[Insurance-Medical, Coexistence or Mutual Destruction] Electronic Claims Processing for Real Loss Insurance Desired by All Except Doctors '12 Years Stalled'

(중)Stalled '35 Million' Real Loss Insurance Claim Computerization
Medical Community Fears Pressure on Medical Fees Due to Accumulation of Non-Reimbursed Data
Insurance Industry "Computerization Cost Burden... Possible to Alleviate Medical Community Concerns"

[Editor's Note] 'Medical Moral Hazard' is undermining the insurance industry. Despite the financial authorities' determination to eradicate it, fraudulent and excessive medical treatments leading to inflated insurance claims, or even medical professionals being involved in insurance fraud to deceive patients, are widespread. Even in the era of the Fourth Industrial Revolution, the simplification of claims for indemnity health insurance and the healthcare sector remain trapped behind barriers. As the insurance and medical industries fail to coexist, insurance premiums rise every year, and consumer harm continues to spread due to the complexity of insurance claim procedures causing many to give up. Experts warn that if 'medical moral hazard' is left unchecked, both the insurance and medical industries will inevitably self-destruct. Asia Economy explores the insurance and medical sectors at the crossroads of coexistence and mutual destruction in a three-part series.

[Asia Economy Reporter Oh Hyung-gil] ZhongAn Insurance, jointly established by China's Alibaba and Tencent, has grown into a giant insurer with a market share exceeding 20%, despite being a digital-only insurance company.

Behind ZhongAn Insurance's growth lies not only new niche products like cyber damage compensation insurance but also its ability to quickly meet consumer needs. In particular, it has implemented a system where subscribers only need to enter accident details and medical expenses into a mobile application (app), and the medical records are automatically transmitted from medical institutions, enabling rapid insurance claim payments.

There is a long-standing issue that consumers, financial authorities, and the insurance industry have been unable to resolve for 12 years: the computerization of indemnity health insurance claims. All stakeholders want its introduction, but the reason a solution has not been found is strong opposition from the medical community.

The medical community has continuously ignored public opinion that calls for resolving the inconvenience faced by insurance subscribers who are also medical consumers, citing concerns over infringement of personal information self-determination rights. Beneath this opposition lies significant pressure on medical fees due to the accumulation of non-reimbursable medical expense data.

Ultimately, with the financial authorities selecting the computerization of indemnity insurance claims as a key proactive administrative task this year and parliamentary discussions gaining momentum, attention is focused on whether the simplification of indemnity insurance medical claims can be realized this year.

"Issuing claim documents at medical institutions... it's cumbersome"

The computerization of indemnity health insurance claims refers to a system that allows medical expense proof documents to be submitted electronically anytime and anywhere, without being restricted by time or place. Insurance subscribers can claim insurance benefits without visiting medical institutions to obtain documents. This improves consumer convenience and reduces administrative costs.

The insurance industry explains that many policyholders who do not claim indemnity insurance will benefit. A survey conducted over the past two years by civic groups such as the Green Consumer Network, targeting 1,000 citizens aged 20 and over who have indemnity health insurance, found that 47.2% responded that they could have claimed indemnity insurance benefits within the last two years but gave up.

The second most common reason for giving up claims was that they failed to prepare the documents to submit to the insurer on the day of treatment and had no time to revisit the hospital (46.6%). If claim computerization is implemented, this difficulty can be resolved at once.

However, the medical community opposes, stating, "Indemnity insurance is a private contract between the policyholder and the insurer, so medical institutions are not parties to it and have no legal relationship," and argues that imposing an obligation on medical institutions for claim computerization is unfair.

They also cite concerns about 'medical information leakage.' They argue that if information leakage occurs due to claim computerization, it is unfair for medical institutions to bear responsibility or damages. In the market, criticism has intensified that opposition is due to pressure to reduce medical fees caused by the accumulation of non-reimbursable medical expense data, greatly weakening their justification.

Five bills proposed in the 21st National Assembly... Are there any loopholes?

Five amendments to the Insurance Business Act aimed at introducing the computerization of indemnity insurance claims were proposed in the 21st National Assembly alone. While recognizing patients' rights to transmit medical information, there are slight differences in details. Among them, the insurance and medical industries have struggled to reach consensus on who should bear the cost of building the system and on establishing medical information management and protection frameworks.

At the 'Legislative Public Hearing on the Computerization of Indemnity Health Insurance Claims' held by lawmakers from both ruling and opposition parties on the 10th, Seo In-seok, Insurance Director of the Korea Hospital Association, argued, "The law should explicitly state that the insurance company must bear the cost of claim simplification."

Park Ki-jun, Head of the Long-term Insurance Department at the General Insurance Association, said, "If the Health Insurance Review & Assessment Service, which has security expertise, handles the claim computerization intermediary, information security will actually be strengthened."

Especially, the medical community opposes, arguing that data collected for insurance claims could lead to price control of non-reimbursable medical services by medical institutions. In response, the amendment includes provisions that the Health Insurance Review & Assessment Service or specialized intermediaries cannot use or store data for purposes other than insurance claims and includes penalties.

An insurance industry official emphasized, "We are discussing ways for the insurance industry to bear the costs of computerization. Since we have sufficiently accepted the medical community's demands, cooperation is now necessary."

The National Assembly's Political Affairs Committee plans to formally submit bills related to the computerization of indemnity insurance claims as agenda items at this month's extraordinary session. Eun Sung-soo, Chairman of the Financial Services Commission, pointed out, "Every year, families and elderly people face hospital waiting rooms to obtain 400 million pieces of proof documents, meet staff face-to-face, and personally send documents to insurers. Delaying this any longer is regrettable to the public and embarrassing for Korea, which is at the forefront of digital innovation."

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.