[Bottomless Jar 'Hanbang Hospital' Part 1] Zero Out-of-Pocket Costs... The Main Culprit of Over-Treatment in 'Hanbang'

Proliferation of Traditional Korean Medicine Hospitals Specializing in Traffic Accident Treatment
Medical Fees Increase 34% in One Year, Approaching 1 Trillion Won
Chuna Therapy Coverage Leads to Surge in Insurance Payments

[Editor's Note] The 31st confirmed case (female, 61 years old), presumed to have an important epidemiological link in the spread of the novel coronavirus infection (COVID-19) within the Shincheonji Church of Jesus, visited a church located in Nam-gu, Daegu four times before and after the onset of symptoms. Although she was hospitalized for treatment at a Korean medicine hospital due to a traffic accident on the 7th, it was confirmed that she frequently left the hospital to visit churches and hotels. This incident has brought to light the poor management of Korean medicine hospitals regarding 'malingering patients,' a long-standing headache for the insurance industry. Korean medicine hospitals have been cited as major culprits in worsening insurers' loss ratios due to excessive treatment, as hospitalization is easy and management is lax. Experts point out that if the management system of Korean medicine hospitals had functioned properly, the spread of COVID-19 could have been largely controlled. This article analyzes the issues of excessive treatment in Korean medicine hospitals and seeks solutions through this case.

[Asia Economy Reporter Oh Hyung-gil] "If you say you want to be treated at a Korean medicine hospital after a traffic accident, your out-of-pocket expense is zero."

Recently, Korean medicine hospitals specializing in traffic accident treatment have been springing up like mushrooms. Networks of Korean medicine clinics for traffic accident treatment and franchise Korean medicine hospitals have even appeared. They recommend treatment even to patients with minor traffic accidents, saying things like "Even a small impact can leave invisible damage to fragile joint areas," and "If not properly treated, long-term aftereffects of traffic accidents may occur."

Most of these hospitals aggressively attract patients by emphasizing that there is no out-of-pocket expense if automobile insurance is used. This leads to excessive treatment, increasing insurance payouts, which in turn is a major cause of premium hikes. The burden of premium increases is directly passed on to honest policyholders. This creates a vicious cycle where loss ratios worsen and premiums rise repeatedly.

According to the Health Insurance Review & Assessment Service and the insurance industry on the 26th, last year, Korean medicine treatment costs paid under automobile insurance approached 1 trillion won. Out of the total automobile insurance medical expenses of 2.2142 trillion won, Korean medicine treatment costs were 956.9 billion won, an increase of 34.0% compared to the previous year. Meanwhile, Western medicine treatment costs slightly decreased by 0.4%.

Korean medicine treatment costs under automobile insurance have nearly tripled over the past five years. Korean medicine treatment costs, which were only 357.6 billion won in 2015, increased by 28.6% to 459.8 billion won in 2016. In 2017, they increased by 31.3%, surpassing 500 billion won, and in 2018, they rose to 713.9 billion won with a growth rate of 28.8%.

While the number of deaths and injuries from traffic accidents has decreased, medical expenses have skyrocketed. In 2018, the number of deaths and injuries from traffic accidents was half of what it was ten years ago, but medical expenses have rather increased. Looking at the per capita medical expenses paid to outpatients who did not require hospitalization, Korean medicine treatment costs averaged 560,000 won over the past four years, significantly higher than Western medicine treatment costs of 177,000 won.

Especially, Korean medicine treatment costs were higher for minor injuries. There is a clear tendency for minor injury patients to prefer Korean medicine treatment.

According to the Korea Insurance Research Institute, the number of minor injury patients requiring treatment for less than three weeks due to traffic accidents increased by 41% over the past 10 years. Among minor injury patients (grades 12 to 14), 36% used Korean medicine treatment. Korean medicine accounted for 61% of the total medical expenses for grades 12 to 14. Accordingly, Korean medicine treatment costs paid to grades 12 to 14 surged from 126.8 billion won in 2014 to 356.9 billion won in 2017.

Traffic accident scene Photo by Yonhap News

The inclusion of some non-covered Korean medicine treatments such as Chuna therapy and manual therapy into coverage is also cited as a cause of the surge in insurance claims from Korean medicine hospitals.

Hyundai Marine & Fire Insurance analyzed Korean medicine treatment costs before and after the coverage of Chuna therapy. From January to April last year, the monthly average claim amount for Chuna therapy was 310.89 million won, but after coverage from May to October, the monthly average claim amount reached 880.84 million won.

Korean medicine hospitals find it easier to claim insurance payments compared to Western medicine hospitals. This is because the automobile insurance fee schedule is not specific. While the Health Insurance fee schedule set by the Ministry of Health and Welfare clearly defines drug names, target diseases, and dosage standards, the automobile insurance fee schedule set by the Ministry of Land, Infrastructure and Transport is not detailed. For herbal medicine, it is stipulated that "it should be administered appropriately according to the patient's symptoms and disease severity, and claims are limited to 10 days per prescription and up to 2 doses per day."

Researcher Chae Jeong-mi of the Health Insurance Review & Assessment Service pointed out, "Because the fee schedules for automobile insurance and health insurance differ, the same medical procedure can result in different medical fees. From the medical institution's perspective, higher income can be generated, and from the patient's side, more compensation can be received without out-of-pocket expenses."