Medical professionals and industry groups are pushing back against government plans to cut reimbursement rates for laboratory and imaging tests.
The government announced it would reduce fees for so-called "over-compensated" services, including specimen and imaging tests, and redirect the savings to other areas. Critics argue the methodology used to calculate cost recovery rates is fundamentally flawed and warn that aggressive cuts could compromise test quality and undermine Korea's in-vitro diagnostics industry.
The Korean Society for Laboratory Medicine issued a statement on the 25th expressing "concern over the unilateral and radical push for fee reductions," demanding the government "immediately halt reckless fee adjustments made without statistical representativeness or policy validity."
The society challenged the statistical limitations of the government's cost recovery rate calculations.
According to the society, the accounting survey included only six tertiary hospitals, 74 general hospitals, and 88 clinics. No secondary hospitals were included, the so-called "Big 5" hospitals were excluded from the tertiary category, and the clinic sample represented just 0.24% of all medical clinics—indicating a limited and biased sample.
The society also noted the survey was skewed toward institutions participating in the bundled payment system and failed to account for cost distortions from outsourced testing. "Institutions in the new bundled payment system receive policy premiums, and if these were not properly separated in cost calculations, the cost recovery rate may be overestimated," the society stated. "When medical institutions outsource tests, revenue structures diverge from actual cost structures including equipment and labor costs, and these distortions were used in calculating cost recovery rates without adequate refinement."
The society warned that repeated fee cuts would trigger a vicious cycle. "The fact that cost recovery rates exceeded 100% even after major fee cuts in 2017 and 2024 reflects a combination of the balloon effect—where test volumes increase to compensate for losses—and economies of scale," it said. "Simple fee cuts drive up test volumes, and the resulting efficiency gains make cost recovery rates appear higher, creating justification for further cuts in a self-defeating cycle."
The society called for "sharing medical cost analysis data with professional societies and institutionalizing joint verification systems," emphasizing the need to "establish a mutual trust-based policy decision structure by unifying data verification and policy communication channels, and recognize diagnostic testing as core infrastructure for precision and essential medicine, not merely a means of fiscal reallocation."
Industry groups share concerns that the measures will shrink Korea's in-vitro diagnostics sector. The Korea In Vitro Diagnostics Association issued a statement warning that "if the pattern of successive fee cuts following the elimination of tier-based premiums becomes entrenched, it could negatively affect not only healthcare service quality but the entire industrial ecosystem."
The association argued that diagnostic test fee cuts directly erode healthcare providers' profitability, inevitably leading to demands for lower prices on diagnostic reagents and equipment. With global conglomerates already leveraging fully depreciated facilities and large-scale production systems to maintain price competitiveness, applying uniform pricing standards would put domestic companies at a relative disadvantage, industry sources noted with resignation.
"If stable domestic production capacity and technological self-reliance are weakened, it may become difficult to reliably protect public health in future infectious disease crises," the association said. It emphasized the need for "a systematic approach that comprehensively reflects various factors including not just raw material costs, but quality control costs to maintain test accuracy, specialized personnel wages, and logistics and storage expenses" when calculating cost recovery rates.