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Press Release

Innovating NHI to ensure access to essential healthcare and consolidate our support for reform

  • Regdate2024-02-28 20:00
  • Hit800

Innovating NHI to ensure access to essential healthcare

and consolidate our support for healthcare reform

- 2nd Comprehensive NHI Plan (20242028) announced -

- The plan proposes a new slogan, “Innovate NHI, Be Healthy Together,” and 4 policy directions -

 


Reform the payment system for sufficient provision of healthcare services and just compensation

Improve the healthcare delivery system to address healthcare gaps and ensure healthy living

Prevent abuse of healthcare services and ensure efficient management of the NHI finance within the affordable extent

Build a virtuous cycle through a stable supply of essential medicines and healthcare innovation


 

 

On February 4, the Ministry of Health and Welfare (MOHW, Minister Cho, KyooHong) announced the 2nd Comprehensive National Health Insurance (NHI) Plan, which set forth four directions for Korea’s medium- and long-term NHI policies.

 

Aimed at achieving the sound management of the NHI under Article 3-2 of the National Health Insurance Act, the 2nd Comprehensive NHI Plan was developed through an extensive consultation process including eight meetings with policyholders, service provider groups, relevant organizations, and experts, as well as policy forums and Health Insurance Policy Deliberation Committee meetings.

 

In recent years, Korea’s healthcare delivery system has been in a critical state, including the lack of local and essential healthcare services and medicines, which posed a grave threat to people’s lives and health. The population decline accelerated by population aging and low birth rates, confounded by the growth of single-member households, accelerated the downsizing of the society in general, threatening the sustainability of the NHI.

 

* 10-year NHI premium revenue growth: 7.6% < 10-year medical care cost growth: 7.7%

 

Despite these issues, the existing NHI Policies put too much focus on increasing the coverage of the NHI scheme, exacerbating the structural issues caused by the current payment system, such as the concentration of large hospitals in the Seoul Capital Area and the resulting lack of local healthcare; the lack of doctors going into essential healthcare due to declining service quantity and imbalanced compensation; and increased use of needless healthcare services induced by lower co-payment.

 

The new plan addresses these issues by fundamentally changing the NHI framework and setting forth measures designed to maintain the sustainability of the scheme while ensuring that both the current and future generations equally benefit from the NHI.

 

The plan will be implemented in four directions, as follows:

 

First, the government will innovate the NHI payment system to ensure appropriate provision of healthcare services and just compensation.

 


[Fill the Gap in Essential Healthcare through the Payment System Reform]

As-Is

 

To-Be


(Gap in Essential Healthcare)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fee-for-service

 



Supplementary public policy-driven fees

Alternative

payment system

 

 

 

 

 

 

 

 

 

Fee-for-service


* Increase to be centered around fee schedule for essential healthcare, Supplementary public policy-driven fees, Alternative payment systems (alternative public policy-driven fees, bundled payment, etc.)


 

Depart from the fee-for-service model and uniform increase of service fees by the contract of conversion factors by type, and reform the price-setting structure to focus on raising the prices of under-valued services, including essential healthcare services.

 


(Spending Target) Set yearly “spending targets” based on expected revenues and other factors, within the extent the NHI finance can handle.

 

 

If the actual spending exceeds the target, the excess will be considered when setting the price increase rate for the following year.

 

(Cost Survey) Conduct yearly medical cost surveys for faster, evidence-based price adjustment.

 

(Fee Adjustment) Adjust the fees for under-valued services (identified using medical cost survey results) based on relative values and conversion factors.

 

 

The fees for high-valued services will not be changed, in principle.


 

Adopt public policy-driven fees to incorporate factors overlooked under the existing fee-for-service system, including the difficulty, risk, and urgency of medical services, the skills of the medical staff, the on-call and stand-by time, and inter-regional gaps.

 

* Fee calculation: (Before) relative value score × conversion factor (After) (relative value score × conversion factor) + supplementary public policy-driven fee

 

Work toward the adoption of alternative payment systems that, beyond the fee-for-service framework, provide differentiated compensations based on service quality and performance rather than the quantity of services.

 

 


Examples of alternative payment systems

 

(Pediatrics) Pilot post-service compensation program for public medical centers for children (20232025)

 

- Provide compensations for losses suffered by public medical centers for children, based on each center’s progress on performance targets.

 

(Critical Care) Pilot project for a stronger critical care system (20242026)

 

- Provide compensation based on each institution’s performance in outpatient care reduction, development of partner medical institutions, facilitation of consulting, and higher quality of medical services.

 

(Local) Pilot project for innovation of local healthcare (2H 2024)

 

- Provide bundled compensation for each institution based on performance. Determine the amount of compensation based on the quantity of specialized/collaborative care.


Create an Innovation Account to develop models for payment reforms and pilot projects and build performance-based integrative review/evaluation systems.

 


Performance-based integrative evaluation system

 

(Common Metrics) Define and use common metrics through the evaluation integration portal Prevent redundant surveys on common metrics.

 

Reduce administrative burden on healthcare institutions by preventing redundant evaluation of similar metrics.

 

(Performance Metrics) Reform evaluation metrics to shift the focus from “input/structure/process metrics” to “performance metrics.”

 

(Performance-Based Compensation) Reshape healthcare quality evaluation grants, etc. into compensation based on the performance of each institution. Merge various evaluation-related fiscal resources* to build a KRW 1.5 trillion fund.

 

* Healthcare quality evaluation grant, care benefit adequacy evaluation adjustment, institution type-based additions, etc.

 

Through an unprecedented expansion of performance-based compensations, improve healthcare quality and increase meaningful incentives to achieve results.


 

Second, the government will improve Korea’s medical services delivery system to address gaps in healthcare and ensure healthy living.

 

Enhance networking and cooperation among local medical institutions centered on national university hospitals and other base hospitals, thereby building a delivery system capable of timely provision of healthcare services across different phases in life/disease.

 

 


Healthcare Delivery System for Acute, Recovery, and Chronic Phases

 

 

 

 

 

 

 

 

 

 

 

Premorbid

 

Postmorbid

 

 

 

 

 

 

 

 

 

 

 

 

Preventive Care

 

Acute Care
(Examination/Tests Surgery/Treatment/Hospitalization Discharge)

Recovery Care

Chronic Care

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Health Centers

(Health Guidance)

 

 

 

 

 

 

 

 

 

Specialized Rehabilitation Institutions

* 53 institutions in Korea(2023)

 

Chronic Hospitals

(Care Hospitals)

 

 

Primary

Medical

Institutions

(Clinics)

Secondary

Medical Institutions

(Hospitals)

Tertiary

Medical Institutions

(General Hospitals)

 

Health Examination Institutions

(Physical Checkup)

 

 

Build a Recovery Care Institution System

Integrative Management System

(Pilot Project)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Provide policyholders whose yearly healthcare usage is prominently low with vouchers equal to 10% of the NHI premiums paid in the previous year (up to KRW 120,000 per year), expand the eligibility of the healthy lifestyle support grants, and increase other benefits for self-driven health management.

 

Build a comprehensive management system for chronic diseases, including patient-tailored physical checkups and polypharmacy management, and enhance support for preventive and comprehensive health management, such as increasing mental, women’s, and children’s health management services and promoting support for residence-based end-of-life healthcare catered to the needs of older people.

 

Improve healthcare safety nets for vulnerable groups by, for example, steadfastly expanding co-payment ceilings and catastrophic health expenditure* and minimizing wage restrictions for overdue premiums**.

 

* Do not increase co-payment ceilings for the lowest 30% (2024). Provide total amount-based support for catastrophic health care costs across all diseases (2024).

** Expand scope of exclusion from wage restriction: (Before) Yearly income below KRW 1 million + property below KRW 1 million (After) Yearly income KRW 3.36 million or lower + property KRW 4.50 million or lower

 

Lower the pharmaceutical expenditures for life-threatening diseases, such as cancers and rare diseases, and devise measures to prevent excessive healthcare costs, including the expansion of general care-nursing integration services, to ease the burden for acute patients.

 

Third, the government will strictly prevent abuse of healthcare services and ensure efficient management of the NHI finance within the extent the people and the state can afford.

 

Prevent patients from choosing services not covered by the NHI by providing sufficient information on non-covered services and work with the Financial Service Commission to improve medical indemnity insurance schemes.

 

Consider creating a list of non-covered services with standardized names and classification codes and proposing a recommended price for each service.

 

In addition, prohibit mixing covered services with excessive non-paid services for non-critical conditions, such as manual therapy and cataract surgery, and greatly enhance the management of non-paid services by, for example, establishing a mechanism for eliminating non-paid services through reevaluation.

 

Keep the number of hospital beds and equipment* to appropriate levels (currently, markedly higher than the OECD average) and distribute a list of appropriate services as part of the Choosing Wisely Campaign** to prevent excessive provision of healthcare services.

 

* (Hospital beds [per thousand, 2021]) Korea 12.8 > OECD 4.3 / (CT [per million, 2021]) Korea 42.2 > OECD 29.8

 

** (Choosing Wisely Campaign) A campaign aimed at preventing the overuse of unnecessary services and improving healthcare quality by having healthcare professionals build and distribute lists of appropriate services (started by the American Board of Internal Medicine [ABIM] Foundation, joined by 80 associations across 20 countries)

 

Given the high number of outpatient visits per year in Korea (three times higher than the OECD average*), provide a quarterly notification service on healthcare usage and healthcare expenses and increase co-payment** in case of excessive usage, thereby encouraging rational medical utilization.

 

* (No. of outpatient visits per person/year, 2021) Korea 15.7 > OECD 5.9

 

** E.g. If the number of outpatient visits exceeds 365 per year, increase the co-payment rate to 90%. In case of receiving physical therapy more than once per day at a single institution, increase the co-payment rate

Build a mechanism to reevaluate covered services on a regular basis to adjust the prices of, or exclude, services lacking in efficacy or economic feasibility.

 

Continue to reform the income-based charging system to improve fairness and equity in premium payment, such as reducing property-based insurance premiums for non-employee policyholders and improving the system for dependent household members.

 

Reassess the premium imposition method for new income types (influencers, etc.) and improve payment services, including lump sum payment or minimizing the gap between income earning and premium imposition.

 

Expand the scope of financial metrics requiring disclosure and apply stricter National Assembly reporting procedures to improve the transparency and reliability of NHI finance management.

 

Fourth, the government will build a system to ensure a stable supply of essential medicines and support healthcare innovation for more treatment opportunities.

 

It is important to ensure a stable supply of essential medicines, etc. to maintain healthcare security even during a global supply chain crisis due to external factors, such as COVID-19 or the RussianUkrainian war.

 

Address this need by encouraging the use of domestic ingredients to ensure a stable supply of essential medicines, and apply favorable medicine prices for maintaining production facilities and infrastructure in Korea, along with other measures.

 

Create treatment opportunities for diseases for which there is no cure today, and facilitate faster adoption of innovative healthcare technologies offering effects far exceeding existing treatments by reducing their mandatory listing period, lowering economic feasibility evaluation requirements, and applying favorable prices.

 

In particular, consider providing favorable pricing and other benefits to companies leading healthcare innovation and contributing to a stable supply chain through R&D investments, supply of essential medicines, and job creation.

 

While ensuring the protection of personal information, expand the use and disclosure of NHI data for scientific research for public interests and self-driven health management to stay ahead in healthcare innovation.

 

Second Vice Minister Park Minsoo of the MOHW said, “With this plan, we will normalize healthcare service delivery by ensuring its solid supply in essential healthcare sector and adjusting fees to reasonable levels,” and “We will lay the groundwork for the sustainability of the NHI moving forward, by reducing abuse of healthcare services, such as unnecessary “medical shopping,” and building a stable supply chain and a support system for healthcare innovation.

 

He added, “We will maintain support to ensure NHI benefits that are appropriately given to the people, and commit more than KRW 10 trillion over the next five years on sectors where service delivery has been lacking despite their direct impact on people’s lives and health,” and “Through this plan, we will take our best efforts to facilitate the implementation of planned measures, including the essential healthcare policy package announced on February 1, under stable financial support.” ///


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