South Korea's Ministry of Health and Welfare has designated manual therapy, percutaneous epidural neuroplasty, and radiation hyperthermia as "managed benefit" items due to their role in excessive treatment and soaring medical costs. Manual therapy, in particular, has been a major contributor to the financial deterioration of indemnity health insurance, placing significant burden on the insurance industry.
The government plans to provide a 5 percent insurance benefit for these three items while closely monitoring for excessive treatment and limiting prices and frequency to reduce unnecessary non-covered medical services.
According to the National Health Insurance Service, as of September 2024, these three items ranked among the top 10 non-covered medical expenses: manual therapy at 47.8 billion won (second), neuroplasty at 13.6 billion won (sixth), and hyperthermia at 9.2 billion won (tenth). Data from the NHIS non-covered information portal showed that manual therapy alone generated 120.8 billion won in treatment costs in March last year. Notably, domestic non-life insurers paid a total of 1.39 trillion won in indemnity insurance claims for manual therapy last year, the highest among all categories.
The price disparity among hospitals for these three items has reached alarming levels. The ministry's survey found manual therapy prices ranging from 300 won to 600,000 won (a 200-fold difference), neuroplasty from 200,000 won to 6.5 million won (32-fold difference), and hyperthermia from 1,410 won to 900,000 won (63-fold difference). Without standardized pricing guidelines, hospitals have been free to set their own prices, leading to a surge in insurance claims.
The insurance industry welcomes the ministry's decision. Designating these three non-covered items as managed benefits and establishing uniform pricing is expected to curb excessive treatment practices at some hospitals.
"Once prices are set for managed benefit items, the problematic practice of some hospitals inflating treatment costs by hundreds of thousands of won will disappear," an insurance industry official said. "This could serve as an opportunity to clean up the rampant excessive treatment practices centered on non-covered items."
However, the industry expressed disappointment that extracorporeal shockwave therapy and speech therapy, both identified as areas of excessive treatment, were excluded from this designation. Insurers argue that these treatments should also be included to reduce loss ratios on chronically unprofitable indemnity insurance and ease pressure for premium increases.
Analysts suggest the ministry excluded shockwave therapy and speech therapy from this round due to strong opposition from the medical community. The Korean Medical Association's Indemnity Insurance Response Committee issued a statement the previous day strongly opposing the move.
"Manual therapy and extracorporeal shockwave therapy are highly customized treatment areas, and attempting to confine them to insurance benefit standards is an outrage that forces low-quality 'factory-style care,'" the committee said. "If the government proceeds forcibly, it will face unprecedented massive resistance."
The medical community is also concerned that expanding managed benefits to include shockwave therapy and proliferation therapy could significantly undermine the revenue base of outpatient-focused private clinics.
"Non-covered items are the last survival foundation for private clinics under the low fee system," a medical industry official said. "Although shockwave therapy and speech therapy were excluded from this first round of managed benefit designation, we worry they could be included at any time."
The ministry expects these managed benefit measures to prevent excessive treatment, normalize the non-covered market, and curb the concentration of medical personnel in non-essential healthcare fields.
"The managed benefit system is being introduced to address problems such as excessive treatment and extreme price differences in some non-covered items, and to mitigate the outflow of personnel to non-essential medical areas where non-covered treatment is easier to apply," said Kwon Byung-ki, Director of Essential Medical Care Support at the ministry. "Now that the first items have been selected, we will set reasonable prices and benefit standards through further discussions, monitor their effects, and continue to develop the system."
