Structural limitations of volume-based fee-for-service reimbursement and distortions in the compensation system

The heavy workload and sense of relative deprivation among otolaryngologists identified in this study stem from the chronically low reimbursement structure under the fee-for-service system that has long sustained the healthcare system in the Republic of Korea. In the survey, 67.4% of respondents reported that their current workload was excessive, and 61.2% expressed dissatisfaction with their current income. This combination of a heavy workload and inadequate compensation has contributed to the perception, reported by 51.0% of respondents, that otolaryngology holds a lower standing than other specialties, thereby reinforcing clinicians’ sense that their specialty is undervalued.

Private practices have also been largely excluded from alternative payment models introduced to complement the current reimbursement structure. Value-based payment mechanisms, which link compensation to the quality or value of care, account for only 1.4% of overall healthcare payments, and approximately 68.2% of this limited share is concentrated in tertiary general hospitals [5]. This distribution indicates that the characteristics of primary care, including a high proportion of brief outpatient visits and limited administrative resources, are not adequately recognized in value assessment systems. It thus reveals a structural limitation that reinforces the concentration of compensation in large hospitals and widens the divide between primary care and tertiary general hospitals.

In a fee-for-service environment in which cost recovery rates for basic consultation and procedure fees fall far below actual costs, primary care clinics that are also excluded from value-based reimbursement inevitably depend on maximizing service volume to remain financially viable. This structure forces physicians to see hundreds of patients per day and prevents patients from receiving in-depth care, thereby perpetuating a vicious cycle inherent in the current system. Accordingly, the findings that 88.8% of members identified low reimbursement rates and tighter government regulation of non-covered services and private indemnity health insurance as the greatest obstacle and that 90.1% identified imbalances in relative value scores and low reimbursement rates as the greatest threat can be interpreted as a call from clinicians for comprehensive reform of a distorted payment system that is excessively focused on service volume.

Rigidity of the healthcare system and delays in establishing reimbursement for new health technologies

The rigidity of government healthcare policy and payment-system governance is a major factor limiting the future sustainability of otolaryngology-head and neck surgery [4]. A fragmented landscape of approximately 49 payment-related pilot programs currently exists in the Republic of Korea, yet no systematic criteria or governance mechanisms exist for converting them into full-scale programs or terminating them. As a result, some programs have remained at the pilot stage for more than 10 years without progressing to full implementation, reflecting substantial institutional stagnation.

This bureaucratic stagnation directly conflicts with members’ calls for new revenue models and growth opportunities. In anticipation of an era of physician oversupply resulting from the rapid expansion of medical school admissions, members want otolaryngology to develop distinctive areas of expertise that are not easily replicated by other specialties. However, passive government administration and a rigid payment-system governance structure obstruct the introduction of new technologies and reimbursement mechanisms, effectively precluding innovative initiatives in clinical practice.

The finding that 49.0% of respondents selected “creating future reimbursement opportunities through the development of new health technologies” as a key area for increased Society investment reflects members’ expectation that the Society should take the lead in overcoming the stagnation of the healthcare payment system. To address this institutional rigidity, the Society should establish a research foundation for demonstrating the clinical effectiveness and cost-effectiveness of new health technologies and should focus its policy advocacy on reforming the inefficient structure centered on pilot programs.

Tertiary general hospital restructuring and the less visible erosion of the foundation of otolaryngology-head and neck surgery

Beginning in 2026, the government’s tertiary general hospital restructuring support program entailed an across-theboard reduction in the total number of general inpatient beds to 85% of the previous level [4]. Although the stated aim of the policy was to reorganize the healthcare system around patients with severe and emergency conditions, it effectively prioritized services, largely for administrative convenience, solely according to whether a condition was considered directly life-threatening.

The major procedures performed in otolaryngology-head and neck surgery constitute function-preserving essential care directly related to human dignity and quality of life, including the preservation of hearing, breathing, swallowing, and verbal communication. Nevertheless, these procedures are relatively undervalued because they are given lower priority than services for cardiovascular and cerebrovascular diseases or severe trauma under current policy criteria for clinical urgency. Consequently, they receive lower priority in the allocation of hospital resources, including scheduled operating room time, which limits timely surgery for patients with severe conditions. The resulting reduction in clinical volume then provides hospital administrators with a rationale for curtailing personnel and equipment support for otolaryngology-head and neck surgery.

These developments directly worsen the working conditions and professional standing of faculty members and even erode their pride as academics. Faculty shortages have recently become increasingly evident at training hospitals, consistent with the 86.5% of members who regarded the problem as serious. The resulting departure of faculty and deterioration of the training infrastructure are creating a structural crisis in the training system. Ultimately, tertiary general hospitals responsible for training future specialists and providing highly complex care, including head and neck cancer surgery and cochlear implantation, risk losing the physicians capable of performing these procedures.

Lack of additional compensation for specialties providing definitive emergency care and the risk of losing essential subspecialties

In the survey, 52.3% of respondents identified the demanding workload associated with excessive on-call duties and surgery as a fundamental reason for not applying for faculty or fellow positions. Head and neck surgery was also identified by 63.8% of respondents as the subspecialty expected to have the fewest newly trained specialists in the future.

As strongly emphasized in the free-text responses, deep neck infection is a common and severe emergency that can become rapidly fatal owing to airway obstruction. Nevertheless, reimbursement for this condition remains inadequate, and its severity continues to be underestimated. Otolaryngology-head and neck surgery has also been largely excluded from government support schemes for essential specialties and those at risk of workforce depletion, including residency training allowances and emergency department care allowances.

Faculty members who work more than 80 hours per week without appropriate compensation are losing confidence in their future prospects and leaving university hospitals, while applications to otolaryngology residency programs are also at risk of declining to critically low levels. The failure to compensate specialists who provide definitive emergency surgical care for weekend and nighttime standby duties constitutes a major gap in the reimbursement system. This lack of compensation is a key factor exacerbating gaps in the provision of essential healthcare.

Proactive transition to a diversified payment portfolio

The Society’s strategy for establishing appropriate reimbursement levels and reforming the low-reimbursement structure cannot remain confined to conventional demands for across-the-board fee increases, as such an approach is unlikely to succeed. The government’s broader healthcare roadmap aims to reduce the share of the conventional fee-for-service system to 70%-75% by 2030 and to fully implement a diversified payment portfolio grounded in reliable cost analyses, including bundled payments, quality- and value-linked reimbursement, and person-centered payment [6].

The Society should therefore anticipate this policy shift and proactively design and propose value-based payment models suited to otolaryngology-head and neck surgery. Building on the global trend toward payment structures that promote collaboration among providers and population health management, the Society should lead the development of bundled payment models linked to quality-of-life outcomes across the life course for disease groups commonly managed in primary otolaryngology practice. These should include chronic rhinitis and allergic diseases, as well as hearing loss and auditory rehabilitation, dizziness, and sleep apnea-conditions of growing importance in a super-aged society.

Such a system would help practices move away from a structure in which survival depends on seeing large numbers of patients and relying on revenue from one-time consultation fees. Instead, it would support a stable private-practice environment in which physicians receive greater compensation for providing high-quality, in-depth care and continuous patient management. To achieve this transition, the Society should establish a dedicated committee for reimbursement and payment-system reform and engage in rigorous, evidence-based negotiations with the government.

Detailed classification of medical procedures and scientific measurement of workload and costs

Diagnosis and surgery in otolaryngology-head and neck surgery have evolved from predominantly direct-vision approaches to high-precision diagnosis and microsurgery using high-resolution endoscopes and surgical microscopes. However, the current Korean relative value score system does not adequately reflect these technological advances or the accompanying changes in required resources, including expensive equipment and specialized expertise, creating the paradox that technological progress can result in financial losses for hospitals [7]. By comparison, the United States uses CPT, a standardized system for classifying and coding medical services, together with the RBRVS to define individual services and systematically quantify the resources required for their provision. Correcting undervalued reimbursement rates and ensuring the sustainability of medical services therefore require the Korean system to benchmark the US CPT/RBRVS system in the following ways.

First, Korean reimbursement codes classify procedures such as endoscopic sinus surgery under a single comprehensive code without accounting for the number of sinuses opened or their anatomical complexity. As in the CPT system, these codes should be subdivided according to anatomical location, surgical approach, and procedural complexity, including simple procedures, complex procedures, and revision surgery.

Second, codes for diagnostic endoscopy should be clearly distinguished from those for therapeutic or surgical endoscopy in order to reflect differences in technical complexity. New add-on codes should be introduced, or existing codes should be further subdivided, according to whether laser or navigation systems are used.

Third, physician work must be urgently reassessed. This assessment should not be based solely on time but should also quantify mental effort and judgment, technical skill, physical effort, and stress. Invisible work, including equipment setup and preoperative CT-based anatomical mapping, should be quantified through time-and-motion studies and incorporated into reimbursement as a prerequisite for rationalizing payment levels.

Fourth, otolaryngology-head and neck surgery requires expensive equipment, including endoscopes, microscopes, and audiometric booths, resulting in substantial depreciation and maintenance costs. As in the United States, where these expenses are calculated as direct costs and incorporated into reimbursement, Korea should collect detailed data on the costs of consumables and equipment that are currently overlooked and use these data to establish realistic cost recovery rates.

Limitations of the patient classification system and reform of the specialized disease group framework

The current KDRG system has several limitations. First, its foundation lies in earlier research on bundled payment commissioned by the Health Insurance Review and Assessment Service.8) The system was originally developed as a healthcare reimbursement framework to separate physician costs from hospital costs and to classify hospital costs by disease, rather than to distinguish the clinical severity of individual conditions. Consequently, although conditions and procedures of widely varying severity are grouped within the same disease group, the KDRG system is broadly misused as an indicator of clinical severity.

Second, the government’s classification criteria rely on simple statistical measures of where a given condition is most frequently treated, rather than on the patient’s underlying conditions or surgical complexity. Even identical procedures, such as tonsillectomy or septal surgery, are categorized as general Group B or simple Group C cases regardless of the patient’s condition, merely because they are commonly performed in primary care clinics. Patients who cannot undergo surgery at primary care institutions because of serious underlying conditions, including cardiovascular disease, severe obesity, or severe sleep apnea, and who are therefore referred to tertiary institutions may still be uniformly assigned to the same low-severity groups. This produces the erroneous outcome of penalizing tertiary general hospitals for treating such patients. The current classification also fails to reflect the multimorbidity associated with population aging or the corresponding level of resource utilization.

Third, even when professional societies seek to separate high-complexity procedures into independent disease groups on the basis of patient age or surgical complexity, the current KDRG system restricts the creation of an independent disease group when there are fewer than 300 cases per year. Rare conditions such as congenital aural atresia and pediatric laryngeal stenosis, which are potentially fatal yet uncommon and difficult to treat, therefore fall into a classification blind spot in which they cannot be appropriately recognized as severe conditions.

Finally, cases in specialties such as otolaryngology, ophthalmology, orthopedic surgery, and plastic surgery are prone to being classified as low severity despite involving highly complex care. These specialties are consequently placed at a substantial disadvantage in tertiary general hospital evaluations, which ultimately contributes to the progressive erosion of these specialties.

To overcome these limitations, the KDRG system should introduce exception mechanisms or detailed classification codes that allow cases ordinarily assigned to Group B or C on the basis of diagnosis alone to be upgraded to Group A according to the patient’s underlying conditions, the anatomical location of the lesion, including the skull base or deep neck, the specialized equipment required, and the level of surgical expertise involved. Specialty-specific adjustment coefficients should also be introduced immediately into the evaluation of tertiary general hospitals. The characteristics of otolaryngology-head and neck surgery should be explicitly taken into account, including its predominantly outpatient-based practice structure and the unavoidable need to admit patients referred from primary care who fall within Groups B and C. Rather than uniformly imposing a hospital-wide target proportion for Group A cases, such as 70%, the evaluation system should substantially reduce penalties related to the proportion of low-severity cases or apply a separate evaluation pathway through flexible adjustment of performance indicators.

Establishing a special add-on for microsurgery adjacent to cranial nerves and the skull base

A primary reason that neurosurgical craniotomy receives high reimbursement is the risk of damage to brain tissue and neural structures. Mastoid surgery, ossicular reconstruction, and endoscopic skull base surgery in otology and rhinology are similarly high-risk procedures that involve drilling bone only a few millimeters from the facial, vestibulocochlear, and optic nerves and the meninges. In head and neck surgery, malignant tumor resection and neck dissection are also highly complex procedures performed while preserving major neurovascular structures, including the carotid artery, internal jugular vein, and hypoglossal and vagus nerves.

A new reimbursement mechanism should therefore explicitly designate procedures performed adjacent to cranial nerves or the skull base and provide a “high-risk microsurgery” addon equivalent to approximately 30%-50% of the base surgical fee. In neurosurgery, craniotomy receives a 50% increase in the anesthesia fee in recognition of its procedural complexity and duration. Cochlear implantation, vestibular schwannoma surgery, and head and neck reconstructive surgery are similarly complex microsurgical procedures that may require 5-10 hours or longer. The relevant reimbursement regulations should therefore be revised to establish designated codes for complex, prolonged microsurgical procedures in otolaryngology-head and neck surgery and include these procedures as exceptions to the current guideline limiting the 50% anesthesia fee add-on to craniotomy. This revision would allow these procedures to receive equivalent compensation.

Reframing the public outreach strategy

The distorted public and governmental perception that otolaryngology-head and neck surgery is merely a specialty that treats uncomplicated colds must be dispelled. Beyond treating common colds, the specialty provides care for life-threatening airway conditions, performs complex head and neck cancer surgery, and offers specialized care for hearing loss, dizziness, and thyroid disease. Its fundamental identity as an essential specialty providing critical and emergency care should therefore be communicated to the public on an ongoing basis. Improving public awareness and sustaining these outreach efforts are prerequisites for securing due recognition of the specialty’s expertise, fair compensation, and greater professional standing in government policy development and reimbursement negotiations.