A hospital in Wuxi, Jiangsu province, is suspected of illegally using medical insurance funds totaling nearly 22.3 million yuan ($3.16 million), according to investigation results released by the National Healthcare Security Administration on Tuesday.

About half the defrauded amount was illegally obtained by fabricating medical records, the administration said in a circular. By working with healthcare agencies and offering free health checkups, the hospital coaxed insured people into pretending to be hospitalized to generate documents seeking insurance funds for medical services that were never rendered.

The case first emerged around late last month after a doctor at the private hospital reported irregularities to the media, prompting central, provincial and Wuxi healthcare insurance administrations, as well as local police, to launch an investigation.

The circular said that police have detained 24 suspects, including the hospital's president and legal representative.

Investigations are underway into other suspected crimes such as collective perjury, the destruction of financial records and tampering with medical documents and data deletion.

Wuxi has terminated its medical insurance service agreement with the hospital and has initiated procedures to hand out administrative penalties.

According to the circular, senior hospital managers colluded with medical insurance department workers, doctors, nurses and an employee at a local cancer rehabilitation association to forge medical records.

"Their counterfeiting of medical records involved a chain of comprehensive and mature steps," the circular said.

For instance, a physician would come up with a fake hospitalization record tailored to a patient's health condition, and an ultrasound technician would copy or capture corresponding images from a hospital database storing the examination results of real patients.

Each entry of a falsified hospitalized record would generate between 5,000 to 8,000 yuan of ill-gotten insurance funds, and all people involved would split the gains.

The hospital is also accused of obstructing investigations into illegal activities such as collective collusion, as well as attempting to destroy medical records and delete data.

The National Healthcare Security Administration said that it will guide Jiangsu authorities to examine 100 insurance-designated medical institutions in Wuxi while launching a national campaign to crack down on medical insurance fraud.