Due to issues such as swapping pharmaceuticals and excessive medication, there have been violations in the use of medical insurance funds by Yixintang, resulting in the responsible persons being interviewed by the National Medical Insurance Bureau's Fund Supervision Department. Yixintang has indicated that they will submit a rectification report to the National Medical Insurance Bureau's Fund Management Department before June 30th this year. On the same day, the company announced that its controlling shareholder and director, Ruan Hongxian, proposed the company to repurchase shares for 80-150 million yuan.
According to Caixin Global on June 3rd (Huang Lu reporting), due to irregularities such as the substitution of drugs and excessive prescription and medication, among other issues of violating the use of medical insurance funds, the responsible persons of Yixintang (002727.SZ) have been recently interviewed by the National Healthcare Security Administration (NHSA) Fund Supervisory Department. Today, Yixintang's stock price dropped by 8.53% at the opening and it closed with a decrease of 8.01%.
According to the National Healthcare Security Administration (NHSA) WeChat public account on June 2nd, on May 24th, the Fund Supervisory Department of the NHSA interviewed the relevant responsible parties of Yixintang. The interview pointed out that in the work of fund supervision, the healthcare insurance department discovered problems such as drug substitution, excessive prescription and medication, medical insurance settlement on behalf of suspended target retail stores, inconsistent records of drug purchase and sales, and improper sales of prescribed medicines in some Yixintang stores, resulting in losses to the medical insurance fund.
The above issues violated the relevant provisions in Article 38, Article 39, and Article 40 of the "Regulations for the Supervision and Administration of the Use of Medical Insurance Funds" and the content of the local medical insurance service agreement. Relevant stores have been punished by the local medical insurance department for suspending payments or recovering medical insurance funds, paying damages or administrative fines for breach of contract, and lifting the medical insurance service agreement.
On May 24th, Yixintang's closing price was 22.02 yuan/share. As of the close on June 3rd, its stock price had fallen to 18.98 yuan/share, a decline of 13.8% during that period. Tonight, Yixintang issued a statement, which seems to appear a bit "late to the party." It has been 10 days since the company was interviewed by the NHSA Fund Supervisory Department.
On the evening of June 3rd, Yixintang issued a statement that the company was recently interviewed by the NHSA to standardize the use of medical insurance funds for its retail drugstores and that the NHSA had interviewed the company in accordance with the relevant provisions of the "Opinions on Strengthening the Standardized Management of Medical Insurance Fund Use" by the General Office of the State Council and the "Regulations for the Supervision and Administration of the Use of Medical Insurance Funds."
From the previous nationwide medical insurance fund supervision cases, some stores owned by the company had violated regulations when using medical insurance funds. Among them, the illegal swiping of medical insurance cards by a subsidiary of the company, Hainan Hongxiang Yixintang, in 2018, was a major violation. The matter was reported by the media on March 27, 2018, and the company cooperated with the local medical insurance department to complete the inspection and rectification. The others were general breaches of contract. During the medical insurance settlement, the medical insurance center suspended payments of medical insurance fees, imposed damages or refused payment of fees, and the company completed the relevant accounting processing in each year's financial report. This type of violation did not cause significant impact, so it was not disclosed separately.
Yixintang stated that, in conjunction with the requirements of the interview and the company's own need for standardized management, the company conducted self-inspection and self-correction, found problems, proactively rectified, standardized the operation behavior of its retail chain stores with significant improvement measures, and will submit a report on the rectification situation to the NHSA Fund Management Department before June 30, 2021.
The company also stated that, because of the NHSA’s interview, the company carried out self-examination and rectification in accordance with the "Regulations for the Supervision and Administration of the Use of Medical Insurance Funds," actively communicated with various local healthcare insurance bureaus, and conducted relevant work. However, the impact is uncertain.
Caixin Global reporters noted that in April 2024, the NHSA and other six departments jointly deployed a special campaign to crack down on illegal and irregular activities related to medical insurance funds. Practices such as excessive prescription and medication, beyond the scope of use and sale of medical insurance drugs, among others had already been listed as the focus of rectification.
"One professional insider said to Caixin Global, in 2018, CCTV's Economic Half Hour exposed some problems with stores under Yixintang. Such problems should serve as a warning, and they should not touch the “high-voltage line” of medical insurance funds. If pursuing interests were the main goal, letting regulation go lax would inevitably lead to bad consequences.
On the same day, Yixintang announced that its actual controller and chairman of the board, Ruan Hongxian, proposed that the company repurchase shares with 80-150 million yuan and use it for share cancellation or to purchase shares for employee shareholding plans or stock-based incentives when appropriate in the future.