November 4, 1997                                                                PUBLIC ACCOUNTS COMMITTEE


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.