Manual Therapy Set for Managed Benefit Conversion... Test Case for Improving Indemnity Insurance Loss Ratios

Manual Therapy Prices to Decrease, Raising Hopes for Improved Loss Ratios
Concerns Remain Over Balloon Effect in Non-Reimbursed Treatments
Opposition from the Medical Community Adds Uncertainty

As manual therapy is set to be converted to a managed benefit item, expectations for improved loss ratios in indemnity health insurance are rising, while concerns about a possible balloon effect in non-reimbursed treatments are also growing. If price and session limits, as well as prerequisite treatment requirements, successfully reduce excessive use, the burden of insurance payouts could be eased. However, if demand shifts to other treatments such as extracorporeal shock wave therapy or non-reimbursed injections, the positive effects may be limited. With opposition from the medical community also mounting, there are predictions that this policy could become a litmus test for the overall non-reimbursed medical service management system.

According to the insurance industry on June 23, starting from July 1, manual therapy will be converted into a managed benefit item, with the fee per session set to be adjusted to 43,850 won. A managed benefit is a system in which medical services with high risk of overuse are brought under the national health insurance system, but a high coinsurance rate is applied to control utilization.

For manual therapy, patients will be responsible for 95% of the cost, while the National Health Insurance Fund will cover the remaining 5%. Up until now, prices varied significantly by medical institution, but the same standard fee will now be applied at all healthcare providers nationwide. The number of sessions will also be limited, allowing up to twice a week and up to 15 times a year, regardless of the treatment site. However, in cases of clear joint contracture or stiffness due to surgery or fractures, up to 24 sessions per year may be permitted at the physician's discretion. Before receiving manual therapy, patients must first undergo basic physical therapy or simple rehabilitation for at least two weeks and at least four sessions.

The industry anticipates that this policy will help stabilize the loss ratio of indemnity health insurance. Manual therapy has long been identified as a major driver of increased indemnity insurance payouts. Because the necessity of treatment criteria was unclear and out-of-pocket expenses were reduced by indemnity insurance, there have been ongoing concerns about overuse. In fact, indemnity insurance payouts for musculoskeletal disorders, which include manual therapy, totaled approximately 2.7 trillion won last year, which is higher than the payouts for cancer, cerebrovascular, or cardiovascular diseases. Jae-woo Kim, a team leader at Samsung Securities Research Center, said, "The conversion of manual therapy to a managed benefit item institutionally blocks the biggest factor worsening indemnity loss ratios," adding, "If the structure of abuse is fundamentally improved, the reduction in insurance payouts will become visible starting from the policy implementation next month." He also commented, "In particular, the prerequisite treatment requirement will serve as a strong deterrent to manual therapy for simple pain, and is expected to have a greater real-world impact than price or session limits."

However, there are also views both inside and outside the insurance industry that the loss ratio improvement effect may not last. This is because the demand for manual therapy may not disappear, but instead shift to other non-reimbursed treatments such as extracorporeal shock wave therapy, non-reimbursed injections, or proliferative therapy. If this so-called "balloon effect" occurs, the reduction in indemnity insurance payouts could be limited.

Opposition from the medical community is another variable. Some in the medical field argue that converting manual therapy to a managed benefit could infringe on patients' right to choose their treatment and physicians' professional judgment. They claim that since the necessary number of sessions and treatment methods may differ depending on the patient's condition, uniform price and session limits could lead to confusion in medical practice.

The industry is also paying attention to the possibility that this policy could be expanded to the overall non-reimbursed medical service management system. If effective management is confirmed for manual therapy, it may be extended to other high-cost or high-frequency non-reimbursed items. An insurance industry official said, "The conversion of manual therapy to a managed benefit item is not simply a matter of lowering prices for one treatment, but could affect both the loss ratio of indemnity health insurance and the entire system for managing non-reimbursed medical services," adding, "While the easing of insurance payout burdens is expected, the key will be how effectively the policy can prevent the balloon effect of demand shifting to other non-reimbursed treatments."

This content was produced with the assistance of AI translation services.