A staff member explains medical insurance policies to a resident at a hospital in Sanming, Fujian Province, Nov. 18, 2020. [Photo/Xinhua]

China's National Healthcare Security Administration (NHSA) announced on Thursday that it will roll out stricter regulation of medical insurance funds through a nationwide implementation of drug traceability codes this year.

The initiative aims to combat fraudulent activities such as the resale and substitution of insured medications, as well as the misuse of medical insurance cards and counterfeit prescriptions, the NHSA said in a statement.

The drug traceability code, described as a "unique electronic ID" for each medication, will be leveraged to build large-scale data models to enhance regulatory oversight. The NHSA will use this data to identify and crack down on violations, strengthening enforcement actions against illegal activities, the statement said.

In April 2024, the NHSA launched a nationwide pilot program for the collection and use of traceability codes. In November 2024, the NHSA publicly questioned 46 designated medical institutions about duplicate claims associated with these codes, marking the first step toward regulating medical insurance funds through traceability technology.

The NHSA has held two rounds of discussions with over 100 pharmaceutical companies to guide self-inspection, address potential violations, and clarify regulations. Local health authorities have also organized similar outreach activities.

The NHSA urged all medical institutions to adhere strictly to regulations, conduct self-checks, and report any violations to local authorities, the statement said.

Institutions are expected to follow guidelines such as avoiding "empty billing," ensuring ethical procurement practices, and refraining from dealing in illegally sourced drugs, according to the statement.