February 13, 1992

PUBLIC ACCOUNTS COMMITTEE

The Committee met at 10:00 a.m.

MR. CHAIRMAN (N. Windsor): Order, please!

I would like to welcome everybody here to the first

meeting of this Public Accounts Committee. It is essentially a reconstituted

Public Accounts Committee, I think there are only three former members present.

I would like to welcome the new Committee members and, at the same time, express

a word of thanks to the former members and the Chairman, Mr. Hearn, from St.

Mary's - The Capes, who did an admirable job, I think, over the last couple of

years in dealing with the work of the Committee.

I would like to introduce the Committee. To my

right is the Vice-Chairman, Mr. Jim Walsh, MHA for Mount Scio; Mr. Danny

Dumaresque, a new member, I believe, from Eagle River; Mr. Tom Murphy, St.

John's South; Mr. Alvin Hewlett from Green Bay. Mr. Bill Ramsay from La Poile is

not with us today and, Mr. Garfield Warren from Torngat Mountains is not

present. I have a letter from Mr. Warren indicating that he is meeting with the

hon. John Crosbie in Ottawa today and could not reschedule, so he sends his

regrets.

First of all, I will ask the witnesses to identify

themselves. Mr. Robert Peddigrew is the Executive Director of MCP. Whom have

you, Mr. Peddigrew?

MR. PEDDIGREW: I have the Audit Director, Mr.

Tony Maher.

MR. CHAIRMAN: Thank you.

We have, also, the Auditor General, Mr. Chris Hart.

MR. HART: The Acting Auditor General, I should

point out, and I have with me today our Audit Principal, Mr. Ed Sweeney and

Audit Manager, Mr. Bill Barron.

MR. CHAIRMAN: Thank you very much. Does the

deputy minister or anybody else in the background want to speak or be

identified?

MR. HART: We have several staff members here,

another Audit Principal, Mr. Drover, who has been involved to a certain extent

in the MCP audit, so I thought it was appropriate to have him, and some other

interested observers, another Audit Senior, Dave White, from our office, and

John Casey, an Auditor III right now.

MR. CHAIRMAN: Thank you very much, and for the

benefit of Committee members and the media, we have Miss Elizabeth Murphy, Clerk

of the Committee and Mr. Dick Porter, Research Assistant to the Committee,

seated at the table with us. I am Neil Windsor, of course, Chairman of the

Committee.

First of all, I guess, we will ask the Clerk to

swear in the witnesses who will be appearing before us today.

MR. WILLIAM BARRON: I, Bill Barron, swear that

the evidence I shall give on this examination shall be the truth, the whole

truth and nothing but the truth, so help me God.

MR. ROBERT PEDDIGREW: I, Robert Peddigrew,

swear that the evidence I shall give on this examination shall be the truth, the

whole truth and nothing but the truth, so help me God.

MR. TONY MAHER: I, Tony Maher, swear that the

evidence I shall give on this examination shall be the truth, the whole truth

and nothing but the truth, so help me God.

MR. CHAIRMAN: Thank you very much. Let me point

out to the witnesses that you are sworn in, of course, as a Committee of the

House of Assembly. You have sworn an oath. But this is not a trial, it is a

hearing to gather information, to hear your opinions and give you an opportunity

to discuss with the Committee and with the Auditor General and his officials,

various aspects of the financial affairs of MCP in this particular case, and to

give the Committee an opportunity to question both the Auditor General and his

officials and the officials of MCP.

So we are very much here in a formal setting, but

hopefully, we can operate in somewhat of an informal manner, the main purpose

being to gather as much information and to clarify as much as possible. Maybe

that is our role here today.

The topic on the agenda is basically the financial

procedures followed by MCP. Particularly, I think, Committee members are

interested in obtaining further information and clarification of information

that has been provided by MCP to the Committee, on billing procedures to

doctors; outstanding amounts that are there, why are these amounts outstanding;

the nature of these amounts; what efforts have been made to collect, these sorts

of things.

I think that will be the thrust of the Committee. I

do not mean to speak for the Committee. Obviously, he Committee is free to ask

any questions that they feel are appropriate. But in the interests of expediency

we should try to keep our questions as brief as possible, and our answers as

brief as possible without trying to preclude you from giving a full answer if

you feel that is necessary. By all means, take the opportunity to present your

point of view as clearly as you would like to do so.

I ask the witnesses to speak clearly into the

microphones so that the Hansard people can properly record the proceedings; and

also identify yourselves before you speak unless I, as Chair, identify you, then

it will not be necessary. Of course, the same is true, I guess, for Committee

members, as well. We are often reminded by His Honour, the Speaker of the house

of Assembly, to identify ourselves. We are very much now in the House of

Assembly.

Perhaps I will ask the Auditor General if he would

like to make a brief opening statement, or if he has any remarks to make, if he

chooses to do so.

Mr. Hart.

MR. CHRIS HART: Thank you, Mr. Windsor. I guess

I should say that this is a little bit unusual in the sense that normally we

appear as a result of items arising in our annual report. In the last fiscal

year there was no reference to MCP but we have made comments over the years.

Just as a matter of preparation for this meeting, I went back as far as 1981 and

saw that we had several comments relating to MCP and the audit process they have

in place. From 1981 to 1986, it appeared several times.

I guess, what I would like to say from our

perspective is that we are dealing with a significant amount of public money

when we talk about the MCP operation. In looking at the last year's financial

statements that were attached to the information here, for March 31, 1990, the

Commission expenditure was in excess of $100 million. So we feel, from an audit

perspective, that when you are dealing with that kind of public money there has

to be accountability, there has to be an audit process to verify proper

expenditures have taken place.

We understand very clearly, in this particular

case, the importance, as well, of the confidentiality aspect. It tends to make

it difficult from that point of view. There has to be, in my opinion,

accountability and an audit process, but it has to be handled in such a way as

to preserve patient confidentiality and that sort of thing. So that adds an

extra difficulty, I think, for the Commission, because sometimes to set up that

kind of a system is difficult.

That is all I would like to say at this time.

MR. CHAIRMAN: Thank you, Mr. Hart. Let me just

emphasize again, the mandate of the Committee is not only to review the Auditor

General's report, of course, although historically, I think, the Auditor

General's report has provided great fodder for the Committee, and we have

certainly accepted the Auditor General's advice and investigated matters that he

has brought to the attention of the Committee, as I think we should.

But the Committee also has the mandate to identify

other areas that it may be interested in, or that are referred to it by the

House of Assembly; or the members of the House of Assembly may, as we have done

on a couple of occasions already this session, request that the Committee look

at certain items and the Committee will then decide if those items are

appropriate. The Auditor General is quite right in pointing out that this was

not referred as a matter of concern by the Auditor General, but it is an issue

that was raised by a member of the previous Committee. In fact, this Committee,

in this meeting, is attempting to finish up some of the business that was left

by the previous Committee before the next AGs report is tabled in the House,

hopefully within the next couple of months, I would assume.

MR. HART: It should be tabled, according to our

new legislation, immediately upon the opening of the House, I think.

MR. CHAIRMAN: Within two weeks, or something, I

think it is.

MR HART: Whenever the House opens it should be

tabled.

MR. CHAIRMAN: Once we receive the report, the

Committee will focus in on that, and pay considerable attention to it. In the

meantime, there are other issues, this being one of them, that have arisen,

other than from the Auditor General's Department.

Mr. Peddigrew, do you have any opening comments you

wish to make to the Committee before we begin questioning?

MR. PEDDIGREW: Thank you, Mr. Chairman.

I presume we are dealing here with the financial

year 1989-90. Is that correct?

MR. CHAIRMAN: That is correct.

MR. PEDDIGREW: I just want to note that we are

now into 1992 and we have just completed our annual report for 1990-91, which

has not yet been presented in the House, so we are dealing with information that

goes back a considerable period of time, and we will certainly do our best to

address the questions in that regard. Also, as the Auditor General has pointed

out, we are dealing with a very considerable amount of money. I think our budget

for this current year is something in the area of $137 million or $140 million.

So, we, in operating the commission, recognize our responsibility to protect

those large amounts of taxpayers' funds.

MR. CHAIRMAN: Thank you, Mr. Peddigrew. The

Committee, I think, recognizes the fact that the data we are dealing with is

somewhat old. One of the weaknesses, unfortunately, of the Committee, is that by

the time we get the Auditor General's report it is then three or four months

old. The House is then in session and we don't meet while the House is in

session, so we wait for another three or four months until the House closes

before the Committee meets, and then we are generally dealing with data that is

six or eight months old. I just say, I think from the Committee's perspective,

and I believe I speak on behalf of the Committee, that we are not so interested

in the data as in the general principles, policies, and procedures here, that

are probably as consistent in 1990-91 as the data is representative of ongoing

problems that we would like to look at, if there are ongoing problems that we

can identify, and I think we can gain some information from that.

Perhaps we will move right along to the Committee

members and ask if they would like to begin with some questioning. Who would

like to begin? Perhaps, Mr. Dumaresque, you, the newest member of the Committee,

would like to lead off?

MR. DUMARESQUE: Thank you, Mr. Chairman.

We have certainly been provided with some

information as to the audit procedure and, in particular, how the audits are

performed and on what basis, I guess, the audit process was brought into the

MCP. I am concerned about the process, itself, and whether the process is cost

recoverable and on what basis the audit process was brought in, in the first

place. Do you have any concerns now that it has been in play for while, about

its effectiveness, and if your objectives are being met as you intended in the

first place?

MR. PEDDIGREW: Mr. Chairman, there has always

been an audit process, I guess, since the commission was initiated back in 1969.

However, I think it is fair to say that as of the mid-1980s or perhaps around

the year 1987, we began to put added emphasis on the audit process. That really

began with a small re-organization or the appointment, in fact, of an audit

manager - a position which did not exist prior to that. It was clearly the

intention of the commission to enhance the audit process, to review it. We did

look at legislation, and the process that was in place, and worked in that

regard.

We currently have a clearly defined process to

which you referred, which I think was outlined recently in a newsletter to

physicians to clarify for them just what the process was. I think what might

also be helpful is a flow chart that we have developed, and it is actually

scheduled to go with our next newsletter to physicians. If you wish, I will pass

this around because I think it will help to illustrate the various stages of

audit.

As you will see from the flow chart - and I will

not go through every step here because it is fairly detailed - audits are

initiated from actually one of three sources, I suppose. One is a patient

verification process that is done where we take claims at random from every

physician, and ask patients to verify that, in fact, the service has been

rendered as it has been claimed.

We would also initiate an audit upon a complaint or

information that is provided, either from a doctor or a patient, if it appeared

to have any basis. That could trigger a preliminary type of audit.

We conduct, in certain cases, profiles of the

physician's practice pattern. This is simply an analysis of his billing history

and looking at various components, the cost per patient; the number of services

per patient; the number of certain types of services that perhaps tend to be

higher priced services that might be questionable; so, it can initiate from any

of these sources. It proceeds on so that if this preliminary review, including

the patient's response, indicates any kind of discrepancy in what the commission

has been billed and what the patient has said, or the other information

indicates, then we do what we call a preliminary audit. In fact, in that one

case of patient discrepancy we ask the doctor to provide the record pertaining

to the service that is in question. If that record verifies the service as

claimed, then that is it; that audit is over. There is really no need to go

further. If, however, there is a discrepancy in the information given from the

physician's record, then that will trigger a preliminary audit, which would be a

small sample, usually about ten claims, where we would ask for ten more records.

Because, as I said, there is an indication of some sort of discrepancy -

recognizing that it may be an isolated case and could be quite well explained.

However, if, from the preliminary audit, there is an indication of a further

problem with any of the billing, then we do what we call a comprehensive audit.

By the way, if the ten records come in and they check out, then, again, that is

the end of the audit. There is no further action taken in that regard.

With the comprehensive audit, we employ a

statistical sampling methodology against the whole base of claims for that

doctor, for that service, and it would vary in terms of time that you go back,

because it could depend on the time. The doctor may have only started in

practice last year, so obviously it would only go back last year. It could

depend on changes in the

preamble or the payment

schedule that were made in the

year before or two years before, whatever. Obviously the same billing conditions

would not have existed all the way back so, in that case, the maximum we would

go back would be five years to look at the base of claims for that particular

service that we are interested in. In that case, then, the sample would

determine a number of claims of records that should be reviewed, and it will

vary anywhere from twenty records up to forty or fifty. I guess in the very

largest cases it could be 100 records. This is only done where we have detected

discrepancies earlier on.

Anyway, the comprehensive audit is undertaken, the

records come in and incidentally we get very good co-operation in this regard.

Certainly, there has been controversy and some opposition to this method and so

on; nevertheless, we have had extremely good co-operation from physicians in

complying with these audit requests. When the comprehensive audit is undertaken,

these records are then reviewed, and if there are any that cannot substantiate

the services billed, then those are taken and reviewed, and there is a review

process by a supervisor/manager. We have now employed a medical consultant to

make an actual medical determination before it goes to a committee called the

Medical Consultants Committee. Now, bear in mind, we have not taken any action

about recoveries or anything, at this point, we have simply made our own

internal screening and determination, and then, if we feel it is something that

warrants review by the Medical Consultants Committee then it is passed onto that

committee.

Now, that committee is currently made up of ten

members, five of whom are physicians nominated by the Medical Association, three

fee-for-service doctors, and two salaried doctors. Then, from the commission

side or the government side there is our own medical director, our medical

consultant to whom I just referred, our dental director, the medical consultant

to the Department of Health, who is a physician, and one chartered accountant

from a local CA firm. This person is not a member of the commission or employed

in any other way by the commission. He is just, upon nomination, an appointment

by the minister.

The ten members of the committee meet and review

these comprehensive audit cases and make a determination of whether, in fact,

the services were valid as rendered. If, in their view, they were not, then we

proceed with a recovery of funds. Now, the first step in that process is to

notify the physician first and make a determination of the precise amount, and

that is done by taking the number of unsubstantiated claims from the sample and

extrapolating that across the whole base of claims, so that if there were 20 per

cent of the sample unsubstantiated, then it affects 20 per cent of the services

in the whole base.

The physician is notified. The process is laid out

in the Act. He or she has the right of an appeal hearing - well, first, to make

written representation on the matter and, at the same time, the Medical

Association is written and asked if they wish to make any written representation

on behalf of the physician, and there are time limits laid down for that.

Following that procedure then, those representations made, if any, are

considered, and then a final determination is made to either revoke the

allegations, as the Act terms it, or to proceed with an appeal hearing, if the

person elects to have a hearing. If a hearing is held, then the committee is

appointed, and certainly, the physician, then is entitled to make his

representation in person with legal counsel if he so desires. Following that

again, the commission will hear, then, the recommendations of the appeal

committee. Again, turning to the flow chart, should you want to trace it through

that process, if the commission finds through the appeal process that there is

other information that affects this matter, then it might be decided that the

audit is invalid or the allegation should be revoked. Otherwise, the

recommendation is made to proceed with an action or a recovery of funds. That is

then formalized by the approval or an order approved by the Minister of Health,

and then issued by the commission upon the physician in question. So that is

essentially the process that is followed in these audit cases. I do not know if

I have strayed from the point, but I think your question, Mr. Dumaresque, was in

reference to outstanding amounts, and what -

MR. DUMARESQUE: Maybe I can get a bit more

specific. I notice in the last report, I think in 1990-1991, that there was

$549,000 of funding deemed recoverable. Two points, I guess: Were there any

amounts deemed non-recoverable, and why; and of the amounts deemed recoverable,

what success have you had, and have there been any trends, in particular, that

would indicate there are certain areas where these charges have been made to the

commission and for some reason you feel they are recoverable?

MR. PEDDIGREW: Well, just to address that, the

reference, I guess it was in our annual report where we say that the commission

recovered x-number of dollars and then there was an estimated recovery amount of

$250,000 or $500,000 or whatever - $500,000. -

MR. DUMARESQUE: $549,000.

MR. PEDDIGREW: That was for the year 1989-1990,

was it, or 1990-1991? I just forget for the moment.

MR. DUMARESQUE: 1989-1990.

MR. PEDDIGREW: That $549,000 - and I think we

supplied the breakdown of that amount - is an estimate which is compiled, and it

is to report in our annual report just where we are with the audit process for

that particular year. These cases have not all proceeded to the final stage. In

fact, while some of them have, a number of them have not. So, at this point,

they are really only an estimate of each audit that is in progress as to what -

should it end up in being a final recovery, then this is the estimated amount

involved. So it is not yet - until it reaches the stage where the order is

issued and it is finalized, I guess it does not become a receivable, as such. So

it is reported in our report simply for information, that here is the sum total

of audits in progress and the estimated amount should they all proceed to

conclusion.

With regard to success in collection, it is total

success. As soon as the process has been followed, the whole procedure of

appeal, and so on, if there is one, and an order issued and so on, well, then we

immediately, in accordance with the Commission's policy - which, again, if you

wish, I can distribute copies of that - the policy is to recover audit amounts

such as this. If they are less than $1,000 they are recovered immediately from

the next payment due to the physician. We continually pay physicians every two

weeks. If we find that an amount is due, then it is recovered from his or her

payments which are due on the very next pay period. Obviously, if a physician is

no longer here, we would pursue that through the normal collection process. But,

in pretty well all of these cases, the doctor is still practising and we just

proceed with deduction from payments due to him or her.

If the payments are over $1,000, we withhold 30 per

cent of the subsequent payment and proceed on that basis until the full amount

is recovered. We charge 2 per cent above prime rate on any outstanding balance,

as outlined, I think, in our payment recovery procedure. So we have not

experienced any problem in recovery of monies.

MR. DUMARESQUE: I wonder if you could pick up

on the latter part of the question. Are there any services that you see as a

matter of a trend that seems to be in dispute on an ongoing basis? If so, do

they pertain to a select few physicians, or is that something that randomly

occurs?

MR. PEDDIGREW: Yes, I think, certainly, there

is a trend in billing. We feel that, in a relatively small number of cases, it

is over-utilization of that service. The primary service that has been

over-billed and the one that we have concentrated the audit on since 1989, or

1988, has been general assessments. Now, general assessment is a full

examination performed on a patient. It consists of a check of seven body

systems. By the way, I am not a medical person, but having dealt with this

matter extensively, certainly over the past year, I am familiar with that much

of the payment

schedule and its definition of a general assessment.

But general assessment is the problem. It is a

higher priced item. An ordinary visit to a physician is in the range of, I

think, $13.50,

whereas for a general assessment, the price is $33.50, obviously,

in recognition of the additional work required to perform a general assessment.

Our finding has been, in the cases outlined on this

summary of the $500,000

collection amount that, as determined by the consultants' committee and the

process that I mentioned, the services could not be substantiated as general

assessments. And bear in mind, these are physicians who are examining this and

who are being reasonable, I think, in their assessment of the case. Because it

is recognized, the fact that a doctor doesn't always write down everything does

not mean that he didn't perform the service; but again, bear in mind that it is

based on a sampling of patients who have said - you know, out of a sample which

represents the large base, when you get a significant number indicating that,

no, those things were not done and then the records do not support that, then

the committee makes its conclusion that these are definitely not qualified as

general assessments.

So, yes, we have noticed a significant trend. In

fact, the concentration on general assessments in - as I say, I guess it began

in 1988-1989, was because of a very significant rising trend in the billing for

that service and, of course, it was apparent in the overall expenditures of the

commission. The commission total expenditures through the later 80s were rising

by a very considerable amount each year and that was a concern to government and

something that the commission, itself, identified as a problem.

So, the concentration was put on that service, it

extended into another area which is really still a general assessment, but it is

on babies, children under two years of age, where the service, itself, is called

'well baby care', and there again, it involved a check of a well baby, not a

sick baby, and because, I guess, the check on a baby is not as extensive as it

would be on an adult, the fee for that service is lower. The same as the

ordinary office visit, I think it is $13.50. But there again, through the audit

process and the review of records, and so on, it was found that these were well

baby checks and should have been billed under that fee code rather than the

general assessment fee code.

I think you asked me what number of physicians - I

suppose it was a little bit widespread. If you look at the total number here,

there are perhaps twenty-five or thirty cases identified in this

summary, but

you will notice that seventeen are above $1,000. So, I think these minor, not

minor, I mean, they are amounts of $300, $400, $500, these were cases where it

was determined - and again, the commission recognizes that these can happen from

simply a staff person in the doctors office not understanding how to bill this

to the proper fee code, or inadvertent errors in billing, and I think it would

be fair to say that we do not regard these as significant audit cases, but

nevertheless, having identified them, the funds have to be recovered. And I

think what perhaps has antagonized a number of doctors is that they know they

are performing good work and good practice and when there has been some

inadvertent mis-billing and they get these audit letters from MCP and the money

is being recovered, I think it is disturbing for them, but I do maintain that,

as I guess the Auditor General will tell us, we have a responsibility to

identify those, as well as the bigger cases, and effect any recovery that is

appropriate.

MR. CHAIRMAN: (Inaudible) I invite Committee

members, by the way, to interject if there is a point relating to what is being

said, a brief point. I do not want to get into a free for all, but you are free

to request an interjection if you want to. I just want to ask Mr. Peddigrew this

point in relation to that question: In reading the documentation that you

provided, you gave us a list of services under MCP that are payable by MCP and

some that are not. One I noticed that was not payable was an annual check-up

which surprised me a little bit. I would have thought that we would encourage

people to have a check-up once a year, probably in the long-term to the

taxpayer's advantage, for people to have a regular check-up rather than find out

too late that they need very expensive surgery and other things. The policy is

not the point I am getting at. I assume well baby care would be much in the same

sort of category. If an annual check-up is not a payable item would well baby

not be? That is why you raised the question of well baby care.

MR. PEDDIGREW: That is a valid observation. I

think, Mr. Chairman, the annual check-up is not insured because it is considered

to be in the category that it is not an illness. The basic provisions of the Act

and the program are to provide for medical attention resulting from illness of

some sort, and an annual medical technically is not in that category. It is

preventative, and I agree, I think that it would be a valid service to perform

as a preventative measure, but that is a matter that I think would have to be

looked at by the legislature or government in terms of whether they want to

include it as an insured service. That well baby care item, I guess,

traditionally has been recognized as a service that should be provided. I

suppose it is a valid point that it is not an illness. In fact, on the contrary,

it has to be in the category of being a well child. So I am afraid I cannot

really explain why that one is an insured service.

MR. CHAIRMAN: Yes, I think you are quite right.

It is a policy decision. I would tend to go that the annual check-up should be

included, as well as the well baby care. Do you have any idea how many people

are actually billed for an annual check-up? I have to say that it sort of caught

me by surprise. I do not know of anyone who has ever paid for an annual

check-up. Perhaps a doctor is saying he is in because he has a cold or a

headache or something.

MR. PEDDIGREW: Well, if there is a presenting

complaint of any kind then it does not go in the category of annual check-up,

and I think that is the case. A lot of people go because they feel some little

ailment and say: 'I think it is probably time I had a full check-up,' or the

doctor decides that you have not been - you know, he cannot determine just from

your presenting complaint what the problem is, so, in his judgement, he feels it

is wise to do a full examination.

MR. CHAIRMAN: I don't think many people knew

that an annual check-up was not tabled by MCP, probably because very few people

have ever been charged for it.

Mr. Hewlett, would you like to comment.

MR. HEWLETT: I just wanted to make a brief

couple of comments. I am here on your flow chart, by the way. A couple of years

ago, I had an ailment for which I had to see a doctor on an ongoing basis for a

number of months. I think I received a total of three letters from the Medical

Care Commission, and the letters basically said: on such and such a date did you

visit Dr. so and so? How long did you spend with Dr. so and so? Just a few very

quick, simple little questions. What that comes under, I guess, is patient

verification. Was I just picked randomly or was that doctor under some sort of

examination or was it the repetition of my visit? Does the computer sort of

screen the thing because I had to make repeated visits over a period of months,

and it was like it rang a bell somewhere in your shop. I received three letters

and my answers on the letters were consistent, that the doctor was doing such

and such and spending such and such amount of time with me. The letters stopped

after the third one. Out of the blue a letter to me from the Medical Care

Commission arrived in the mail and how did that start? Would it have been the

long-term repetitive visits, a random thing, or computer screening for long

repetitive visits with them doing further checking?

MR. PEDDIGREW: Actually the process in that

regard has changed relatively recently. In fact, I think, it was really perhaps

in reference to some of the Auditor General's observations in this regard that,

at one point, and I cannot recall exactly when it was, we examined this

methodology. It was done originally on a manual random sampling of claims. We

would take recent claims, recognizing that people cannot remember very long

back. So, from a number of physicians, in terms of the volume of work our small

audit staff could accommodate, we would take, say, five physicians every two

weeks and audit a batch of randomly selected claims from each of those - it

might be fifty or one hundred claims from each physician.

In response to questioning, I guess, of the real

methodology here, we had the Newfoundland Statistical Agency, or some such

sampling agency, examine for us the methodology, and recommendations were made

that it was not really an effective valid methodology. Pursuant to that we did

introduce a different methodology because the problem with that was it might be

a period of years before some physicians could be audited. It was too haphazard.

We now ensure that we audit every physician on a

continuing basis every pay period so there is now a computer selection, a random

selection of the recent service again that generates a letter to the patient and

it is a more valid sampling method. The fact that you got three in a row, I

think, could be related to the fact that back then, and I presume this was a

number of years ago -

MR. HEWLETT: A couple of years ago.

MR. PEDDIGREW: - we perhaps, at times, zeroed

in on certain services and certain combinations of service. If you had been seen

twice in the same day, for example, every one of those would be audited, or if

you had been seeing two doctors on the same day, even though it might have been

a GP and a specialist, we would audit that. I do not know if I can answer

precisely as to what circumstance brought about your three requests but that is

the current process.

MR. HEWLETT: That is all I have right now, Mr.

Chairman.

MR. CHAIRMAN: Mr. Murphy, before you start I

would like to welcome Mr. Noel the Member for Pleasantville, who has joined the

Committee and is entitled to participate and ask questions, if he wishes, but

cannot vote on any matter that requires a vote later on. We welcome Mr. Noel.

Mr. Murphy.

MR. TOM MURPHY: Thank you, Mr. Chairman.

I notice, Mr. Peddigrew, that there are

approximately 500 general practice physicians in the Province, which is a little

better than half of all physicians throughout the Province, all the specialists,

and I think they account for approximately 44 per cent of billing. One thing

comes to mind: I think it was this time last year, we received some information

that there was tremendous deviation from some general practice physicians. Some

were billing around $100,000 and some were up close to $500,000. I realize, in

your audit initiation that patient verification, I guess practice profiles,

would be the area that the billing would send up a flag and/or signal to MCP

that a physician was a quite busy individual if he was putting in those kinds of

billings where, at the end of the year, he would have approximately five times

more than another general practice physician.

When you would go, or if you would go, I suppose -

the indication to me is that you probably would, that that kind of a signal

would obviously get your mind going that doctor who, living wherever, is sending

in billing excessive to what you would consider normal - when you go out to do

an audit on that doctor, do you have, number one, the right to talk to patients

and ask - I mean, if a patient has a high blood pressure problem and/or an

ongoing problem that needs medical attention, I guess it is not unreal to assume

that that person would be back in the doctor's office once a month or even twice

a month, but when you go out and find patients who have twenty-six and

twenty-eight visits annually to a general practice doctor, without a specific

problem, can you determine that in your audit you actually go to the patients? I

am trying to get in on that, because it would seem to me that there is an awful

lot of - I mean, does the patient determine whether or not he comes back on the

12th, or, in a lot of cases, does the doctor say: Mr. Jones, or Mrs. Jones, by

example, come back on the 12th? Are those the kinds of things that you see in

your audit?

MR. PEDDIGREW: Yes, Mr. Chairman, we do see

that sort of thing, and here, again, it is in the commission's and in the

committee's view not really possible to make a valid determination of whether,

in fact, it is patient abuse, patient overutilization, or physician

overutilization until you do a thorough analysis of that patient's profile. That

consists of looking at the number of services rendered within a certain time

frame, looking at the number of doctors visited, and looking at the diagnosis of

the various claims that have been submitted. Quite often, from some of the

preliminary information, it is possible to tell when this is a very sick patient

who has a legitimate need to see a number of specialists, a number of doctors

and so on, but, in other cases, it is not.

MR. MURPHY: And if not, Mr. Peddigrew, how do

you respond?

MR. PEDDIGREW: Then, what we do is request

records again from the physician. This could involve going to each of the

physicians this patient has seen, asking them if they would provide the records

related to the services in the period in question that we are talking about -

indicating to them that we think this could be patient abuse, if that is what we

think, and asking them if they would provide any comments they can to assist us

in determining that. We are talking here of the cases of suspected patient

abuse.

MR. MURPHY: Turn it over, now.

MR. PEDDIGREW: So we then, based on the

information provided, make a determination. When I say "we", I mean it is

medical people who will make that determination. We attempt to deal with it.

It's an area that I think requires further attention in terms of a full process

as to what you do about that problem.

MR. MURPHY: That leads me to two specific

questions, Mr. Peddigrew. If you determine that it is patient abuse, what do you

do about it? If you determine it is physician abuse, what do you do about it?

MR. PEDDIGREW: If we determine that it is

patient abuse, our medical director would write that patient and indicate that

we believe he or she is seeing too many doctors, that they can be better served

by confining themselves to one or two doctors whom they should designate. We

indicate to them that in fact, if the pattern continues, that they are, under

the Act, subject to repayment of any amounts that are determined to be abuse.

MR. MURPHY: Is that happening?

MR. PEDDIGREW: Yes, that is happening, but, I

would have to acknowledge, only recently.

MR. MURPHY: Remotely?

MR. PEDDIGREW: Well, when I say 'recently',

that is, I guess, over the past year or so.

MR. MURPHY: What about the physician?

MR. PEDDIGREW: On the physician side, it is a

difficult matter to decide whether it is abuse, because if, in the doctor's

opinion, it is necessary to see the patient more often, then that is his

opinion. I guess it is only when the committee of physicians and the medical

consultants' committee determine that it is not an acceptable pattern, then we

would proceed, as we are doing here, to recover funds. If beyond that, it is a

case of outright abuse, then it could be looked at from a legal point of view

and we would ask the Department of Justice to review the matter and determine

whether any further action should be taken there.

MR. MURPHY: Is it your opinion that there is -

it is very rarely, I would imagine, that that takes place?

MR. PEDDIGREW: Yes, that's right.

MR. MURPHY: I can understand readily if

somebody has a condition that requires a physician to check, whether it is high

blood pressure, an aneurism or any kind of problem that needs medical attention.

But it has come to my attention that some people are told to come back in two or

three weeks without sound, solid reasoning, as such, but just 'Come back and see

me, Aunt Jane,' or whoever, as the case may be.

What I am trying to zero in on, is: Are we

establishing something out there that - and I'm not suggesting that the

physicians have taken this position. But it seems, in some areas, that

physicians tell their patients to come back, without a reason sometimes, every

three or four weeks,, and this practice is ongoing and intensifying, obviously,

when you look at the cost of MCP and how it has escalated over the years. Do you

find that?

MR. PEDDIGREW: Yes. I think some of the cases

listed here are perhaps in that category. As I said, they have gone to the

consultants' committee, the committee has determined these are not acceptable

patterns of practice, and they have to be dealt with in the way of indicating to

the physician that it is an unacceptable pattern, and, if necessary, recovering

any amount that is felt by the committee to have been billed inappropriately.

MR. MURPHY: Off the top of your head, one small

question, what is the highest billing for a general practice physician in the

last fiscal year in your recollection?

MR. PETTIGREW: In the last fiscal year, you

mean the year 1991?

MR. MURPHY: Yes.

MR. PETTIGREW: Something under $500,000.

MR. MURPHY: But close to a half million

dollars?

MR. PETTIGREW: Yes.

MR. MURPHY: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Walsh?

MR. WALSH: Sir?

MR. CHAIRMAN: Would you like to carry on with

that one?

MR. WALSH: No. I will not ask how many hours

there are in a day. That could be a surgeon or a general practitioner or someone

who has a waiting room saying, 'next please'.

MR. PETTIGREW: The case to which I referred,

was a general practitioner. There are higher amounts than that billed by

specialist physicians.

MR. WALSH: I would tend to think that someone

who is pushing $500,000 a year with a waiting room must certainly be under the

scrutiny of MCP.

MR. PETTIGREW: Yes, that is fair to say.

MR. WALSH: Fair to say. I will leave that as I

want to move on, Mr. Chairman. Looking at some of the reports Mr. Pettigrew has

been giving us, and I am being a little picky, but we are talking about a budget

that concerns $140 million of the people's money. In your submission there were

a number of meetings held that apparently, according to your own reports, were

not signed off. Is that normal or is that just an oversight or was there

something where a tremendous amount of follow-up was being done? There were some

six meetings held between 1966 and 1989 that were not signed off. What would

happen in that case?

MR. PETTIGREW: You are referring to, I guess,

the auditor general's management letter. That is a minor oversight. The chairman

of the commission, following each monthly meeting, would sign the minutes of the

previous meeting. Many of our meetings go on after hours and it was simply just

a pure oversight, a minor oversight, in those not being signed.

MR. WALSH: That is what I thought it would be,

but seeing it there it just sort of jumps back out at you, I was just wondering

what may have happened.

MR. PETTIGREW: That is the only way I can

explain it. It is just a minor oversight. Perhaps the minutes were not presented

to him to be signed. The official recorded minutes of the commission are put

before him and with many, many matters of not urgent, but very important

business, it is one of these little details that was lost in the shuffle, and

that has since been corrected.

MR. WALSH: Okay, thank you. In terms of that

same report: from January to March 1990 it looks like you were moving over to

full computerization, at the same time doing a manual ledger and a computerized

ledger, and apparently when you finished up there was a difference between the

manual and the computer ledger systems. There was a recommendation they should

be identified and corrected and my question first would be, how big were those

differences? I have seen accountants chase pennies to get the books to balance,

but are we talking in terms of large numbers, and what amounts would they have

been and if they were what has been done to correct those differences?

MR. PETTIGREW: I don't know the amounts. I am

under the impression they would have been very small amounts. I think it was

more a point being made of technical accounting procedure. As you have

indicated, we were converting. This is in reference to our financial system but

they were small amounts I believe. Maybe some of the audit people who are here

might be able to indicate that more precisely than I can, but I think it is a

minor technical accounting procedure that has been addressed and rectified, but

I cannot tell you the amounts.

MR. CHAIRMAN: Mr. Hart.

MR. HART: I think I will just generally

respond. My opinion on this would be that if they were material in nature

obviously the audit report would have been an adverse opinion or a qualification

of some sort, so from that perspective I cannot imagine that they were too

material. But it is important that any differences be identified because

otherwise it is an indication that something might be wrong with one system or

the other. Just to give more detailed information on it I think maybe our audit

manager who was involved in that particular audit might be able to share

something with the committee, so I pass it over to Mr. Barron.

MR. CHAIRMAN: Mr. Barron.

MR. BARRON: The differences were not very

large. The problem with it was they were running a new system, they were setting

up a computerized general ledger system and they also had the manual running at

the same time. Our problem was that they used the computerized ledger to form

the financial statements even though there was a difference between that and the

manual system, but the differences were not very large.

MR. WALSH: I have one final question, Mr.

Chairman, and then I will move on. I may have myself confused on this one so I

say that right up front. In the audit newsletter of October 1991 there is a

section, Page 20 in the notes that we have Mr. Peddigrew - Audit of General

Assessments. It says that over the past three years the audit department has

made a number of recoveries totalling $205,000 as a result of inadequately

documented general assessments, and it goes on to talk a little more about it.

When I go back through the information that was given to us in the same document

from Page 5, I am having difficulty coming up with $205,000. I am just wondering

if the newsletter is not a much more recent document, an updated one, I cannot

total up the numbers. As I said my math is not the greatest but I am getting

references to $205,000 in one

section and then I am looking at, all of a sudden

in 1991, a

summary of probably a lot less than that.

MR. PEDDIGREW: Mr. Chairman, the $205,000

indicates that it was over a three year period. It says over the past three

years the audit department has made recoveries of $205,000. When we say 'audit'

there are a number of components, the Workers' Compensation component which is

explained in here, and third party liability recoveries, but the other audit

recoveries are the ones we have been talking about here, the general assessments

and that sort of thing. On your Page 5

summary, and this does not look familiar

to me, this particular page, but in any event I am looking at, if you add the

third line there, audit recoveries -

AN HON. MEMBER: I may be of some help here. If

you look at that

schedule it appears that four years would total up to the

$205,000.

It is exactly $205,000, whether it is just

coincidental or not I do not know.

MR. PEDDIGREW: No. See, this newsletter would

only have covered I guess six months of the 1991 year.

AN HON. MEMBER: Yes, that's what I would have

thought.

AN HON. MEMBER: (Inaudible) 1992 year.

MR. PEDDIGREW: Of 1992 year. It would have

included - like our reference here would have included.... No, not 1992.

AN HON. MEMBER: Yes. The year ending March,

AN HON. MEMBER: It's a 1991 newsletter.

MR. TONY MAHER: I can explain if you

(Inaudible)?

AN HON. MEMBER: Yes. I defer to Mr. Maher of

MCP.

MR. MAHER: The $205,000 refers to the past

three years. It is not the past three fiscal years. It is the past three years

since the October 1 date. So there were certain amounts recovered from April 1,

1991, to October, 1991, which are not included on this page 5 as you have

referred to. They would be included in the year ending March, 1992, which is not

yet concluded.

MR. WALSH: I hear where you are coming from,

but it is an audit newsletter dated October 1, 1991 -

MR. MAHER: Yes.

MR. WALSH: - and it says: over the past three

years the audit department has collected recoveries totalling $205,000. So we

are talking October, 1990, probably, or year end, six months of this year with

the two previous years, is that what we are...?

MR. MAHER: No. Six months of this year plus the

two previous years, plus six months of the previous year.

MR. WALSH: Okay. So.

MR. CHAIRMAN: Three calendar years from

October.

MR. WALSH: So we are looking at the whole

composite numbers.

AN HON. MEMBER: You can't - it won't reconcile.

MR. WALSH: Alright.

AN HON. MEMBER: Just apples and oranges.

MR. WALSH: Very good. I qualified by saying I

am having difficulty with it, and I wanted to take it from there.

Mr. Peddigrew, I am not sure if I am going to get a

chance to come back and ask a question, so let me go right to the point and say:

$140 million. Loaded question, because you are the man in charge. Are we the

taxpayers getting our money's worth? I am going to ask the same question of the

acting Auditor General.

MR. PEDDIGREW: I guess my personal view is yes.

I think the medical care program is perhaps one of the greatest programs this

whole country has, including this Province, and I think in large

part it is well

used, it is properly used. There is some abuse. I do not think anybody can deny

that. It is not wholesale but it is significant enough to warrant close

attention. But by and large I think the program is very well administered, very

well used, and is a great service to the residents of the Province.

MR. WALSH: Mr. Hart?

MR. HART: As you indicate it is a very

difficult question. I guess from an audit point of view I would generally state

that the Commission, largely I guess as a result of recommendations that we have

made over the years, and their own initiative, they have implemented a lot of

improvements in their auditing process. So I think there have been significant

improvements, but I do not think I would be prepared to state categorically that

there are no further savings that can be attained. Obviously that would be

something - unless you went in and looked at the system again and as a follow

up, it would be a position that an Auditor General would not want to put himself

in.

There are certain types of abuse that obviously no

audit is going to pick up, especially when you are delivering services. It is a

relationship between a doctor and his patient, and no matter how good your

auditing system is there are going to be certain things that slip through. But I

think generally speaking the Commission has made tremendous strides in improving

its systems, and I think generally speaking the doctor-client relationship is a

responsible one. There may be abuse there but I don't think it is as significant

as some people may think.

But there are certain procedures which we have

identified I guess in the past that may help to a certain extent in terms of

improving even further. But it comes down to a question of: how many resources

do you put in there to carry out the procedures that we are talking about? When

we suggest improvements in systems generally our responsibility is not to be

concerned with the dollars it takes to put those systems in. We will look for a

Cadillac system

whereas the economic situation may dictate that you have to have

something somewhat less than that. So there are always trade offs in that

respect. But overall, I think the Commission has made good strides.

MR. WALSH: Thank you, Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Hart, Mr. Walsh.

Perhaps if the Committee agrees I will just ask a couple of questions of my own

and -

MR. MURPHY: Mr. Chairman?

MR. CHAIRMAN: Yes, Mr. Murphy.

MR. MURPHY: To Mr. Hearn. Am I gathering, Mr.

Hearn, from what you are saying that -

MR. CHAIRMAN: Mr. Hart.

MR. MURPHY: I'm sorry, Mr. Hart.

MR. HART: That's okay.

MR. MURPHY: Are you, as the acting Auditor

General, satisfied that the audit procedure that is in place now has reached a

degree of competency to handle, as well as possible, abuse?

MR. HART: As I indicated, I think the

Commission has taken great measures to improve itself but there are still, as I

indicated, some recommendations that we have made, based on our previous audits

of the Commission, that have not been implemented. The executive director can

speak to that himself, but it was, as I indicated, probably a situation where

you utilize the resources that you have available to do what you think is the

most meaningful and significant way of recoveries.

A couple of things that we have recommended, for

example, would be that the internal audit division of the MCP conduct visitation

of doctors' offices. From our understanding and what we have observed it is an

audit situation where the information is requested of various doctors when a

problem arises. In terms of sending the information in to the Commission

offices, we feel that it might be a better approach if there was to be

visitation on a test basis. Or if there was a problem, to go out and actually

sit down with the doctor and talk first-hand. But then you are into a situation

where it is going to be more time consuming and that sort of thing. But I think,

from my experience, most internal audit divisions do conduct on-site visits and

that sort of thing. So we have suggested that in the past. The Commission has

considered it, obviously, but to date I do not think that has been implemented.

Another area that we have suggested, and have been

suggesting for some time, is in relation to confirmation requests that are sent

out to patients. The practice of the Commission as we understand it is that only

those replies that are received from patients are followed up on if there are

any discrepancies noted. There are no follow up procedures relating to

situations where there are no replies from patients.

So, for example, if they send out 100 patient

confirmations and eighty reply and twenty don't, the twenty that don't are just

pushed aside and forgotten about. From an audit perspective we think that those

twenty could probably be... generally, if somebody is not replying, either they

are not interested in it - just take it and throw it in the garbage like a lot

of people would do - or else maybe there is a problem that they don't want to

discuss. From an audit point of view I think those twenty could be more

meaningful than the eighty that say: yes, everything was fine.

MR. CHAIRMAN: Thank you, Mr. Hart. I am going

to ask Mr. Peddigrew to respond, because some of the documentation I read last

evening indicates there is a procedure to check upon those who do not respond

and how far they carry it. I also would like to ask Mr. Peddigrew to address the

question of: is it practical to have auditors go into doctors' offices? More

specifically, does MCP have the legislative authority to do that?

MR. PEDDIGREW: Yes, Mr. Chairman, in response

to the first point regarding visits to doctors' offices. No, we do not have

legislative authority to conduct on-site visitation. We also have indication

that there in fact may be Charter of Rights considerations in that regard.

Nevertheless, I should note that we do conduct on-site inspections in certain

cases where we have the consent of the physician. We have done that. Where there

is consent we have gone in and reviewed.

I guess I would agree that it is probably the best

way of auditing, or would be, but we currently have no provision to do that. I

would think that it is probably not the procedure that most doctors would want

to have. There are cost considerations but those are not the only ones. But I

just want to make that point. That we really have no authority to do it at the

moment.

With regard to the audit follow up of patient

verifications, we do in fact do a follow up. We mail these letters to patients.

We wait four weeks. If there is no response we do a second request to the person

and we then wait and see if we get a response there. We do not follow up beyond

that point, that is true. Because back some years ago the Auditor General made

that recommendation in his report and we did in fact then for a period of time

conduct follow ups right to the end. It meant that in some cases you were

writing as many as seven or eight follow up letters to patients, or tracking

them down, or you would find that people had moved and that is why they did not

reply. We even found cases of people who had deceased, and some we were just not

able to contact, despite every type of pursuit in trying to track them down.

So it does become a question of resources. When you

are sitting there with these audits for example that are in progress and require

clerical and management effort to complete and conduct, it just becomes a

question of feasibility. To continue to follow up on cases where we have proven

in the end did not yield any significant result as a result of intensive follow

up, then why do it? So I suppose it is a matter on which we have some

disagreement in that the Auditor General will recommend this as an ideal

auditing methodology and we accept that, yes. But there is a question of

practicality.

MR. CHAIRMAN: There are probably a couple of

points here. One is how far do you go, and what is the cost effectiveness of

continuing to go back, and go back, and go back? But I think the Auditor

General's point that those who do not respond may well give rise to a question

of: why didn't that person respond? Maybe this guy just says: 'I don't know what

you are talking about,' and throws it in the garbage. I think it is a good

opportunity for us to make the point hopefully publicly through the news media

that these questionnaires from MCP are important in the MCP carrying out their

roll and their auditing. People who receive those requests should take it more

seriously and respond. What would be the percentage of response generally? Would

it be 60 per cent, 80 per cent or 90 per cent.

MR. PEDDIGREW: After the second request it is

70 per cent, roughly. Mr. Chairman, if I may just go back to one more point

regarding the requesting of records and on site visits and so on. I would like

to make note that there is currently a committee, recently appointed at the

Minister of Health's request, consisting of NMA representatives and

representatives of the Commission who are in the process of examining this whole

audit process, including the matter of records and so on, and the mandate they

have been given is to, if possible, identify a better, more acceptable method,

if there is one, but of course one that has to be as effective. The current

method, there is no question about it, is very effective. It has its

difficulties, as we all know, but if there is another way then by all means the

Commission has clearly indicated that it is flexible in this matter and is

entirely willing to consider any other method.

MR. CHAIRMAN: Thank you. I think that committee

is the appropriate committee to deal with it. It is not an area that I think

Public Accounts wants to get into. Clearly the Auditor General has indicated

from a financial point of view he would like to see that. There are broader

questions, obviously, which have to be considered, and that committee structured

by the minister I think is the appropriate one to deal with it.

Just an observation from my point of view, if I

may: you have given us over the last hour a pretty good view of what, from my

layman's point of view seems to be a very detailed system of checks and cross

checks, and I appreciate Mr. Hart's comments that it is very good and has

improved over the years. There is always room for improvement, I guess. We are

looking at half of 1 per cent that is really in question here, and I am assuming

that that $500,000 that we talked about, and I do not want to get into now, that

not all of that is actually incorrect billings. Some of it in question is to be

reviewed, is to be maybe honest errors, maybe administrative or computer errors

or whatever. The question may be: what percentage of that $500,000 could you

guestimate? I know you do not know because you told us earlier that this was

your estimate of what you are going to look at. What percentage do you think

might be validly items that you need to get at that somebody is trying to get

approved improperly? Could you hazard a guess?

MR. PEDDIGREW: You are asking - you mean in

terms of intentional misbilling?

MR. CHAIRMAN: Yes.

MR. PEDDIGREW: I would think it is very small.

I do not know if I could hazard a guess, but you know just based on the number

of cases where there is some real indication of intentional misbilling, it is

far less than 1 per cent, in my estimation, of all physicians.

MR. CHAIRMAN: Let us get a little more

specific. You answered a question for Mr. Murphy that one physician may have

billed up to a half a million dollars last year. Obviously physicians have

expenses, they have facilities and equipment and they have staff and

administrative costs and all the rest of it, so half a million dollars does not

go into the physicians' pockets, obviously. Let's not be misleading here, but

would you say that is an undue amount? How could one physician, physically do a

half a million dollars work? Does that mean he has three examination rooms

constantly going and spending fifteen seconds with each patient saying: take an

aspirin and go to bed, and charging twenty dollars for that, or is that

physician working eighteen hours a day, six and a half days a week? What would

your view be on that, and what would an average physician billing from a person

with a general practice be?

MR. PEDDIGREW: The average would be about

$150,000 in terms of gross billings, and certainly it is accurate that their

overhead expenses have to come out of that amount. I think it has to be

recognized there are some doctors who conduct busier practices. They work longer

hours and it is really in a sense a free enterprise where if a physician is

willing to put in the time then he can see more patients and would generate a

higher income. I do not feel qualified to make a judgement as to what is the

upper limit. I think again that is a matter that our medical consultants

committee would be more capable of determining and it is really out of my realm.

MR. CHAIRMAN: A physician who bills $500,000,

would his or her records be reviewed more carefully than others? Would you look

at that and question it? Would you refer it to your medical committee and say:

would you please see if this person, even if he or she has provided all of these

services, are these services being well provided or are they being shuffled

through the waiting room sort of syndrome? What extra precautions would

you take? What extra investigations would you take?

MR. PEDDIGREW: Mr. Chairman, the profiles

mentioned in the flow chart are in fact precisely that, they would zero in on a

physician who has an excessive number of anything, and would be a trigger to the

audit manager or the audit personnel to perhaps conduct an audit on that

physician. Yes, anyone who has abnormal or deviant practice patterns would be

evident from a profile. Now, I think I should clarify that. The auditing

activity over the past while, since 1987-88, has not dwelt on audit profiles to

the extent that we intend to, in fact, in future, and part of that is in trying

to develop better profiles, better computer analysis of the practice patterns.

They have been done and are currently being done, so just as the patient who

sees too many doctors and has too many visits get highlighted in the reports

then so would a doctor whose billings are that high.

MR. CHAIRMAN: It being 11.35 p.m. we, with some

difficulty, arranged some coffee and it is outside going cold. It is not in a

heated container. It is just some cups of coffee brought up. Because we were

late starting, as most of us got caught in traffic this morning, I suggest that

we go out and get a coffee and bring it back. We will take five minutes if you

care to go to a washroom or grab a coffee. We can then come back and have our

coffee while we continue.

RECESS

MR. CHAIRMAN: I call the meeting to order again.

Mr. Murphy should be back momentarily. I do not think he will object if we

proceed. Perhaps I will go back to Mr. Dumaresque. Would you like to ask some

further questions?

Mr. Dumaresque.

MR. DUMARESQUE: Thank you, Mr. Chairman.

I just have one final question. Being one of the two

members who have a district bordering Quebec I am just wondering if you have had

any problems with that Province's claims and if you do what type of problems

they may have been? Sometimes in my riding I have had some concern raised by

constituents that Quebec has a different system or they have a different rate

and sometimes my constituents get extra charges. I am just wondering if you have

encountered any of that and what might happen in the future?

MR. PEDDIGREW: On that point, out of Province

claims, no. We have now in place right across the country, with the exception of

Quebec, a very good system of processing and payment for claims for out of

Province.

I can speak pretty knowledgeably, I guess, on this. I

was chairman of the medical plan directors of Canada when we implemented what is

called the reciprocal billing agreement. It is an agreement whereby all the

provinces - and it relates to the provisions of the Canada Health Act now, which

say that services rendered in another province are to be reimbursed by the home

province at the host province rate. So that

whereas before you could have a

difference in your bill when you visited Ontario and had to pay it yourself, now

we pay those claims at host province rates. But the way the system works, rather

than patients being given bills and so on, is that the physician in the visiting

province submits his claim to his own plan and the plan reimburses him. Then the

plan bills the home province back.

All the information has to be captured, the identity

and so on. But it facilitates it for patients and they do not get left with

bills. But there is a problem with Quebec in that Quebec does not participate in

the plan. There is not a payment problem because we will still reimburse

patients at the host province rate. But it means the patient has to submit the

claim directly to MCP in our case and we pay it and repay the patient, or the

doctor, if the patient has already paid for the service.

So the system is working very well. It was one of the

last I guess outstanding items that Justice Emmet Hall, when he did a review of

Medicare - he of course is known as the father of Medicare, having I guess

designed the original concepts of Medicare back in the 'sixties - but he did a

review in 1981 and identified out of province as a continuing problem. This was

subsequently addressed by the Ministers of Health of the day and led to the

reciprocal billing arrangement that we have today. That has been in place since

April 1, 1988.

Incidentally, I think there was some concern or

question regarding audit staff and costs of the audit operation and that sort of

thing. The introduction of that reciprocal billing system for out of province

meant of course a considerable reduction in the numbers of claims that would

have to be processed within the Commission, therefore, a resulting work load

diminishment and so on. The audit division was created from the staff that were

largely the staff that was essentially displaced by the out of province

processing operation changing.

So in terms of cost of auditing, there has been no - I

shouldn't say "no" - certainly the position of audit director is new. Previously

he was called audit manager, in 1987, that is a new position. But the

supervisory position and most of the staff - in fact all the auditors, with the

exception of one or two other clerical people - were put in place from transfer

of staff from the out of province division. So there was no additional cost

there in that regard.

MR. DUMARESQUE: No other questions, Mr. Chairman.

MR. MURPHY: Yes, Mr. Chairman.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Thank you. Mr. Peddigrew, while you

are talking about the rest of the nation, and the fact that Quebec does not

participate with the rest of the provinces - of course that is their decision.

But how - off the top of your head, you may or may not have the figures at hand

- how does Newfoundland compare with the rest of the nation in a per capita

sense, number one on visits, and probably number two, on costs per person

against the medical system?

MR. PEDDIGREW: It is a little difficult to make

comparisons because each of the provinces operate quite differently. In some

provinces the Medical Commission, if there is one, operates both the hospital

and the medical programs and that of course is not the case in Newfoundland. MCP

is strictly physicians and a lot of people have that misunderstanding and think

MCP is hospital, and it's everything - it's not. It is physicians, dentists and

up until last year, optometrists, whose services are not now insured. The other

thing we have to look at is that Newfoundland has a much higher percentage of

salaried physicians -

MR. MURPHY: Cottage hospital type hospital

physicians.

MR. PEDDIGREW: - and while they are funded through

the commission now, again, only as of last year, there is no individual patient

claims submitted and so on, so you cannot get a reading from that, but for the

fee for services component, you know the average number of services I think is

something in the order of eight per year, which is comparable to elsewhere, I

would not say that it is any higher or lower than average.

MR. MURPHY: So the eight visits by a

Newfoundlander to a physician and/or billing by a physician for a Newfoundland

person is comparatively about the same as it is across the nation, so we are not

high and we are not low, we are just kind of -

MR. PEDDIGREW: Yes, that is right.

MR. CHAIRMAN: I might just interject here. I think

research has shown that the number of visits to a doctor is directly

proportional to the state of the economy.

Mr. Murphy?

MR. MURPHY: Then I might suggest that -

MR. DUMARESQUE: It would only drop in the future.

MR. MURPHY: - perhaps the chair is indicating that

there are quite a few extra visits at this point and time in our lives.

MR. CHAIRMAN: I suspect that this could be a rough

year at MCP.

MR. MURPHY: I suspect it could, yes. Thank you,

Mr. Chairman.

MR. CHAIRMAN: Thank you, Mr. Murphy. Mr. Hewlett,

would you like to -

MR. HEWLETT: No, I pass, Mr. Chairman.

MR. CHAIRMAN: Mr. Walsh?

MR. WALSH: Thank you, Mr. Chairman. I wanted to

touch on the

summary of costs and in particular the administration of MCP. In

1987 - 1988, we were looking at 3.4 million and we jumped a full half million in

1988 - 1989 and then we have jumped virtually another half million in 1989 -

1990. Over a two year period we have seen a million dollar increase in

administration. What happened with the commission for such a sizeable increase

to take place two years in a row?

MR. PEDDIGREW: I have not analyzed those figures

going back beyond the area of the 1989-1990 report, but just let me say in

general that it perhaps goes back somewhat before that. Up until the early 80s

the commission was pretty static in terms of its program as such. Now it was not

static in the sense that going back to the first year of operation 1969-1970,

the commission processed approximately one million services paid to physicians.

We are now processing in the order of five million services, so there has been

that kind of increase, that is talking about the medical services. Beyond that,

in the early 80s, I think it was 1981 we introduced the optometry program.

In 1983 we took responsibility for radiology services

which were not previously insured through the Commission, they were handled

separately. In 1985, we took the children's dental program, which is a pretty

large, significant program, in the order of $7 million. It is not just for

children, social services recipients, and certain other disadvantaged groups are

insured under that program. In 1987, we took another component, in-hospital

diagnostic services, which previously were billed elsewhere through the system

and are now billed through MCP, and these all required development of payment

schedules, regulations; you know, the children's dental program, for example,

was a manual operation. I think there was some concern with the Auditor General

back then about that program, and we have since taken it and done, in my view, a

very good job of developing that program, putting the appropriate legislative

and policy provisions in place and computer systems to handle it, and

negotiations with the Dental Association on the payment schedule, and so on.

In 1990, we took responsibility for salaried physician

payments, and that is, again, an enormous program: $24 million, so, the

Commission is now responsible for disbursement of those funds,

whereas, in other

provinces, I think you would find that the trend tended to be for commissions to

phase out. They did in three or four other provinces, and the programs came in

under the ambit of the Departments of Health in those provinces. I guess we have

gone the opposite way.

The Medical Care Commission in Newfoundland has

expanded and has continually taken on new programs and new responsibility, and I

feel it is in recognition of the fact that we do a good job, and we have done.

But putting those systems in place obviously required additional resources. Now,

I point out, I made reference to things like reciprocal billing enabling us to

transfer staff to the audit and staff the audit department.

Our staff complement in 1969 was sixty-eight

employees, and when we took the dental program, there was a transfer of, I

think, seven employees who came with the program, as such, bringing it to

seventy-five. Our total number of personnel on staff today is seventy-four, but

there are ten vacant positions, most of which are in the process of being

filled, and will be filled shortly. But we are talking a period here of

twenty-three years, whatever, where the Commission has not expanded

significantly in terms of numbers of staff, but yet, we have taken on enormous

additional responsibilities.

Part of the process, I think you probably noticed that

the computer development cost is a significant component here, and that is

because we are in the midst of, I guess, perhaps one of the largest computer

redevelopment projects undertaken in the Province largely by Newfoundland and

Labrador Computer Services. It is to develop entire new systems for all of these

programs. Much of it has been done. We started with a complete new registration

processing system, and that is the system, of course, that registers - like MCP,

of course, insures every residents of the Province - you are talking all 580,000

beneficiaries. The matter of issuing - you know, we do 80,000 transactions a

year for updating cards, the replacement of cards, newborns registered,

termination of people leaving or who are deceased, address changes, and all of

that. That is a very big program in itself, just the regular registration

program. That one has been done, is in place and is working very well. The next

phase was the dental system. Even though we had developed a computerized dental

system in 1985, we redeveloped it just this past year and put that in place.

That was really, in a sense, the pilot project for the bigger system, which is

the medical claims processing, which is still underway, and we may have to look

at a revised implementation date for that one. But it is scheduled to go in late

this year or early next year.

So, computer development is a major component of our

increases here. The rest of it would be in the area of general salary for -I am

just referring to general increases for the general service. Our employees are

members of the general service, so, whatever increases applied to the whole

general service would have applied there.

I don't know if there are any other significant areas

that you want to address within those administrative costs. But I do want to say

that our administrative costs are 3.9 per cent of the total program costs. In

1969, the Commission determined - well, their initial year costs were 9 per

cent. The Commission of the day projected that if they could, in subsequent

years - because that was a heavier start-up year - get it down to 6 per cent,

then that would be quite reasonable. Ours today is 3.9 per cent, so I leave it

at that.

MR. CHAIRMAN: Mr. Walsh.

MR. WALSH: Just as a follow-up, you mentioned that

the salaried physicians have now moved back? I think in 1979 they were moved

into the Department of Health. They have now moved back to MCP as well.

MR. PEDDIGREW: Yes, that is correct.

MR. WALSH: You mentioned that much of the heavier

costs we are now incurring are coming from computerization. I believe you

mentioned what is affectionately known as 'Knuckles' doing that work for you.

Was that a tendered program? Did we call for proposals and tenders? Or was it

simply because they are internal we decided to look to them? I ask that

specifically, because I am a firm believer in the free enterprise system and I

tend to think that, internally, we tend to overcharge ourselves to justify our

own existence. If I am referring to 'Knuckles' directly, then let that be the

case, because I believe there are people in the marketplace who could meet those

computer needs at much more reasonable cost to the taxpayer than we tend to be

charging ourselves internally. I am wondering, was that a tendered program or

was it simply offered internally?

MR. PEDDIGREW: As, in fact, one of the founding

clients, I guess you would say, of Newfoundland and Labrador Computer Services,

MCP has - no, the project was not tendered publicly. We deem ourselves to be

part of the government community. I think, the overall government dictate is

that we have a centralized processing facility, a large one in NLCS, and that

clients, government departments and agencies, and so on, should appropriately

use NLCS services. In my view, I do not believe there is a local private

enterprise firm that would be able to undertake a project the size of this one.

Now, I say that though, acknowledging that we did not go to tender for that

project.

MR. WALSH: I tend to agree with you, that for

processing purposes, you are absolutely correct - if we have a building full of

equipment, let us use it. I agree with you, that is absolutely correct; but from

a design perspective, I say no. Simply because we are going to use someone's

equipment afterwards does not mean that we have to utilize their services at

what can be higher than the free enterprise rates available to us for design.

That was why I was asking: Did we go outside to look for a design program to

meet your needs? I guess the answer is: No, we stayed internally.

MR. PEDDIGREW: That is correct.

MR. CHAIRMAN: Mr. Hewlett.

MR. HEWLETT: Mr. Chairman, just a quick

interjection.

Bureaucracies, by their very nature, have a tendency

to grow empires, and the people in charge of empires have a tendency to enhance

and increase their empires. You indicated that your Commission has taken on an

increasing number of functions, or the administration of an increasing number of

medical functions, over the past decade or so. Was this at the instigation,

suggestion, of the Commission, or was it as a result of the Throne Speech and/or

budgetary measures on the part of the government in power at the time?

MR. PEDDIGREW: It was as a result of government

preference and government approach to the Commission to undertake these

programs.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Walsh.

MR. WALSH: Mr. Chairman, with your indulgence, in

defence of the Commission, to have gone from sixty-eight employees to

seventy-four employees does not sound to me like a big empire. I would tend to

think that the fact that Newfoundland Computer Systems seems to have exclusive

rights to anything that happens within government, and, therefore, have free

access to the public pockets, that the empire that has been built over there has

been far greater in significance than the addition of six employees in ten years

at your particular -

MR. PEDDIGREW: I think I would have to

acknowledge, in that case, that I must also take some responsibility because,

for a period of four years, I was Chairman of Newfoundland and Labrador Computer

Services and, in fact, have only just resigned from the board. MCP has, I guess,

traditionally, had representation on the board of NLCS; but I think perhaps that

the President of NLCS can speak better for his organization than I can, even

though I have been there for some of the very crucial board decisions that have

been taken.

But that corporation operates essentially at the

direction of government in that three shareholders are members of government.

Certainly, from the point of view of providing computer facilities at, in my

view, reasonable cost, I think they fulfil that mandate.

MR. CHAIRMAN: I might just point out that as

Minister responsible for 'Knuckles' for four years, a different four years, I

have also seen the internal workings of it. I was going to point out to Mr.

Peddigrew that he had been on the board. There are other factors involved, the

most important one, I think, being confidentiality, not only of MCP records but

of other government records, as well. It is a highly secured building and there

are a lot of data in there that do not pertain to MCP, but there is a benefit to

government. I think government's policy is a correct one, that of maintaining

such an agency and a facility to keep government records in one location.

Perhaps I will just move on with a couple of quick

questions of my own, short specific ones, relating to the audit recovery report

of March, 1991, which the Commission provided to us. Basically, I am looking for

some clarification.

Night premiums, item S 001. What exactly are night

premiums? Could you just explain the terminology for me?

MR. PEDDIGREW: That refers to an extra fee that is

applicable for services rendered at night. It may relate to a period. In fact,

the payment

schedule has been changed in this regard. I think - it was our view,

and it was negotiated with the Medical Association, that that particular service

was somewhat open to abuse, so there was mutual agreement to change it. But it

was a component of the fee

schedule to recognize - as the current one does, but

in a different form - an extra fee, or to provide an extra fee for services

rendered at night or after hours.

MR. CHAIRMAN: So this $15,000, $5,000 of which has

been recovered, would be for a number of physicians, not for one particular -

this is for one particular physician?

MR. PEDDIGREW: This is one physician.

MR. CHAIRMAN: So he is very busy at night - he or

she. No doubt that led the Commission to have some concern and that is why this

was -

MR. PEDDIGREW: Yes. Excuse me, Mr. Chairman. Each

of these items here is individual. Well, I should not say 'each' - pretty well

all of these are individual physicians.

MR. CHAIRMAN: Could you address 'home visits',

number 8 there, in the amount of $130,000? Again, this is one physician who did

$130,000 worth? Or is this what you consider an overpayment, or an over claim?

If you are concerned about $130,000, how much more did he or she legitimately

bill?

MR. PEDDIGREW: This is one physician. It is our

estimate of the amount inappropriately billed for that service.

MR. CHAIRMAN: Would this be for a one-year period?

MR. PEDDIGREW: No. It is a -

MR. CHAIRMAN: Built up over a period of how many

years?

MR. PEDDIGREW: Built up over a period of time,

yes.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: It seems like a fairly large amount

to be billed over, in excess, for night visits. I would be interested to know

how much was overbilled for the day visits if he billed $130,000 too much for

night visits.

AN HON. MEMBER: Went through a half million

(Inaudible).

MR. CHAIRMAN: This is the same individual with a

half million dollars.

MR. PEDDIGREW: I do not think it would be

appropriate for me to comment further on identifying the individual.

AN HON. MEMBER: A busy person.

MR. CHAIRMAN: No, it's not our mandate - let me

just interject. It is not our mandate to put any individual physician on trial

here. I think it meets the Committee's purposes to know that the Commission has

identified this person and that concern is being expressed and this is being

looked into. But just out of curiosity, I think, I wanted to know exactly where

this came from.

I see other ones down here: $50,000 for general

assessments, $46,000, $42,000 for general assessments. These are individual

doctors over a period of a number of years. So I assume the fact that these have

been identified, these individual doctors are now being looked at carefully.

MR. PEDDIGREW: Yes. These are all the subject of

audits and are at various stages. Some of these have since been completed, in

that the recovery has been effected and an appeal if there was one has been held

and an order issued, and so on. But others are still in progress. Sometimes

audits take a considerable period of time. The process, again, outlined in the

flow chart, is one involving very comprehensive analysis of data and meetings of

various people who are involved here, and the arrangement of appeals if they are

held. So it can be, in some cases, a very prolonged exercise.

MR. CHAIRMAN: I point out the fact that, even

going back to the $130,000 means there is a difference of opinion. It may not

all be incorrect billing. It may be a matter of dispute.

MR. PEDDIGREW: Yes, it is conceivable. Before the

matter is finalized we cannot say that this is definite.

MR. CHAIRMAN: Whether it is right or wrong.

MR. PEDDIGREW: But the audit is in progress.

MR. CHAIRMAN: Sub-specialist audit, $21,000, means

just a specialist? What is it? It is just the terminology I am interested in

here.

MR. PEDDIGREW: Yes. There are certain specialties

that are designated as sub-specialities, and there are specific billing

provisions that apply for that category. This just happens to be one in that

area where there is a billing anomaly or whatever, where that amount of money

has been identified as being inappropriately billed.

MR. CHAIRMAN: An item on the second page of that,

on page 4 of the notes, WBC 1. Well baby care audit, $50,000. Is that one

physician providing well baby care?

MR. PEDDIGREW: No. That is a number of physicians

and I could not give you the exact number.

MR. CHAIRMAN: Okay.

MR. HEWLETT: Mr. Chairman, might I interject with

another quick question?

MR. CHAIRMAN: Mr. Hewlett.

MR. HEWLETT: There was something in the order of

$130,000, I believe, for night visits. Precisely what is that? Is that a call -

a patient in hospital, a doctor leaving his home and visiting the patient in

hospital, or a doctor visiting the patient at home, or a combination of both?

MR. PEDDIGREW: I guess it could primarily be home.

There are provisions again in the payment

schedule for visits to the patient's

home, visits to a patient I guess in a hospital at night. There are different

rates that might apply for, say, from midnight to 8:00 a.m., and for up to

midnight. These conditions, these billing provisions, and so on, change over

time. As I said, at the moment, we have a different structure in place, or fee

system, than existed, say, two years ago. But it would relate primarily to home

type services.

MR. HEWLETT: So there is such a thing right now,

to use the old-fashioned phrase, as house calls?

MR. PEDDIGREW: Oh yes.

MR. HEWLETT: An insurable - because I was of the

impression that such a thing was very much of the past or whatever -

MR. PEDDIGREW: Oh, no.

MR. HEWLETT: - or belonging to country doctors

with gray hair and horn-rimmed glasses, who practised a profession, say, rather

than a trade. There are home visits or house calls, as you want to call them,

that is an insurable service. Under what sort of circumstance do you find that

sort of thing going on in this day and age?

MR. PEDDIGREW: It is an insurable service. There

are certainly many people who are not able, particularly elderly people, to go

out at night. Certainly it is recognized that it is a very legitimate service to

have a doctor visit a patient at home at night. It might be a child, it might be

someone with a severe illness who requires a home visit.

MR. HEWLETT: Thank you.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: I have a quick question, Mr.

Peddigrew. Sometimes if you talk to somebody who is ill and has to have surgery

they claim that when the anaesthetist put them to sleep there were three people

in the room and sometime later he found out there were nine people in the room.

Is there any format, as such, for the OR in as much as that the attending

surgeon is there, a backup physician, an anaesthetist, and what have you? Does

the surgeon determine how many people are in the room or is there a format?

MR. PEDDIGREW: I am not in a position to answer

that. I can only answer from the point of view of the billing that MCP would

receive. It would normally be a bill from a surgeon, possibly an assistant, and

an anaesthetist. There might even be a second assistant, but that is recognized.

In fact that is part of our claiming process. Physicians have to indicate what

their capacity was in rendering any service and their fees are based on that.

The assistant obviously does not get the same value that the surgeon, the

primary care physician would get, but in terms of who can be in the room, I

guess that is a hospital policy. It is not at all a matter for MCP to adjudicate

or even know about.

MR. MURPHY: I suppose if you look at young general

practitioners who are going of into speciality fields, if they were in to

observe, would they bill?

MR. PEDDIGREW: No. They could not bill. There are

certain situations where a teaching physician can, or at least an intern can

render the service under the supervision of a teaching physician, but the

teaching physician must make himself known to the patient and be responsible for

the care.

MR. CHAIRMAN: That intern would be a salaried

physician on the hospital staff normally anyway, would he not?

MR. PEDDIGREW: Yes.

MR. MURPHY: But he could still bill.

MR. CHAIRMAN: Can he still bill him?

MR. PEDDIGREW: But the intern would not be

registered as such with MCP. The physician is responsible for that care.

MR. MURPHY: But in some cases we do find general

practitioners who would have an opportunity to bill and who move on into a

speciality field. I do not think it is unusual that we find some GPs who are out

there billing and then, for whatever reason, they want to move on and

specialize, and during some surgery I think we find that these doctors are in an

observing situation, or whatever. They have already had the experience of

billing with MCP as a GP. Would it be acceptable for these physicians, even

thought they are only in the room to observe and learn, to bill?

MR. PEDDIGREW: No, not unless they are designated

as an assistant to the surgeon. Otherwise, if we get a bill from a physician

like that who is not indicated as an assistant then it is going to conflict with

the date of surgery and the patient number. It will all match up in the

patient's history as a questionable event and will be rejected and reviewed by

our assessing staff as to what is the explanation here, and that would be

investigated or assessed.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Thank you, Mr. Chairman. I am going to

ask you a question. I do not know if you can give me an answer or not.

In general surgery, if somebody was going into the OR

to have a gallbladder operation or whatever the case may be, are there standard

fees for the general surgeon, the anaesthetist, the backup support, are there

general fee structures for that?

MR. PEDDIGREW: Yes there are and for each service.

The MCP payment

schedule consists of approximately 2,500 procedures that could

be billed, including the office visit and so on, but there is a whole surgery

section which outlines every procedure, unless it is a new technology, a new

procedure that has not yet been included, but all of those are laid out in terms

of the fee code, and the service is defined and explained, and -

MR. MURPHY: Could you give an example, Mr.

Peddigrew? Just how much would a general surgeon receive, for instance, for

doing a gallbladder operation that lasted half an hour or forty-five minutes?

What would his fee structure be?

MR. PEDDIGREW: I am not familiar with the fee, and

I do not have much occasion I guess to look at individual fees, but I suppose it

could be something in the order of $200 or $300; but I am not suggesting that is

the fee for a gallbladder, but -

MR. MURPHY: No.

MR. PEDDIGREW: There are ranges of fees in the

schedule for surgery that would go all the way from a minor laceration of $15 or

whatever, up to $900 and more for when you get into neurosurgery or something,

and so on.

MR. MURPHY: I was just trying to zero in then on

what the cost of an operation would be, considering the number of physicians

that would be billing, and you are saying there are more than likely in every

scenario three physicians, and that would be the surgeon, the backup, and the

anaesthetist?

MR. PEDDIGREW: Yes, two to three. It is not always

that you have an assistant. You might just have the surgeon and an anaesthetist,

and that is all.

MR. CHAIRMAN: If I may interject, I think your

point in very valid; if we knew the cost of services provided to us, not only

for surgery, but for doctors visits as well, it is a matter that has been

discussed I know in Government for many years, of providing a statement each

year to each individual as to what services were provided, and the cost of those

services. Unfortunately the cost of putting the information together and mailing

it out does not justify it. Although it would be very desirable, it would cost

several hundreds of thousands of dollars I am sure to produce that information

and to mail it out to 500,000 Newfoundlanders. But I think people would be

surprised as to the value of the service that they are receiving through the MCP

plan and from hospital care.

MR. MURPHY: Somebody just mentioned to me, and I

do not know, you do a little bit of seek and search, and somebody said: If you

have a gallbladder operation, you are talking about $1,500 that it would cost

MCP. That is not the hospital cost or whatever - somewhere in that vicinity.

MR. CHAIRMAN: And if you would like to have it

done in Florida it would cost you $10,000 out of your own pocket.

MR. MURPHY: Yes.

MR. PEDDIGREW: I think that is a high estimate for

a gallbladder, unless the person did mean the cost of the hospital stay as well,

because that is a very significant cost, but that is not billed to MCP.

MR. MURPHY: No, I understand that.

MR. PEDDIGREW: But it certainly is high.

MR. MURPHY: Yes. Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Mercer, any further questions?

MR. MERCER: No.

MR. CHAIRMAN: Mr. Hewlett?

MR. HEWLETT: Just one curiosity question. I will

not get into details, but some years ago I had elective, I guess, voluntary

surgery on my part that was not required for my health, and it was not covered

by MCP, and it required four hours of microsurgery under general anesthetic by a

specialist urologist, and I was charged $1,500 Canadian cash up front for that.

Is that in line with what is normal if it were a service that was required

medically - I volunteered for this particular service. It was not required of

me, but it was an anaesthetist, a specialist who was a surgeon, and I was out

cold for four hours in microsurgery, and it was $1,500 cash on the barrelhead up

front. Does that jive with the kind of rate structures you have for something

that would be required medically?

MR. PEDDIGREW: It probably does if all the

components of cost are included there. I guess it is difficult to know from that

just what the surgeon's fee was for that particular service. In the meantime, I

think in making the comparison you would have to recognize Newfoundland's

payment

schedule rates are low by comparison to other provinces. They are

reasonable, but they are low and that is recognized. It may have been that your

service was rendered by a physician perhaps who was opted out of the program. In

fact, even if he was not, if the service is not insured and you chose to have it

done -

MR. HEWLETT: The service was not insured.

MR. PEDDIGREW: Okay, then he would be at liberty

to charge you whatever amount he deemed appropriate, but usually that would be

in accordance with his Medical Association payment

schedule which would not be

the same rates as the medical plan rates.

MR. HEWLETT: But he was not bound to charge a

certain rate. He could have charged me $2,000 if he saw fit in that particular

case.

MR. PEDDIGREW: Yes. I really do not think I could

answer it without knowing the exact service and the components of it.

MR. HEWLETT: Thank you, Mr. Chairman.

MR. CHAIRMAN: Mr. Walsh, do you have any final

questions.

MR. WALSH: No, thank you.

MR. CHAIRMAN: Perhaps then I would ask

Mr.Peddigrew: do you have any concluding remarks you would like to make by way

of a wrap up, or any final observations? Any other items that perhaps the

committee has not brought forward but you would like to take the opportunity to

bring forward?

MR. PEDDIGREW: Yes, Mr. Chairman, I guess I would

say that I know that the audit activity is looked upon by some people as a

necessary evil or an unpleasant exercise, but it is in our view necessary. I

think that the effect is significant. It is having a significant effect upon the

program, because when I referred earlier to the trend in utilization increase

that we had been seeing up until 1988, has now begun to show a dramatic

reversal, and that some of this can be directly attributable to audits. In that

sense I think it demonstrates the fact that the process must go on. At the same

time, I think we have to be open minded and listen to the Medical Association's

concerns or physician's concerns and ensure that in recognizing our

responsibility to protect the tax payers dollars - and they are very significant

dollars - I think we also have to recognize the other side, that there are

concerns about confidentiality and we have to do everything within our power to

protect that side of it and adhere to that responsibility as well.

That is all I can say.

MR. CHAIRMAN: That you, Mr. Peddigrew.

Mr. Hart, do you have any final questions, comments or

observations?

MR. HART: Thank you, Mr. Chairman.

I would just like to endorse the concluding remarks

made by Mr. Peddigrew. As he said, and as has been indicated throughout this

meeting this morning, we are talking significant amounts of dollars, public

money, and that should undergo the same scrutiny as any public money. There are

complex issues dealing with confidentiality that we have to be always concerned

with and I think the commission is very cognisant of that fact. From our

perspective our office will continue to conduct audits of the commission and

where we think we can make recommendations that would improve their system of

accountability we will be making those comments. We probably will be scheduling

an audit in the near future in respect of the commission because I think it is

probably four or five years ago since we have done a detailed review of their

system and the processes they have in place.

MR. CHAIRMAN: Thank you, very much, Mr. Hart.

With that let me thank all our witnesses today for

both the level of co-operation they have shown and for the professional quality

of the responses they have given to the questions from the committee. I thank

the Hansard staff and the members of the committee. The committee will be

meeting again this afternoon at 2:00 p.m. in camera for the purpose of receiving

information only. It is not a hearing as such. It is for the purpose of

receiving information preliminary to perhaps carrying on with a hearing at a

later date. The meeting will be in camera and I do not think we will need the

Auditor General and his staff present at that meeting unless he wishes to be

present.

MR. HART: Well, we have lots of other things we

could be doing, but if you need us we will stay.

MR. CHAIRMAN: I do not think we will need you.

Does the committee have any views on that?

AN HON. MEMBER: It is just a preliminary look.

MR. CHAIRMAN: It is just receiving information.

MR. HART: Well, if anything should come up you can

reach us at the office.

MR. CHAIRMAN: With that we thank all the witnesses

again, all the staff, the committee, and the meeting now stands adjourned until

2:00 p.m. this afternoon when we meet in camera.

Thank you all.