"Pay Gambling Debt with Cataract Surgery Insurance Money"... Insurance Fraud Crosses the Line (Comprehensive)

Excessive Charges for Examination and Lens Fees
40% Increase Over 5 Years, 690,000 Cases
Insurance Payments 779.2 Billion Won... 354% Rise
Financial Authorities Warn of "Moral Hazard"

[Asia Economy Reporter Oh Hyung-gil] Choi Jeong-geun (52, pseudonym), who incurred private loan debts while gambling at an illegal gambling house, received a proposal from a hospital introduced by a violent organization that if he underwent cataract surgery, he could repay his debt. The suggestion was to receive the cataract surgery insurance payout from the insurance policy Choi had subscribed to in order to reduce his debt. Recently, an insurance company began investigating after suspecting an increase in cataract surgery insurance claims at a specific hospital, revealing that violent organizations, brokers, and hospitals have been committing insurance fraud in the same manner.

As the number of cataract patients has surged recently, cases of insurance fraud exploiting cataract surgeries are increasing, prompting financial authorities to issue warnings to insurance companies.

According to the insurance industry on the 7th, the Financial Supervisory Service recently sent an official letter to insurance companies urging them to pay close attention to contract reviews and related tasks to prevent cataract-related insurance fraud.

Cataracts, a condition where the eye's lens becomes cloudy due to aging, causing blurred vision, can have its progression slowed in the early stages with medication, but surgery is the only treatment. Accordingly, some hospitals frequently recommend early surgery and excessively charge for examination fees and lens costs.

The number of cataract surgeries increased by 40% over five years, from approximately 490,000 cases in 2015 to about 690,000 cases in 2019. Insurance payouts for cataracts last year amounted to 779.2 billion KRW, a staggering 354% increase over the past five years.

The surgery involves removing the cloudy lens and inserting an artificial lens. The average cost for surgery on one eye is around 1 million KRW. Although the surgery is covered under a bundled payment system, some non-reimbursable items such as artificial lenses are exceptionally recognized, allowing hospitals to charge patients additionally.

Hospitals explain that while traditional monofocal intraocular lenses require patients to wear glasses or magnifiers after surgery for normal daily life, multifocal intraocular lenses can simultaneously correct presbyopia and astigmatism, enabling patients to see well at both near and far distances without glasses or magnifiers after surgery.

Reliance on Specialist Diagnosis for Surgery Necessity... Difficult to Prove Insurance Fraud

As a result, moral hazard incidents, such as inflating non-reimbursable items like examination fees and multifocal lens costs to excessively increase surgery expenses, have occurred repeatedly, drawing close attention from financial authorities.

The average cost of cataract surgery rose 78% from 1.28 million KRW in 2016 to 2.28 million KRW last year.

Notably, among approximately 446,000 recipients of cataract surgery insurance payouts over the past five years, 17,625 (3.8%) have a history of insurance fraud. Reports of suspected insurance fraud related to cataract surgery increased from 39 cases in 2018 and 32 cases in 2019 to 69 cases last year alone.

There were many cases where insurance payouts were received multiple times for a single surgery. The number of insured persons who received duplicate cataract surgery insurance payouts was 186,836, and those who received payouts three or more times numbered 53,892.

There were 15,232 people who received insurance payouts exceeding 10 million KRW and 4,171 people who received more than 20 million KRW. Since cataract surgeries rarely exceed 10 million KRW even in high-cost cases, these instances raise suspicions of overcharging.

An insurance industry official pointed out, "Not only through indemnity insurance but also through surgical riders, some exploit the system to receive insurance payouts exceeding their out-of-pocket expenses," adding, "Since the necessity of surgery is diagnosed by specialists, it is also difficult to prove insurance fraud."