[Bottomless Jar 'Hanbang Hospital' Part 1] Zero Out-of-Pocket Costs... Suspicions of Over-treatment and Insurance Fraud (Comprehensive)

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 a significant epidemiological link to the Shincheonji Church of Jesus in the spread of the novel coronavirus infection (COVID-19), 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 'malingerers,' a long-standing issue in 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 problems of excessive treatment in Korean medicine hospitals and seeks solutions through this incident.

[Asia Economy Reporter Oh Hyung-gil] "If you say you want treatment 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 for minor traffic accident patients, saying things like, "Even a small impact can leave invisible damage to vulnerable 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 and ultimately causing insurance premiums to rise. The burden of premium increases is directly passed on to honest policyholders. This creates a vicious cycle where loss ratios worsen and premiums continue to rise.

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 nearly reached 1 trillion won. Of the total automobile insurance medical expenses of 2.2142 trillion won, Korean medicine treatment costs were 956.9 billion won, a 34.0% increase from the previous year. In contrast, 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, recording 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 traffic accident deaths and injuries was half of what it was ten years ago, but medical expenses have instead increased. Looking at the per-patient 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 in minor injury cases, Korean medicine treatment costs were higher. There is a clear tendency for minor injury patients to prefer Korean medicine treatment.

According to the Korea Insurance Research Institute, over the past 10 years, the number of minor injury patients requiring treatment for less than three weeks due to traffic accidents increased by 41%. 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.

The inclusion of some non-reimbursed Korean medicine treatments such as Chuna therapy and manual therapy into reimbursable services 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 inclusion of Chuna therapy in reimbursable services. From January to April last year, the monthly average claim amount for Chuna therapy was 310.89 million won, but after inclusion from May to October, the monthly average claim amount rose to 880.84 million won.

Also, from January to September last year, five non-life insurance companies including Samsung Fire & Marine Insurance, Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, and Meritz Fire & Marine Insurance paid out 4.2 billion won in insurance claims for Korean medicine treatments received by children under three years old. The number of cases reached 12,000. There were even 524 cases where infants under one year old received cupping or moxibustion treatments and claimed insurance benefits.

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

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