In Korea, most medical services are covered by the National Health Insurance System except for a limited number of medical services including but not limited to beauty related plastic surgeries. Any Korean citizen admitted to the National Health Insurance System is required to normally bear no more than 20% out of total medical bills for any medical service rendered by a hospital or clinic in a form of treatment of diseases or a surgery operation while the balance of total medical bills is paid by the National Health Insurance Service directly to that hospital or clinic. Due to the aforementioned payment system, a hospital’s or clinic’s determined attempt to vigorously solicit patients aiming to generate high profits for their own benefits thereby ultimately causing jeopardizing the financial strength of the National Health Insurance System is prohibited under the Korean Medical Service Act on the ground of the regulatory banning from soliciting patients for profit-making purpose, accordingly.

Those notable soliciting activities banned under the Korean Medical Service Act are as follows:

i) Any medical service by a medical doctor with a discount or exemption of a patient’s share in medical bills is held illegal. Consequently, a medical doctor’s discount or exemption of a patient’s share in total medical bills tainted by his/her personal acquaintance with the patient or based on the patient’s statement of he or she having no money is held illegal.

ii) It is also held illegal to pay a commission to a person, who has solicited and introduced patients to a hospital or clinic. This classification of illegal activity also extends to any medical services uncovered by the National Health Insurance System. For instance, a plastic surgery hospital’s payment of a commission in consideration of solicitation of patients is held illegal, accordingly.

iii) A provision of gifts or valuables by a hospital or clinic to a patient for his/her visit to them is also held illegal.

Statutory Exception for Solicitation of Foreign Patients

Korea enacted ‘the Act on Support for Overseas Expansion of Healthcare System and Attraction of International Patients’, under which a business being paid a commission in consideration of its solicitation of foreign patients (“foreign patient solicitation business”) is held legal and legitimate practice. Such commission payment to a foreign patient solicitation business by a Korean hospital or clinic in consideration of solicitation of foreign patients, who are not admitted to the National Health Insurance System in Korea, is deemed permissible and thus acceptable practice, accordingly.

However, in order to qualify as a foreign patient solicitation business, such business is required to file an application to the relevant authorities in accordance with the statutory requirement provided in ‘the Act on Support for Overseas Expansion of Healthcare System and Attraction of International Patients’. Under this Act any business, which locates in a foreign country outside Korea and thus which does not have a principal business place or office in Korea, is legally prohibited from being paid a commission by a Korean hospital or clinic in consideration of soliciting foreign patients. Moreover, any business, which even locates in Korea but has failed to file an application to the relevant Korean authorities or has been paid an excessive commission by a hospital or clinic, may be subject either to a criminal sanction or to an administrative disposition as well.

Limitation on Medical Advertisement

Korea used to heavily regulate an advertisement related to medical services (“medical advertisement”). The Korean Government permitted to publish a medical advertisement to the limited extent of the very basic information such as the name of a medical institution, its address and its contract information. Such rigid limitation was, however, lessened by virtue of a judgment by the Korean Constitutional Court holding that such limitation on medical advertisement would be in contravention of the Korean Constitution.

Under the circumstances, only those advertisements explicitly specified in the relevant laws are prohibited. They may include, without limitation, i) an advertisement aims to facilitate a discount against or exempt paying entire medical bills in order to deceive consumers, ii) an advertisement aims to allegedly guarantee the treatment result, iii) an advertisement showing an actual and real surgery operation, iv) an advertisement omitting material information such as serious side-effect or v) a deceptive or misleading advertisement without a supportive basis. Moreover, any TV or radio advertisement is not permitted to air as a way of advertisement.

Prior to the Korean Constitutional Court’s judgment, any medical advertisement was required to take a prior review by the Ministry of Health and Welfare; however, such requirement was also rendered unconstitutional by the Korean Constitutional Court finding that such review would constitute a unlawful review prohibited under the Korean Constitution, as a result of which any regulatory mandatory prior review on medical advertisement was abolished.

Administrative Disposition

A regulatory control available against medical services may be divided into two categories, i.e. i) a regulation on a license held by a medical person and ii) a regulation on medical practice performed by a medical institution.

At first, we take a look on a regulation against the medical person’s license. Upon finding of a violation of the Korean Medical Service Act, the Minister of the Ministry of Health and Welfare may completely cancel or temporarily suspend his/her license held by a medical person not exceeding 1 year period depending on the nature of such violation. By examining the nature of the violation led to the cancellation of his/her license, a medical person may be granted a new license, having passed an evaluation procedure for the purpose of issuing a new license, after 2 or 3 years from the cancellation date.

Lastly, we take a look on a regulation against medical practice by a medical institution. Upon finding of a violation of the Korean Medical Service Act, the head(s) of a local municipal government(s) supervising a medical institution in its jurisdiction may be able to render his/her administrative disposition either to suspend such medical institution’s practice not exceeding 1 year or to cancel the license to practice or to completely shut down. If suspension of a medical institution’s practice has caused the severe hardship such as an inconvenience to patients being hospitalized in that medical institution, at the request of such medical institution, a local municipal government may, exercising its own discretionary power, proceed to replace such suspension disposition with an imposition of a penalty upon that medical institution derived from an annual report of the revenue filed by the medical institution.