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South Korean medical artificial intelligence (AI) service providers are expressing disappointment over the government’s cost reimbursement system for AI medical devices.

According to multiple industry sources on Monday, the non-reimbursement ceiling by sector in the health insurance fee proposal prepared by the government in November 2023 was set at 2,920 won ($2.2) for the first group (medical laboratory technologist), 1,810 won for the second group (specialized imaging diagnosis such as MRI, CT, and PET), 1,180 won for the third group (endoscopy and ultrasound), and 310 won for the fourth group (others).

“We are pleased to usher in the era of medical AI, with the non-reimbursement application of domestic AI medical devices starting last month,” an industry insider said. “But we are disappointed about the actual examination fees, or insurance fees, which are too low.”

JBS-01K, an AI solution developed by medical AI service provider JLK Inc., diagnoses cerebral infarction by analyzing CT and MRI images, and is the first AI medical device to receive medical fees and be used for general patients in Korea.

But concerns rise as the overall pricing of AI medical devices is too low, making it difficult for companies to improve profitability. This is because fees applied to X-ray diagnosis, including brain CTs and MRIs, are lower than the cost, particularly for image diagnosis fees in the case of X-ray diagnosis.

JBS-01K is in the second group due to its specialty of diagnosing brain diseases and the non-reimbursement upper limit was set at 30 times the maximum multiplier, resulting in a 54,300 won fee.

However, most medical AI companies are in the fourth group. Since the fee for the fourth group is 310 won, examination fees will not exceed 3,100 won even when the maximum multiplier of 10 times is applied.

Industry sources noted that Medical AI, which has a program for early detection of heart failure, will inevitably be affected.

Since the examination fee for electrocardiogram examinations is not high, it is expected to be 3,000 won at most with the application of the reimbursement ceiling. This is only about one-tenth of the minimum examination fee considering the cost.

“In this case, a significant number of companies entering the non-reimbursement sector may have to shut down their businesses,” according to an industry official. Meanwhile, the Ministry of Health and Welfare noted that the additional examination by doctors is inevitable due to legal responsibilities when using medical AI and that the insurance fees for medical AI must be set low.

The ministry also stated that it will review the usage status moving forward, gather field opinions, and prepare supplementary measures such as additional incentives.