Simplification of insurance claims for medical expenses at risk of delay

2023.09.20 12:02:02 | 2023.09.20 14:30:04

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The simplification of insurance claims for medical expenses in South Korea to allow policyholders to easily submit claims with just a few clicks, is at risk of stalling in the National Assembly due to political disputes. A proposed amendment to the Insurance Business Act, which includes this provision, has been presented to the National Assembly’s Legislation and Judiciary Committee for the first time in 14 years, but recent disruptions in the standing committee’s schedule due to political disputes have cast doubt on its passage this year. The current complicated claims process has led to insurance benefits worth 270 billion won ($203.52 million) going unclaimed each year, resulting in growing public dissatisfaction.

According to sources from the political circle and the insurance industry on Tuesday, the amendment to simplify insurance claims for medical expenses is likely to be delayed again. “The bill would have been passed if the Legislation and Judiciary Committee was held on Sunday as scheduled, but it was postponed indefinitely due to the suspension of the standing committee (due to political disputes),” according to an insurance company official. “I understand that Representative Park Joo-min of the main opposition Democratic Party, who initially opposed the amendment, turned positive after considering the explanations from the financial authorities and the purpose of the bill for the benefit of the public.”

The simplification of claims in health insurance refers to a system where medical certificates and medical records are sent directly from medical institutions to insurers for payment, instead of policyholders submitting paper documents. Currently, patients need to visit medical institutions, pay fees, obtain diagnosis certificates, and then either take pictures and upload them or send them directly (by fax or in person) to insurance companies to claim the insurance benefits. Insurance companies even hire part-time workers to manually enter the information from these documents into their computer systems, and the process results in the disposal of approximately 400 million sheets of paper (estimated based on 100 million claims with four sheets per claim).

As a result, many policyholders have given up on filing claims. According to a survey conducted by the National Council of the Green Consumers Network in Korea and other consumer organizations in 2021, one out of every two policyholders did not claim their medical expense insurance benefits. The reasons cited were mainly “the small expenses amount” (51.3 percent), “lack of time to visit the hospital” (46.6 percent), and “the inconvenient process for sending documents” (23.5 percent). As the survey allowed for multiple responses, the survey results indicate that simplified claims, if implemented, would encourage more policyholders to claim their benefits. While most unclaimed amounts were small, more than 10 percent of respondents reported amounts ranging from over 100,000 won to 300,000 won.

Insurance companies also strongly support simplified claims, as they believe that even if they pay an additional 270 billion won in insurance benefits annually, it is still more cost-effective to computerize the process. “Currently, the manual entry of data results in each company has different formats, and although it is rare, mistakes such as incorrect payments due to individuals with the same name can occur,” an insurance company official said. “It is better to return insurance benefits to customers instead of wasting time and money on simple and repetitive tasks.” Some hospitals have gone so far as to set up their own electronic submission systems with individual insurers and hiring companies to streamline the claims.

Despite the overall benefits, the system for simplified claims has been stalled for 14 years due to opposition from medical associations. Some stakeholders from the associations have raised concerns, arguing that the initiative might jeopardize the security of sensitive personal health data and enable insurers to electronically collect and exploit such information for financial gain. Recently, some patient advocacy groups also held protests, claiming that insurance companies might use the information to selectively pay small claims and deny insurance benefits for high-cost treatments.

However, both arguments are criticized as unrealistic. To prevent the leakage of personal information, medical records can simply be transmitted to the Health Insurance Review and Assessment Service or the National Health Insurance Service, but medical associations staunchly oppose this option as they do not want these organizations to scrutinize their non-insurance medical records and rejected the proposal even when the Korea Insurance Development Institute offered to act as an intermediary organization.

By Shin Chan-ok, Yoon Yeon-hae, and Han Yubin

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