China has put in place the basic medical insurance network covering the entire population, the number and frequency of people who seek medical service increases. However, the problems in the supervision of medical insurance funds are also obvious, especially after the fraud incidents of medical institutions in Taihe County, Anhui Province, which caused much concern on the supervision of medical insurance funds. This paper mainly discusses how to solve the problem of medical insurance fund supervision in primary medical institutions, and introduces the experience of Zongyang County in strengthening the supervision of medical insurance funds from the aspects of establishing a medical insurance management system, and improving the medical insurance fund supervision system as well as the fund supervision and restraint mechanism.