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HOME > About HIRA>Healthcare System in Korea>Healthcare System

Healthcare System

The healthcare system in Korea has two components, health insurance and medical aid. The national health insurance system provides coverage to all citizens and it is managed comprehensively in the form of social insurance. It is funded by beneficiaries` contributions. Medical Aid component provides support to lower income groups and is funded by general revenue.

Ministry of Health and Welfare (MoHW) oversees the national health insurance system. Two other institutions, the National Health Insurance Service (NHIS) serves as the insurer and the Health Insurance Review & Assessment Service (HIRA) conducts reviews and assessment of medical fees.

"Fee-for-Service (FFS)" has been the traditional reimbursement system in Korea. Given that FFS' payment is based on individual visit or procedure, it encounters use of more services. In order to reduce the number of unnecessary services, Diagnostic Related Group (DRG) system has been implemented since 2002. For certain illnesses, DRG method pays a lump sum based on patient's diagnosis.

The reimbursement process starts with the health institution filing a claim for medical fees to HIRA. After HIRA reviews the claim, it notifies the result to NHIS and the health institution for payment.

The insured pays a monthly premium according to his/her income level to the insurer and a co-payment (a fixed-rate) to the health institution after receiving medical services.