[Issue] [January 2016] Special Issue : Abolishing the Differential Medical Payment System


Abolishing the Differential Medical Payment System

Nam Eun-Kyeong

Director, Social Policy Team


The Ministry of Health and Welfare
announced a partially revised bill to abolish the differential medical payment
system on November 5th of last year. The system was designed to encourage proper
medical treatment in hospitals under the state medical insurance. A medical
reimbursement for the cost of medical treatment is paid by the National Health
Insurance Service when the time span of treatment per person is less than six
minutes. However, a shortened treatment period of only one or two-minutes is
prevalent. Why does the government push for a policy of wasting individual
medical premiums and ruin the treatment in hospitals?

The system was rejected last June by
an opposition group of medical insurance holders, some of whom were insurers
and some of whom were experts in the Assessment Committee. It was rejected because
of the failure to propose an alternative to a wholesale abolition of the
system. However, after three months, the government passed the bill without a
preliminary overhaul by Professional Assessment Committee.

The stability and confidence to remove
the system is damaged in the absence of proper procedure. This decision should
be reviewed due to the fact that it inhibits the right of people to pay the
medical premium.


Why should the differential medical payment system be maintained?


Purported to be a significant national
service, the state medical insurance is a national system funded by the
government in an effort to cope with people’s health and societal hazards
caused by the burden of medical premiums. The amount the state insurance pays
to medical institutions depends on the price of medical care conducted by the
institution (i.e. treatment, pills and sources of treatment). The price of
medical treatment is set according to reasonable facts such as the workload of

The medical institutions make the
claims for the medical fees—as many as 8,000 medical activities approved in
2015—to the state medical agency. The institutional medical providers tend to
pursue more financial gains than better quality of medical services by means of
increasing the number of patients and treatments and conducting specific treatments
that contribute to higher returns. Therefore, the reimbursement to the
institutions should be made in accordance with the proper treatment and a sense
of how fairly they charge.

The medical payments system is aimed
at preventing inappropriate medical activities from taking place for the sole
purpose of financial gain. Without desirable alternatives, serious negative
effects could result.

Last June, the system was discussed in
the Commission and an alternative measure was proposed that would shut down
certain medical institutions at certain hours. Yet in October, no additional
alternatives were discussed by the Commission.

Providing a government subsidy according
to hours of operation of large-scale institutions (and not medical clinics) is
wrong because it targets the medical clinics to be shut down. It’s not ok to
abolish the subsidy or to target the small clinics without an alternative. Therefore,
it’s not an appropriate solution to abolition the system.

A minimum treatment time has to be ensured to secure the quality of
medical service:

Nowadays, the prevailing tendency among
some hospitals is not to focus on the patient. A concern over limited time for
treatment and prescription is raised due to a possible degradation of medical
service. A policy that secures the minimum treatment time needs to be
strengthened to ensure appropriate time for treatment. The government has
claimed that it is fine for medical clinics if the differential medical
charging system is abolished.

Medical evidence that a mere
two-minute treatment is sufficient in a small-scale neighborhood hospital
should not even be an option. A ban on short term treatment that might cause
low-quality medical service should be imposed on all medical institutions in
this regard.

The fact that a large-scale hospital
attracts a plurality of patients is responsible for a growing medical premium
which results in inefficiency, besides the potential for failure to deliver
quality medical services. A comprehensive and systematic measure that the
differential medical charging system is applied to both a small- and a large-size
hospital should be brought up with in an attempt to improve the healthcare
delivery service and the efficient use of medical funds.



Translator : Joon Hyoung Kim