more likely to resort to fraud and other unethical means to cope with the survival pressure they encounter. At its core, the profit-seeking mindset is the direct catalyst for fraud, essentially a game played out over the economic interests of the medical insurance fund Some insured individuals or institutions strive to obtain additional services and financial benefits through fraudulent means, leading them to continually devise strategies to defraud the medical insurance fund
(2)"Opportunity Factor"
Opportunities for fraud arise from the external environment and conditions that facilitate unethical behavior. These primarily encompass shortcomings in system design, including loopholes, incomplete regulations, lags in establishing robust internal controls, and ambiguity in punishment measures.Regarding the regulatory framework of medical insurance funds, key issues are information asymmetry, legislative gaps, and inefficient enforcement[11]. These factors create an enabling environment for fraud, allowing perpetrators to evade oversight and sanctions to a considerable extent.
(3) "Self-Rationalizing Factor"
Fraud perpetrators' misinterpretations or ethical distortions regarding the nature of Medicare reimbursement can lead them to justify unethical behavior morally and alleviate feelings of guilt. Additionally, limited comprehension of the rights and obligations associated with medical insurance funds usage results in ambiguity among insured individuals regarding the absence of robust punishment mechanisms for fraud and the boundaries of their entitlements [12]. Consequently, despite a clear understanding of fraud's definition, some participants invoke distorted rationalizations such as the "waste if unused" mentality to justify their actions.
Drawing from the theory of cognitive dissonance, engaging in fraudulent behavior can evoke feelings of anxiety and unease within the perpetrator, ultimately provoking a moral self-condemnation and descent into self-sanction. Consequently, individuals strive to reconcile this internal conflict and attain a harmonious alignment between their inner selves and behavioral patterns. This reconciliation can be achieved by altering one's behaviour to align with personal values or by adjusting one's attitudes to conform with one's actions. In essence, the aim is to minimize cognitive dissonance and restore a sense of moral integrity.
The specific analytical framework is shown in Fig. 1.