Nationwide Selection of 100,000 Hospitals, Pharmacies, and Insurance-Linked Institutions by Year-End
HIRA Disappointed... Alternative Options Like KIDI Discussed
Challenges Remain in Coordinating Medical and Insurance Sectors' Differences
The timetable for the 'Simplification of Actual Medical Expense Claims,' where actual medical expense insurance claims are automatically filed after treatment, has been set. The amendment to the Insurance Business Act, which includes the simplification of actual expense claims, has passed after 14 years despite opposition from the medical community, and is scheduled to be implemented on October 25 next year. Although the schedule is set, challenges remain to be resolved. One key issue is selecting an intermediary institution to relay medical records and insurance claim information between insurance companies and medical institutions. Since the medical community strongly opposes the government’s access to detailed non-reimbursable treatment information, difficulties are expected to continue for the time being.
According to the industry on the 5th, the Financial Services Commission and the Financial Supervisory Service held the first meeting of the 'Actual Expense Insurance Claim Computerization Task Force' on the 3rd with the Life Insurance Association, the General Insurance Association, and consumer groups (Consumers Together). This marks the official start of the simplification process for actual expense claims.
Until now, to claim actual medical expense insurance, patients had to obtain paper documents from hospitals, clinics, or pharmacies and submit them to insurance companies. The insurers then manually input this information into their systems before paying out the claims to customers. However, with the simplification of actual expense claims, this process will no longer be necessary. When paying medical bills, if patients request to claim their actual medical expense insurance, the hospital will immediately send the relevant documents directly to the insurance company.
This is expected to significantly reduce cases where patients forgo insurance claims due to inconveniences such as revisiting hospitals or obtaining documents, despite having paid insurance premiums. Representative Yoon Chang-hyun of the People Power Party estimated that unclaimed actual medical expense insurance amounted to 255.9 billion KRW in 2021, 251.2 billion KRW in 2022, and 321.1 billion KRW in 2023. Hospitals will also experience reduced administrative burdens, and insurance companies will save on the over 400 million sheets of paper used annually for claim reviews. Both sides will be able to utilize their workforce more efficiently.
The final task is the designation of an intermediary institution. To ensure the smooth operation of the computerization of actual medical expense claims, a computerized system connecting 30 insurance companies and approximately 100,000 medical institutions must be established. The financial authorities plan to form a joint medical-insurance committee and select a transmission agency to build and operate the computerized system, possibly within this year.
Disagreements between the medical and insurance industries over the designation of the transmission agency have persisted even before the amendment to the Insurance Business Act was passed. Whenever the government and insurance industry proposed the Health Insurance Review and Assessment Service (HIRA) as a candidate, the medical community strongly opposed it, fearing that non-reimbursable treatment details from hospitals and clinics would be transferred to HIRA. This would allow the government and insurers to clearly identify and control non-reimbursable information. Alternatives such as the Korea Insurance Development Institute or fintech companies have been suggested, but it remains uncertain whether they can quickly establish and operate a system connecting over 100,000 hospitals, clinics, pharmacies, and 30 insurance companies, with more than 100 million claims annually.
Previously, the medical community outright rejected the simplification of actual expense claims itself, citing concerns that insurers could use patients’ medical data to deny claims or insurance subscriptions and that medical information could be leaked. They have even indicated they might file a constitutional lawsuit against the law related to the simplification of actual expense claims.
However, since the government has set the 'deadline' for selecting the transmission agency by the end of the year, a conclusion must be reached somehow. A financial authority official stated, "After long consultations with the National Assembly, the medical and insurance industries, and consumer groups, the amendment to the Insurance Business Act for the computerization of actual medical expense claims was enacted," adding, "We will thoroughly prepare to ensure that the computerization of actual medical expense claims is implemented smoothly from October 25 next year."
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