Failure to Pass the 'Health Insurance Special Judicial Police Act' to Crack Down on Office-Managed Hospitals and License-Lending Pharmacies

At the National Assembly’s Legislation and Judiciary Subcommittee on the 24th, a decision was made for “continued review”...
Concerns raised over possible abuse of investigative powers
Health insurance financial leakage nears 3 trillion KRW...
Despite detection, average collection rate remains only 8.3 percent

A bill granting special judicial police authority (special judicial police) to the National Health Insurance Service (NHIS) has once again failed to pass the National Assembly's bill review subcommittee. The NHIS argues that special judicial police authority is necessary to swiftly detect 'illegally established medical institutions,' which are considered a major cause of the deterioration of health insurance finances. However, opinions favoring more caution in granting investigative powers have gained traction.

Last year, the NHIS uncovered a total of 58 illegally established institutions, and the amount of insurance premiums and medical benefits decided for recovery reached 277.695 billion KRW, but only 7.7% of that, 21.418 billion KRW, was actually collected.

According to the National Assembly and the NHIS on the 25th, the National Assembly's Legislation and Judiciary Committee held a meeting the day before to discuss the 'Partial Amendment Bill on the Act on Persons Performing the Duties of Judicial Police Officers and Their Scope of Duties,' but failed to reach a conclusion and decided to continue the review.

The special judicial police system is designed to allow NHIS employees with expertise, rather than general judicial police officers, to be authorized to investigate in order to prevent so-called 'office worker hospitals' and 'license-lending pharmacies.' An office worker hospital is a medical institution established and operated under the name of a medical professional or a non-profit corporation by a person (business owner) who is not qualified to open a medical institution under the Medical Service Act, by employing a medical professional (doctor). Similarly, a license-lending pharmacy is a pharmacy operated under the name of a pharmacist hired by a person who is not qualified under the Pharmaceutical Affairs Act. These illegally established institutions are identified as the main culprits worsening health insurance finances by forcibly hospitalizing patients or creating fake patients on paper to maximize profits.

The problem is that these institutions quickly close down and dispose of or hide assets to avoid seizure as soon as they are detected, while police investigations take an average of 11 months. The NHIS currently conducts administrative investigations and claims that, given their expertise, the introduction of special judicial police would reduce investigation periods to about three months and prevent financial concealment by illegally established institutions. Accordingly, the special judicial police system has been pursued since 2020 but has repeatedly failed to pass the legislation. This time as well, it is reported that opinions were divided among the Legislation and Judiciary Committee members over issues such as granting investigative powers to non-public officials.

In particular, opposition from the medical community is strong. A representative of the Korean Medical Association said, "Many hospitals and clinics are already struggling due to on-site investigations by the NHIS, and if special judicial police who may not properly follow criminal procedure law are overused, serious violations of individual human rights and hospital medical rights will occur." They also argued that to eradicate office worker hospitals, "it is necessary to introduce procedures to prevent the establishment of office worker hospitals rather than relying on post-facto crackdowns and investigations."

Leakage of health insurance finances due to illegally established institutions continues. Over the past 16 years, the NHIS has uncovered a total of 1,737 illegally established institutions, and the scale of health insurance financial leakage caused by this exceeds 2.9268 trillion KRW. However, the amount actually recovered through collection is 242.474 billion KRW, only about 8.3%.

Lee Yun-hak, Director of the NHIS Medical Institution Support Office, said, "The introduction of special judicial police is absolutely necessary to eradicate illegally established institutions and protect health insurance finances," adding, "We will continue to promote this by strengthening expertise in consultation with the Ministry of Health and Welfare to prevent abuse of investigative powers or infringement of basic rights of the people."

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