Medical Fee Checking System
Health Insurance Review & Assessment

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
•In South Korea, as in much of the world, healthcare costs are significant and increasing every year. In 2000, under a series of reforms, the government unified a fragmented health insurance system of hundreds of insurers into one single public insurer thereby giving near universal health coverage to the entire Korean population. •In the early 2000s, there was growing public concern regarding the rising costs of out-of-pocket expenditures – moreover, public anger began to mount following a series of reports of fraud and abuse where patients were inappropriately or excessively charged for healthcare services. Since health is fundamental to life, people are typically compelled to pay whatever medical fee charged to them for treatment. •In particular, a 2006 high-profile court case filed by parents of a child with leukemia found that over 90% of the hospital bill was incorrectly charged. The healthcare facility also persuaded the desperate parents to pay for the full treatment package versus a less comprehensive package and were charged accordingly when the child passed away. The public outcry following this case was mirrored in the National Assembly and led to demands for greater protection of patients. •Citizen and patient advocacy groups also pointed out the vulnerability of the elderly, poor, and disabled who disproportionately require healthcare services than the general population, but have limited capacity to carefully check their medical fees and are thus susceptible to exploitation. •The most common reasons for incorrect, excessive, or fraudulent charges were: 1)Inappropriately designating ”covered services” as “uncovered” – a healthcare provider submits a payment claim to the government for services that are covered by insurance, while the rest is the responsibility of the patient. However, many providers unintentionally and intentionally designated “covered” services as “uncovered”, which were then charged to the patient. Unintentional charges would occur when benefit guidelines were unclear or through error. Intentional charges would occur to take advantage of these “gray areas” in benefit coverage to charge the patient the full amount desired by the provider, which was typically higher than what would be reimbursed by the national health insurance. 2)Prohibited items – patients were being charged for unapproved therapies, tests, and services of which the government was unaware. This also exposed the patient to potential harm. 3)Duplicate items – the fee-for-service model charges for individual services and items (e.g. gauze). Some of those items, which are bundled into general covered services (e.g. wound dressing), would also be charged again as separate items under “uncovered” services. In addition to incorrect high cost charges, incorrect low cost charges that typically go unnoticed by patients were also being systematically added to hospital bills. The cumulative sum of these charges can be quite significant for a large healthcare facility. •Although the public sector agency, Health Insurance Review & Assessment Service (HIRA), had the authority to review claims submitted by hospitals it could not review the out-of-pocket expenditures for uncovered services for which the patients were responsible.

B. Strategic Approach

 2. What was the solution?
The Medical Fee Checking (MFC) System was developed in response to the strong voice of citizen and consumer groups for change. These groups were responsible for generating the political momentum for legal change to grant HIRA the authority to review medical bills on behalf of patients and create the MFC system. The Ministry of Health and Welfare (MOHW), HIRA, and the National Health Insurance System (NHIS) jointly convened a series of multi-stakeholder meetings to devise a solution. There were two overarching objectives of this initiative: 1. To ensure that citizens were protected from fraudulent, exploitative, or unintentionally inappropriate medical fees. 2. To create a system that was highly convenient, responsive to citizens concerns, and reduced their administrative, financial, and time burden. While the target audience was the entire general public, there was special attention made to senior citizens, the poor, and other groups who were vulnerable to exploitation. In cooperation with citizen groups, HIRA devised the Medical Fee Checking System - a streamlined process by which citizens can submit a request to HIRA to check their healthcare bills. HIRA functions as an intermediary between the patient and the healthcare facility. HIRA personnel review and investigate questionable charges to see if they were inappropriately designated as covered, prohibited, duplicate items, or for others reasons. If the MFC results show that the citizen is due a refund, HIRA will contact the healthcare provider to obtain the money directly for refund or deduct it from the provider’s next insurance reimbursement from the state. Specifically, the procedure of verification is as follows: •Patient submits application for fee verification and hospital bill to HIRA •HIRA places a call to provider requesting medical records •HIRA reviews medical bill according to national guidelines on healthcare coverage. oIn case of major charge or dispute, the request is submitted for review by an expert committee. •HIRA notifies applicant and healthcare provider of results. oApplicant can appeal to HIRA within 90 days and provider can appeal within 30 days. oFurther appeal can be made to the Dispute Resolution Committee of the MOHW who will make final decision within 90 days. •In case of refund, HIRA ensures payment to patient. The Medical Fee Checking System has been continuously enhanced with additional services as well as improvements in processes. These include: •multiple avenues to submit medical bill – online, smartphone, in-person visits, phone call •a unique ID by which citizens can track cases •a Refund One-stop Service (ROS) through which HIRA guarantees timely payment back to citizen. •Medical bill calculator where patients can assess whether their hospital bill is within an appropriate range of costs. Importantly, the Medical Fee Checking System has the institutional might and expertise of HIRA to serve as patient advocate whereas the lone citizen voice would typically not be able to successfully challenge bill disputes after services are rendered.

 3. How did the initiative solve the problem and improve people’s lives?
This initiative was created and continuously enhanced in accordance with citizens’ needs and wishes. Each enhancement was designed to lift the burden off of the citizens and let HIRA do the work. Several innovative features of the MFC system have contributed to its success: •IT enhancements for convenience. Citizens can submit requests online or by taking a picture of their medical bill through their smartphone. Future enhancements will allow citizens to receive alerts (push notifications) that indicate at what stage their case is in the process. •The Refund One-Stop Service – HIRA directly contacts healthcare facilities to ensure that refunds are promptly returned to citizens. •Medical Bill Calculator – Patients can visit a website where they input each item of their hospital bill into an online calculator that will then provide an estimate of what the medical fee should be based on the type of facility they visited and the typical costs of each service. It allows patients to determine whether their bill was fair and if they should submit a verification request. In the future, citizens will be able to directly make a verification request through the calculator.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Strategic Element 1: Conception and Legal Foundation for MFC Service Early-Mid 2002 •Intense lobbying by civil society. Citizen groups regularly meet members of the National Assembly and senior officials at the MOHW, HIRA, and NHIS to raise concerns regarding excessive medical fees. •Citizen groups raise public awareness through regional conferences, public hearings and the media. •These efforts build momentum for legislative change. Citizen groups work with National Assembly to draft the legal foundation for the MFC system. December 2002 – The National Assembly passes a law granting authority to HIRA and the NHIS to review medical fees on behalf of patients. May 2004 – Administrative law is passed that healthcare facilities must comply with requests to provide information for MFC. March 2009 – HIRA becomes sole government agency in charge of Medical Fee Checking System thereby reducing duplication. Strategic Element 2: Design and Implementation of MFC System 2003-2004 •The MOHW, HIRA, and NHIS jointly convene a series of meetings with citizen groups to devise a system to protect citizens from excessive or inappropriate medical fees. •Interagency MFC committee is formed to develop process and mechanisms for MFC system. •MFC committee provides report on the step-by-step process, which is shared with stakeholders and given final approval by MOHW. 2004 January 2004 – HIRA creates Medical Fee Checking department staffed by 16 members. February 2004 – HIRA conducts first MFC informational and feedback sessions with healthcare facilities. These are subsequently held twice a year. May 2004 – Medical Fee Checking System is launched nationwide •Citizens can submit request to HIRA to verify that they were correctly charged for health services. •Citizens can make request by sending a fax of the hospital bill or by in-person visits. June 2005 – Medical Fee Checking System website is launched Citizens can submit request online and receive a unique ID to track progress of case. August 2006 – The MFC team is expanded with 21 members and a team leader. This team functions under auspices of customer service department. April 2007 – “Happy Call” Center is established •Citizens can call hotline to submit request and ask questions regarding hospital fees. November 2008 – Pilot Project for Mobile Application is launched •Pilot project with users assesses feasibility of smartphone enabled Medical Fee Checking requests. February 2009 –Refund One-Stop Service (ROS) is launched •HIRA acts as intermediary between patient and healthcare facility for reimbursements and timely refund. March 2010 – Medical Fee Checking Process moves to paperless system. * Petitions are made through website, smart device application, or in-person. In-person requests are filed electronically by HIRA staff. Strategic Element 3: Continuous Citizen Engagement A. Law, Policy, Action •During MFC design phase, consumer groups successfully persuade government to make several changes in guidelines to expand coverage for certain health services. •Once launched, quarterly reports from MFC service provide evidence of patterns of incorrect or fraudulent charges by hospitals to patients. •Citizen groups demand action by government to: 1) clarify gray areas of covered vs. uncovered services and expand where appropriate, 2) induce health care facilities that have high frequency of incorrect charges to correct their behavior. •National Assembly orders HIRA to conduct investigation in 2010 and audits in 2012 of major healthcare facilities. B. System Enhancement •HIRA holds regular meetings with consumer groups to solicit feedback on MFC system. •Consumer groups are active stakeholders the design of the MFC system. They meet regularly with MFC committee to discuss the necessary features that will promote convenience, ease of use, and provide important information to citizens. •Consumer group feedback led to improvements in website, establishment of Happy Call Center, and Medical Bill calculator.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The main stakeholders for the MFC initiative were as follows: Public Institutions: - The Health Insurance Review & Assessment Agency (HIRA) and the National Health Insurance Service (NHIS) convene stakeholder meetings and consultations. HIRA senior leadership and the HIRA Benefit Coverage Verification Department with their counterparts in NHIS lead the consultations, design and implementation of the Medical Fee Checking initiative. Prior to 2009, both HIRA and NHIS offered Medical Fee Checking Services to citizens. Subsequently, the National Assembly granted HIRA sole authority to implement the Medical Fee Checking initiative thereby reducing administrative duplication. -The Ministry of Health and Family Welfare and the National Assembly Health Committee were involved in providing high-level oversight and recommendations during the initial stages of design and implementation. Consumer Groups: Consumer Groups played a very important and active role in the conception, design, and implementation of the MFC system. The Consumer Research Advocacy Alliance, Consumer Advisory Group, and the Labor, Farmer, Consumer Group brought together representatives from numerous associations to provide their opinions and recommendations regarding MFC.
 6. How was the strategy implemented and what resources were mobilized?
The Medical Fee Checking Service was integrated into HIRA’s core services since it was established in 2004. As a primarily customer-driven service, the majority of the costs are directed towards HIRA staff salaries. Initially there were 16 staff members dedicated to MFC who were placed within HIRA’s Customer Service Department, Benefit Coverage Division. Salary expenditures for these people were approximately $640,000 USD. As of 2014, staff for the MFC service expanded to 55 people (including 3 IT and 2 “Happy Call Center” representatives) located at headquarters and HIRA branch offices. In 2013, the staff salaries totaled to approximately $3.3 million USD. In general, expenditures for MFC service activities during the implementation phase have been related to direct client service or outreach. In 2014, approximately $163,000 USD were allocated as follows: $75,700 for the postal delivery of documents to citizens (47%), $30,000 for public relation efforts (18%), $15,300 for educational sessions (9%), $6,400 for hearings with medical institutions (4%), and $35,500 for other activities (22%). Thus, the majority of expenditures are directed towards document delivery. Even though the online method of the MFC service is popular, many citizens prefer to send and receive back paper copies of their medical bills and MFC-related documents to have physical proof of their request. The annual expenditures for MFC have been generally stable during the implementation phase. Notably, however, major increases or decreases in expenditures have been associated MFC enhancements. For example, the activities expenditures in 2010 was $234,000 USD but declined to $169,000 the following year from cost savings with the introduction of the online option for the MFC service. In 2013, the budget increased for additional promotional and advertisement campaigns for the MFC service.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
1.Multiple convenient means of submitting and tracking medical fee verification requests. Citizens can submit medical fee verification requests by contacting the Happy call center, submitting online, or through smartphone. The most popular method is online, followed by smartphone, and Happy Call. Moreover, with a unique ID, citizens can track at what stage their case is being processed. The MFC system has taken advantage of advances in technology to focus on improving the convenience of citizens and lift the administrative, financial, and time burden in dealing with the healthcare system. 2.Refund One-Stop Service. As of 2009, HIRA ensures full and timely reimbursement to patients. Patients no longer have to contact hospitals over bill disputes and suffer delays in receiving a refund. Moreover, patients – as ongoing consumers - can maintain good relations with healthcare providers. Instead, HIRA asks healthcare providers to choose the refund method between direct refund to applicants or payment of refund is deducted from their next insurance reimbursement from the NHIS. 3.Streamlined system with speedy processing of high-volume of claims The MFC system has improved each year to better serve citizens. In particular, the speed of processing claims has declined significantly over time. In 2010, it took an average of 90 days, in 2012 - 78 days, in 2013 -58 days, and in 2014 the average is projected to be 48 days – nearly half the amount of time since 2010. The MFC system has processed a significant volume of claims between 15,000-44,000 annually from 2007-2013. 4.Data collection system to systematically track evidence of errors/fraud HIRA collects and aggregates data annually from all requests to assess patterns and identify problems (e.g. one hospital with many cases of overcharging patients). This data serves as the basis to conduct visits/audits by HIRA staff to health facilities. Moreover, it leads to clarification by HIRA in its guidelines. 5.Review of the Emergency Medical Fund – Every province and district office has an Emergency Medical Fund, which pays the out-of-pocket expenses of low-income citizens. Since the Emergency Medical Fund is government aid for low-income citizens, these funds are vulnerable to fraudulent charges by healthcare providers. Since 2013, HIRA has reviewed any claims over $1500 from Emergency Medical Funds throughout the country. In one year, 1150 cases from these funds were submitted of which 66% received refunds. The amount saved through MFC review of Emergency Medical Funds totaled to approximately $100,000 USD.

 8. What were the most successful outputs and why was the initiative effective?
An interagency MFC committee, which led the design and implementation of the MFC system, was responsible for reporting the progress of MFC implementation to key stakeholders: High-level political oversight was provided by members of the National Assembly and the Ministry of Health and Welfare. During implementation, the MFC committee formally reported to the MOHW on a monthly basis and was in regular contact with senior officials. Specifically: -The MFC committee outlined the objectives and process for the MFC service, which was reviewed and approved by the MOHW and subsequently shared with stakeholders. -The MFC committee reported the anticipated budget, timeline, and principal activities for the first (in person visits, fax) and subsequent version of the MFC service (on-line, smartphone) -Examples of reported activities and indicators include: # of customer service staff hired for MFC, # and description of consultations and outreach activities with healthcare providers, progress on development of database to store and track verification requests, Given the leading role of citizen groups in spurring the creation of MFC system, the committee also reported to and solicited feedback from consumer groups on a monthly basis. Consumer groups monitored several critical enhancements in service, which they suggested (e.g. Happy Call Center) to improve public service delivery. Within HIRA, senior leadership from each department as well as the HIRA president received regular reports on the rollout of MFC service. Once the service was launched, each of these groups continued to receive regular (monthly and annually) reports on key indicators related to the output of the MFC service. These include: # of verification requests submitted, # granted refund, # denied refund, # withdrawn cases, amount of money refunded. These statistics form the basis of regular evaluations of the behavior of individual and aggregate healthcare facilities to identify where there are continued problems or improvements. This data also identifies patterns in problems (e.g. one service being frequently checked for verification). These regular evaluations of MFR made by these groups have led to recommendations for visits, audits, and clarifications in guidelines.

 9. What were the main obstacles encountered and how were they overcome?
The main challenge during the implementation of the Medical Fee Checking System came from the medical establishment who expressed very vocal concern that the very premise of the system would cause the public to not trust the healthcare system. They argued that the creation of a medical fee checking system would give the impression that fraud and exploitation of vulnerable patients – particularly the elderly and infirm – were rampant in Korea. HIRA recognized these concerns as valid and had many consultations with the medical community to address them. They focused on clarifying guidelines between “covered” and “uncovered” services and that visits by HIRA staff were not of a punitive nature, but opportunities to address problems and change procedures to prevent future errors in medical fee charges to patients. However, it must be recognized that despite the objection by the medical community to the Medical Fee Checking system, the call for such a system was very strong from consumer groups, citizens, and members of the National Assembly.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The MFC system significantly lifts the financial, psychological and administrative burden off of citizens regarding healthcare bills and empowers them to take active roles regarding their healthcare. Prior to MFC, citizens would feel intimidated by the knowledge gap regarding healthcare costs and reluctant to question healthcare providers. The MFC service functions as a patient advocate and a tool for citizens and their families. In turn, this system has led to improvements both in public service and in the billing practices of healthcare providers. Specifically, they key benefits are: 1.Investigation of inappropriate medical fee charges and money returned to citizens Since its establishment in 2004, the Medical Fee Checking System has returned over $52.5 million. From 2007-2014, the MFC system reviewed approximately 200,000 cases. During this same period, 40-50% of cases each year resulted in a refund to patients. These figures show the importance of the MFC system to identify and correct hospital bill discrepancies. The fact that each year nearly 50% of the cases result in refunds means that opportunities for error, fraud or lack of clarity continue to exist. In large part this reflects the changing nature of health care services. As new medical services and technologies are introduced, coverage guidelines need to be updated and “gray areas” clarified. The MFC system helps identify those areas as patterns in erroneous charges can be observed. The medical bill calculator allows citizens to also check before submitting a verification request whether their bill is within the estimated expected range. This promotes confidence in the healthcare institution and even allows citizens to price compare among healthcare facilities. 2.Clarification and adjustments to insurance coverage policies The Medical Fee Checking system also uncovered gray areas in guidelines and led to numerous clarifications and policy changes that made it easier for healthcare providers to appropriately charge patients. If there were frequent items that were charged as “uncovered”, then healthcare provider groups, consumer groups, and HIRA would evaluate whether to change guidelines to expand coverage for those services. This is a tremendous benefit of MFC and the role of citizen groups to broaden the healthcare services for citizens and reduce their financial burden. For example, following the 2006 court case of the leukemia patient, the “Friends of Leukemia” civil society group successfully lobbied HIRA to expand coverage of leukemia cancer services. 3.Action to investigate and correct billing behavior of healthcare providers The MFC system provided concrete evidence to initiate consultations and audits to healthcare facilities with repeated patterns of inappropriate hospital billing practices. In particular consumer groups used the reports to argue that billing behavior among healthcare facilities were not sufficiently improved. Specifically, in December 2010, pressure from consumer groups convinced members of the National Assembly that further action was warranted. The National Assembly gave HIRA the responsibility to conduct an investigation of tertiary hospitals. The study indicated continued practice of inappropriate and excessive medical fees, which led to audits of 10 hospitals. In 2012, the National Assembly ordered HIRA to conduct audits of all 44 tertiary hospitals, which also uncovered evidence of inappropriate charges. Data from the MFC system pertaining to the number of claims and percentage of refunds also are used for quality ratings of hospitals and shared with the public. This puts pressure on healthcare facilities to correct billing behavior. There is evidence that healthcare facilities are making substantial improvements in billing practices to reduce inappropriate or erroneous charges to patients. Specifically, the amount of money refunded has, in general, declined annually from $15.2 million in 2007 to $3.0 million in 2013. 4.Promote citizen participation and engagement in policy dialogue The MFC system was created in response to public concern and lobbying by civil society groups. Consumer groups played an active role in determining the features of MFC and how to reduce the burden on the citizen. Specifically, the establishment of the “Happy call center” and the “One Stop Refund Service” were a result of discussions between HIRA and consumer groups. HIRA continues to hold quarterly meetings and two workshops annually with consumer groups to discuss the MFC system. In 2014, several patients who received refunds were invited by HIRA to give their testimonials at the quarterly meetings.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
There are several features of MFC that ensures its sustainability. *Institutionally, the MFC system is now an integral function of HIRA with a dedicated staff of 55 personnel. The MFC system has been recognized as important public service by the Ministry of Health and Welfare who oversees activities and has used MFC results to assign HIRA further responsibilities to better advocate for citizen interests. * Financially, MFC is supported with an annual budget that support HIRA staff and continued enhancements to provide additional services and improve convenience for citizens. *Socially, support from the general population and citizen groups is key to the long-term sustainability of the MFC system. The ongoing cost savings to patients has a real impact on the everyday lives of citizens and enhances the image of public service employees as advocates for citizen interests. Moreover, there is a sustained two-way dialogue between citizens and consumer groups with HIRA that continues to influence policy, catalyze political action, and shape the MFC system to be more responsive to their concerns, HIRA is now leading efforts by the Government to share the MFC system with other countries. It has presented the MFC system to approximately 64 countries who have expressed interest and enthusiasm for the government’s role to review medical fees on behalf of patients and control medical expenditures. The MFC system is appealing because it has a strong and direct impact on the lives of citizens. In countries where national health coverage is available, the system is easily transferable as a stepwise process that can be adapted to the local context in accordance with the IT capabilities. Even in countries without national health insurance, the MFC system demonstrates the important role of government in preventing exploitation of citizens from excessive and inappropriate healthcare fees. In many countries, high medical fees are a main driver of poverty. A government can adapt elements of the MFC system to empower citizens with knowledge of the appropriate and average healthcare costs in their country.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
Above all, this initiative revealed how a strong dialogue between public servants and citizens can create positive synergies to solve a critical problem. Although citizens and civil society groups were frustrated and angry about excessive medical fees, they took a very active role and made positive contributions to the development, implementation, and continued improvements of the MFC system. For example, citizens strongly conveyed the administrative and financial hardship in tracking down and pressuring a health facility for reimbursement. Together with HIRA, citizen participation led to the creation of the Refund One-Stop System. Importantly, before the initiative, HIRA staff had underestimated the value of citizen participation to make significant improvements in processes, feeling that “we know our systems best.” However, it was through continuous citizen feedback that the MFC process became even more efficient and in 4 years reduced the processing time by nearly half. Public dialogue continues to be important in light of reports and audits mandated by the National Assembly, which revealed ongoing problems of incorrectly charged medical fees. The willingness of HIRA and other public stakeholders to sincerely listen and share the concerns of citizens helped to bring confidence and trust in the government. It was also important to understand the concerns of healthcare providers who felt that the MFC system would create mistrust between providers and patients for what they deemed to be largely administrative errors. By working together, this initiative helped bring about clarifications in coverage guidelines and reduced opportunities for inappropriate, incorrect, or fraudulent medical charges. Moreover, the online medical bill calculator allows patients to check that their hospital bill was within a fair and correct range. The online calculator takes into account the variations in costs for a given service due to facility type (e.g. tertiary hospital vs. clinic). Thus, in most cases, a citizen who might feel that she was overcharged would see that it the fee was, in fact, appropriate. This helps build trust that the health facility is charging a fair amount for services. The citizen would not need to submit a verification request; in turn, the health facility would have fewer cases filed against them, which can affect their reputation. Given the concerns surrounding mistrust, many at HIRA were initially reluctant to promote the program that seemed to pit patient against provider. However, we quickly learned from the verification request cases that erroneous and fraudulent medical fees were a real problem that was supported by data. This boosted the confidence of public servants to take on the role of citizen advocate. Moreover, we also saw at HIRA that we could improve coverage guidelines where they were unclear and have the data to justify changes in coverage guidelines of certain important services that were commonly paid out-of-pocket.

Contact Information

Institution Name:   Health Insurance Review & Assessment
Institution Type:   Public Agency  
Contact Person:   Jongsu Ryu
Title:   Senior Adviser for International Cooperation  
Telephone/ Fax:   82-2-2182-2428/82-2-6710-5849
Institution's / Project's Website:  
Address:   22 Banpo-Daero Seocho-Gu
Postal Code:  
City:   Seoul

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