The government is moving to stamp out fraudulent billing and illegal medical operations — including unlicensed broker-run hospitals — that it says are endangering public health and draining the national health insurance system.
The Ministry of Health and Welfare announced Monday that it has launched a high-intensity investigation and enforcement framework as part of its second-half 2026 work plan, designating the elimination of abnormal medical practices as a key national policy priority.
According to the Ministry of Health and Welfare and the National Health Insurance Service, 1,805 illegally established medical institutions were uncovered between 2009 and 2025, with recovery orders totaling 2.9 trillion won ($2.04 billion) issued against them.
Fraudulent billing by medical institutions has also surged, jumping from 69.8 billion won in 2023 to 131.8 billion won in 2024 before easing slightly to 103.3 billion won in 2025 — a trend officials say reflects a serious and worsening drain on health insurance finances.
Particularly concerning, authorities say, is that the misconduct being uncovered recently has moved well beyond simple document falsification and now directly threatens patients' daily lives and health.
A prominent example is the practice of offering cancer patients kickbacks — refunding a portion of inpatient care costs — at long-term care hospitals. Also targeted are institutions that admit patients on the condition of administering unproven injectable treatments and then bill for excessive medical fees, as well as clinics that over-prescribe attention deficit hyperactivity disorder medications outside the insurance coverage system.
The deeper problem, officials say, is that even when such illegal institutions are caught, recovering the ill-gotten gains is extremely difficult.
Data submitted by the National Health Insurance Service to the National Assembly shows that of the 3.4 trillion won in recovery orders issued against illegally established institutions from 2009 through July 2024 — a span of roughly 14 years — only 233.6 billion won, or 6.92 percent, was actually collected.
The remaining 3.14 trillion won, representing 93.08 percent of the total, remains uncollected because operators concealed or transferred assets before seizure and forced-execution proceedings could be initiated.
In response, the government launched an administrative investigation task force on abnormal medical practices in June.
The task force goes beyond checking for statutory violations, conducting comprehensive reviews that cover the appropriateness of care itself — including cancer patient billing kickbacks, admissions induced by unproven injections and excessive non-covered prescriptions.
The ministry plans to aggressively apply the Medical Act's prohibition on unethical medical conduct, suspending the licenses of physicians found in violation and immediately referring cases for prosecution.
Alongside this, the government will pursue rapid targeted investigations into fraudulent national health insurance billing. Beyond clawing back ill-gotten gains, authorities plan to impose sweeping punitive measures — including business suspensions of up to one year, fines of up to five times the fraudulent amount and public disclosure of violations — to ensure illegal conduct carries serious consequences.
The government also plans to deploy an AI-based monitoring system that will continuously screen medical institutions with a high likelihood of fraudulent billing and automatically flag facilities for on-site inspection, building a precision surveillance network.
To address the root cause of asset concealment, the government is also working to shorten the judicial process. Police investigations have averaged 11 months — long enough for operators to hide assets before accounts can be frozen. Once enabling legislation is amended this year, the National Health Insurance Service will receive special judicial police authority starting in 2027, cutting the investigation period to three months.
The National Health Insurance Service is already securing dedicated personnel and conducting preparatory training — including support for joint investigations into illegal pharmaceutical crimes — so that officers can be deployed immediately once the special judicial police bill passes.
thlee@heraldcorp.com
