A former cancer care hospital director in Hwasun, Jeollanam-do has alleged in an exclusive report by The Chosun Daily that nearby facilities inflate non-insured treatment fees and return a portion to patients in cash, billing the full inflated amount to the patient’s real-loss insurance policy.
The complaint, first filed in July 2023 on the websites of the Jeollanam-do Office and local health centers, remained buried for three years without significant repercussions. It has since resurfaced after the Ministry of Health and Welfare announced a crackdown on cancer care and Korean medicine hospitals billing non-insured treatments at 4 million to 9 million won per month.
The scheme, as Director A described it, begins with pricing. A hospital charges a patient an inflated rate for a non-insured treatment, then returns a portion of the fee in cash after the patient’s real-loss insurance absorbs the full inflated charge. In the example he provided, a low-frequency hyperthermia cancer treatment ordinarily priced at 300,000 won per session is billed at 500,000 won. The patient receives 200,000 won back, while the real-loss insurance policy pays the full 500,000 won.
The arrangement may appear neutral or even beneficial to patients receiving cash returns, but the consequence accumulates over a course of treatment. Each inflated claim draws down the patient’s annual real-loss insurance coverage limit faster than standard pricing would, potentially cutting what should be a full year of treatment to five or six months. “Paybacks aren't free. The patient’s annual coverage limit depletes quickly, allowing them to receive only five to six months of treatment instead of a full year,” Director A told The Chosun Daily on June 11.
Director A said the effects reach beyond the individual patient. Inflated claims aggregated across a patient population drive up premiums for all policyholders, gradually narrowing access to coverage. “If real-loss insurance payouts leak massively due to paybacks, premiums rise. Those who truly need coverage may be unable to afford premiums or cancel their policies,” he said. On care quality, he said: “If paybacks are practiced, cancer treatment inevitably becomes subpar. Cancer patients are the biggest victims.”
Director A currently operates a clinic in Hwasun. He said his hospital operated normally and was ostracized as a result, eventually closing due to worsening management. Patients compared cash return offers across facilities and left for those offering better terms. He described a week in which 25 patients departed after asking why his hospital did not match offers made elsewhere. “Our hospital, which operated normally, had to close due to worsening management. Active investigations by supervisory agencies are needed,” he said. He characterized the practice as fraudulent: “Paybacks are insurance fraud.” The post remained buried for three years without significant repercussions, and Director A said the situation has not improved since. Asked whether conditions have changed, he said: “Not at all. It seems to have worsened.”
Local police and health authorities stated they inspected the facilities named in the July 2023 post and found no evidence of paybacks. Director A questioned whether those inquiries went far enough. “If they investigate actively, it will come to light, but there seems to be no will,” he said. He attributed the lack of enforcement urgency to a view that patients benefit financially from the arrangement and are therefore not harmed. “There’s a strong perception that ‘since patients don’t lose money, there’s no need to intervene.’ But the biggest victims are the patients,” he said.
Going public carried personal consequences. One of the hospitals he named filed a false accusation complaint against him, leading to a police investigation. He was cleared, but described the process as difficult, occurring as his own hospital was losing 200 million won monthly and preparing to lay off 16 employees. He said the problem extends well beyond Hwasun. “Gwangju, a nearby city, was even worse. It’s a nationwide issue. The capital region, densely populated with cancer Korean medicine and care hospitals, is the worst,” he said.
Real-loss insurance claims for cancer immune injections – treatments without established clinical efficacy – reached 51.6 billion won in the first quarter of 2026, a 21% increase from the same period a year earlier, according to The Chosun Daily. Director A said individual patients’ real-loss insurance coverage limits deplete faster when treatments are overcharged, leaving them with fewer months of coverage than their policies would otherwise provide. Premiums for first- through fourth-generation real-loss insurance policies, a generational classification used in Korea, rose an average of 7.8% this year.
That premium pressure aligns with a record year for insurance fraud nationally. Detected fraudulent payouts in Korean private insurance totalled 1.16 trillion won in 2025, rising steadily from 1.12 trillion won in 2023 and 1.08 trillion won in 2022, according to the Financial Supervisory Service (FSS) cited by Korea JoongAng Daily. The number of fraud suspects fell 3% year over year to approximately 105,700, even as total losses climbed. The Financial Services Commission (FSC) estimates that including undetected fraud, the figure could reach around 9 trillion won, with long-term non-life insurance – encompassing real-loss insurance products – accounting for 44.7% of detected cases, according to Asia Business Daily. An FSC official noted that fraud-driven payout leakage “leads to higher premiums, and when insurance fraud involves claims for health insurance benefits, concerns rise about the depletion of the health insurance fund.”
The domestic fraud challenge sits alongside a sustained rise in medical costs across Asia-Pacific that is independently compressing insurer margins. Korea’s projected gross medical trend for 2026 stands at 13.5%, below the Asia-Pacific regional average of 14% but above the global figure of 10.3%, according to a WTW report published Dec. 11, 2025. The regional figure has climbed from 11.8% in 2024 to 13.2% in 2025. Among the top cost drivers cited by Asia-Pacific insurers were fraud, waste, and abuse, alongside new medical technologies and pharmaceutical advancements. Korea’s position – above the global average but below the regional one – places it among the markets where cost pressure is sustained but not at the upper end of the range, even as 57% of Asia-Pacific insurers expect elevated medical cost growth to persist for at least three more years.
