Public Accounts Committee

1997-11-04

Newfoundland and Labrador — Committees

November 4, 1997

The Committee met at 9:30 a.m. in Room 5083,

Confederation Building.

CHAIR (E. Byrne) : Good morning. I will call the

meeting to order. This is the Public Accounts Committee, and this morning we are

holding a hearing on the Newfoundland Medical Care Commission which is part of

an ongoing process. It concerns issues raised in the 1996 Auditor General's

Report.

Before I move on, I would like to introduce the

Committee. My name is Ed Byrne, MHA for Kilbride and Chair of the Public

Accounts Committee. To my immediate right is Mr. Tom Lush, MHA for Terra Nova,

Vice-Chair of the Committee; Mr. Jack Byrne, MHA for Cape St. Francis; Gerald

Smith, MHA for Port au Port; Anna Thistle, MHA for Grand Falls - Windsor; Don

Whelan, MHA for Grand Falls - Buchans; Don Whelan, MHA for Harbour Main -

Whitbourne; Elizabeth Murphy, Clerk of the Committee; and Mark Noseworthy,

Executive Officer of the PAC. The Auditor General and her staff will introduce

themselves in a minute.

I just want to go through a couple of things. First

of all, this process is essentially a public process. It is an opportunity for

not only questions to be asked, on the topic today, of the officials of the

Newfoundland Medical Care Commission, but also an opportunity to exchange

information and to give a further understanding of the financial operations and

the decisions made by the Commission; and it should be viewed in that spirit.

I will ask the witnesses if they could, for the

record, identify themselves, and subsequently, when anybody asks a question, for

the record again, identify yourself before you answer.

So, if you will just take a minute.

MR. PEDDIGREW: I am Bob Peddigrew, Executive

Director of the Newfoundland Medical Care Commission.

MR. CROSBIE: Roger Crosbie, Chairman of the

Commission.

CHAIR: I will ask the Auditor General if she

could introduce herself and her staff; and then if she has any opening comments

to go ahead.

MS MARSHALL: My name is Elizabeth Marshall, the

Provincial Auditor General. To my right is John Noseworthy, Deputy Auditor

General. To my left is Michele Peach, an audit manager with the office. In the

audience one of our staff Sandra Russell - Sandra did a lot of the detailed work

on the MCP audit and I have asked her to sit in as a spectator.

CHAIR: Okay. I will ask our Clerk to swear in

the witnesses before we proceed any further.

SWEARING OF WITNESSES

Robert Peddigrew

Roger Crosbie

CHAIR: I will turn the floor over to Mr.

Peddigrew. If you have any opening comments feel free to take as much time as

you require. Following that, we will proceed with the rest of the process in

terms of questioning.

MR. PEDDIGREW: Mr. Chairman, I would just like to

say that over all I feel the Auditor General's Report was a positive one. I

think it substantiated that the Commission is conducting the affairs in

accordance with its mandate. Certainly we recognize that in the areas which were

noted by the Auditor General there is room for improvement in some of our

processes, and we have taken due note of that. In fact, I feel we have addressed

most of the areas in accordance with her recommendations.

There are one or two areas where we either feel that

it is not appropriate to proceed as recommended at this time or, in one

particular area, where we just disagree with the approach recommended, and that

is to do with the salaried physician capture of clinical information. I guess we

can deal with that a little bit later.

Generally, I do feel it was an opportunity for the

Auditor General to do an in-depth review of the Commission's operations. It was

an extended audit, not the normal audit done. Even in her review of this past

year, 1996-1997 - and that is not covered here - her management letter indicates

that, in fact, it was a very clean audit in that there were no recommendations

made for any area that required to be addressed.

With that, I will leave it until we get into the

detail of the audit.

CHAIR: Fair enough. I will open the floor for

questions.

Mr. Lush.

MR. LUSH: I am going to let my colleagues over

here start this morning, unless they want me to go earlier.

SOME HON. MEMBERS: Go ahead.

MR. LUSH: Taking the report from the beginning,

just getting into some of the administrative matters: The Auditor General, on

several of her audits of various government agencies, makes the same observation

with a number of them. In this particular case, the Medicare Commission did not

have a mission statement stating its goals and objectives. Of course, the most

effective way in measuring whether or not an organization is performing, is to

have objectives so that the organization's performance can be measured against

those objectives.

In view of that observation, that the Medicare

Commission doesn't have a statement of mission, doesn't have objectives, could

the Commission comment on that and what it is doing in that regard?

MR. CROSBIE: I will take it, Bob. That is so.

Since the Auditor General's observations about that, a mission of statement has

been developed. Strategic plans - I am not sure if the Commission has

necessarily got as far in the strategic planning as possibly the Auditor General

may have anticipated. I think it is a matter of a degree of understanding the

Commission's mandate.

The Commission's mandate, by itself, as I see it as

Chairman, is to administer a system and ensure that there is the proper

distribution of funds to the physicians. In as far as the regulations allow that

the health care services in Newfoundland are delivered to the beneficiaries,

there is, I think, some indication in the Auditor General's Report that maybe

the Commission has a bigger mandate than that, a mandate of somehow being

responsible for the "delivery" of medical services and the development of

directional development of medical services. I don't think the Commission sees

that entirely as being its view.

The Department of Health has the responsibility for

mandating the medical services and the delivery processes. The Commission's

mandate is to organize and administer the payment system that goes along with

that. So I think there may be a difference of opinion as to how much strategic

planning the Commission does by itself. As is noted in the report, the

Commission is a member of the government side of a Joint Management Committee

which is being established between the medical profession and the Department of

Health and, through that committee, has input as appropriate in a number of

areas and initiatives that are being developed for the development of the health

service.

MR. LUSH: Regardless of the scope in the meantime,

would the Commission not see it to be very important that it would have stated

specifically the mission statement, and specifically just what its objectives

are? Then one could measure the mandate of the Medicare Association against

these objectives. So regardless of how broadly based anybody should think that

the mission of the work of the Medicare Commission should be, once its mission

statement is stated and once its objectives are stated, that is the measure by

which one would measure the performance of the Commission.

CHAIR: Before you answer, I would like just to

remind the witnesses of the purpose of the transcript to state your name prior

to answering the question.

Thank you.

MR. CROSBIE: I don't disagree with that at all,

and within that context, as I said, the mission statement was developed and

approved by the Commission. Operational plans, as again pointed out in the

Auditor General's Report, have been developed for the last couple of years, so

that there has been an improvement in the area as indicated by the Auditor

General's Report.

MR. LUSH: Carrying on from that: The Auditor

General also noted that the Commission's Annual Report is not tabled on a timely

basis, and in addition to that the results of the Commission's programs are not

measured against its objectives.

MR. PEDDIGREW: I will respond to that. Mr.

Chairman, the annual report has - in fact, I think there was only one occasion

when it was not presented within the required time, and that was only by two

weeks. The report is required by the Act to be presented to the Minister of

Health by September 30, and indeed we have been complying with that provision

ever since. Now that is not to say that it is tabled in the House of Assembly.

The Commission has no control over when it is actually tabled. So, I can't

respond in that regard, but, in fact, the report is presented to the minister.

CHAIR: Then the minister would be responsible for

the tabling of the report, is that correct?

MR. PEDDIGREW: That is correct, yes.

Incidentally, I think we should be clear, that this

audit pertains to the year 1994-95, even though it was published in, I guess,

the auditor's 1996 report. Since that time we have been complying with that

provision.

The most recent report of the Commission, which is for

the year 1996-97, was, in fact, presented to the Minister of Health within the

required time frame. It does give an accounting of the Commission's operational

plans and the results achieved, but that report has not yet been presented in

the House of Assembly, of course.

CHAIR: That is it?

MR. LUSH: I will stop there.

CHAIR: Mr. Jack Byrne.

MR. J. BYRNE: I have a few questions. On page 1 of

the Auditor General's Report, the first column, second paragraph there,

"Payments to the Commission constitute about 17 per cent of the total budget of

the Department of Health. For fiscal years 1989-90 to 1993-94, expenditure of

the Commission range from $114.1 million to $144.1 million." This is an increase

of $30 million. Would you like to comment on that, the reason why there is such

a dramatic increase there?

MR. CROSBIE: I think the major part of that $30

million was the incorporation of the salaried physicians' payments by MCP.

Previous to that these monies had been paid directly by the Department of

Health. MCP took over the administration of that payment system sometime in this

period of 1989. I am not quite sure what year. When we took it over - and I will

have to go by memory - my memory says that new budget item was somewhere between

$20 million and $25 million. In this current year, the salaried physicians'

budget is $29 million.

WITNESS: About $30 million.

MR. CROSBIE: Yes. So the great bulk of what

appears to be a massive increase is just because we increased our budget to take

on a new program.

CHAIR: Just a point of clarification: When you say

you took on that program, essentially the Department of Health transferred that

responsibility to the Commission. Would that be correct?

MR. CROSBIE: Yes, that is correct.

CHAIR: Okay.

MR. PEDDIGREW: Another point, Mr. Chairman: Within

that period, 1989-90 to 1993, was the introduction of the joint management

agreement and the idea of a capped global budget for MCP. Prior to, I think it

was 1991, when we commenced the fixed budget, it was what we call an open ended

budget, in that increases negotiated with the Medical Association were applied.

I forget just when we brought that in, but since the introduction of the capped

global budget, expenditures have been much more limited in that they are in

accordance with the fixed budget. Thus the increase.

It cites the budget for 1993-94 as $144 million and

then in 1994-95 it was $146 million. That is a relatively small increase as

compared to earlier years. The increase there would have been just in relation

to the items that are negotiated within the joint management agreement. Even

though the fee

schedule and increases are fixed at zero, there are certain

increases such as for utilization, physician supplies, the number of physician

increases in the specialities - that would be funded - and new technology. So

there are provisions there for some limited increase in the budget. In recent

years it has not been at all in the order that it was earlier on, prior to the

fixed budget.

MR. J. BYRNE: Okay.

CHAIR: Excuse me, Jack, for one moment. I think

the Auditor General would like to make a comment.

MS MARSHALL: (Inaudible) reference in our file

that between that time period, salaried physicians are included. Perhaps you can

just show Mr. Peddigrew so he can - there is about $25 million for them.

MR. PEDDIGREW: Yes. You are saying that they were

in the first year of the -

MS PEACH: No. That doesn't confirm what he said.

MS MARSHALL: Oh, okay.

MS PEACH: I would just like to confirm what Mr.

Peddigrew said. It was in 1991 that salaried physicians became included with

MCP, and prior to that, in 1990, were not. So at that time $23 million is the

bulk of the increase.

CHAIR: Mr. Jack Byrne, go ahead.

MR. J. BYRNE: On page 2, second column, second

paragraph: "The Commission ...."

CHAIR: Just one second now, until I get a chance

to get to it.

MR. J. BYRNE: Second column, second paragraph.

CHAIR: Under Payments?

MR. J. BYRNE: No.

CHAIR: I am sorry! Compensation and Other

Practices.

MR. J. BYRNE: "The Commission has not established

policies and procedures relating to hiring consultants. Also, no guidance is

provided to Board and Committee members respecting conflict of interest." Could

you tell me what type of consultants are talked about here, and what is being

done with respect to the conflict of interest?

MR. CROSBIE: I will take conflict of interest

first. The Commission, since the Auditor General's observation, has developed

and published a conflict of interest. I think we had a conflict of interest

statement for our staff, but we added a conflict of interest statement for the

commissioners.

Consultants to MCP are very limited. We have, in the

past, had an economic consultant do some work for us when we have been in

negotiations, but a very limited contract. We have a legal staff which is hired

now through a process that has being established by the Justice Department. At

the time of this report we were in the process of looking at getting a

consultant to give us a hand on a performance management system, but we didn't

go ahead with that particular program since then. In actual fact, MCP has very,

very limited use of consultants.

In our budget, we may have a budget heading for

consultants, because for the last number of years our associate medical director

for audit has been a part-time member of the staff. I believe that his

remuneration is probably carried in our budget under Consultant Fees.

We have a major committee made up of members of the

medical profession that we call the Consultants Committee, and that generates a

budget item with us. These members are recommended by the Medical Association to

serve on a committee of MCP to advise us in certain areas. But in the normal

sense of consultants, other than legal the Commission has almost no consultants.

MR. J. BYRNE: In your answer you mentioned you

were looking at a consultant to look at programs or management programs?

MR. CROSBIE: A performance management program.

MR. J. BYRNE: And you decided not to go ahead with

that. What is the reason why you decided not to go ahead with that?

MR. CROSBIE: Well at the time - Mr. Peddigrew may

have more information - but at the time, we were developing this at exactly the

same time that the government also came out with information indicating they

were look at a new performance management program and we elected to defer

inventing the wheel ourselves and wait for the government.

CHAIR: Mr. Lush.

MR. LUSH: Just following up on this notion with

the consultants: On page 44, the

Schedule of Administrative Expenditure for the

year ended 31 March, 1997, it shows that the Consultant fees for that year,

ending March 31, 1997 was $170,255. Then coming across for the year 1996, it was

$205,739. I realize you stated that this was mainly legal. Maybe with these

specific figures, we could get some information on what kind of consultants they

were, whether they were legal or just what they were for these two years in

particular.

MR. PEDDIGREW: Mr. Lush, as indicated by the

Chairman, the bulk of this is with respect to a salary that was paid to our

Medical Audit consultant. I think it was an amount of $70,000. I think we would

have to get a breakdown. A lot of it, as well, is in relation to these

committees the Chairman mentioned. The Commission operates in terms of its audit

program with a medical consultants committee, as it is called. This is made up

of ten individuals, five physicians nominated by the Medical Association and

five who are government representatives.

That committee, as well as another committee of the

Commission which deals with complex claims, such as when we have claims from

physicians that there is some dispute about - our indication is that they go to

this Medical Advisory Committee. Those are also primarily outside physicians who

comprise that committee. They are remunerated in accordance with government

guidelines for committees, but they are charged under our budget as consultant

fees. I think this is what represents the bulk of that funding.

Other than the economic consultant, whom the Chairman

referenced, the Commission really doesn't utilize consultants as such very much.

I think this -

MR. LUSH: Maybe we should call it something else.

MR. PEDDIGREW: I think it is a little bit

misleading in that respect, but I can get a breakdown.

MR. LUSH: How do these physicians get selected to

these various committees that you have just described?

MR. PEDDIGREW: Well, the Audit Committee, the

Medical Consultants Committee it is called - the process is that the Commission

invites nominations from the Medical Association for five positions on that

committee. Three of them are fee-for-service physicians and two are nominated

from the salaried physician group.

Prior to the introduction of this structure of review

we had a committee structure that the Commission didn't feel was very effective

in that it was primarily, with the exception of our medical director, all

Medical Association nominees. This process was set up to give equal, sort of

balanced, representation. There were five from the Medical Association and then

the other five representatives; one is a chartered accountant from private

industry, our own medical director, the health consultant to the Department of

Health is a member, our dental director is a member, and the chairperson of that

committee is either our own medical director or our assistant medical director.

Currently it is our assistant medical director.

Just as a matter of interest, that whole structure

process was the subject of a recent court case. This was one of the items

challenged in the court case. The judge, in fact, ruled that the committee was

appropriately constituted and gave fairness and balance to the audit review

process. This committee doesn't have any decision making powers. It is an

advisory committee or a review committee that reviews the internal audit

findings of the Commission and then makes recommendations to the Commission

itself.

The other committee is called the Medical Advisory

Committee, and it is comprised primarily of Medical Association representatives

- I think there are six - and our own Medical Director or her designate. That

Committee is intended to review complex claims where there are no established

fees within our payment

schedule or where a physician challenges our

adjudication of the claim when we were assessing these for payment. If there is

any dispute about the amount paid or the fees that are paid, then the matter

would go to that committee for review. These are all specialist physicians who

we feel can give a good adjudication of the claim and determine a rate to be

paid.

MR. LUSH: So it is really an internal arrangement

for review and consultation provided by generally the medical profession?

MR. PEDDIGREW: Yes, that is right. That is a fair

assessment of it. The Medical Association feels that it is a fair and proper

process as well. So, it has worked well, I think, for the commission,

particularly the new consultants committee dealing with the audit. I guess

everybody knows the matter of audit has been very controversial since we began

intensively auditing. In the final analysis I think it has been judged that we

have a very good process and one that is accepted now by the profession and by

all parties.

CHAIR: Mr. Byrne, do you want to ask one or two

questions?

MR. J. BYRNE: Yes, a couple of more at this point

in time.

On page 44, the

Schedule of Administrative

Expenditures, Office rental, three-quarters of a page down, is $311,179. Is that

for one location and, if it is, could you tell me what the square metres are for

that area? Because what I am thinking is, if they are paying out $311,000 for

rent, would it make sense to have a building, instead of paying out that kind of

money?

MR. PEDDIGREW: Yes, it is for one location. It is

for our premises at Elizabeth Towers. If I recall, I think we occupy about

19,000 square feet, I think. I am not sure what it is in metres. Well, included

in that is an area in the lower level of the building which is stockroom,

storage, machine room, that sort of thing. Our space is on the main floor

primarily, the office space at Elizabeth Towers.

In terms of a building, some years back the Commission

did examine, not a building as such, but alternate accommodations that might

provide better security. Ultimately, I think, we actually did go to tender and

looked at alternate space. I am not sure of all of the reasons, but we were

asked to continue on at our premises at Elizabeth Towers. So, no, we have never

pursued constructing a building as such.

MR. J. BYRNE: So, basically, the size is 100 by

200 which is 20,000 square feet. So if you cut that in half, you have a two

storey building 100 by 100. To me it seems to be a lot of money to be paying out

year after year for rent.

MR. PEDDIGREW: You know, the rental rate is market

rate.

MR. J. BYRNE: I know that, but still - just in the

comparison.

On page 7, the first column, under Recommendation,

says, "The Commission should formalize its policy to ensure all providers in the

Province are registered." Then the Response is, "The Commission will formalize

its policy to ensure that all providers in the Province are registered." I

remember reading here that they made the comparison that if you go and try to

update the card system for myself or whomever in the Province, it could be more

costly. What have you done there with respect to the Commission being

formalized?

MR. PEDDIGREW: I think, in fact, all providers

essentially were registered in the Province. These are physicians, dentists and

so on. They were, in fact, registered. There were, I think, some deficiencies in

our registration of salaried physicians - I just forget what the circumstances

were - where it was found that there were some physicians actually in existence,

but had not been registered on a file. I just forget the detail of that. As I

say, our whole process depends on having physicians registered and assigned a

billing number and so on.

In the salaried area, because they don't bill

directly, salaried physicians are employed under the health care boards. They

are employees of the boards. So they are not actually direct employees of the

Commission. As I say, I think there were some deficiencies there which we have

addressed. While we always had a system, we now have, I guess, what you would

call a formal registration system and process in place.

MR. J. BYRNE: Could you just -

CHAIR: One more?

MR. J. BYRNE: Yes. With respect to the beneficiary

registration, and there were some problems there with that too. The number

exceeds the population of the Province by approximately 270,000. I remember

reading that there were problems. To try to keep that updated could be more

costly than the system they have in place now. Is there going to be anything

done about that?

MR. PEDDIGREW: Yes. The numbers listed are, in my

view, misleading because it indicates a number of 270,000 in excess. I mean that

is every MCP card that has ever been issued since 1969. In fact, the more

appropriate number to deal with, I think, is the current active file. We are

showing 649,000 registered on that file.

The point made that - because the others are

terminated numbers or numbers where we have, through a purge of the master file,

taken them off because they have not been active in terms of receiving services.

So these are put off to an inactive file and for all intents and purposes are

removed from the master file.

With regard to the others, and the point made about

that, with out-of-province services, you know, it is conceivable that there are

people out there who are continuing their coverage but, in fact, are not really

residents of the Province any more; and we accept that there are some of those.

However, a review of the out-of-province billings that we receive shows that it

is not really a major problem. The recommendation here is that we should have

expiry dated cards, and we agreed with that, but it would not be feasible to

spend the money. Our recent estimate indicates that it would cost, to issue a

plastic card, in the order of $1.2 million, to do a re-registration and to issue

expiry dated cards. Now there are many reasons why that probably should be done.

I think the Province is at the point where a re-registration should be done and

these cards should be issued, but to do it strictly to pay off a potential

problem of people who are out there with open ended cards is not feasible.

Issuing an MCP card with an expiry date would not really address the problem

that is noted here, because even if you get someone who goes to another

province, fails to register, you know, stays, continues their coverage, an

expiry dated card, that has an expiry three or five years from now, won't do

anything. The person can continue to use that card even though it has an expiry

date because the date is not up yet.

Our information, having looked at the billings and so

on, is that it isn't a major problem in terms of out-of-province billing right

now. You know, our out-of-province budget is about 4 per cent of the total MCP

budget. For the years, 1994-95 through to 1996-97, we haven't, despite the

significant outflow of registrants, experienced a significant increase in that

budget. It has gone up somewhat, but it also has to be remembered that

out-of-province claims are paid on the basis of the rates and conditions of the

other province, and those provinces have been increasing their fee schedules and

so on while ours has remained static. So the increase in the budget is quite

minimal actually. In fact the number of claims processed for 1994-95 was 125,000

in other provinces, and was, in fact, the same number in 1996-97. So while there

have been fluctuations up and down in the out-of-province billing, it is not

inordinate.

The other thing, with regard to out-of-province

services, is that they are paid through a process call reciprocal billing where

if a person from Newfoundland, say, visits a physician in another province, that

doctor will bill his own province for the service. They will adjudicate the

claim and pay it, then bill MCP for that. We will pay it, and we will not

challenge. You know, this is part of the agreement that makes it

administratively efficient, is that we rely on them to adjudicate.

Now, the point made here is that a person whose number

is actually terminated on our files could still receive services, and that does

happen to some extent; but it is not a major problem in terms of the amount of

money. When we looked into this we found, in those that we had audited, that it

was a case of - this is what we do with these services, we audit them. We can't

contest them with each other province, but we do audit them. We find it is

usually a case where a person has moved, used his MCP number during a waiting

period which applies, and the doctor's office has recorded that number on file

up there and continues to use it, even though the person has now, perhaps,

registered with the other province. However, when we audit them, we will then

attempt to follow up with that person and ask that they stop using the card or

return the card to us. That meets with very limited results, but nevertheless I

think we are doing what we can with it.

All I would say is that certainly it is a potential

problem, it is being dealt with by our audit department, but it is down on the

list of priority audits that we would do because we feel there are bigger

problems in relation to services rendered right here within the Province, in the

form of mis-billing, that should be audited.

MR. CROSBIE: If I might interject?

CHAIR: Go ahead.

MR. CROSBIE: The Commission looked at this whole

business of re-registering the province, and this is an issue that has come up a

number of times over the years and has been looked at over the years. It was

started to be looked at again when the Auditor General raised it in this major

review. The Commission felt that maybe it was time to revisit this whole area.

Just about the time that the Commission was revisiting the whole area, the

government had set up a task force, I think it is called the Health Information

Task Force, and one of the areas that they are looking at is a health number for

every resident of the Province, a number that would be in wider use than the MCP

number, and MCP supports that. Given that, the Commission then said that we

would not revisit this issue until this task force have gone forward. MCP is on

this task force. I understand that the issue of a health number is their number

one priority and that they are working towards doing that.

In response to that, we did have a look very recently,

because the Department of Health asked us about reissuing our MCP cards and

asked us the costs. In the review of that, and not done very scientifically, it

looks as if to re-register the Province of Newfoundland, to issue all new cards,

is going to be over $1 million. Then, if you set up a system where you would

issue these for three years and stagger your re-registration so you handle a

third of it a year, you are probably looking in the order of another $500,000 to

keep the registration system up.

If you are doing this strictly to make sure that some

out-of-province claims, and even some in-province claims, are not improperly

paid for, the Commission's view in the past has been that there is no cost

benefit on this, that the savings would be nowhere near enough to justify the

upfront cost of a million plus dollars and the ongoing cost of $500,000 to keep

the registration up.

Given a wider use of the card, the card being for a

wider use than MCP - and MCP has made this suggestion numerous times in the past

to government, that it would make sense, from the Commission's point of view, if

the government had a number that registered the people of the Province, and it

could be used for a whole variety of things: providing a licence number, a

hunting number, an MCP number, a number on every hospital in the province. I

mean, it is just unending. Almost everywhere you go you have a number. It just

seems to me to make sense that we if we had one number we could all use it and

then one central agency could keep it up to date. As I understand it, this

Health Task Force is envisioning something like that. Now, how widely used the

number would be I don't know, because we get into this whole business of

confidentially and people (inaudible) looking over your shoulder.

From the Commission's point of view, to this point in

time, this is an observation that has been discussed by the Commission over the

years. It has been judged up to this point in time, from MCP's stand alone

issue, that the cost value has not been there to justify complete

re-registration and trying to keep this number up to date all of the time. But

with new technologies coming in, the use of a magnetic strip or some sort of

information card, if you could develop a card that had to be used in order to

obtain the services, then this would be a very good initiative, but I think it

is an initiative that wants to be looked at in a broader context than MCP by

itself.

CHAIR: Which obviously they are participating in

anyway.

MR. CROSBIE: That is right, and it is currently

underway. It is my understanding that this will ultimately come to pass as they

go down the road of trying to get an information system that can capture the

health information of the residents of the province, in hospitals, in public

health, in all the areas where the interaction on the health system is.

CHAIR: Before I proceed to Mr. Whelan, just one

quick question. You have indicated, Mr. Peddigrew, that out-of-province billings

and services is not a major problem. What is the scope or the size of the

problem in real dollars? You indicated it represents about 4 per cent of your

budget, but yearly what does it represent in real dollar figures? Feel free to

be approximate, I know that you may not have that information at your

fingertips; but what is the cost to the Commission?

MR. PEDDIGREW: It is difficult to know exactly

what the cost is, because you never know who is out there using a card, or to

what extent. Our auditing of it indicates that it is less than $50,000 problem a

year.

MR. CROSBIE: The out-of-province billing is in the

order of $4 million a year, $3.8 or $4 million a year. I think Bob is indicating

that when we look at it and try to assess what the magnitude of misuse -

CHAIR: He has answered the question I have asked.

I understand that.

MR. CROSBIE: Again that is not scientific. But in

trying to look at it and look at the services and what limited auditing we done,

an estimate is that there might possibly be a misuse of -

MR. J. BYRNE: I want to ask this question; just

one more quick supplementary.

MR. WHELAN: Mr. Chairman.

CHAIR: Go ahead, Mr. Whelan.

MR. WHELAN: Having read a number of reports from

the Auditor General's Office, and notwithstanding some fine-tuning on her

recommendations, I would have to congratulate you, gentlemen, on running a

relatively tight ship.

There are a number of questions, I guess, that always

stands out and beg to be asked, and after the first hour or so, a question we

usually ask. However there are a couple of things that I wanted to get answers

to.

I noticed the Auditor General noted that not all the

committees of the Commission had clear and approved terms of reference. Now, I

have a funny feeling they are not setting up the committees for the sake of

setting up committees. So I am just wondering what the explanation would be to

that comment.

MR. PEDDIGREW: Well, the Auditor General is quite

right, I think we did have terms of reference for a number of our committees,

but they were not in a uniform format and some where not properly documented.

The various committees are, in fact, listed in our annual report. Subsequent to

this they have all been given clear terms of reference and these are been

reviewed by the committees themselves and by the Commission and approved and

documented; that has been done. These are the committees such as the Medical

Consultants, the Medical Audit Committee, there is a Dental Monitoring Committee

which is essentially the same as the Medical Committee which does all jobs, I

guess, in audit and claims assessment, and the Joint Management Committee.

They all have, in fact, subsequently been clearly

documented. As you say, they are not there for the sake of creating committees.

All of our committees are effective committees which do the job assigned, I

think.

MR. WHELAN: You mentioned briefly, in your opening

statement, that a number of concerns that were addressed here in the

recommendations that were made subsequent to (inaudible). I haven't seen a copy

of the last Auditor General's Report. I understand there has been one done

subsequent to this one. Is that correct?

MS MARSHALL: Well, the last audit we did wasn't a

legislative audit, such as what we are discussing here now, but we did audit the

financial statements for the year ending the 31 March, 1997. Now it is not such

a broad audit, but it is an audit. There were no significant (inaudible) that

arose as a result of that audit.

MR. WHELAN: There was something else that I wanted

to point out. It is a matter of the car allowance being made to (inaudible).

That seems to sort of go against the normal trend of governments today where we

have so many cutbacks. I believe there were some courses or - government policy

(inaudible). Educational systems provide (inaudible).

MR. PEDDIGREW: Mr. Chairman, the automobile

allowance has been discontinued, but it was, in fact, maintained in accordance

with government policy. Government travel rules provided entirely for that

allowance. In looking into it and consulting with Treasury Board it was

determined that - the

interpretation, I guess, given to the travel rules by the

Commission was not totally consistent with the

interpretation given by Treasury

Board. It is the allowance which is provided, for example, in the general

service agreement for all government employees. It was the Commission's

understanding that the provisions of that rule would apply.

It was subsequently determined that this is not

applicable for other executive employees within government, and with that

information the Commission said: Okay, then it would not be applied in our case

as well.

The educational allowance was totally in accordance

with a documented policy on education allowance which the Commission had adopted

some time considerably prior to this. In the absence of a government policy,

when the Commission adopted its education allowance policy it was because there

was none in existence in government and that was what was being applied. It is

essentially the same or very similar to the policy that was subsequently adopted

by government. I guess this was the point, that when the Auditor General did

this review that government policy had recently been adopted and the Commission

was following its prior policy which I submit was a totally reasonable policy

and was applied.

Since the report, the Commission, as it does in all

government policy, has rewritten its policy to be totally consistent with

government's policy, and that has been done in this case as well.

MR. WHELAN: Thank you.

CHAIR: Mr. Smith.

MR. SMITH: Thank you, Mr. Chairman.

I would just like to go back to the item on page 7,

dealing with the Beneficiary Registration. We have had considerable discussion

on that, but there are certain elements of that - for example, when I read that,

the primary concern that comes to my mind, the word that come to mind, is the

possibility of fraudulent activity related to this. I mean, it is a concern that

I would have looking at the number of people that we have registered. What kinds

of controls and guarantees do we have, if you have these cards out there, that

they are not being used fraudulently?

My first question would be: In terms of the operations

of the MCP program here in this Province, how many cases do we identify on an

annual basis and prosecute, of fraud related to MCP? Could you answer that for

me, first of all?

MR. PEDDIGREW: We have not identified a single

case of fraudulent use of MCP cards. That is not correct. Some years back we did

identify one case. It was within the Province where a person had been obtaining

other people's MCP cards and using them to visit a number of doctors to get

prescription drugs. That was dealt with. We laid charges and the person was

convicted. Other than that, though, we do not find any evidence of fraudulent

use of MCP cards. The major control we have is in issuing the card in the first

place. You know, to have a card issued the person must present, if it is a

person coming to the Province, other than a newborn - for newborns obviously

there is a different process and different documentation required. For people

who move to Newfoundland and say they are registering from some other

jurisdiction, if it is from out-of-country we require copies of immigration

documents, we require other proof of identity and a signed statement as to why

they are here, how long they are staying and whether it is a temporary move or

whether it is permanent.

MR. SMITH: If I could just interject. That is

fine. You are talking about in terms of initial registration. My question is

with regards to existing cards. If I present myself at a hospital and they ask

me for an MCP card, that is all I present. They do not ask me for any other

identification other than a MCP card and a MCP number. So my question to you is:

What kind of an assurance can you give me that, in fact, this doesn't allow the

possibility of fraudulent activity, if, in fact, these cards are out there?

Because if all I am being asked for is a card and a number, where is the

control, where is the check there? I don't follow that.

For example, when you say to me that there haven't

been any prosecutions, does that mean there have not been activities of a

fraudulent nature or is it just that we have not identified them or we have not

uncovered them because we do not have the checks and controls to pick that up?

MR. PEDDIGREW: Well, I certainly couldn't say it

doesn't happen. I would only be able to say that our review of out-of-Province

billings - and that is only in relation to the medical service. Bear in mind

that MCP is only dealing with the physician bills, not the hospital bills. Our

review of it doesn't show any evidence - by evidence, I mean, that where this

happens in other provinces, particularly in the border provinces, you have

people who can, I guess, from the U.S. come over and obtain services. I would

think it really isn't in anybody's interest to go and obtain a twenty dollar

office visit to a doctor,

whereas it might be in relation to expensive surgery

or extensive hospitalization coverage. We are not finding any evidence of that,

as other provinces have found, in terms of people who are crossing the border,

so to speak, and obtaining services.

In terms of the hospital where the bigger cost is -

and I agree that it is still based on your MCP number, you know, your

eligibility - I would think hospitals have better processing in place rather

than just simply looking at a MCP number. I would think that they have

established the identity of this person as having been referred by doctors. I

don't know, I can't speak for hospitals. I don't know what the process of

identifying people is.

We do not and cannot control what happens in that

respect with regard to hospital services. But with regard to medical physician

services, we have found, in auditing out-of-province claims, that the record of

the history of the patient - and what we deal with are the higher cost items. We

don't audit the twenty dollar visits; I have acknowledged that. We deal with

those above $500, where there could be significant costs involved. When we look

at the history of the patient, we can see a pattern of in-province servicing and

referral out to this physician in Toronto or whatever other mainland centre the

person has gone to for service. In each of the cases that we check, these have

been what certainly appear to be valid claims and valid to residents of the

Province.

MR. SMITH: If I could make just one final

observation with regards to that, I am certainly not suggesting that it is not

in place. What I am saying is that it would seem to me, when I read about the

cost of health care, what people in other areas of the world are having to pay

for certain procedures that are available to me in this country free of charge,

I can certainly see that it is the type of system that could be open for abuse

unless we are vigilant in terms of how we run the system, and how we make sure

we have checks and balances to ensure that the people who access these services

are indeed the people who are entitled.

I haven't had occasion to make extensive use of the

health care system, fortunately, but the few times that I have it would seem to

me that it is relatively easy, it is very accessible and I don't get a lot of

questions. So when we talk about people outside of the Province accessing, it

would seem to me - you know, I am just looking at it and saying, if you have

someone in Ontario somewhere, someone on the border, who needs something done I

could see this sort of thing being possible, unless somehow we have checks and

balances there to make sure that doesn't happen.

MR. PEDDIGREW: Well, the check is, as I say, even

though we get a bill from another province and we are obliged under reciprocal

billing to pay it, we then run that data into our file on that patient's number,

and if we see a pattern of totally out-of-province service, no in-province

service, you know, to Newfoundland physicians and so on, that would be

questioned. We would want to check on why does the person have that pattern,

over an extended period, I am talking about. You know, it is normal to have it

over a few months period, but if it is there that they have not had any

in-province servicing in two years, but they have had extensive out-of-province

services, we would want to follow up on that.

MR. SMITH: One other question I have, Mr.

Chairman.

CHAIR: The last one before the break, okay.

MR. SMITH: One of the things we do here from time

to time; whenever we get the information being released as to billings by

doctors and the total amount of billings for the year, in terms of the operation

of the Commission, what kind of ongoing monitoring is done with regards to

physician billing? I mean, do you red flag certain people to audit? Just how

does that whole process work?

MR. PEDDIGREW: Okay, it is a lengthy process. Did

I hear you mention you want to take a break?

CHAIR: Yes, if you like. I would like to take

probably a fifteen minute break for some coffee.

MR. CROSBIE: If I might just comment on the

business of the misused cards. I think it is a fair statement to say that, for

instance, a Newfoundlander who has left Newfoundland and is living in the States

and returns home on a regular basis, who has kept an MCP card because they are

open ended cards, quite possibly when that person comes back in the summertime,

if they need a doctor, they used their MCP card. I think that happens. We don't

think there is a lot of it, but we certainly admit that that happens.

We don't think there is a lot of fraudulent getting of

our cards. It seems to me that if people are trying to get a medical card that

they are going to get a lot of use out of - I mean, you are either in

Newfoundland or you are not in Newfoundland. You don't fly in here to get some

medical services. There are nearer sources of doing it. So in that sense we look

at this, and when the Commission has reviewed this whole business of cards in

the past, these are the types of discussions that we have had.

Yes, if the card was time expired, at least every

three years, somebody, somehow, has to present himself and get a card. Although

even in that sense I would say that if someone says they have a card and they

are a resident of Flower's Cove - and I just pick a name - come registration

time we sent it out to an address and it goes to the parents' house, and the

person is no longer there but comes back every summer, there is a chance that

even that person would get re-registered at the end of three years, by just

filling out the appropriate forms. I mean, the form came back properly filled

out with an address and a name, and it was an existing person. I suspect that

even in the re-registration system we would probably register him again even

though they may spend most of their time in some other jurisdiction.

Yes, there is an opportunity, very clearly, in a

system where the public pays for medical services, and the only methodology of

adjudicating that is a piece of plastic. In actual fact, once the number gets

registered somewhere you do not even need the piece of plastic, you only have to

tell them the number. There is the opportunity that some people have changed

their status to such an extent that they are not really entitled to it. Whether

or not just issuing a card that had an expiry date on it would change a lot of

that would be an ongoing discussion. That notwithstanding, I think a card that

had an expiry date, that has greater use than an MCP's card, would be a very,

very good thing.

CHAIR: We will take a fifteen minute break. I

think the issue that Mr. Smith has raised in terms of the whole auditing process

is another one of the key elements of our discussion here this morning. So, we

look forward to the answer when we return.

Recess

CHAIR: Question, Mr. Smith?

MR. SMITH: Mr. Peddigrew and I were discussing it

over the coffee break and primarily it is in terms of physician billings and

what sorts of ongoing monitoring there is being done basically.

CHAIR: Mr. Peddigrew.

MR. PEDDIGREW: I think the question was, I guess,

to elaborate a little on the audit process. I would say at the outset that I

feel that MCP's audit process is recognized as perhaps being one of the best and

most effective in the country. We began a more intensive type of auditing back

in the late '80s. It's a structured process, supported by the legislation within

the Act, but essentially it is a process whereby we do a random sampling of all

doctors' claims. So every doctor, if you like, is audited to some extent. But an

audit can come from different sources. We do a patient verification on all

physicians. We send out letters to patients. It is a relatively low number, but

it is a valid sampling of each physician, and we ask the patient to verify that

a service that we have just had a bill for, that that service was, in fact,

rendered on that day, by that doctor. We ask for certain information: What time

of day; where was the service rendered? Because all of this can have a bearing

on the fee that applies, depending on the time of day, the location, whether it

is the home, the hospital, the doctor's office or whatever. So we get that

information.

If the patient answered that form and indicated

anything that was questionable, then we would do a little more intensive audit.

We would do a sampling then of perhaps ten more letters to patients for that

physician. Certainly, if there was some information then that came out of the

ten, if anything did not indicate an appropriate billing, then we would do an

intensive follow up where we would do a statistically valid sample of the

doctor's claims for the past two years. We would then do follow-up forms to a

more extensive number of beneficiaries. Again if the information from that

indicated a significant problem, what we would do is request the doctor's

records from that statistical sample and we would review these. Professional

staff would conduct a review of the actual record which supports the doctor's

claim. Of course, we do find in some cases that they don't support the claims

and we would then, in that instance, go ahead with a determination of the extent

of the over billings based on that sampling, and go through a process where we

would, first of all, notify the physician of our findings.

Let me go back: Prior to notifying the physician, we

would take the report of the internal staff which has been done on that audit

and it would then go forward to the Medical Consultants Committee, which I

mentioned earlier, and that committee would review our findings. This would be a

pretty comprehensive review of the cases that are presented to the committee.

Bear in mind we are getting then professional input into this evaluation of the

billing. Based on the Consultants Committee's recommendation, we may then go

forward with a notification to the doctor that we have found misbilling to

whatever extent and we are proposing to recover these funds.

Now let me say, in the meantime, if we find in this

whole process an indication of fraudulent activity we would immediately go

forward to the Department of Justice or to the police as the case may be,

depending on the circumstances. So that would be dealt with that way. The normal

course is to go forward, then through the Consultants Committee, notification to

the physician. The physician then has the option to request a hearing which

again is provided for under the Act and regulations, and a Hearing Appeal

Committee would be structured and set up and the physician, if he or she so

chooses to bring legal representation, would do so. The hearing would be held

and, you know, the findings of the earlier recovery process would be reviewed

and either endorsed or altered or whatever. It would ultimately come as a case

then to the Board of Commissioners, the MCP Commission, to be dealt with.

Eventually, if we are proceeding with the recovery, it would go on through the

Minister of Health with an order being issued to recover those funds.

Now, just to go back: I said that the patient

verification was one of the ways that would trigger an audit, but it is not the

only one. We also review physicians' billings. It can be for a variety of

reasons. It can be a complaint from a person who feels that billings may have

been submitted inappropriately in their own case or in some other case that they

have heard of. We would follow up on any information that is provided by

beneficiaries or other physicians; sometimes it happens. We also do profile

analyses of physicians and we are actually in a process now of redeveloping

these whereby they will - they are computerized assessments, analyses of the

physician's practice pattern in relation to his own speciality in his own area,

and in relation to the province as a whole; so that physicians whose billing

appears to be out of line, it may only be in respect to certain services, not

the whole practice pattern, but in regard to certain services.

If we see that there is a questionable billing

pattern, then we would follow up on that and perhaps do an audit of that service

billed by that physician. That would then follow the same course as the rest of

the audit procedure where we would get samplings of the billings and look at

records and, if necessary, have them go through the Consultants Committee

review. So that is essentially the process that is followed.

CHAIR: One more question, Mr. Smith?

MR. SMITH: Yes. If you could, just for my

information: In terms of the fee-for-service physicians, the range of the

salaries in terms of the billings to MCP, what would the range be?

MR. PEDDIGREW: Do you mean the average billing by

MCP? What amount of money?

MR. SMITH: Yes. Because there are stats that are

released each year in terms of the breakdown. What would be the range?

MR. PEDDIGREW: Yes, they are reported in our

annual report. I think the general practice average, and you have to only look

at full-time, what we would deem as full-time fee-for-service physicians, is in

the range of about $160,000 per year.

MR. SMITH: That is the average, but what would the

range be within (inaudible)?

MR. PEDDIGREW: Oh, the range can be - well, for

full-time we define it as anyone who has earned more than $75,000 and who has

billed in throughout the year. I mean there are people who come and go. They may

have earned -

MR. SMITH: So you are saying the low side is

$75,000?

MR. PEDDIGREW: Yes, $75,000.

MR. SMITH: And the high side?

MR. PEDDIGREW: Well, the high side - there is

really no upper limit.

MR. SMITH: For the past year then. I am going to

ask you for specifics. In terms of the last year recording period, what would

the range have been for that recording period?

MR. PEDDIGREW: I can't answer that exactly.

Normally, though, there is a limit of $300,000 for general practice physicians.

That is the ceiling. I mean, when they bill more than $300,000 they are prorated

at one-third. So anything billed above $300,000 up $350,000 is paid at

two-thirds of the rate. One-third is not paid. After $350,000, only one-third is

paid. So they are reduced by two-thirds.

There are very few - I mean, generally physicians

realize it isn't feasible to bill beyond. Some marginally go beyond the

$300,000. I mean there have been cases, and certainly prior to the introduction

of the ceilings we had billings in excess of $500,000 a year. I don't think we

have any since the introduction.

MR. SMITH: When did this control come in?

MR. PEDDIGREW: That was in 1993, I think.

MR. SMITH: Fine. Thank you.

CHAIR: Ms. Thistle.

MS THISTLE: Continuing on with the line of

questioning by my colleague, Mr. Smith. Since getting elected, when you are out

and around the district you hear a lot of constituents about MCP and doctors

visits and so on. Now, I know you are operating probably one of the busiest

offices in the Province. But when you look at billing and so on, there is

nowhere, I suppose, in the Province where you can go and actually obtain a

service without signing for it. One particular constituent said to me: What

would be wrong with taking that MCP card and swiping it through an electronic

reader to indicate that that person has actually being in a doctor's office, and

even signing a voucher to that effect? Have you ever looked at that?

MR. PEDDIGREW: Yes, we have. It is not a system

that would produce any significant reward, in my view. I guess it has been the

subject around the Commission table as well. First of all, swiping a card, that

presumes you go and issue a mag striped card which we don't currently have. If

we were to have one, yes, it would verify that the person has been there that

day. However, our extensive auditing experience has shown that doctors billing

for a service when they didn't even see the patient, that is rarely the case. In

terms of misbilling, which you will find is not because somebody is submitting a

bill for someone they didn't even see, it is to do with billing for a service

that is more expensive then the one that was actually rendered. In all the

auditing that we do we rarely find that it is a case where somebody is, on a

consistent basis, submitting bills for people. That would eventually be

detected, we think, through our audit anyway, where we send these letters out to

patients. If it has been happening that doctors are submitting bills when they

didn't even see the patient, then eventually, I think, we are going to hit on a

patient who says: No, I wasn't there that day. As soon as that happens, we would

do the intensive audit and it shows that, yes, we have many cases of this where

bills have been submitted for that physician and he didn't see these people.

So just to bring in the swiping - and bear in mind the

swiping of the card will only work in the office setting. The patient, in terms

of signing something, will not know what they are signing. Claiming now is done

electronically, almost exclusively by the computer on line submission of the

form. So the old claim form that we used to have, that a patient could sign,

doesn't exist any more. You would have to have them sign something else that

says, I was there, but then you have no means of authenticating those

signatures. You would have to have backup paper to the electronic submission,

which suggests to me that it would not be a feasible method of operation. There

are better ways to check on the authenticity of the claim than having a patient

sign something to say, I was there that day. That is my response.

MS THISTLE: I guess, with the cost that is

involved in providing free medicare today, the general population needs to know

what it is costing. Maybe if we looked at providing a statement to each medicare

cardholder saying, this is what you actually spent during the year, this is the

number of visits you made and so on, it would put some realism into what it is

really costing us to operate the system.

MR. CROSBIE: The Commission actually has had a

number of discussions along that line, as to whether or not we should sent out

an annual statement to each individual in the Province, detailing to whatever

level is considered appropriate, how much medicare money is being spent on their

behalf. That is possible. With the information that we contain in our computer

banks we could actually develop that statement and produce it.

There are a couple of problems. One of the problems is

that a goodly number of our population deal with salaried physicians working in

rural Newfoundland, and we don't have their information. So to one segment of

the population, people who deal with salaried physicians, we wouldn't be able to

supply the information. For the rest of the population, it would be either the

total bill, or if they were mixed between salary and fee-for-service, it would

be somewhere in between.

In the Commission's discussion of this, as we go down

this road and think of what the benefit would be, what we would accomplish, the

view has ultimately prevailed that there may be some considerable shock value

for this for the first year or two. There may actually be a number of people who

would be very, very surprised to find out that their health costs are, whatever

it is, $500, $1,000 or $2,000. Over time, and very quickly over time, this

statement coming in, which is difficult for them to relate to anyway, would lose

the shock value very quickly. Trying then to project what they could do about

it, you know, what actual use they could make of it in the sense of saying, well

I don't think it should have cost $2,000, it should only have cost $1,000, now

where do I go from here? If they come to MCP and say, it was $2,000, I think it

should only be $1,000, the processes that we would have to go through to try to

either validate that or not validate it, because we are going to be dealing with

a memory situation - I guess, we could take the full line and say: Well, did you

see the doctor? Then they say they didn't see the doctor, and we could start to

follow through on it.

You have to understand that one of the key pieces of

information that we have in our background, with this patient verification

program that we have, where each doctor every two weeks one of his patients is

sent an audit form, we know from feedbacks from the doctor that many of these

patients go in to the doctor and say: Doc, did I see you? Or: Doc, I got this

form from MCP, what do I do with it? Because people's memories tend to get

vague, and get ever vaguer when you start talking about a mother who is going to

get a statement for minor children.

One area of discussion on this was an area of

confidentiality. There was some considerable discussion over it at the time, and

that was the area of: What do we do with the statements for teenagers? I don't

know what the appropriate age is, about twelve to eighteen or some such thing.

Do these go to the parents, and if they go to the parents, then when are we

breaking the level of confidentiality? When does it become confidential that

some teenager has seen a doctor, say for a sexually transmitted disease, just to

pick a socially sensitive thing, and the parents don't know about it? This was

another area that was being discussed around the Commission table, as we have

looked just at this thing.

At this stage in time, we decided that there were

enough areas where we would either have to modify the program or areas where we

don't have all of the information to cover all of the people. When all was said

and done, and the information got out there, it started to come back, what we

could do with it. The decision to date has been that we don't think that this

will necessarily, in the long term, add anything to the system.

One other point I would like to make, and that is

reference back to the business of swiping cards or validating patients who have

seen the doctor. We are working with a system with doctors and providers that

are highly professional people. I guess there has to be a certain level of

trust. If someone is going to be fraudulent, then there is nothing to stop them

from getting MCP cards or using their patient numbers at different times. I

mean, once someone decides that they are going to fraudulently bill MCP for a

visit, they are going to put horses on the payroll, as we used to talk about

back in the construction business, and then it takes a very, very - I don't know

of any system, you know, that can be designed to stop someone who wants to beat

the system. When you talk about someone who is fraudulently going to bill the

system, and this may happen - I mean, in theory, there could be a doctor out

there who never sees a patient but who regularly sends us in a bunch of bills.

If he does it in a good regularized system we might, other than our patient

verification - one patient every two weeks gets a letter that queries: Have you

seen a doctor? We would probably catch it from that. Once you start to get into

the area of fraud, that someone is fraudulently going to try to bill the system,

then the systems that we have are limited in how we are going to deal with them.

CHAIR: One more question relating to the topic?

MS THISTLE: A new topic.

CHAIR: Okay, go ahead.

MS THISTLE: Just to clue up. I guess you are

looking at an excessive paper trail to look at that system. Maybe, from another

point of view, it does two things: It also gives the person, the client, the

patient the paper trail saying: I made twenty-five visits to the physician last

year; and it is just that. I have twenty-five pieces of paper, but what is

happening to my health? A feeling that, yes, it is costing a lot money, is there

anything I could have done to maybe prevent these frequent visits or whatever?

MR. PEDDIGREW: If I may, on that point. At the

time we looked at this, we did look at other provinces that had done it, that

had implemented that process, and subsequently abandoned it because their

findings didn't significantly alter the usage or the utilization of the program.

There was a very considerable cost involved in doing it and it had very

questionable results in that regard.

MS THISTLE: Thank you. Another topic -

CHAIR: Time for one last question, and then we

will proceed, because I am trying to give every one equal time. One more.

MS THISTLE: I was looking on page 5, when the

Auditor General examined the way the Commission is handling the excess chunks of

payroll money that are left in bank accounts. I know that the Province provides

the Commission with the cash requirements for salaries on a bi-weekly basis, but

I noted that the Auditor General had stated that it cost actually more for the

Commission to invest this money for the cost of electronic transfers than you

actually earned in interest. Is that matter now being addressed? Is there any

system in place to combat that?

MR. PEDDIGREW: Yes, Ms. Thistle, the funds are now

drawn only as required, so that they are retained by the Department of Health or

otherwise invested. We have addressed that and don't draw funds prior to the

date on which they are needed to make payment to physicians.

MS THISTLE: Very good. Thank you.

CHAIR: Before I proceed to Mr. Lush, I have a

couple of questions.

Across the country, in the last, certainly three to

five years, there have been significant moves with other jurisdiction to curb

and to limit the amount of double and triple doctoring that occurs. Certainly,

in the budgetary process that government went through in 1995, out of that

process arose, from the pharmacists and the Pharmacy Association, a lot of

debate about the systems that are in place in other provinces; that if patient X

goes to pharmacy Y for the third time in that day, automatically the system

indicates that that person has already received prescription drugs of this

nature yesterday and the quantity, et cetera.

There are a couple of questions surrounding it. What

are the Commission's thoughts, first of all, on double doctoring? In view of the

fact that you really have no hard evidence or controls, in terms that you can't

point a finger directly to what the abuse might possibly be in terms of

out-of-province billings, what do you estimate the abuse, if any, in terms of

double and triple doctoring? What initiatives are you looking at to correct that

situation?

It is an issue. I think it is a problem that we have.

We see it physically. Visit any high school yard and you will see it. You will

see Valium being sold and you will Prozac being sold in the parking lots of high

schools in the Province. Obviously that comes from somewhere. It comes from the

pharmacies. It comes from situations that develop like that. I will leave it

open for that moment, just to address the Commission.

MR. CROSBIE: First of all, MCP, through its

budgetary control, doesn't pay for prescription drugs. That notwithstanding, in

order to get a prescription you have to see a doctor, so we are paying for the

seeing of the doctor.

It is very difficult to know how much abuse is going

on by people who are seeing multiple doctors just to get prescription drugs that

they can then sell on the street.

CHAIR: Or to use or abuse themselves.

MR. CROSBIE: Anecdotally, we know that is going

on. We have had one or two cases where we have been involved with the police in

doing some work in this direction. MCP has also been very supportive of a

program that is being used in some other province called the triplicate

prescription program. As I understand this program, when a doctor writes a

prescription he writes it in triplicate, he keeps one copy, two copies go to the

druggist and the druggist in turn sends a copy to a central location. There are

modifications to this program now that we have computerized drugstores.

I am not entirely sure of the details, but I believe

that finally there is a pilot program being developed in Newfoundland and that

money has been allocated to do this pilot program in the area of triplicate

prescription, so that certain drugs, be they the Valiums or Prozacs or whatever

are considered the appropriate drugs, can be monitored, either directly at the

drugstore, or I believe it is done after the fact, that a person will very

quickly build a profile that they are seeing more than one doctor and are

getting prescriptions. Then an intervention can be done on an individual basis

with the program.

MCP, in its own work, have done some beneficiary

audits. When we see a beneficiary that is seeing ten or twelve doctors on a

regular basis, we get very suspicious. We have done some auditing on that and

out of that has come one or two cases where we have identified abusers and the

police have intervened. We also have a program whereby we write the beneficiary

and we advise them what our findings are, that they appear to be seeing a number

of doctors and we suggest then that they can confine their activities to one or

two doctors as appropriate. In actual fact we have found that there has been

some benefits from this program, as we review a sample of these patients later

on.

It is an area that is of great concern, and it

requires the co-operation of a number of jurisdictions to solve the problem. As

I say, it is my understanding now that money has been allocated for a pilot. I

don't think the pilot has started, but some people have been contracted to put

the necessary computer programs and to start this program.

CHAIR: I understand that MCP is not directly

responsible for the cost of prescription drugs. You alluded to the fact that

within your own reviews you pick up situations where beneficiaries may have seen

ten or twelve or any number of doctors, where you, in fact, write the

beneficiary. How extensive is that review? Is it an ongoing process? Is it done

on a weekly, monthly, bi-monthly, quarterly basis?

Obviously there is a cost associated to the

Commission, as well as in terms of doctors visits, that at the end of the year

the Commission ends up paying for, and we all end up paying for. So the question

directly then is: How expensive is that review? Is it an ongoing process or is

it occasionally done?

MR. CROSBIE: I think it is an ongoing process in

that we are doing beneficiary audits all of the time. Not all of them will

necessarily be connected with drug abuse, but some of them clearly will be just

because of the way we identify these people. Within our total audit process this

is one of the ongoing audits. Whether we do enough of it, to be very honest with

you, is always open to a judgment call.

One of the areas, keeping the resources in our Audit

Department and building these resources, has been an ongoing initiative of the

Commission for the last four or five years. I would like to see the Audit

Department expanded more than it is right now, but within the constraints of

budgetary control and whatnot. We are doing as much as we can and, in fact, have

increased our resources in the Audit Department quite considerably over the last

four or five years. It takes time to develop the people and the programs to do

it.

CHAIR: So it would be fair to say that, within our

technical systems management, there is or there isn't a program that would flag

a beneficiary, somebody with a card; that automatically the system itself would

generate a red flag, so to speak? In terms of if that beneficiary or that

individual goes over a threshold of doctors automatically, there would be a

check for balance in terms of looking into seeing what the situation is here.

Would that be in place?

MR. PEDDIGREW: Yes, Mr. Chairman, there is such a

process whereby - and I forget the parameters - if a person has had more than a

specified number of services within, I think, it is a ten day period, then there

is another one for a thirty day period, or has seen numbers of physicians beyond

a normal limit, these are flagged and then reviewed by our audit staff and

followed up. It is part of our program. It is an ongoing process.

As the Chairman indicated there are - we would like to

extend it because we think there is also abuse at some of the lower volume

levels, but within our limited resources we have it set at a limit we can cope

with in terms of the numbers.

I would like to make the observation, though, that it

is not quite as easy just having a computer generated flag -

CHAIR: Why is that?

MR. PEDDIGREW: - and then extent it and say, well,

then the computer could generate a letter. Because unfortunately, if someone is

very, very sick and gets into our hospital system it is very, very easy for

people to generate a very high number of visits with a very high number of

doctors as they get into the specialists and whatnot. So what happens is that

you generate a report that flags these things, then someone has to physically go

get those histories and look at these and try to make a judgment call: Is this

something that is normal or is this something that is abnormal, and then go from

there. So it burns up a lot of resources, as you have to look at this on case to

case history.

CHAIR: I guess the spirit of the questioning is

that I perceive it to be a problem, and I think the stakeholders and the

industry do as well.

MR. PEDDIGREW: And we do.

CHAIR: I mean representations from everybody, from

the Department of Health to the Medical Association, to the pharmaceutical

companies, to the Nurses Union, this issue has been certainly one that everybody

has flagged. So the spirit intended in the questioning really is to, I guess,

gauge from my own point of view where the Commission's view is on it, and to the

greatest extent they can, within the financial framework that you have to live

under, what you have done to try to curb that.

MR. PEDDIGREW: Actually we have taken an

initiative in this. The whole discussion, with all the interested groups - and I

am talking the police, the Pharmaceutical Association, the Medical Association,

the Nurses Union and so on. We called a couple of years back of all these

parties and raised the issue because it is one that we had identified and, of

course, we know it has to be affecting all parties. I think that meeting, in

particular, brought some very interesting discussion of the issue and eventually

resulted in our recommendation to the Department of Health, that this whole

program be looked at. As Mr. Crosbie has indicated, there are now some movements

in that regard.

Just with regard to the beneficiary audit, we have

found from our examination of these persons and their usage of the system, and

having written them - these are dealt with by our Medical Audit Consultant who

is a physician. These individuals are written, and as Mr. Crosbie indicated,

asked to limit their use to one primary care physician and so on. We are finding

very good results from that. The data, and this is after a sustained period - we

follow their history then for a year. We found that overall we get a 30 per cent

reduction in the number of doctors seen, and it is around 30 per cent in the

costs that they are generating in terms of the physician costs and in the

service levels. So, in some cases it isn't successful and it requires further

follow up, but generally I think those are fairly sufficient results obtained.

CHAIR: One last question, then I will move on to

Mr. Lush.

I know we have visited it already and you have given

commentary and answered questions on it, with respect the number of beneficiary

cards that are out there. At this point I believe - and correct me if I am wrong

- you have indicated that the cost of putting out new cards, about $1 million I

believe you said, far outweighs, in your own minds and within in your own

internal review, the cost of not doing it.

Has any consideration internally, within the

Commission, been given to, number one, providing new cards, but in terms of

subsidizing the cost or getting the cards paid for by introducing a fee, a two

or three dollar fee, for beneficiaries, whether it be every two or three or four

years, that would cover the cost, that would come outside of your budget? If any

consideration has been given to that, could you elaborate on? And if so, have

any representations been made to the department with respect to that issue?

MR. PEDDIGREW: Well with regard to a fee, I don't

know if you recall but some years back MCP did charge a fee for replacement

cards. These would be cards lost or if any card had to be replaced for any

reason; a fee of five dollars. As, I think, a budgetary measure - again I do not

recall what year - but it was a government budget decision to discontinue that

charge, that fee.

With regard to a fee to support issuance of new cards,

I can't say that that has been seriously examined. One thing in that regard that

would have to be looked at is The Canada Health Act which might have a bearing

in this regard, in that there is not supposed to be any direct charge to

beneficiaries with relation to the Medical Care Program. Now, the fee that we

charged previously was considered an administration fee, just to cover the cost

of replacement of the cards. But, no, I can't say that has been reviewed

extensively by the Commission.

CHAIR: Has it been reviewed at all recently?

MR. CROSBIE: Well, as was said earlier, the

Commission took up the whole business of cards when we got the Auditor General's

Report, and essentially postponed discussion of it because of the initiatives

that are going on for a new health card, which we support. We have postponed

replacing the MCP card until we find out what is going to happen with this new

health card which we would be part of. We know that if they issue the card then

MCP will be able to make use of that number. As a matter of fact, it would

appear that probably it would be the MCP number, but it would be administered in

a wider sense.

CHAIR: Yes, I understand.

Mr. Lush.

MR. LUSH: I just want to go back to the MCP card

again. I don't want to belabour this too much, but along the line of questioning

advanced by Mr. Smith, page 7, the Auditor General has identified there the

various classifications of the MCP. We talked about the active cards, the

current card holders, 649,000; inactive, no claims in several years, 145,000;

and then the terminated ones, for a total of 843,658 cards. She goes on to say

that this is in excess of the population by 270,000. I suppose, it is probably

to include the ones that are cancelled. It is harder to collect, they are

cancelled. Nevertheless, the point is the cards are still out there. So

whichever way you cut it you are looking at about roughly 230,000 cards out

around the Province of Newfoundland and Labrador in excess of the population.

Now, if they were credit cards, gold visas, I don't

know what would be happening, but I realize it is a bit of a different analogy.

Does the Commission, you know, not see any danger in this at all with these

numbers of cards? I guess my second question is: How is a card terminated, apart

from the obvious, people dying. Outside of that, how are cards terminated? Ought

there not to be a procedure, once that is done - I realize it is difficult - for

a card to be destroyed or returned or something, rather than having that

situation, where Mr. Smith was making the point. It is an important item, for we

are all assigned it. It is obviously important, so shouldn't there be some

attempt to get these out of the system, so that, as I said, we don't have the

situation of 230,000 cards out there floating around in the system?

Then the other question was: How would they be

terminated?

MR. CROSBIE: The terminated cards are probably the

easiest ones because we get records from the Newfoundland Statistics Department

on deaths. So, if somebody dies we can terminate their number. We also get

information from some other provinces that says that somebody has turned their

card in or has applied to them to be registered under their province. So again

we can terminate their card. Unfortunately that particular one may not terminate

the card because the person may keep the card, and if they return to

Newfoundland would probably use it again. Then our number would come up and we

would have to go and rescue it out of the files. That does happen.

Yes, I think you make a very good point. I think the

Auditor General makes a very good point. It seems to be a bit ridiculous if you

have 570,000 people, more or less, living in the Province and you have 843,000

cards. What is going on with the other 270,000 cards? I mean, some of them have

been lost and some are not around, but potentially these cards are out there.

The only way of stopping the use of these cards is to change the system, and

issue a card that is self-terminating by putting an expiry date on it. That was

not done with the original MCP Card, and up until this point in time, when it

was discussed by the Commission, when we tried to look at the fraudulent uses of

card, it wasn't deemed to be a cost benefit analysis at the time.

That notwithstanding, things are changing and, as we

have alluded to before, there is another initiative to get a new card on the go.

So MCP, in its wisdom, said at the time, we won't revisit this issue right now.

If the new card wasn't on the go, I think the Commission would have revisited

it. I can't predict what the outcome would be, but there are enough indications

on the go that we would have probably been exploring the possibility of doing

something with our card. In the past we have suggested a number of times to

government, as I said before, that they should consider looking at a card that

is of wider use than MCP, so that cost would be shared.

All that notwithstanding, I think in today's age we

might look at reissuing the card. There are a whole variety of things that need

to be done to make this effective, and one of the main things that needs to be

done is to somehow design the card so that it has to be used like a credit card,

that it cannot just be a registered number that goes on a physician's files and

once he has their MCP number he doesn't need it again.

The ideal situation would be to develop a card and

somehow make it so that the populace would expect to use it the same way as they

expect to use a credit card. Nobody goes into a store and expects to be able to

say my number is X, Y, Z, 2, 4, 1. They know they have to produce the card. As

it stands right, now once captured in a physician's practice the MCP card is

never even shown again. They know Mrs. Jones, they have her number. If you go

into a hospital - and in actual fact some of our hospitals now have a different

number, but they also use the MCP - they do not ask you for your MCP card. When

was the last time you were asked for it a MCP? They ask you your name.

CHAIR: Most hospitals have their own cards.

MR. CROSBIE: Most hospitals have their own cards.

So, the ideal situation would be, not only would this

card be time expired so that it is self-cancelling, but whatever way we develop

it, whatever information we put on it, we would try to make it so that that

would also have to be used; always remembering that there are numerous

situations. The obvious one is the hospital when people may present themselves

for emergency service without having the card available. There will always be

situations were it is not used. That notwithstanding, that is the ideal and

these are some of the things - well I know the Task Force is looking at the

health identifier - they have in mind too.

MR. LUSH: Where a lot of Newfoundlanders work in

other parts of Canada and many of these positions are only transitory, they are

only there for six or seven months, some less, do they have to make a change

when they are just there for that period of time, six or seven months?

MR. CROSBIE: If they obeyed the law, if they

understood what the law was in theory, yes, they have to. Generally speaking,

there is a three month waiting period. If you move from one province to another

province, there are three month. The three months are put into the system to

allow you to get re-registered in the other province and get set up the system

and whatnot. That is what the rules say. The practicality of it is, I would

suggest, that the ordinary Newfoundlander, and many Newfoundlanders, spend, as

you say, up to six months away. I would suspect that, generally speaking, these

are healthy people who don't avail of the medical system that much unless they

have to. I would suspect they don't bother to register in a hospital unless

their employer has, you know, a registration system, and if they find an

occasion when they have to go see a doctor they show their MCP card, and under

our Portability Act that we have and reciprocal billing, that it is all they

need and it is not questioned. The doctor in that province can take the MCP

number and can give the service, submit the claim to his province who

adjudicates it under their rules and in turn charges it back to us. I would

think there are a lot of Newfoundlanders who work regularly away from

Newfoundland who use their MCP number, if necessary, in the other jurisdiction

and also use it back in Newfoundland when they are here.

MR. PEDDIGREW: Just a point on that. Persons who

are out temporarily working can do so entirely in accordance with the provisions

of the eligibility agreement. They retain their MCP coverage. You can be

temporarily absent workmen for up to twelve months subject to returning to

Newfoundland only once in each twelve months, and you can continue your coverage

on that basis. So the waiting period would not apply. That only applies to

people who are moving permanently.

Whereas, you know, there are many

Newfoundlanders who work in the Great Lakes and work elsewhere in Canada whose

families are still back here, but they retain their coverage even though they

may have to visit physicians away. That is the same for all provinces.

MR. LUSH: Page 10, Workers' Compensation

Recoveries: The Auditor General identified some past problems, some current

problems, problems prior to 1993-94. As we know, injuries treated by physicians

related to insurable injuries are covered by the Workers' Compensation

Commission, and apparently there has been some problem with this.

In the first paragraph the Auditor General says, "This

process also identified any instances where a physician billed both WCC

Compensation and MCP. The physician billed both. I suppose he was trying to

ensure his chances of getting paid; billed the Workers' Compensation and the

MCP. So I just wonder if you would like to comment on that.

Still talking about problems now, I don't think we

have ironed them out entirely, even though we have come up with a new process.

But the Auditor General mentions as well that recoveries made by the Commission

from the Workers' Compensation amount to about $200,000. That is a fairly hefty

sum. So I wonder if the Commission could comment on these problems now with

Workers' Compensation and whether or not they have been satisfactorily resolved?

MR. PEDDIGREW: Yes, we think they have. Prior to

1993, the Commission did have a process in place whereby we exchanged data with

the Workers' Compensation Commission and matched their claiming records against

our own. Where we found that there were services that we determined should have

been billed to Workers' we recovered these from the physicians and so on.

In 1993 we made modifications to our system which, I

guess, were such that - and this is regarding the whole claims processing

system. I guess, the Workers' was a minor aspect of the changes that were made.

But it did, in fact, result in the Workers' programs were not compatible with

our own and we couldn't do this exchange. So a period of time went by when we

didn't do the exchange. Where we felt that a claim could have been a Workers'

related claim we questioned it, recovered it and so on, but we didn't do this

exchange.

Subsequent to this report, and in fact leading up to

this report, we had extensive discussions underway with the Workers' Commission

and it resulted in an agreement being struck. I think it was back to April 1995.

We have gone back and matched the records and made the appropriate recoveries.

Since that time, we have had the program of exchange of data reinstated and the

appropriate recoveries being made. We are currently in the process of

renegotiating this. It is an agreement we have with the Commission, and we are

in the process of renegotiating. Our preference is to continue with the current

agreement and to carry on from there, but we are not sure what the Commission's

position is on it.

MR. LUSH: Why would there be a problem in terms of

collecting this information? The sharing of information mutually, is a benefit

to both the Workers' Compensation and the Medical Association.

MR. PEDDIGREW: Yes, we agree. I think it is

strictly a matter of the logistics of their computer system versus ours.

Obviously they were not built for total compatibility. To actually implement the

data transfers that have to be done, they have had some considerable computer

internal programming problems, and that has been their main problem with this, I

think, up to now.

Other than that, we are not aware that they are

reluctant to share. There is no indication that they are reluctant to provide

the information. That has been established.

MR. LUSH: Page 11, Audit Coverage: The Auditor

General explains that there have been 378 audits commenced since 1989. It points

out that less than 50 of these have targeted specialists who receive a bigger

portion of payments than general practitioners. It was also noted that the

audits have concentrated on just a few fee codes such as full assessment and

psychotherapy. Could the Commission comment on this, as to why this was going

on?

MR. PEDDIGREW: Yes. We started with general

practitioners with our intensive auditing in building the audit process. I

simply suggest that the numbers done were all that could practically be done

with the resources we had. I mean, we had a very small audit staff, we were

having to establish the process, and in many cases, having to deal with

challenges of the process that had been put in place, report challenges which we

welcomed because these enabled us to modify the process where required.

It was just simply a matter of logistics. We could not

cope with more audits. Each audit, one that proceeds to the comprehensive claims

review stage, is a very complex thing that requires very careful documentation

and follow-up and management. It was not just possible to deal with more cases

than we did.

However, I will have to say as well, that with regards

to specialists we tended to take the view that within a lot of the specialities

the same extend of auditing is not required. It is there by nature of the

speciality. For example, surgery: It is not just the one bill from the surgeon

that you get; you have a bill from an assistant or from the anaesthetist who

participated in the surgery, you have extensive hospital records and

documentation of the service being provided. So it is not the same as a service

rendered in the doctor's office where you have nothing else to verify the

service other than the doctor's claim. Within a lot of specialities you have

supporting consultation reports and operative reports. Before auditing takes

place at all, there is an extensive assessment of claims that goes on. We have a

whole assessing department, and their role and responsibility is to assess and

validate these claims before we ever pay anything. So the check on many of the

specialist services is more extensive in that regard upfront. I guess we have a

greater degree of confidence in the billing within certain specialities than in

others.

Nevertheless, we did agree that, yes, we should be

auditing more specialists and so, over the past couple of years, since this

report, we have undertaken significantly more specialist audits and have had

some significant cases of recovery and so on in that regard. I think I submitted

an account of our specialist auditing within the past year - I forget what year

that pertained to - showing that we had, I believe it was thirty-five

specialists that we had audited.

MR. LUSH: It also noted that, of the 378 audits

undertaken by the Commission since 1989, sixty-two were still outstanding as of

the 30 June 1995, and of that amount, thirty-nine were commenced prior to 1993.

So can the Commission explain why audits would be allowed to be outstanding for

such a long period of time?

MR. PEDDIGREW: The audit process is often a very

prolonged and difficult one in some respects, in that the status which I

outlined earlier can, depending upon the responses of the physician in supplying

records or depending upon the ability of the Consultants Committee to deal with

cases - I mean they are limited in the number of cases that they can review.

With the audit staff that we had up until recently, it was just physically not

possible to advance audits at a faster pace than was the case.

Since that time, the backlog of audits that is

referenced here has been cleared. We are not now dealing with older audits, we

are fairly current in all of those. We had made a particular presentation to the

department and, I guess, to Treasury Board with a view to increasing our audit

resources back some time ago and that was accepted. This was during a difficult

period of down sizing which we were undertaking as, I guess, all government was

a year or two ago. So while we were having down sizing in other parts of the

organization we were having to make a case that we required additional resources

in the audit area; and fortunately that was accepted and endorsed. While we have

had some problems in recruiting and retention of employees in that area - some

of the recent people we have recruited in that area have gone on to other

positions and so we have had a fair turnover. But we do have the positions in

place and are working to restaff those and to proceed with our audits.

CHAIR: One more question, Mr. Lush.

MR. LUSH: Page 43, with respect to Investment

income: Where the investment for 1996 was $265,064 and for 1997 it was $174,616,

could the Commission explain where this investment would have come from?

MR. PEDDIGREW: I think that would be primarily in

relation to the transfer of funding from the Department of Health not being

drawn earlier than needed, so that the funding is not now available for

investment prior to payment to physicians. As I indicated earlier, we

discontinued. It may also be interest rates. Lower interest rates would be a

factor definitely. It would also be related to the amount of funding, I guess,

that we have recovered through audits. I think that funding would also be

invested. It is probably a combination of these factors.

MR. LUSH: The last one on page 48, Identified

Overpayments: Overpayment in 1995 of $409,049.75 and on page 49 an Overpayment

of $454,552.08; could the Commission explain how these overpayments could have

developed, and is there any difficulty in collecting these monies?

MR. PEDDIGREW: The term overpayment, I think, is

one that was used in the request that we received from your Committee. I think a

more appropriate term would be Audit Recovery. These are the individual cases in

each of these fiscal years in which we are recovering, each one listed there.

For 1995-1996, there are twelve audits. These are individual physicians from

whom we have recovered these individual amounts.

WITNESS: Or will recover.

MR. PEDDIGREW: Or will recover, yes. We are in the

process of recovering. But these are audit cases that were dealt with in

entirety and were identified for these funds to be recovered. It will vary. As

you can see, there is one case there for $228,231.68. It can vary extensively in

terms of year to year. In this case, for the year 1996-97, the amount is

relatively the same, but again it is only a reflection of the fact that the

total adds up to be that. Depending on how many very large cases of recovery you

get in any given year, that amount can vary from as low as $100,000 to as high

as $700,000 or $800,000.

CHAIR: Just a quick question: In the 1995-96

period, of the $409,000 approximately, there is one case that represents

$228,000 of overpayment. Is that correct?

MR. PEDDIGREW: Yes.

CHAIR: And in 1996-97, of the $454,000.00 that was

registered as overpayment, one case, No. 10 A-327 audit number, represents

$317,000.00 of overpayment. Would that be to one physician?

MR. PEDDIGREW: Yes.

CHAIR: How would that occur? It seems an

extraordinarily amount to occur in an overpayment to one physician. You know,

what type of a physician are we talking about here?

MR. PEDDIGREW: The case in 1995-96 that is

referenced - yes, in each case it is one physician. This particular one I guess

I can comment on because it has been a public issue. It was in the case of a

psychiatrist where that amount of misbilling was determined and the recovery was

effected.

CHAIR: Without getting into names, because I don't

want to get anybody into trouble here, I guess the intent of my questioning is

that, you know, comparatively there are amounts there of $1,500, $5,000, $6,000,

$2,600. I am looking at the identified overpayments in 1996-97, when one

physician probably represents close to 80 per cent of the overpayments for the

entire year. I am still not clear on how that would happen without it being

picked up throughout the year. It seems extraordinary. Can you comment on that

case, for example?

MR. PEDDIGREW: Again I cannot identify an

individual.

CHAIR: No.

MR. PEDDIGREW: It is a matter of the billings

having been submitted and paid by MCP. They appear to be totally legitimate

bills at the time they are received and they are paid in good faith. We

subsequently go back through the process, which I mentioned earlier, and if we

find after having paid those claims that there is now evidence that puts these

billings into question, then we do an intensive review of that physician's

services for a two year period. When we go back it is normally for two years. If

we find, after requesting records to substantiate the billings, further records

than we had before, that they have been misbilled, then we proceed with the

case. I mean sometimes these cases are very small, as you can see in the case of

some that are $2,000 or $3,000.

CHAIR: That is not what I am concerned about.

MR. PEDDIGREW: No, no, but we would follow the

process. We never know at the outset whether it is going to be a small amount or

a large amount, when we follow the same process. I would suggest that there is

no way of knowing, until you go through that process of more extensive

examination of records and so on, that it is going to be to this extent; but

that was the case.

MR. LUSH: Has there been a recovery of all these

funds?

MR. PEDDIGREW: No. These are those which are

ongoing. I mean, these are the ones from these two years mentioned. We have

other cases going back to 1993, 1994 and 1995 where similar amounts have been

dealt with and recovered, and the books are closed on those.

MR. CROSBIE: The normal recovery process of MCP,

with our provider, is that we enter into an agreement with them whereby we

recover 30 per cent of their billings every pay period. In return for that they

pay interest on the outstanding debt at a rate that is not very attractive. I

think it is 12 per cent or 13 per cent right now.

CHAIR: That you actually charged?

MR. CROSBIE: That we actually charged on the

outstanding amounts, the interest. It is a rate that we got from the Justice

Department or something. Of course, it is not designed to be very attractive

because we are not a banker, but we also recognize that as we recovering money

from providers that they have problems coming up with the money in a lump sum.

So our standard arrangement is, and they agree, that we deduct 30 per cent of

each pay period's billings and we also charge interest. So some of these amounts

will be outstanding for a number of months. As a matter of fact, one or two of

them may be outstanding for longer, into a year. But that is the norm that we

have.

MR. LUSH: Will there be any criminal charges for

some of these cases?

MR. CROSBIE: No. On any of these cases the

adjudication has not been - I realize the amounts look very, very big. In most

cases this is not a matter that a service was not provided; a service was

provided. In looking at the records, the adjudication is that the service that

was billed, the records don't support it. The provider in most cases will say: I

did it. You know, my records are the thing that is wrong, not what I did was

wrong. But in areas where we have some very definitive requirements, where we

can audit and look and say - if we require certain documentation that is not

there then we say: Your documentation does not support the bill you sent. Then

in that case there may be, particularly if you are dealing with a specialist -

and this is a specialist - a considerable difference between the fee charged for

a consult versus the fee charged for, say, some sort of other ordinary visit.

So in all these cases, there has not been an

adjudication that fraud was involved, that this was a mistake in the billing

process.

CHAIR: It is a big mistake, I would think anybody

would agree.

MR. CROSBIE: Unfortunately! I mean, we are dealing

with -

CHAIR: When you talk about an overpayment - in

this instance, for example, the physician's claim is $317,000. What would his or

her income have been? What was it they were overpaid? Should they have been paid

$250,000 or $300,000? Have you come to a determination what their salaries

should have been fee for service?

MR. CROSBIE: Just let me say that you have to be

very careful when looking at the amount that finally comes out versus what we

are doing? Yes, I look at an amount of $228,000 and I get a little bit horrified

when I see that statement. I don't know if this one is two years, because we

have done audits as far back as five years, but this is probably two years.

As Mr. Peddigrew said, you start the process, you get

into it and you look at it. Now when I go down to the amount, a physician makes

his arguments and he says that he thought that was the service he provided and

he thought that he was billing correctly. We look at his records and say: Well,

notwithstanding what you thought your records indicated, that is not the service

you provided, so consequently we are going to downgrade the payment or in some

cases maybe even refuse the payment entirely.

One has to be very careful when one looks at that and

says: Well, someone who this involves $228,000 for, somehow he might be

fraudulent, but someone who only involves $5,000 or $6,000, for exactly the same

thing, he is not fraudulent. The whole business of fraud is a very, very

difficult area. Generally speaking, MCP takes the attitude that mistakes get

into the billing system, and they are honest mistakes. They may be perpetuated

over a time, but we treat them as honest mistakes.

It was said very early in the game, if we find a case

where we think there is fraud - what might we think is fraud? If we found

falsification of records, if we found horses on the payroll, or something like

this, very clearly a deliberate attempt to fraudulently bill the system, we

immediately turn cases like that over to the police and say: Hey, go at it, we

think that there is something radically wrong here. This is not what we are

talking about. We are finding some records that don't meet our standards. We

found situations, when we first got into this, where bad habits have developed

over a time, and slowly but surely, every time we do an audit hopefully a

message goes out.

I agree. I look at it and say: How could somebody get

$228,000 from us and we not catch it. Hopefully, that will not happen in the

future.

CHAIR: These are all fee-for-service physicians we

are talking about here in overpayments, are they?

MR. CROSBIE: Oh, yes. We have no audit program for

salaried physicians other than an audit that we try to do at the hospitals to

make sure that the hospital sends us a bill, that in actual fact there is a

physician at the end of that bill.

CHAIR: I accept what you are indicating, in terms

that the Commission has looked at it. They have made repayment schedules,

associated with the overpayments, specifically with a large amount. I accept

that you made a determination that there is no fraudulent activity and,

therefore, no need to send it to the Department of Justice. But, I guess, being

not completely aware of how a situation like this would arise, when I look at

1996 Annual Report, for example, and there is a total of 422 physicians, level

of annual payments to full-time, fee-for-service physicians - I think there are

about twenty-eight. Thirty-three fee-for-service physicians get paid up to

$100,000; 208 are between $100,000 and $200,000; 130 are between $200,000 and

$300,000; 40 are between $300,000 and $400,000; and 10 are between $400,000 and

$500,000. So with respect to that, obviously it is a small group of physicians

that we are talking about that would be in a receipt of an overpayment of

$317,000 here.

What sort of things would have led to the overpayment

that the Commission picked up? What sort of services would have been charged for

that should not have been charged for per se? I am just trying to be clear on

that. I am not pointing fingers or anything like that. I just want to be clear,

in my own mind. What would an audit have picked up that would have identified

$317,000 in overpayments?

MR. CROSBIE: Let me go back to an earlier audit,

in one of the first series of real audits that we got into a number of years

ago. It was an audit of a fee code that was called a general assessment which is

done by a general practitioner. Now a general assessment essentially, in

layman's terms or in my terms, would be done for a number of reasons. If you

changed your doctor and went into a new doctor, in order to take you on as a

patient he would do a general assessment, he would look at you from head to toe

and spend considerably more time than normal. He would be checking you out. So

he charges a general assessment on that.

Back in the days when we were doing that, that fee,

from memory, was about $35.00. For a general practitioner, generally speaking,

other than few a specialized fees, his other fee that he charges is an ordinary

routine office visit which is about $12.00 or $14.00, something in the order of

that. So you had a fee that was $20.00 more than the ordinary office visit that

he makes his living from. When we got into the general assessments, in order to

qualify as a general assessment there were a number of criteria that were laid

down in the MCP payment schedule, which said what things needed to be done in

order for this to be a general assessment.

When we started this audit, and we discovered that

clearly there had been a lot of misbilling, and I use the word misbilling, we

did a considerable recovery. This was the first major audit that we did. What we

found was that, as we got the records, the documentation in the doctor's files

did not support the general assessment. All it supported was an office visit.

Now, I can go into anecdotal information and things

that went on and things that we were told, and all the reasons for the various

appeals that we had, as to why they did it and that they thought they were

allowed to do a general assessment, you know, bill it once a year on all their

patients. I mean, all kinds of reasons were given as to why this went on, but

that notwithstanding, the documentation wasn't there. Now another major reason

that was always given was, I did the general assessment, I just didn't write it

down, I didn't need to write it down, I know my patient. But based on the

records we were looking at - the definition of a general assessment had not

always been as clearly defined in our regulations as it was when we started this

audit, because what we did was we changed the regulations and made sure that

everybody understood the rules and then we did the audit.

So you have a provider who says: I did the work, I

didn't do the documentation. You have MCP that says: That notwithstanding, if

you don't have the documentation we are not going to pay you $35.00, we are only

going to pay you for an ordinary office visit. So considerable sums were raised

that way.

As we move into the specialities - and this is a

specialist we are looking at here - you know, a consult for a specialist is, I

don't know, $60.00, $70.00 or $80,00, and a partial reassessment, which is a

much lower fee, is $20.00 or $25.00. If the documentation doesn't justify the

consult then we say it wasn't a consult, obviously, so it must have been a much

lower fee. If you extrapolate this across a very busy practice and you end up

with the very sizable recoveries we have right here.

As I say, when we look at this and get into it, the

adjudication is that, for whatever reason or however it crept in, whether it was

from very bad record keeping, the work was done absolutely 100 per cent but the

records weren't kept, or there was a misinterpretation of what exactly

constituted getting billing for that fee. When we check it out we say: No, it is

not the high fee, it is the lower fee. But it is not fraud. We are not in a

position to look at it and say, just because the dollar figure is high that that

is any more fraudulent than some other specialist who had a very low instance.

CHAIR: I don't think that is the suggestion, that

because it is high it is any more fraudulent than any other overpayments.

MR. CROSBIE: Why did it go on so long? It is an

area that we have only -

CHAIR: I mean even at $80 a consult, you would

have to agree that a specialist charging $317,000 would have to have a

significant amount of consults. I mean, it does take a lot to see this, just do

the math; on top of what the physician should have charged. It just seems very

peculiar to me and very extraordinary, that such an overpayment occurred, that

is all. Looking at all the others, I'm not suggesting that it is any more

fraudulent. I accept the premise which it is coming from and your own

determination on that, but it seems highly irregular that such an overpayment,

of such a magnitude, would occur without it being picked up prior to reaching

that level. That is the point I am making.

MR. CROSBIE: Well, the other side of the coin is,

the question may well be: Why didn't you audit it before? In the greater scheme

of things, this type of auditing is relatively new.

Mr. Peddigrew pointed out early in the hearing, that

in actual fact, as far as Newfoundland can find out in checking with other

jurisdictions, when it comes to auditing we are on the leading edge. Auditing is

a major, major program of MCP now and it will continue to intensify as long as

we are finding areas that need to be audited.

MR. PEDDIGREW: In relation to that point, Mr.

Chairman, that particular case was not outstanding in terms of the billing, you

know, it was normal for that speciality. There would be nothing to make it

appear to be out of line.

The other thing is that the Commission receives

annually over 5 million claims from physicians, or claim items. Each claim is

supported by a detailed description or identity of the patient, the MCP number,

the date, a billing code that denotes what the service was, a diagnostic code

that relates to the illness of the patient, details on the date and fee and so

on. So logistically, we can only deal with that information as we assess every

claim. We then take that and relate it to the patient's history that we have on

file. We have extensive patient history on every person.

Every claim is assessed on that basis, with what you

take to be valid information being provided to you by the physician. You could

not feasibility go and ask for all these records, you know, that pertain to

every claim. It is only through the audit process, when you get in and begin to

look in detail at these records, that you find this problem. It is not something

that is apparent.

CHAIR: I am not suggesting that. It is just a

question because it jumps or leaps out at you. Obviously there are effective

controls within the management of the Commission, otherwise you would not have

picked it up. I accept that. Just in terms of comparatively to the other amounts

that are listed here it seemed rather large.

I think there are probably one or two questions left.

Mr. Byrne, and then we will conclude.

MR. J. BYRNE: The out-of-Province Service, for

March 31, 1995 is $3.8 million. In 1996 the out-migration in this Province was a

record high, and it seems to be continuing in 1997. Do you see any problems for

MCP with respect to this situation? And would see that $3.8 million

significantly increasing?

MR. PEDDIGREW: The amount has not increased

significantly. As I said, we did a review of this just recently and the budget

for the current year, 1997-98, is $4.1 million. So, it has gone up. Actually,

for the past three years, it has gone up only by about 4.8 per cent. I think, as

I indicated earlier, a lot of that is attributable to the fact that we are

paying the rate that the other provinces charge and they have been increasing

their fee schedules at about that rate, on average, throughout the country.

Surprisingly, it isn't translating into a major increase in that budget as we, I

guess, all of us, expected to see.

I make the point, with regard to the tremendous

out-migration we have had, that there is no financial incentive for the people

who are going out to stay on their MCP coverage unless they are only going to

two provinces, B.C. or Alberta, because they are the only two that charge a

premium. If you are going to Nova Scotia, where surprisingly a majority of our

MCP beneficiaries go - our reciprocal billing tells us that. You know, if you

are going permanently, then there is no advantage to stay on your MCP coverage.

You should get your three months coverage under MCP and then transfer over to

Nova Scotia coverage.

I think it is the case were a lot of people who are

going out are going with great uncertainty. I mean, the whole thing of your MCP

coverage is based on your clear intentions. If you are going to another province

to live permanently and you know that and you state it upfront, then your

register and they notify us, which incidentally was a MCP initiative. This

exchange that we do where people register with another province and then that

province tells us, we initiated that for the country as a whole. Really, it is

not translating into a big increase in that out-of-Province budget.

CHAIR: Mr. Byrne.

MR. J. BYRNE: One quick question. The Auditor

General mentioned, I think, it is on page 13, that two employees received 100

per cent tuition and books for educational assistance with no proof of

completion.

CHAIR: (Inaudible).

I will offer Mr. Crosbie and Mr. Peddigrew the

opportunity to offer any concluding remarks they wish to make, if they see fit.

If not, that is fine. Don't feel obligated that you have to.

MR. CROSBIE: No further remarks.

CHAIR: Okay. I would like to, on behalf of the

Committee certainly, thank both Mr. Crosbie and Mr. Peddigrew for coming and

being forthright in answering questions that have been put forward. I think that

was a good exchange of information.

With that, the Auditor General has no concluding

remarks and no other member of the Committee does, so I will conclude the

hearings. Thank you.

The Committee stands adjourned.

Document details

Collection	Newfoundland and Labrador — Committees
Citation	1997-11-04
Type	committee
Volume / chapter	committees_standingcommittees_publicaccounts_ga43session2_1997-11-04_pac_.htm
Language	en
Format	html
Source	PROVINCIAL
Identifier	32ad222e887b8c484d15854435b71207456ff5e7

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