STANDING COMMITTEE ON PUBLIC ACCOUNTS
Mr. John Leefe
MADAM CHAIRMAN: Ladies and gentlemen, I think we will commence the proceedings and I will just let you know that I am taking over the role of Chairman this morning for John Leefe in his absence. We have George Archibald here this morning substituting for another member of the committee and I understand John Holm is momentarily about to come through the door and on that note I will get us proceeding.
I would like to welcome the members of the Department of Health who are with us this morning. Mary-Jane Hampton is the Executive Director of Strategic Planning and Policy Development and in no particular pecking order, I am just going to go down the front row so that people are connected to the faces. Ed Cramm, Deputy Minister. Anna Stuart is the Executive Director of Administrative Services. Eleanor Hubbard is with us, the Director of Pharmaceutical Services and then Derek Dinham is the Senior Director of Insured Programs Management. Sitting on his right is Marie Kuttner and Marie is the Special Assistant to the Deputy Minister and I understand is also going to be helping us with some of the technology this morning. I think you are all familiar with the members on the committee. We are joined, also, by the Auditor General's Department staff: Mr. Salmon, the Auditor General; and David Perry, the Audit Manager.
I would like to welcome you all here this morning and perhaps open it up with the presentation from the Department of Health. Who is actually going to go first?
MR. ED CRAMM: First off we have a presentation which will deal with the Seniors' Pharmacare Program. If it meets with the approval of the committee, we would run our presentation through to include the out-of-province revenues/recoveries, which is shorter than the Pharmacare presentation, but do the total presentation before opening it to the floor to the committee for questions.
MADAM CHAIRMAN: That is fine, thank you.
Derek, I guess you are taking over.
MR. DEREK DINHAM: What we have this morning is approximately 20 slides that will probably take us about 15 minutes to 20 minutes to go through since we will hold the questions to the latter part of the session. What we would like to do is to give an overview of the program itself over the last couple of years. I think it is important to get an appreciation of the program itself, where it has come from and where we are headed in the future with this program.
So we have put together a presentation. Some of you, I know, have seen parts of it before. Parts of the presentation have been taken on the road on a number of occasions when the program was unveiled in 1995-96. In any event, we will go through some of the program highlights - what we have now, what we still have in the future and to give a quick overview of that.
The Nova Scotia Pharmacare Program, the new program, is still the most comprehensive program in Atlantic Canada. Certainly we do have a slide later that will give some comparisons. Not only is it still the most comprehensive program in Atlantic Canada, but it still remains one of the most generous programs in all of Canada as we compare the overall cost to individuals and cost to government.
The program itself, in comparison to other provinces: we have picked a number of provinces that can be compared to both the demographics of Nova Scotia and the overall size, so we did take four other provinces to have a look at what they do, the current status of their program and costs and so forth. New Brunswick is the first province we compared ourselves to and in New Brunswick, for those receiving the Guaranteed Income Supplement, there is no premium. There is a co-pay of $9.05 per prescription to a maximum of $250 per year. For non-GIS, there is a government-sponsored, private plan in conjunction with Blue Cross that has a premium established at $640 with, again, a co-pay arrangement of $9.05 per prescription with no maximum upper limit.
I will go through the other provinces fairly quickly but we do have, I guess, to come back to, an overall analysis of what the cost is to each of these programs compared to what it is in Nova Scotia. Prince Edward Island, again, has no premium for GIS. The average co-
pay per prescription is $14.85 with no maximum limits. There is a program for non-GIS seniors but they must apply for it.
For Newfoundland, again, there are no premiums for GIS recipients. The cost to seniors is $6.50 per prescription plus 10 per cent of the drug cost. Again, there is no annual maximum as far as the contributions to co-pay. For non-GIS, they are not insured.
Saskatchewan has a rather comprehensive program that is universal. All age groups are covered but for the seniors' portion, itself, for those in receipt of a Guaranteed Income Supplement, the premium is $400 per year plus 35 per cent of the drug cost, itself, as a co-pay contribution. There is no maximum contribution limit. For non-GIS, the cost could go as high as $1,700 per year in premium payments with 35 per cent contribution for the co-pay amount.
In trying to sort out what the cost to seniors would be: for New Brunswick the range could be anywhere from $250 to $900; Prince Edward Island, for those who do participate, the average cost would be in the range of $300 to $400 in total; for Newfoundland, it could range anywhere from $200 to $700, depending on the level of drug use for individuals; for Saskatchewan, it is difficult to come up with a figure but it is rather considerable, when you average it out for all seniors, it would probably be in the range of $800 to $900; for Nova Scotia, the maximum that would be paid, both through the premium contributions and co-pay, would be $415 but it could be as low as just slightly in excess of $100, $115 depending on the level of rebate.
We would like to give a quick history of the program. It was established in 1974. The annual cost at that time was $7 million. In 1995-96, the cost has escalated to $83 million in total. Historical utilization, we have gone back a number of years and you can pursue this with the hand-outs, we have gone back and looked at the history of the program back to 1986-87 when there were 105,000 seniors insured at a cost of $46 million. Over the years the number of seniors who have participated in the program has gone up by approximately 10,000. The cost of the program has gone from $46 million in 1986-87 to approximately $83 million projected for 1996-97.
As you can see, and we will go through some of the details, the total cost of the program, certainly from 1991-92 has been fairly stable in terms of overall costs. There has been a number of initiatives implemented over this period to keep the program within the cost limits that have been established. The big factor you see here, of course, is a movement from the net cost which has been up to 1995-96, total government cost has moved from a combined contribution by government with a co-pay contribution. Of course, once we get into the 1995-96 period, there are other factors that come into play as well as the co-pay amount.
Over the last number of years, a number of factors has contributed to the increased cost of the program itself. The first one, and one of the primary ones, is the number of seniors participating in the program itself. On average, we have approximately 2,000 net new seniors joining the program each year. Now this is applicable to the years prior to the new program being introduced. As you are aware, the new program is not a mandatory program but a voluntary one, depending on the coverage that the other seniors may have, but over the years it has been increasing by a net of about 2,000 seniors per year.
Increased drug use. This is factored in by either the type of prescription that is used or the number of prescriptions per senior. New, more expensive drugs coming on the market place, there have been controls placed on this with the new formulary and prior approval of new drugs coming on the market place but nevertheless, there are still new drugs coming on that generally cost more. There are drugs that are replacing other medical and surgical interventions. This is becoming a more frequent occurrence and we do see, as a result of this, a fundamental shift from such things as hospital physician care to problems being treated with medications. Most of these medications are usually the higher cost medications and generally, the rising cost of existing drugs that we have on the formulary. Again, in recent years, the last two or three years, the cost of existing drugs has been maintained somewhat, however there is still an upward pressure on the cost itself.
Over the last seven or eight years, certainly since the late 1980's to the early 1990's, there has been a number of cost-control initiatives implemented. In July 1986 we moved from a catalogue pricing system and mark-ups that pharmacies would charge in addition to a professional fee to actual acquisition costs. What actual acquisition costs means is that we would only reimburse pharmacies to the extent that they pay for the drugs so it is what they actually pay for the drugs that we would reimburse plus a professional dispensing fee.
In 1990, a Maximum Allowable Cost Program was introduced as well as a co-pay arrangement at a fixed amount of $3.00 per prescription. The Maximum Allowable Cost Program basically allowed for interchangeable drugs to be used, generic substitutes, and we did put a cap on the total amount that we would pay for any drug group.
In January 1991, the drug manufacturers had to apply to get products on the Pharmacare benefit list. Prior to this period, any new drug that required a prescription or approved over-the-counter drugs were automatically included in the benefit list. Now, we do have a process where each new drug is evaluated to see the cost-effectiveness of that drug, and choices were made as to whether the individual drug would be included as an insured benefit.
In April 1991, provider fees were frozen for two years which put some limits on the cost increases related to the professional dispensing fee.
In July 1991, the co-pay was changed from the fixed $3.00 fee per prescription to 20 per cent of the cost of that prescription. The maximum amount at that time was $150 per year per senior.
In January 1993, the co-pay was changed again. The maximum amount that a senior could contribute was changed for those on GIS; it remained at $150. For those not receiving the Guaranteed Income Supplement, the co-pay maximum was increased to $400.
In October 1993, the province became the insurer of last resort and, basically, this relates to status Indian groups as well as the veterans who were covered by other plans. This was rather transparent to the veterans and native groups in the sense that the insurance coverage just moved from one payer, that is from the provincial government, to the federal government.
In January 1994, pharmacists voluntarily rolled back their fees by 6 per cent. Now this was in recognition of trying to deal with difficult problems related to cost increases of the Pharmacare Program itself, and pharmacists in conjunction with the department rolled back the fees by 6 per cent.
In January 1995, the on-line computer system came into effect. This provided a greater level of information plus on-line adjudication of Pharmacare claims at the pharmacy level. Without the computer system, the ability of the department to implement the new program with different dates for seniors' joining of the program, or those who wished to opt out, would have been impossible.
In April 1995, the new Pharmacare Program was introduced. Certainly we will go through the specific parameters of that program in a few minutes.
Also, in June 1996, a new formulary was published. Basically, this is a large binder that was to be used for reference by both pharmacists and physicians as to what was insured, and also the appropriate use of these drugs, or suggestions for the use of these drugs.
In October 1996, pharmacists again reduced their fees. This is a voluntary reduction again of approximately 5 per cent of the total professional dispensing fee.
All of these initiatives put it in focus over the last seven or eight years. If indeed we had left the program unrestricted, the cost of the program in the current fiscal period would have been in the range of about $140 million to $150 million. The upper line of the graph shows the program and projected cost if it were left unrestricted. In the late 1980's, early 1990's, we did introduce a number of new cost initiatives to help reduce the total cost of the Pharmacare Program itself and better manage the program. It was not just cost-reduction, it was management of the program itself. This kept the cost within reason up to 1994-95 period, but at that time we saw that the cost of the program would start escalating again. Certainly
at that time, a new approach had to be taken. Hence, the introduction of the new Pharmacare Program. What we are trying to do with this, in conjunction with the seniors, is to try to maintain the cost of the program itself within affordable limits.
The new seniors' program was introduced with a number of guiding principles. First of all, the program would remain universal, that is, all seniors would have an opportunity to join the program. There was discussion during the summer months when the program was introduced as to whether the program should be mandatory or a voluntary participation. In the end, it was introduced as a voluntary program. If indeed you did have drug coverage whether through a private plan or otherwise and you wished not to participate in the seniors' program, you did have that choice. Now, the program was designed so that it would remain a fair program, both for seniors and for government that contributes the significant portion of the costs of that program. The program had to be sustainable; that is, over the next number of years, the program would not see any major changes but would be able to continue to provide a benefit to seniors and to guard against problems that may occur because of the high costs of drugs to individuals. Finally, the program had to be responsible. In that light, the Seniors' Pharmacare Board was developed to have a significant input by seniors whom the program was designed for.
The highlights of the program itself. Certainly the program with the board of directors, primarily made up of seniors, would have greater control over their drug plan. It returns decision-making to those it seeks to serve which is the seniors' group. Seniors did have a major voice in the new program, both the design of it and the fine-tuning of it as well as new initiatives that may come forward in the future. It certainly provides a long-term stability in terms of the sustainability of the program itself. Finally, it does help support health care reform initiatives, certainly, putting the choices as to coverage, costs and so forth back to the seniors themselves.
The parameters of the program, a $215 annual Pharmacare premium for all seniors. Every senior who joins the program must contribute the $215. As well, there is a 20 per cent co-pay, up to a maximum of $200 per year for all seniors. Prior to the new program being introduced there were variable maximum co-pay limits of $150 to $400 depending on whether you received GIS or not. This was stabilized to $200 per year for all seniors. In addition, the province did provide a credit of up to $300 for eligible lower-income seniors. For those who are financially disadvantaged, there is a $300 credit that could be accessed that could pay for both the premium amount of $215 plus a cash rebate for the maximum rebate.
Seniors and government contributions were put into the seniors' trust fund. From the trust fund, of course, the cost of the Pharmacare Program was paid and this was paid to retail pharmacies and other provider groups throughout the province. The Seniors' Pharmacare Board of Directors was established and there was a cost-sharing arrangement established between government and seniors. The program eliminates uncertainty and particularly the burden of excessive drug costs for those who require high cost drugs or high volumes of
drugs. For seniors not currently using the program, it is an insurance for the future when they may need drugs.
The board of directors is made up primarily of seniors; the chair is a senior, Mr. Dean Salsman; there are seven seniors on the program representing a variety of groups. There are two physicians who represent the Medical Society and also the College of Physicians and Surgeons as well as two pharmacists on the board, again representing the professional group as well as the Pharmacy Association itself. There are three non-voting civil servants who provide assistance to the board. The three civil servants come from the Department of Health, the Department of Finance and the Department of Community Services. The total on the board is 15 people.
The responsibility of the board is to monitor the status of the seniors trust fund to ensure in the long term that there are sufficient funds to pay for the benefits established under the program. It does establish annual premiums and co-pay rates. It does provide an annual accounting of the fund itself. It provides the Minister of Health with recommendations on major Pharmacare policy changes and any new initiatives. It should be noted that the first annual report of the board was released just prior to Christmas.
The Pharmacare reform initiatives are ongoing. The point of the Pharmacare reform in conjunction with other reform initiatives is to provide long-term solutions to some very complicated problems related to the use of drugs and the overall financing of the program itself. Reform initiatives will focus on education to ensure appropriate use of medications. I think it is fair to say that in conjunction with the formulary that the appropriate use of medications is probably the single most important area to keep health care costs under control and to provide a better quality of life for those using drugs appropriately.
Other reform initiatives are critical to the health of Nova Scotia's seniors and the Pharmacare Program itself. Reform initiatives must and will continue because the society often views drugs as a way to good health. This is not necessarily the case in all situations but I think with education both by and for seniors and also prescribers of drugs and the dispensing of drugs by pharmacies it will go a long way to leastwise having an informed approach to the appropriate use of drugs.
Another reform initiative that is ongoing is a project on the prudent use of medications, and this is in conjunction with Dalhousie, the Medical Society and the Pharmacy Association in developing better tools and approaches to the use of medications. There have been educational videos for seniors that will continue over the next while to again enhance the educational component of drug utilization.
Treatment guidelines have been developed in conjunction with physicians for individual physician's use. With the high number of drugs and the complication of disease, there has to be, certainly, some treatment guidelines for physicians in order to, I guess, remain aware of the current and appropriate use of drugs.
Academic detailing, a pilot project, has been initiated and this is more awareness education for individual physicians and pockets of physicians throughout the province. There have been presentations to pharmacists and seniors, again, from an educational awareness perspective that have, I think, helped increased the awareness of appropriate drug utilization. There is an education committee established by the board that is actively pursuing a number of initiatives to again increase awareness for both seniors and professionals.
There is the ongoing evaluation of drugs, geared towards the outcome. What this involves is a rather thorough review of all drugs as the new ones come onstream or the continual process of evaluating existing drugs to determine the overall cost-effectiveness of these drugs. We have a 90 day trial prescription program in place and this is designed more for the long-term maintenance drugs that we are suggesting should be prescribed in 90 day lots to avoid additional dispensing fee costs.
There is a continual review of the benefit list itself. You have recently seen in the newspapers and on television, media contributions to the appropriate use of antibiotics. This has been an ongoing project of the Pharmacare Program itself, evaluating and making suggestions in terms of guidelines for physicians in prescribing antibiotics appropriately.
There are a number of other groups of drugs that are being reviewed and to I guess monitor and review the benefit list as a result of these studies and I won't go into the details of that. The review of the formulary itself and the formulary is, I guess, the benefit list as well as the appropriate prescribing activities related to those drugs that is available for both providers of the services in terms of physicians and pharmacists and for others to administer the program appropriately.
There are a number of initiatives that are ongoing, future initiatives, that the board is currently reviewing in order to bring the program in line with the fiscal capacity of the province and the Seniors' Pharmacare Board to pay for as well as to look at better ways to improve the program itself, primarily related to educational activities, the involvement of seniors and physicians in the appropriate use of drugs in Nova Scotia.
That ends the formal presentation that we have. We are certainly prepared to answer any questions that you may have related to either the past fiscal period, 1995-96, or what is going on, being planned for the current fiscal period. Thank you.
MR. CRAMM: Would you like us to proceed with the revenue/recovery presentation or would you like to have queries with respect to the . . .
MADAM CHAIRMAN: Well, I think the original plan was to proceed with both presentations and then get to questions and answers. So who is actually doing that presentation?
MR. CRAMM: Anna Stuart will do the presentation on revenues.
MS. ANNA STUART: I will just take you through a little bit about what comprises the revenue and recovery component of the Department of Health's budget, talk about this year, trends that we are seeing over the past couple of years and what we expect for next year.
The major components of the Department of Health's budget for revenue and recoveries are first in-patient revenues, these are revenues as a result of non-Nova Scotian, Canadian residents who use in-patient services in Nova Scotia and we expect to earn $29 million worth of this type of revenue in 1996-97. The second component is third party recoveries and these are recoveries of medical and physician costs for patients who have been involved in accidents and have received treatments in Nova Scotia hospitals. We expect to recover $8.2 million in this category in 1996-97.
With respect to in-patient revenues, it would be no surprise that the majority of non-Nova Scotians using Nova Scotia's acute care services are our neighbours in the Atlantic Provinces. The other category of note that I have separated here are high-cost procedures. I separated those because we bill them on a per procedure basis rather than a per diem or a daily rate basis which is how we bill all other non-Nova Scotia in-patient stays.
What we have seen over the past several years is a decline in the in-patient stay days. This is caused by two factors, one is the trend within health care to move from in-patient to out-patient service delivery; the other is a conscious effort on the part of the other Atlantic Provinces and all provinces in Canada, in fact, to try to get their patients back to their home provinces as quickly as possible. New Brunswick and P.E.I. have actually hired discharge coordinators who focus, as part of their effort, on just that, trying to get their patients back to New Brunswick and Prince Edward Island as quickly as possible because it is obviously cheaper to deliver service in the home province than it is in another province.
Naturally, as in-patient stay days go down and as we bill based on in-patient stay days, the revenue has also experienced a decline over the past several years.
With respect to high-cost procedures, there has been a national study that is, first, focused on high cost procedures. The focus there was to look at standardizing rates for high cost procedures across all provinces in Canada where high cost procedures are covered under the reciprocal billing agreement.
As a result of the study, there were two recommendations, one of which were national high-cost procedure rates. As you will see in most categories, Nova Scotia rates were higher than the national study recommended. As a result, we have had to lower our procedures rates.
The second recommendation was that we no longer bill for patient stay days prior to the procedure. Nova Scotia had been billing for stay days prior to the procedure. In the case of, for example, kidney transplants, patients would stay anywhere from between 1 and 86 days before the procedure was performed. The national study recommended that when a patient comes in for a high-cost procedure we bill only for the procedure.
With respect to the impact of these changes on revenue, the rate reduction translates into a $1.2 million reduction in revenue for the Province of Nova Scotia and year-to-date, because we are no longer allowed to bill for those pre-procedure stay days, we have lost $130,000 worth of revenue. I anticipate that to come up around $175,000 by the end of the year.
With respect to third party recoveries, the largest component of that category is the motor vehicle insurance levy that is applied to insurance companies based on the number of earned vehicles that they have registered with the superintendent of insurance. In 1996-97, we were charging $14.39 per vehicle on this levy.
The other much significantly smaller component of this are recoveries for non-motor vehicle accidents for hospital stay costs and medical or physician payment costs. That would be slips and falls, that sort of thing, where compensation is recovered through insurance companies or through legal action.The province has been attempting to maximize its recoveries under this category. Some of the things that we have done are to change our internal processes to focus on the claims or the incidents that are most likely to result in recoveries on behalf of the province.
It used to be the case that every time there was an accident, a file was opened and that was subsequently closed when it was found that the patient was not going to seek alternative compensation. Now the province and the administrative process focuses on those claims where a patient is going to attempt to seek some sort of compensation. What we are doing here is just minimizing administrative costs.
We are doing a study of actual cost versus levy revenue to make sure that the levy that we have applied to insurance companies is appropriate to cover the actual costs we are incurring in the health care system with respect to providing services to people who have been involved in motor vehicle accidents.
The other thing that we are doing is examining ways to increase reporting of the non-motor vehicle accident incidents. Some other provinces, New Brunswick, notably, have been fairly aggressive in this category, where they have asked legal firms to report when they have been approached to handle a claim on behalf of a person who is attempting to either do legal action or get, through an insurance company, recoveries that related to an in-patient stay.
In the 1995 Auditor General's Report, there was some discussion of the in-patient billing process under the reciprocal billing agreement. I will just walk you through that process and then talk a little bit about what we have done since that study to improve the in-patient billing process.
All of what I am going to talk about, the process, itself, is dictated under the reciprocal billing agreement which all Canadian Provinces are party to. That dictates how we can bill other provinces for services that we provide. Hospitals submit to the Department of Health discharge records for non-resident in-patients within 30 days. That means that if someone got a service on January 1st, we would not receive the information until the 30th of the following month, at the latest.
The data accuracy and completeness is verified within the Department of Health primarily to ensure that we are not going to send other provinces invoices that are going to get rejected right off the bat. In order to streamline the process, we validate as much information as we can to make sure that the invoices we send are as complete as possible. The invoices are sent to other provinces by the 25th of the month. This is dictated under the program that we are only allowed to bill once a month. The provinces must remit payment within 30 days and, again, this is indicated within the reciprocal billing arrangement. The things to note in this are that New Brunswick and P.E.I. provide to Nova Scotia an advance of approximately one month's worth of billing revenue so that the province, at any point in time, is out as little cash as possible in the billing process cycle.
In the 1995 Auditor General's Report, it was indicated that the turnaround time between date of delivery of service and date of payment was 113 days. We have recently completed an internal audit review within the Department of Health that has indicated that we are now down to 98 days. That translates into about a $165,000 saving for the Department of Health.
Some of the things that we have done in order to improve this reciprocal billing process within the Department of Health since the audit report are that we verified the completeness of reporting information from hospitals to the Department of Health. There was some concern at the time of the audit that hospitals were not reporting to the Department of Health all the information and, therefore, we may have a gap in our revenue. We have checked the submitted information against the CIHI information which records all in-patient information, and we are essentially 100 per cent complete in the reporting from hospitals to Health.
We have drafted a policy directive to major hospitals to have them submit their information weekly rather than monthly. While we can only bill other provinces monthly under the agreement, if we can streamline somehow the process within the Department of Health by doing it more regularly than a big chunk at the end of the month, we are hoping to again decrease that turnaround time for payment.
We also have a proposal that is pending financial approval for enhanced software that will allow us to streamline the billing process. In this case, we are looking at things like electronic billing that would get the information to other provinces more quickly, and electronic payment that would get the payment and the information around the payment back to the province more quickly.
For the future of revenue and recoveries within the Province of Nova Scotia, the national study continues, the one that looked at high cost procedures and set national rates is continuing and they are looking at per diem rates across the country, emergency and out-patient day surgery, lithotripsy, radio therapy, all sorts of services that are provided interprovincially. If the high-cost procedure case extends to other cases and the recommendations from the national committee are consistent in that manner, the Province of Nova Scotia stands to lose revenue as a result of that.
In addition, if we continue to have a decline in patient stay days, we will experience a reduction in revenue and that we would anticipate to continue to happen as more and more in-patient services are provided on an out-patient basis, and as other provinces continue to be aggressive without getting their patients back home as quickly as possible.
We are looking, however, at opportunities to improve the agreement and some of the restrictive things that I have talked about around billing only once a month, getting paid within 30 days, we are hoping to improve, but that has to be a discussion that happens across the country as the reciprocal billing agreement applies across Canada.
Thank you. That is all I had to say and I will happily answer questions.
MADAM CHAIRMAN: Thank you. This was a very informative presentation that has just been flashed up on the screen and talked about. I do not know if there are any other points that the deputy minister would want to insert at this point before I open it up for questioning or not?
MR. CRAMM: No. We are ready.
MADAM CHAIRMAN: We have approximately one hour and 15 minutes remaining for the nine members of the committee to ask questions. I understand Mr. Moody is going to be joining us for Alfred MacLeod. Was that what was anticipated?
MR. GEORGE ARCHIBALD: I expect he is on his way.
MADAM CHAIRMAN: So, I will try to reserve some time. It looks like we are probably going to have approximately eight minutes each for questions. If you would just be mindful of the clock for the members. Who would like to lead off?
MR. ALAN MITCHELL: I enjoyed the presentation. Just a couple of questions. I guess looking at the comparison with other provinces, I am somewhat struck by the fact that our plan looks to be a very attractive plan. If I could just look at Saskatchewan just to make sure I understand this because there seems to be quite a discrepancy, my understanding there for non-GIS, those seniors who have income over the GIS level, that they have a premium they have to pay of $1,700, and that is compared to our premium, I believe, of $250? Am I understanding that right? Is that the way that works? And I am just wondering, surely they do not pay that, write a cheque for $1,700 at the first of each year, do they?
MADAM CHAIRMAN: Eleanor, are you going to answer that?
MS. ELEANOR HUBBARD: Yes, I can answer that. The $400 and $1,700 for Saskatchewan is not a premium but a deductible. It is split up for every six months. For example, with the non-GIS for the $1,700, they have to pay the first $850 of their drug costs every six months and then it rolls back to zero and they start over again from zero. As far as no maximum, because of the limitations of the slides, there are maximums based on income, about 3 per cent of your annual income, but if your income is over $50,000 there is no annual maximum.
MR. MITCHELL: How does that tie in with their 35 per cent co-pay? You have got me a little confused.
MS. ELEANOR HUBBARD: After they pay the deductible when their plan kicks in, then they pay 35 per cent of the total prescription cost and that is where, in some cases, there will be a maximum based on income. In other cases, there will no annual maximum at all.
MR. MITCHELL: That is just compared to our 20 per cent which has a cap of $200. So, when the senior has reached the $200 that he has paid or the 20 per cent then it stops?
MS. ELEANOR HUBBARD: Correct.
MR. MITCHELL: Another area, if I could just ask a few questions on. My father is a federal cival servant who has retired and I had the greatest difficulty trying to explain to him our program as to how it relates to his particular drug program. He was for a long time of the opinion that that program paid for his drugs and he was being charged twice, that he had to pay for two programs for the same coverage. I wonder if you just might walk me through that. I find there is still some confusion where citizens have a private drug plan or a drug plan under the federal Civil Service and feel that they are being over-charged or paying twice for the same service.
MS. ELEANOR HUBBARD: The issue with the federal retired superannuates, I think is what they are called, is an ongoing issue that started well before this plan or the change to the funding of this plan. However, it came to light because of the premium that was introduced with this new plan. The federal retired person's drug plan has always been a supplementary drug plan and many seniors did not realize that. So, Pharmacare was always the primary insurer. We paid all the bills for that group and it was only for things that we did not pay for that the federal private plan paid for, for those people over 65 years old.
What has happened with the new plan is, that group was the group that was very vocal when the plan was introduced and made mandatory, and in response the government changed the plan to make it voluntary to allow those people to access their private insurance. Some private insurers did let the seniors access their drug plan. However, the federal plan did not and maintained that because there was an existing plan in the province that they would still remain the supplementary insurer, or secondary insurer, rather than the primary insurer.
We continue to have ongoing discussions with that plan to see if we can straighten out, for the seniors, their coverage because, indeed, as part of their retirement package they are paying a monthly premium for their private plan, and their private plan is also requiring them to join our plan and pay the $215 if they wish to be covered.
MR. MITCHELL: So, in situations where a federal public servant who has retired, elected not to go into our Pharmacare Program and submitted the bills to their federal plan, they have been denied I take it, is that what the situation has been?
MS. ELEANOR HUBBARD: The federal plan continues to pick up 80 per cent of the co-pay that they pay to the Seniors' Pharmacare Plan. So if someone paid $200, met their maximum in co-pay under the seniors' plan, the federal private plan would pick up 80 per cent of those costs. However, if a senior did not join the Pharmacare plan and thought that their federal private plan would pay, when they submit the total amount of their receipts, which if
it was a $200 maximum, let's say it was $1,000 worth of receipts, the federal plan would only pick up the same portion of the co-pay, so they would pick up 80 per cent of the $200 not 80 per cent of the $1,000. That issue has come up in a number of cases and the individual senior did not know that that was the case, they had assumed that their private plan would pay for them if they didn't join Pharmacare and we have made their coverage retroactive to cover those bills, so that they don't get caught with them. But the federal plan has resisted paying or changing their rules to date.
MR. MITCHELL: In a province where they have a much higher co-pay, for example, Saskatchewan I suppose, in that case the plan for the federal public servants would have to pay a larger portion of the cost of the seniors' drugs than they would here in Nova Scotia for that particular group of seniors?
MS. ELEANOR HUBBARD: That's correct. The other issue that we have been discussing with the federal private plan is the inequity from province to province. If there is a province, such as New Brunswick or Newfoundland that doesn't provide coverage for this group of seniors then the federal private plan becomes the primary insurer and they will pick up all of their drug costs. So if there is not a provincial drug program for which these people are eligible, the federal private insurance will cover them. So one of the concerns of the seniors in this group is the inequity from province to province. We are meeting with that group to try to get this straightened out.
MR. MITCHELL: So is there some optimism that maybe something can be resolved there so all provinces, in particular, are on a bit of a level playing field as far as their obligation to cover costs under Pharmacare? It would seem that Nova Scotia is paying more than some other provinces because we have a better plan for our people.
MS. ELEANOR HUBBARD: That's correct. We are fairly optimistic. Perhaps Mr. Cramm can better comment, but when we met with this group they were quite agreeable that yes, there were inequities from province to province and they weren't quite sure of how to deal with them and that we would look for ways to deal with them.
MADAM CHAIRMAN: I am afraid your first round of question time is over. If you wouldn't mind holding your fire.
MR. ROBERT CARRUTHERS: Madam Chairman, this issue has concerned me since the inception of our plan that because our plan is reasonable and somewhat generous compared to other provinces, these federal government plans, there is an inequity across the system. The real issue here is that, as I understand it, the federal plan and others, under those plans they say, if there is a provincial plan in existence you must participate. If there is not a provincial plan in existence then we will cover you completely. If there is a provincial plan and it is different from another, we will just supplement the plan that is in existence. Somewhat negatively, I suppose, but I wonder, would it not benefit the seniors, for instance, who are on
these federal plans - and I just throw this out for your comment - what would happen if our plan said, if you have a federal plan, you can't join our system? Then the feds would have to pay the whole shot, wouldn't they?
MS. ELEANOR HUBBARD: Yes, they would.
MR. CARRUTHERS: That might be something to consider when we negotiate with them. I am also concerned about one of the points made about recovery, especially in a non-motor vehicle incident. It may be easy to track a person who goes into the hospital, they had been in a motor vehicle accident, the light goes on, there is something on the form that says motor vehicle accident, then there is some tracking and maybe your legal people can look into it. But did I hear you say that some provinces go around and ask legal firms if they represent anybody that is suing somebody for a slip and fall?
MS. ANNA STUART: In New Brunswick, as I understand it, the lawyers will contact the Department of Health when there is the potential that the compensation that could be obtained through legal action could actually accrue to the Department of Health, could actually be a recovery of in-patient costs.
MR. CARRUTHERS: Do you mean that a lawyer that is representing a person picks up the telephone and calls the hospital and says, by the way, you can sue too?
MS. ANNA STUART: That would be my understanding, yes.
MR. CARRUTHERS: Doesn't say much for confidentiality.
MS. ANNA STUART: Naturally, they would need the patient's cooperation in that.
MR. CARRUTHERS: Yes. So, if the patient doesn't cooperate and say let's get some money for the hospital, because many times these settlements, the bottom line is all that matters, you can have nice little categories, $5,000 for this, $5,000 for this and $5,000 for this but the bottom line is how much money you get and how much money are they prepared to pay and whether a piece of it goes into the client's pocket or whether it goes into the hospital's pocket, ask the client and he will tend to want it in his pocket as opposed to the hospital's, I would think.
I find it kind of difficult to understand how we can. It is a really difficult system. I don't know how you can actually, by looking at a patient or interviewing the patient, determine whether you have a right to bring action. Does the hospital or the health system bring action directly or do they try to piggy-back on to the action that is brought by the injured party?
MS. ANNA STUART: I am afraid I would have to be speaking to the legislation in New Brunswick and I certainly am not versed in that.
MR. CARRUTHERS: What about here?
MS. ANNA STUART: Here we are in the preliminary stages of examining some of the alternatives. There is certainly nothing in legislation that would allow us to do this at this point.
MR. CARRUTHERS: So when a person slips and falls, realistically, we don't get much money out of that.
MS. ANNA STUART: We are anticipating out of those sorts of claims this year to get about $700,000 worth of revenue.
MR. CARRUTHERS: Out of non-motor vehicle injuries?
MS. ANNA STUART: Right.
MR. CARRUTHERS: $700,000? That's pretty good. More power to you. It is important. That's a lot of money and I think injuries, myself, in car accidents are a very significant portion of (Interruption) My friend makes comments on lawyers and I appreciate that but it seems to me that you commented at one point that you are reviewing the levy that is being rated on insurance with regard to insurance companies to see if it reflects reasonably the cost to our hospital system. I think that is a good idea. The indications that I have seen is that it is quite a drain. Motor vehicle accidents can be very costly injuries that last in hospitalization for quite a long time. Do you now think that the revenues that we are levying and getting from our levy are reflective of these costs or do you anticipate there may be a shortfall there?
MS. ANNA STUART: We would have to wait until the study is actually done. In four weeks with the Department of Health I would have absolutely no idea if it is close or not.
MR. CARRUTHERS: Okay, I guess that's the best I can hope for there. But I think it is a good idea and I commend you because I think that there probably is a shortfall there.
All in all when we talk about the recoveries, how do you think we compare across the board with other provinces in how quickly we recover fees for non-resident stays in our system? How do we compare with other provinces on our recovery times?
MS. ANNA STUART: I would say that we compare favourably but what we need to keep in mind is that Nova Scotia is the provider of many regional services within Atlantic Canada. So, for example, we collect something like $29 million worth of in-patient non-
resident revenue and pay out only $8 million. So, obviously, the balance that more people are coming to Nova Scotia than are going out of Nova Scotia for treatment and part of our way of compensating for that is to get from our major users of Nova Scotia services advances on their payment. So the one month's worth of advance that we get from New Brunswick and P.E.I. is some sort of recognition of the fact that, on balance, more of their people are coming to Nova Scotia than Nova Scotians going to New Brunswick or P.E.I.
MR. CARRUTHERS: I take it that is basically because we have a pretty good health system to come to. Would you agree with that?
MS. ANNA STUART: We have a bigger health system?
MR. CARRUTHERS: A better health system.
MS. ANNA STUART: A good one.
MADAM CHAIRMAN: John Holm.
MR. JOHN HOLM: I will try to be short with my questions. First of all, Bill C-91, the drug patent legislation, how much is that costing Nova Scotia in increased Pharmacare costs per year?
MADAM CHAIRMAN: Eleanor, are you going to try that one?
MS. ELEANOR HUBBARD: Well, as best as I can, we are currently reviewing the impact of Bill C-91. We have obtained lists of generic products that did not come to market or delays in marketing those generic products and trying to assess the impact. We can only do it on the Seniors' Pharmacare and Community Services' Family Benefits Pharmacare Program but we don't have those numbers yet.
MR. HOLM: Do you have an approximation? Is it a significant amount? Are we talking millions of dollars per year?
MS. ELEANOR HUBBARD: I really don't know yet, I haven't seen the numbers. We just got the list from the federal government about two weeks ago and we are doing that analysis.
MR. HOLM: When do you anticipate that that review will be complete?
MS. ELEANOR HUBBARD: We are hoping within the next month or so, since the Parliamentary review is supposed to start this month.
MR. HOLM: Does the department plan to make representation to that Parliamentary committee?
MR. CRAMM: Yes.
MR. HOLM: Okay, and will the department make available the analysis that is being done in terms of the increased cost to this province of that program?
MR. CRAMM: When we have it, we will make it available, yes.
MR. HOLM: Because I note in the cost projections, certainly at the time when the drug patent legislation was introduced, there was a sharp increase in curve in the projected costs and the measures had to be taken to try to find other ways to reduce it.
Many drugs have been delisted as well by the Pharmacare Program, services that used to be offered. I am wondering if you could provide a listing and also indicate the projected cost savings from the listing of those various drugs. How many dollars is it anticipated will be saved as a result of that delisting, of the various delistings, I should say?
MS. ELEANOR HUBBARD: Since what time?
MR. HOLM: Well, let's take it on a year to year basis, over the last three years. When the cost control initiatives, I am assuming that one of those cost control initiatives is the delisting of a number of medications and so on.
MS. ELEANOR HUBBARD: We do, on an ongoing basis, as Derek mentioned earlier, review the benefit list, in particular when a manufacturer applies for a new drug to go on our benefit list and we do cost-effectiveness or cost benefit evaluation of that product. That product does not get on if it is going to cost more than an existing product that will do the same thing. However, if it is a product that costs less, it may bump some other products off the list but for the most part, even though you talk about individual products being delisted, there are usually alternatives left on the benefit list but it is usually done for savings and yes, we can provide that by category.
MR. HOLM: But there are also some that were delisted for which there is no replacement but simply the department is no longer funding certain kinds of medications and/or procedures.
MS. ELEANOR HUBBARD: For the most part in the Pharmacare Program, there hasn't been delistings where there hasn't been a replacement in the last three years.
MR. HOLM: I look forward to getting what I can on that.
One of the things, certainly the Pharmacare Board is supposed to be reporting annually to the government on co-pay and the amount of the premiums that Pharmacare members are - individuals, those under the program - are supposed to be paying. It is supposed to be recommending that the amount raised equals 50 per cent of the cost of operating the program. Now first, am I correct in that there has been an announcement that there will be no increase in co-pay or premiums for the upcoming year?
MR. CRAMM: That is correct.
MR. HOLM: Okay, secondly, it is my understanding that the co-pay and the premiums collected, and I am not advocating an increase, let's get that straight, but it is my understanding that the amounts that are being raised are actually approximately, or were about $15 million shy of meeting the 50/50 target. In other words, that the province had to put in about $15 million more than originally budgeted. So I guess my question is, did the board not do as they were supposed to, in other words recommend increases, or did the department, did the minister decide to reject any increases, and if neither of those scenarios are correct, how do you anticipate then, that you will, this year, with the changing demographics and more people coming on to the system, that you will get the cost down to the 50/50 rate-sharing that is spelled out under the regulations.
MR. DINHAM: Probably we can reflect back to the 1995-96 fiscal period that we had the actual cost clearly defined. In that year, there were, certainly, start-up costs related to the program and transition problems related to it. In that year, there was $9.6 additional put into the program by government above and beyond its 50 per cent to accommodate the transition period. This, in part, was recognized up front but there were no budget allocations made for it, in a sense that we didn't know the specific amounts that would be required because obviously there were a number of problems, part of which were unforeseen, but evolved over a period of time. If I just can go through that very quickly to let you know why the additional funds were put into the program by government.
First of all, when the program was introduced, we aligned the co-pay period with the fiscal period that we were looking at. Prior to 1995-96, the co-pay period, now this is the period that you build up co-pay dollars to get to your maximum amount, was based on a calendar year, it ran from January to December. In the first year of the program, this was realigned to coincide with the fiscal period year. Hence, for that period we had a 15 month co-pay period as opposed to the normal 12, so additional dollars were required for that realignment. There was an adjustment for the revised co-pay amounts prior to the program being introduced. We had a co-pay maximum ranging from $150 for GIS recipients to $400 for non-GIS. With the delays in finally implementing the program, we did have to make rebates to seniors who had, at that time, exceeded their $200 limit.
There were delays implementing the program, much of which were related to the administrative problems but more so to discussions related to whether the program should be mandatory or optional. Keep in mind the point that was made earlier that we do have approximately 6,000 to 7,000 new seniors coming into the program each year. We have approximately 4,000 to 5,000 seniors leaving the program, whether they are opting out through moving or through death. In any event, we have 2,000 who essentially, for three-quarters of the year, received the benefits of the program but didn't pay the $215. So that cost us approximately $80,000 a month for nine months of last year, 1995-96.
Stockpiling of drugs, with the uncertainty, out there some seniors did get high day supply of their drugs to I guess ward off any uncertainties. Of course there were administrative costs that were incurred, basically for the first year in the sense that we gave every senior every opportunity to participate in the plan. Normally, what we did have was one mail-out plus the senior would respond. In the first year of the program we had up to three exchanges of information with seniors to make sure that we accounted for everybody and gave them every opportunity to join the program. For the start-up year, 1995-96, we anticipated that the additional cost of the program amounted to $9.6 million.
The projections in the current fiscal period, as you have seen from the slide, look as if we are going to spend approximately $83 million. We have noticed a trend in the program over the first nine months in the fiscal period that the projected cost of the program is coming down. This is because of a number of initiatives, reform initiatives, education awareness and so forth, and better controls on utilization. Although we expect the program to come in at $83 million, this may be the upper amount, it could be lower than that.
For the board in its decision-making process to consider whether there should be an increase in premiums or co-pay amounts is going to be rather significant. When they did have to make that decision for invoices to be sent out and to, I guess, make any adjustments required in the billing process, that decision had to be made October-November of this past year. The board decided with the trends that were occurring that for the second year of the program that the premium amounts and the co-pay arrangement would not be changed. It does have the ability to incur deficits and move it to the next year to pay it back. For the uncertainties that were in the program in terms of the overall cost of the program, participation rates and so forth, it decided that in the second year of the program not to up the co-pay or premium amounts and wait until the following year. Again with the uncertainty and I think the stability factors related to the program, it made that decision knowing that there could be some deficits that may have to be carried forward but this would require then a decision for the following year to recoup those deficits if, indeed, there are deficits going into next year.
MR. ARCHIBALD: I am wondering if we could just talk for a moment, the premium of $215, how much money does that bring in?
MR. DINHAM: The premiums paid directly by seniors and this is the cash payment that individual seniors make directly to the program for 1995-96 was $9 million, a little in excess of $9 million. As well we get premium amounts from the fund that has been set up for low-income seniors and from a credit fund we also received $13.163 million last year. So the total premiums received from both sources is approximately $22 million to $22.5 million.
MR. ARCHIBALD: So you add that together with the 10/5 co-pay?
MR. DINHAM: The co-pay was $9.1 million last year. These are figures in the annual report.
MR. ARCHIBALD: I know we talked a moment ago with one of the other members about the $215. Part of the difficulty when this change was introduced was the way it was done and we couldn't really get any idea of why $215 was the particular number that was chosen. I don't think we are any clearer now as to understanding why $215 was the number that was chosen by the government.
MR. DINHAM: When the program was developed in the spring of 1995, we did have to make a number of projections, both by the Department of Health and the Department of Finance to, I guess, develop a program that would be cost-shared equitably by the province and a combination of premiums and co-pay amounts. At that time a number of initiatives were underway in terms of Pharmacare reform and so forth that had to be factored in as well. Certainly, there was a lot of soft information out there in terms of the impact of changing the co-pay period to the 15 month period, a reduction in the co-pay maximums that were allowable and so forth. Health in conjunction with the Department of Finance, attempted to develop a scenario where there would be a cost-sharing of 50 per cent by each group.
Knowing that the first year, because it was a transition year and there was a number of adjustments, to come up and fine tune a figure that is going to I guess come up with a 50/50 cost-sharing was difficult at best. As well, when we deal with the co-pay revenues, it depends on the consumption levels of individuals in terms of what drugs to get, what frequency and so forth. So, the first year of the program we had to make a good estimate, knowing full well, of course, that the board had the authority to recommend changes in the co-pay or premium amounts to ensure that we do have a 50/50 cost-sharing arrangement.
MR. ARCHIBALD: At the present time there is a $10 million payment isn't there that the province is putting into this contribution? Well, it is seniors' money and if we add it all up it comes to just over $30 million and then there is a $10 million fee that the province, I think, has agreed to put into this.
MR. DINHAM: That's correct, for the 1995-96 fiscal period.
MR. ARCHIBALD: Now, if the province decides this year not to put that $10 million into the seniors' fund, what would the result of that be to the premiums that the seniors are paying?
MR. DINHAM: This, in part, will relate to I guess our cost projections for the current fiscal period and I guess working through the math in terms of contribution levels. The revenue that would be generated through seniors' contributions include of course the premium amount and the co-pay amount as well as miscellaneous income that it could earn from interest generated by funds in the trust account itself. We anticipate that in 1996-97, the current fiscal period, that there will be a deficit built up. As I explained earlier, we had to be careful in making projections as to the total costs of the program and the seniors' contribution level in terms of co-pay and premiums and I guess making any abrupt changes without knowing the specific costs of the program itself. As I said earlier, we anticipate that the program costs may come in at $83 million. However, there is a possibility that that could be less or it could be more depending on the utilization pattern over the last three months.
I think where we do have an opportunity and we, I guess, speaking from a board's perspective, have an opportunity to bring forward deficits to be addressed in the upcoming fiscal period. We will have more information in which to make decisions related to the co-pay contributions and the premiums levels.
MR. ARCHIBALD: So the decision of the $10 million to the trust fund, that is clearly one for the government and the Cabinet to decide and it could be $10 million this year or $12 million or it could be $5 million.
MR. DINHAM: Many of the costs related to the $9.6 million additional funds in 1995-96 were clearly related to the transition period and will not be reoccurring. As I have said, the co-pay rates and the premium levels before making changes, the boards wanted to be clear whether it is going to be necessary, number one, and what revenues it may generate. So it decided to defer any increases in the co-pay or premium levels until the 1998-99 fiscal period but would not occur in the 1997-98 fiscal period.
MR. ARCHIBALD: The other topic you covered a moment ago is delisting. But one of the other things that is of interest, too, to seniors is this $85 rebate. Is the department starting to get a handle on who should be getting an $85 rebate and who shouldn't be getting it?
MR. DINHAM: The rebate portion of the program is administered by the Department of Finance. It is for convenience and clarity rolled into the Pharmacare Program when we send out invoices to seniors.
The rationale for the rebate portion of the program relates to a number of programs that are administered by the department. The traditional rebate programs for rental rebates, tax rebates and so forth, is a part of the overall determination of what the total amount would be. The cash portion of it, for those who do receive it, is in lieu of other reductions in other rebate programs that have occurred over the last number of years. This is our understanding of that rationale.
MR. ARCHIBALD: I think you perhaps agree that you must have had many calls from seniors who are concerned about it, because one year they get the $85 and the next year they say, we are sorry we sent it to you; now you not only have to pay us back the $85, we want the $215 as well. It has created hardship for people in relatively modest income levels.
MADAM CHAIRMAN: I am not sure that that is a question more so than a statement but, Eleanor, were you responding to that?
MS. ELEANOR HUBBARD: I can. In the first year, that low income credit fund, through the Department of Finance, had set income levels for eligibility of the rebate where they could get either the full $300 credit or a declining amount down to $1.00. There were some problems in the first year in assessing income. In some cases, the seniors were not familiar with the system and in some cases reported the wrong income. In a small number of cases, they were reassessed because their income levels were above the eligible income level set for that credit.
MR. GERALD FOGARTY: Madam Chairman, I would like have either Eleanor or perhaps Ed Cramm respond to this. I think it is very interesting that the program here in Nova Scotia remains one of the most generous in Canada. Now I understand the numbers on the graph on the next page and I suppose they very clearly show why the program is the most generous in Canada. What resulted in this program that is so beneficial, was there a difference in the basic philosophical approach to the setting up of the program in the Nova Scotia vis-à-vis the drug programs that are in effect in the other provinces? Eleanor, could you respond to that?
MS. ELEANOR HUBBARD: I can try. It is my understanding, and from the discussions certainly prior to implementation of this new program that it was felt that all seniors need to be protected from high drug costs. Therefore, there was an insistence that the plan remain universal. With the high costs of new drugs coming on the market, it very simply can be catastrophic for a senior or any individual if they have an illness that requires drug medication. So, not only did they want to keep it universal but also they wanted to keep a cap on the financial exposure of any senior.
In some of the other provinces, they have de-insured people based on income where they felt that those people could afford to pay for their own drugs. Since drug coverage is a provincial responsibility and is not within the Canada Health Act, every province can make their own decisions about who they cover and what level of coverage is available to them.
MR. FOGARTY: Well, can the committee conclude from that then that the other provinces and the plans that are in effect simply do not go far enough in addressing the needs of seniors? Is that fair?
MS. ELEANOR HUBBARD: I would not make that assumption but the assumption that we deal with in this province is that sometimes paying for drugs is probably more cost-effective than putting them in the hospital for treatment. In some cases where individuals cannot get drugs, they may end up in the hospital. So, drugs may be a cost-effective way of treating individuals as long as the drug treatment is appropriate. Certainly we have a responsibility within the Pharmacare Program to educate seniors as to what is appropriate and how to use their medications wisely so that they get the best treatment they can from this plan.
MR. FOGARTY: I think what I am trying to determine, Eleanor, is, is there agreement with this position, or statement, from the other provinces that it is more generous than other provinces in Canada offer? Do you consult with the other provinces and so on?
MS. ELEANOR HUBBARD: Yes, certainly some provinces wonder why we continue to leave it universal. As recently as a couple of weeks ago, some seniors groups in this province had a meeting here with a number of government departments and there were briefs on different programs. The brief on the Pharmacare Program was a challenge from a number of seniors groups to seniors groups across Canada, if they can find a better drug program they would like to see it.
MR. FOGARTY: Could I ask also - I just went over a couple of pages here - with regard to the make-up of the board of directors, I think Derek said there were seven seniors on the board? Is that so, seven seniors?
MS. ELEANOR HUBBARD: There are actually eight because the chairman is a senior as well.
MR. FOGARTY: Well, is it their responsibility to bring forth the comments and perhaps complaints and observations from seniors in Nova Scotia? They would hear from seniors and represent them in that way?
MS. ELEANOR HUBBARD: On a regular basis, yes.
MR. FOGARTY: Can you give us an idea as to just what those seniors on the board, who represent all seniors in Nova Scotia, are saying, what we are hearing?
MS. ELEANOR HUBBARD: Well, basically, in general comments I guess that most people, even though there was the start-up year and the transition year and some confusion that surrounded that, that the program is working very well for them, and that even though it may not be the same as it was that it continues to serve their needs. Now, the board members certainly do bring concerns of individual seniors or seniors groups to the table as well, and those are issues that many times make up the agenda for that meeting and the next; to deal with streamlining and making the program even better administratively so that it is not confusing for seniors, and as simple as possible.
MR. FOGARTY: So, if there is a perception, or some would hold the view that seniors in Nova Scotia have no way of being heard, then that is simply not so. There are seniors on the board who represent the concerns of all seniors in the province. Is that fair?
MS. ELEANOR HUBBARD: Certainly there are senior members on the board of directors who are very vocal.
MR. FOGARTY: Getting back to the $300 a year, and the $85 rebate, essentially isn't the province paying the premium for lower income Nova Scotians? Is that what that boils down to?
MS. ELEANOR HUBBARD: Yes, even though from the Pharmacare Program's point of view, all seniors are charged $215, those that are eligible for the credit have their premiums paid on their behalf by the low income credit fund provided by the province.
MR. FOGARTY: So, the concerns of very low-income Nova Scotians are being addressed by the program in general?
MS. ELEANOR HUBBARD: Any individual senior with income of $15,000 or less will receive the full $300 credit; for couples, $18,000 or less and both of those decline as their income increases to $18,000 or $24,000 respectively.
MR. FOGARTY: So the province is looking after that. Thank you.
MRS. LILA O'CONNOR: Thank you for coming today. I would like to follow up on what John Holm was talking about, the delisting of drugs and that the drugs were delisted because of the high cost. I may not have heard correctly and if you answered, I apologize. They were not taken off because of the high cost of the drugs. Were they not taken off because maybe they weren't used as often and you were bringing other new drugs on?
MS. ELEANOR HUBBARD: In some cases they were taken off because of the high cost of the product and that they were doing nothing more than something that was lower cost on the benefit list. In many cases, they weren't taken off or they weren't delisted but we set a level of payment - or a maximum allowable cost - is what we call it, for those products so that individuals or seniors would have access to those products but we would not pay the full cost if they showed no additional benefit over an existing product that cost less.
MRS. O'CONNOR: That was the next part of my question. If a person is on one of those drugs and it becomes delisted but they need that particular drug and there is no alternate for it, you would allow that person to stay on that drug?
MS. ELEANOR HUBBARD: If there is a maximum allowable cost set, we will pay up to the price level that is set. They can pay the difference, if they wish. If there is a medical necessity for them to have that product, they can obtain that product and we will pay for the full cost, less their 20 per cent, but they have to have pre-approval, their doctor has to write for a pre-approval for that product. So they can't get the full payment because of preference, I like this brand better. If there is shown medical necessity, they can get it free of charge.
MRS. O'CONNOR: On the co-pay for the seniors, do you have any idea how many of the seniors are really using the full co-pay or how many never meet the maximum of co-pay? You have over here 115,300 seniors. It is not broken down there into how many are paying the $215 and reach the $200 co-pay but do you have an idea whether all seniors who are paying the $215, the majority of them are reaching the $200 co-pay or not?
MS. ELEANOR HUBBARD: For the $200 co-pay, the new level that was put in with the new program, we have not assessed how many have reached the total $200. It is something we will be looking at but we have not gotten those numbers yet.
MRS. O'CONNOR: On the out-of-province recovery, and I am glad to hear that you have gone from 113 days down to 95, on the high cost of the procedure rates and where someone comes in and tells you that we can't charge for the days that you are there before the procedure itself, that is a loss for the province and it is a significant loss. I don't assume that you raise the cost of the procedure to make up for the difference, but how can you argue that? I mean what is the argument we can use? Why should the province be paying for people coming from out of the province to come into the province to have procedures done and we cover the cost?
MS. ANNA STUART: Presumably, when the study was done, the study would have looked at what the actual costs are of doing those high-cost procedures, would have looked at averages of length of stay before procedure and that sort of thing and would have made the recommendation that the cost that was approved as a national standard for that high-cost procedure would reflect actual cost. So I guess the argument on behalf of the committee
would have been that the high-cost procedure rate that they approved would accommodate or compensate hospitals for that prior-to-procedure stay period.
MRS. O'CONNOR: I have one other question that has nothing to do with it. A couple of year ago, we made an announcement on telemedicine and I would like to know - it has been over a year - if you plan to proceed putting that in other areas of the community besides the ones that you did for the pilot project or just what is happening with telemedicine?
MR. CRAMM: On telemedicine, you are right, the pilot project was completed last December. The evaluation was done and for 1997-98 we are currently working on a new version of telemedicine in terms of where we take it from the pilot to expand it to a larger geographic area of the province. Our plan would be to look at the whole eastern region of the province with an expansion of telemedicine and at this point in time we are developing what would be the scope of that project, the cost of that project and attempting to incorporate it into our estimates for 1997-98.
MRS. O'CONNOR: But staying in the eastern region of the province?
MR. CRAMM: At this point in time, yes. We are looking at everything from the Strait east.
MRS. O'CONNOR: Okay, we will talk later. (Laughter) Thank you.
MR. KEITH COLWELL: I have a couple of questions on the Pharmacare Program. Part of the presentation was on Pharmacare reform and the education focus on behalf of the use of medications and how they are prescribed. Could you go into a little bit more detail on that? I think that is a very important part of what is happening because what I am hearing from many of my constituents is that, they get ill, oftentimes, from too many drugs.
MADAM CHAIRMAN: Eleanor, are you tackling that?
MS. ELEANOR HUBBARD: Certainly the reform initiatives, the education initiatives, are a very important part of the whole program. If the money in the program is not spent wisely, it will not benefit the program, nor will it benefit the seniors. We have taken this on as one of the primary goals of the Pharmacare Program to educate seniors, as well as pharmacists and physicians on not only the appropriateness of the medication in terms of clinical benefit, but the appropriateness in terms of cost. There is no need to pay extra money for something that is not going to benefit you. So we are trying to develop our education initiatives around those issues and it is certainly not a short term or a quick solution. It will be long term but we feel if we don't do it this way and have people educated on the best use of drugs, that we will always fight an uphill battle in this system with wastage and inappropriate use.
In particular, with the baby boomers fast approaching the age of eligibility for Pharmacare, we could see the cost of the program balloon if we don't tackle a number of these issues now. So hopefully we are positioning ourselves so that we get physicians, pharmacists and the beneficiaries used to using medications wisely and appropriately and at the best cost that we can.
To give you some details on the Pharmacare reform, just very quickly, the prudent use of medication project also includes the Seniors' Secretariat and is actually being led by that group and it is actually in Kings County, the pilot or the project. They are focusing on hard-to-reach seniors. One of the things we found out when we implemented this new program is we could not get a response from about 6,000 of our senior citizens. With three and four attempts of trying to reach them, we still couldn't reach them and this is the population that this project is focusing on. How is the best way you can reach these people and give them the information that they need, whether it is program information or drug information, educational information. The educational video for seniors that was produced is not only lifestyle issues but how to best use your pharmacist and physician to get the most out of a visit and the best information. Even though we have sent the video out to all of the seniors' councils and groups around the province, we have also set up a speaker's bureau in conjunction with the Nova Scotia Pharmacy Association and the Medical Society where a pharmacist and a physician will go and answer questions of the seniors population concerning drugs to use in conjunction with the video.
Treatment guidelines for physicians, there is so much information out there these days from so many sources, there is no way physicians can be up-to-date on the latest information. Basically, what the treatment guidelines have done is taken a comprehensive look at all of the information and boiled it down into a package of a couple of pages to tell them, in certain disease states, which are the best drugs to use to treat that disease.
Academic detailing project, basically what that is, some people will call it counter-detailing, and it is going in, we send a physician and pharmacist into a physician's office and talk to them about their prescribing profiles, and where they might make some changes. That is one part of it; the other part being where they will go in and educate on a drug class that even though the drug manufacturer may have come through and this is the latest and newest thing, it may not be the best and an older less expensive drug may work just as well. So, they basically do a clinical review with the individual physicians.
The other piece that we are putting into place now and have had some results or some success with is the outcome evaluation of drugs. We are working with Dalhousie University and the medical school to look at ways to measure the impact of adding a drug or taking a drug off our benefit list, or the delivery of a service, whether it is a drug or a physician's service for certain treatments, what kind of outcomes are we getting out of that. Would it be more cost-effective to pay for a drug rather than going in for surgery. So we are doing some
measurements in that project for outcome evaluations which is very important information for us to make decisions on for the future.
MR. COLWELL: Along those lines in the presentation you made, there is a computerized system that is being utilized now by the pharmacists to track each individual patient. Is that correct? Am I correct with that assumption?
MS. ELEANOR HUBBARD: There is a new on-line interactive computer system that has been put in place for Pharmacare and every pharmacist is hooked up to it in the province. Basically, it connects them with our computer. Not that they can get into our computer, but when someone goes into the drugstore to get a prescription filled and the pharmacist fills the prescription, it immediately goes into our computer at Pharmacare and Pharmacare sends them back a message whether it is covered, it is not covered, the individual is covered, whether they got a drug that would interact with this drug, whether it is at that pharmacy or at another pharmacy, whether they got the same prescription at another pharmacy. So, it limits the waste in the system as well as alerts the pharmacies to prescriptions that an individual may have gotten at another pharmacy that unwittingly they don't know that it is the same thing. So, it prevents some adverse drug reactions and interactions as well.
MADAM CHAIRMAN: I am sorry, your time slot is basically out. I am trying to keep you all to the same time slot for fairness. So, we are coming into some second round questions and I have noted a speaker so if you wouldn't mind holding your question, I do not think you are going to get to it. I have John Holm. I am looking probably at 3 minutes if I try to fairly share the clock and I have yielded at this point in time my own eight minutes of questioning.
MR. HOLM: Two questions I want to ask. First one, year one of the Pharmacare Program was underbudgeted in terms of revenue by approximately $5 million and it was overexpended by approximately $10 million, so, overall the government had to kick in about $15 million. On year two, you are well into preparing your budget for next year so you should have a good forecast about what is happening in year two.
I want to know, is it not correct that year two has a similar kind of forecast from year one and that there will then likely be a deficit in the Seniors' Pharmacare Program that will be carried over and that, as pointed out, may have to be made up by seniors in increased payments probably after an election, unless the government agrees to kick in the extra money for it to cover the shortfall?
MR. DINHAM: Again, the 1995-96 fiscal period, $9.6 million additional dollars, above the 50 per cent was put into the program.
MR. HOLM: But is it not well on your way into the second fiscal year and you would be preparing your forecast for the budget that is expected soon? Is it not true that year two is showing a similar picture to year one?
MR. DINHAM: Certainly not a similar picture. The transition costs will not be a part of the second year of the program.
MR. HOLM: But you anticipate millions of dollars of shortfall?
MR. DINHAM: Well, we still have four real months. We do make projections and are trying to get the claims in to make sure all the data is accurate. But we have seen a noticeable trend that the total cost of the program from projections that were being produced in April versus the most recent one have seen a significant reduction in the cost of the program itself.
MR. HOLM: The last question, Nova Scotia had a reputation of certainly over-prescribing drugs. Certainly that is a major cost. Has the department any figures on what has been happening in recent months, years? I know about the education programs and all the things you talked about. What I am interested in finding out in terms of the client, I guess for a lack of a better word, the senior, are they now being prescribed fewer prescriptions on average? What is happening? Do you have any statistics that can show us where we are now on an average basis versus what it was 1 year ago, 2 years ago, 3 years ago and so on before it started?
MS. ELEANOR HUBBARD: Last year we actually did see a slight increase in the number of prescriptions per beneficiary. That was from 22.2 to 23.9. However, in the year 1990, we were at 26.5 prescriptions per person per year. So, we have steadily declined over the last five years, except for last year when there was an increase. The only way we can figure out for that kind of blip in the system is the new program coming on and people opting out after having been covered for 9 to 10 months. So, yes, there was a blip this year. However, the number of prescriptions to date in the Pharmacare Program this year is down from last year.
MADAM CHAIRMAN: George, you had asked for three minutes in the second round.
MR. ARCHIBALD: Well, I did and thank you very much. I was wondering about the premiums that the seniors are paying now. I do not know where the premium arrived at and it arrived and it is being paid. However, it was a shortfall and there is a shortfall this year. However, the shortfall may not be as great as last year. The seniors' contributions comes to about $9 million. Does that mean that within the year, the seniors' contribution could rise to double what it is now to make up the $9 million shortfall that you saw the first year?
MR. DINHAM: Well, again, last year we go back and look at the statistics. The seniors' contribution is made up of a number of component parts. The premiums were slightly in excess of $9 million as well as the co-pay of over $9 million, and the contributions that were made on behalf of low income seniors amounting to about $13 million.
MR. ARCHIBALD: So to make up the shortfall in the seniors' program, are the seniors going to see a large increase in the premium? Is the goal of the government to have the seniors' portion funded by seniors?
MR. DINHAM: We are anticipating, hopefully, that in the current fiscal year, the last three months, that the downward projections will continue. Under the legislation regulations, the Seniors' Pharmacare Program can carry forward a deficit. At this point in time, we are unsure what that deficit may be. It is looking hopeful that it is going to be significantly lower than the $9.6 million and certainly we are nowhere close to those type of projections at this time. Again, before premiums can be established as well as co-pays, we have to understand where the program is headed as far as total cost and base decisions on that.
MR. ARCHIBALD: The delisting is a difficulty for some patients when they arrive at the pharmacy to pick up their prescription and they walk up expecting to pay a co-pay and suddenly they say, no, it is not listed. Then that person has to go back to their physician and he writes a letter saying look, they need this drug, it is the only one that will work and while they are waiting the week to 10 days, some of these people do have a problem because some of the prescriptions are very expensive. I am wondering, do the physicians have an accurate, up-to-date list of the drugs that have been delisted by the province or is there a better way that we could find to solve the problem of delisting, when the physician says this is the only one you can use permission is going to be granted with a letter like that but at the present time there is a hardship for people?
MS. ELEANOR HUBBARD: Certainly with most of - I shouldn't say most of the delistings or adjustments to the benefit lists - there is always a bulletin that goes out at minimum a month to six weeks before any implementation of that policy and it is sent to all pharmacists and physicians in the province. As well, we have the formulary that we referred to earlier, that includes a comprehensive benefit list that is updated on a monthly basis for both pharmacists and physicians. However, we are always looking for ways to improve the administrative system and we are actually, we have just tried it with the change to the benefit status of the high-cost antibiotics, the highly specialized antibiotics where, because of the nature of these drugs you can't wait a week for approval of a product if you need it.
So we have implemented, for a trial at least, a program where the physician fills out the form and sends it to the pharmacy and the pharmacist can fax it immediately to us and we have a turnaround time of within 24 hours for those products. We are going to try it out with this one and then expand it to all of our other products, as you mentioned, that are on exception status or are not covered to that same system when we make sure all the bugs are
worked out of that system. What we will do then is go and do a post audit and make sure it is appropriate.
MADAM CHAIRMAN: Alan Mitchell.
MR. MITCHELL: Just one short question. It was alluded to, I think, earlier, that today there are a number of drugs that are being used as alternatives to other sorts of health care. In some cases, for example, surgery would be required but now with new drugs, that surgery is not necessary. This results in better care for patients but it does result in higher prescriptions for people and seniors and higher Pharmacare costs. The other side of the coin, though, is that there are savings in the health care system. Is there any way to equate that so when we are looking at some higher costs in Pharmacare, what sort of savings are we getting on the health care side?
MS. ELEANOR HUBBARD: We can try to equate the savings to another part of the health care system. However, it has been difficult in the last number of years because there have been cutbacks in all of the systems so trying to equate if the savings were because we are paying for a drug or not is very difficult to ascertain. We would like, certainly, to be able to have those dollars attributed to Pharmacare and maybe will in the future.
MR. MITCHELL: Okay, I think probably my time is up but I think that is something that is worthwhile looking into more because I think that there are savings in the hospital by not having to do surgery, which in the past they would have, and that cost is now under the Pharmacare Program because that is what is preventing the surgery.
MS. MARY-JANE HAMPTON: Madam Chairman, if I could just add to that because there is a corollary to this and it is interesting when we talk about the overall cost of the Pharmacare Program and the premiums to the program and how big it will be, and I think fail, sometimes, to put Pharmacare in the broader context of health. I think we also need to understand that it may be regarded as a success in health reform if over time we can make the Pharmacare Program more cost-effective, not because it insures less, but because we have less inappropriate reliance on drugs.
The other part to your question, Mr. Mitchell, is, some studies indicate that as many as 20 per cent to 25 per cent of people over the age of 65 who end up hospital beds, are there because of negative drug interactions. So it is not only getting the cheapest drug, getting the most appropriate drug, but also using those drugs appropriately themselves and to understand that many times people are not well served by medications and inappropriate use of drugs costs more than anything we could hope to save by choosing generic drugs through formulary. So actually this is an example where success in making a program financially smaller would be evidence of improving the health of seniors in this province because 26.5 prescriptions per senior is not a good news story. It is great that we insure that and I think that it is government's obligation to make sure that there is a comprehensive, affordable,
accessible, drug program to people but we really, as a society, need to think much more seriously about what we rely on medications for and understand that at not all times do we serve people as well as we could.
So having fulfilled the obligation of having a comprehensive, accessible Pharmacare Program is only a part of the picture and unless you put Pharmacare in the broader context, we have not addressed the real issue of the health of seniors in this province.
MADAM CHAIRMAN: Well, thank you. Given that we do have a few other items of business that I would like to get on the record before we conclude today, I think that the time has been well utilized for the questions from the members of the committee, with the absence of my own questions. I would like to wrap up the presentation. We have driven the Department of Health fairly hard, I think, as a committee over the past several months in terms of briefing preparation and requests for information and time from senior members of the department right across the department. On behalf of the committee, today is your wrap-up session with us for this year in terms of our schedule and I very much want to thank each and every one of you for the time and the thought and the consideration that you have given in terms of the preparation that you have done for us, as a Public Accounts Committee. It has been a very good and positive experience, I think. So I just wanted to put it on the record that I am thanking each of you individually for this effort and on behalf of the committee, we will probably have considerable discussion when we get around to doing our final report for the Public Accounts Committee but this experience has been very informative and very positive for us, I think. So I thank you.
I just want to remind the members of the committee that there has been a revised agenda circulated. Wednesday, February 19th is now not a morning session for us because the Department of Finance asked for a different date. So just note that you have a revised agenda and that we will be meeting again on Wednesday, February 26th. February 19th is now open. So you have a week off.
I thank the member who substituted. It was a pleasure having you here today and thank you for your attendance.
MR. ARCHIBALD: It is a pleasure to be in the same Chamber as you when you are in the Chair.
MADAM CHAIRMAN: Oh, I know. So I would stand us adjourned. Thank you very much.
[The committee adjourned at 11:30 a.m.]