Full-Scale Medical Cost Analysis Begins... "Accelerating Reform of Health Insurance Fee Compensation System"

Ministry of Health and Welfare holds the 2nd Medical Cost Analysis Committee of 2025
Plans to analyze medical costs at tertiary general hospitals and expand the number of surveyed institutions

The government will begin a full-scale analysis of medical costs in order to rationally reform the national health insurance fee schedule.

On June 20, the Ministry of Health and Welfare announced that it had convened the "2nd Medical Cost Analysis Committee of 2025" to discuss the following topics: ▲ the 2025 plan for the Medical Cost Analysis Committee ▲ the plan for analyzing medical costs at tertiary general hospitals, among others.

The Medical Cost Analysis Committee is a body that regularly analyzes medical cost data from healthcare institutions to enable rational adjustments to the national health insurance fee schedule. It was established in 2021 under the Health Insurance Policy Review Committee.

Previously, the Ministry of Health and Welfare decided in the second comprehensive health insurance plan (2024-28) to shorten the adjustment cycle for relative value scores from the previous 5-7 years to every 2 years, and to transition to a continuous adjustment system in order to more quickly reflect changes in medical costs. The relative value score represents the value of each medical service item, calculated by considering factors such as workload, resource usage, risk, and social benefit. The health insurance fee is calculated by multiplying the relative value score by the conversion factor (the unit price per score).

The committee will first analyze the previous year’s accounting data by December each year, in line with the new relative value score adjustment cycle, and incorporate the findings into the relative value scores after further review. This year, in preparation for the fourth revision of the relative value scores next year, the committee plans to analyze both the 2023 and 2024 accounting data simultaneously. However, since last year included a period of emergency medical service due to conflict between the medical community and the government, resulting in a medical service gap, the committee will decide later how to utilize the data from that period.

To improve the accuracy of the cost analysis, the committee will also regularly incorporate the contents of previous relative value score revisions. Given that the 2023 accounting data predates the third revision, the committee plans to adjust the cost and revenue data to reflect the changes from the previous revision.

To enhance the representativeness of the analysis results, the number of institutions surveyed will be expanded. In 2022, 99 institutions were surveyed, but the 2023 survey will cover 209 institutions, a significant increase. The types of institutions surveyed will also be diversified, expanding from general hospitals to tertiary general hospitals and primary clinics. In particular, as part of the "Tertiary General Hospital Structural Transition Support Project," 22 tertiary general hospitals have so far applied to submit their medical cost data, and more hospitals are expected to participate by the end of this month.

In addition, to improve the transparency of the analysis results, the committee plans to disclose the outcomes of its meetings. However, in cases where open discussion is needed on ongoing topics, the committee will decide whether, how much, and when to disclose information after further deliberation.

Starting in July, the committee will launch subcommittees to begin discussions on detailed analysis methods for medical cost and revenue data.

Lee Jungkyu, Director General of Health Insurance Policy at the Ministry of Health and Welfare, stated, "Medical cost analysis is the first step toward establishing an adequate compensation system for undervalued fee items by deriving profit relative to cost for each medical service based on scientific evidence," adding, "The government will do its utmost to ensure a rational reform of the fee compensation system by utilizing the results of the medical cost analysis."