Oriental medicine hospital A in Daegu is a prime example. According to financial industry sources on the 14th, insurer B analyzed auto accident patients at three branches of hospital A in Daegu from January to May this year and found an inpatient rate of 43.2%. That far exceeds the typical auto accident inpatient rate of 15% to 20%, as well as the 26.7% at another large oriental medicine hospital in Daegu used for comparison. The number of inpatients also reached 474, more than triple the 156 at the comparison hospital.
That is not all. At insurer B, average treatment costs per minor-injury patient in injury grades 12 to 14 came to 1.865 million won for inpatient care this year, 2.4 times the 792,000 won for outpatient care.
The insurance industry is focused on hospital A's high inpatient rate because of how it recruits patients. According to a recording obtained by insurer B, a hospital official told an investigator posing as a traffic accident patient that "admission is possible the same day" and "let us know the date you want." Asked whether patients could go out during hospitalization, the official replied, "freely possible."
A traffic accident patient actually admitted to the hospital also signed a statement to the effect that an insurance agent had shown promotional materials for the hospital and that the patient decided on inpatient treatment after being told overnight stays outside were possible. Promotional materials obtained by the insurer also listed various perks such as free parking and discounts on non-covered treatments. Article 27 of the Medical Service Act prohibits inducing or brokering patients to medical institutions for profit by providing transportation convenience and similar benefits.
The insurance industry worries such inducement into hospitalization could be used continuously as a way to circumvent the eight-week rule. Under the rule, minor-injury patients in injury grades 12 to 14, such as sprains and bruises, must undergo a review of treatment necessity by medical specialists at the Korea Automobile Compensation Agency to receive treatment beyond eight weeks after an accident.
The industry is also concerned about so-called "diagnosis switching," in which the injury grade itself is raised to avoid the eight-week rule. Minor-injury patients with sprains or bruises in grades 12 to 14 are subject to the rule, while a concussion is grade 11 and thus exempt. Insurer B is worried that some oriental medicine hospitals could exploit this by indiscriminately diagnosing minor-injury patients with concussions. Promotional materials linked to hospital A carried the phrase "concussion diagnosis available." The insurance industry has also detected signs that some oriental medicine hospitals are hiring part-time neurosurgery specialists to issue concussion diagnoses.
A scheme of altering treatment records outright to collect insurance payouts has also emerged. An oriental medicine hospital in Busan was referred to prosecutors by the Busan Metropolitan Police Agency last month on charges of prescribing tonic herbal medicine, which is not covered by indemnity insurance, and then fabricating records to make it appear patients had received expensive non-covered treatments such as manual therapy, herbal packs and pharmacopuncture. One insurer identified 133 million won in fraudulent claims, including 72 million won in long-term insurance and 61 million won in auto insurance, but industry-wide losses were estimated at 1.2 billion won.
Two oriental medicine hospitals in Gwangju were also referred to prosecutors in May following an investigation by the Gwangju Police Agency on charges that doctors and patients conspired to issue false claim documents, including medical certificates and receipts, indicating patients had actually been hospitalized.
Against this backdrop, auto insurance treatment costs paid for oriental medicine care keep growing. Of the 1.5057 trillion won in total auto insurance treatment costs in the first half of this year, oriental medicine accounted for 894.7 billion won, or 59.4%.
The controversy over excessive treatment at oriental medicine hospitals is spreading beyond auto insurance to indemnity insurance. In one confirmed case, after indemnity payouts for non-covered knee injections were limited to outpatient caps, some oriental medicine hospitals introduced robotic equipment and steered patients toward artificial joint surgery. "Every time payout standards are tightened, some medical institutions find new workarounds such as hospitalization or changing diagnoses, and this vicious cycle keeps repeating," an insurance industry official said. "If excessive treatment and insurance fraud are not properly blocked, leakage of insurance payouts will lead to premium increases, and in the end honest policyholders will have to bear the cost."
