[Exclusive] Non-Covered Prostatectomy Cases Surge After Cataract Epidemic [Private Insurance Claims Leak] ①

Cumulative Non-Reimbursed Indemnity Payments of 4.2724 Trillion KRW by Top 5 Domestic Non-Life Insurers in Q3
8.64% Increase YoY... Prostatectomy, Developmental Delay, and HIFU Growth Rates Exceed 10%
Expected Risk Loss Amount for Indemnity Insurance This Year: 2.9 Trillion KRW

Editor's NoteWith about 40 million subscribers, indemnity health insurance (실손보험), known as the "second health insurance," is deteriorating. Annual deficits in indemnity insurance reach 2 trillion won due to moral hazards such as excessive treatments by some hospitals and patients' medical shopping. This increases the national medical expense burden and raises premiums for honest subscribers, adversely affecting public health. Although the government plans to announce reform measures for indemnity insurance next month, the industry fears that moderate reforms alone will not stop the abuse of indemnity insurance. This article series, spanning five installments, will examine specific cases of how indemnity insurance is being exploited recently and explore possible solutions.

A patient undergoing surgery for benign prostatic hyperplasia. The photo is unrelated to the content.

Mr. Park Jeong-su, a man in his 60s, felt discomfort while urinating and visited Clinic A, a urology clinic located in Gangnam-gu, Seoul, last year. Clinic A diagnosed him with benign prostatic hyperplasia. The clinic asked whether Mr. Park had indemnity insurance and recommended the latest medical technology for treating benign prostatic hyperplasia called prostate ligation surgery (UroLift). UroLift is a non-reimbursed procedure that involves tying the enlarged prostate with threads to widen the urethra, thereby expanding the urinary tract. It is not covered by health insurance.

Clinic A encouraged Mr. Park by saying that UroLift has fewer side effects and does not negatively affect sexual function. They also made an offer: they would provide a penile enlargement surgery, which costs about 2 million won, as a complimentary service and would change the paperwork to circumcision so that the treatment could be processed under indemnity insurance. Mr. Park paid 16 million won for the entire surgery, including UroLift, and filed an insurance claim.

This medical practice at Clinic A recently came to light after several domestic non-life insurance companies found suspicious patterns in multiple insurance claims and conducted investigations. The insurers found it suspicious that patients from all over the country visited Clinic A to undergo UroLift, which costs 15 times more than the most common surgery for benign prostatic hyperplasia, transurethral resection of the prostate (TURP), which is covered by health insurance and costs around 1 million won. They also found it unusual that some patients at Clinic A were prescribed erectile dysfunction medications instead of antibiotics or other treatment drugs after the procedure.

A major domestic non-life insurer confirmed that many admission and discharge records and nursing notes documenting patient treatment at Clinic A were falsified. According to nursing records obtained by Asia Economy from the insurer, many notes on symptoms reported by patients who underwent prostate ligation surgery at Clinic A from 2022 to 2023 were largely identical. The patients' statements about pain and the medical staff's responses were copied verbatim. It is highly likely that records falsely indicating patient hospitalization and specific surgeries were fabricated to fraudulently claim insurance money. The insurers have compiled numerous cases of indemnity insurance abuse, including this one, and requested police investigations this year.

Non-reimbursed Indemnity Claims for Prostate Ligation Surgery, Developmental Delay, HIFU Surge as Major Issues

Non-reimbursed indemnity items also follow trends. While cataract surgery and physical therapy were the main culprits of indemnity insurance claims in recent years, recently, claims for non-reimbursed indemnity insurance for prostate ligation surgery, developmental delay, and HIFU procedures have been increasing.

According to data obtained from the five major domestic non-life insurers (Samsung, Hyundai, KB, DB, Meritz), 4.2724 trillion won was paid out in non-reimbursed indemnity insurance claims through September this year. This accounts for 59% of the total indemnity insurance claims (7.2339 trillion won), including reimbursed claims, during the same period. These five insurers hold a 65% market share of indemnity insurance contracts among all domestic non-life and life insurers.

The cumulative non-reimbursed indemnity insurance claims for the third quarter of this year increased by 8.64% compared to the same period last year. During the same period, the increase rates for prostate ligation surgery (15.5%), developmental delay (11.49%), and HIFU procedures (10.12%) all exceeded this growth. According to the Ministry of Health and Welfare's new medical technology notification, prostate ligation surgery is only applicable to patients over 50 years old with a prostate volume under 100 cc, an International Prostate Symptom Score (IPSS) of 8 or higher, and lateral lobe benign prostatic hyperplasia who do not want conventional endoscopic surgery. Despite these strict criteria, the number of procedures has been rapidly increasing. The cumulative non-reimbursed indemnity insurance claims for the third quarter of this year amounted to 19.1 billion won for prostate ligation surgery, 124.5 billion won for developmental delay, and 68.9 billion won for HIFU procedures.

Statistics from 2020 to 2023 show a sharp rise in insurance claims for these non-reimbursed treatments. The total non-reimbursed indemnity insurance claims from the five major insurers increased from 4.5599 trillion won in 2020 to 5.3088 trillion won in 2023, about a 1.2-fold increase. Prostate ligation surgery claims rose from 6.1 billion won in 2020 to 21.5 billion won in 2023, about 3.5 times higher. Developmental delay claims increased from 35.5 billion won in 2020 to 150.2 billion won in 2023, a 4.2-fold rise. During the same period, HIFU procedure claims grew from 63.7 billion won to 84.6 billion won (1.3 times), and gynecomastia claims increased from 5.5 billion won to 12.1 billion won (2.2 times).

In this context, the loss ratio and loss amount of indemnity insurance have been steadily rising recently. The risk loss ratio was 117.2% in 2022, 118.3% in 2023, and jumped to 126.1% in the first quarter of this year. The risk loss ratio is the ratio of insurance payouts to premiums collected by insurers. The risk loss amount increased from 2 trillion won in 2022 to 2.3 trillion won in 2023 and is expected to reach 2.9 trillion won this year. The risk loss amount refers to insurance payouts exceeding the premiums collected. As indemnity insurance deficits accumulate, insurers raise premiums, creating a vicious cycle that increases the burden on honest policyholders.