Health Committee on Feb. 7th, 2007

[The Vice-Chair, Bloc, Christiane Gagnon]

All right, but you'll come back to it later.

We've gotten to Ms. Davidson.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thank you, Madam Chairman, and thank you very much to the Auditor General and the department for being here to talk about these important issues today.

I want to go back to chapter 8. I would like to ask the department a question about the budget for the core funding. The report says that the core funding for the three programs that were audited had decreased significantly over that three-year period, and by quite big amounts—10% for the product safety program, 32% for the drug products program, and 50% for the medical devices program.

As well as that, funds for special initiatives, which were under other budgets, were not always spent for the purposes approved by the Treasury Board, but were reallocated to other programs within the directorate.

My question would be whether the department informed Parliament of its intention to reallocate these resources or how that determination was made. Does that information come through to Parliament in the form of supplementary estimates, or what is the reporting mechanism for something like that?

[Susan Cartwright]

The reporting that takes place through the estimates would probably not have captured all of the internal reallocation that we—and I'm sure other departments—undertake. The estimates would capture any transfers in the department between votes, but those would be fairly significant transfers and would not likely apply in this case.

The one exception would be if we made resource allocation or reallocation decisions relating to something like a government-wide expenditure reduction exercise. That would show in our department in the estimates, as it would for other departments. So it is likely that some of that would have appeared in the estimates, but not all.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

The other thing I was curious about was the cost of some of these and the possibility of increasing user fees. Could you elaborate more on that? Additional revenue obviously has to be found somewhere.

[Susan Cartwright]

Indeed, we do think it's appropriate for us to review our cost-recovery framework in the department, and we have a number of initiatives under way. In some cases, fees haven't been reviewed--as I mentioned earlier, I think in the case of Mr. Yeates' branch—since the early 1990s. So we do have work under way, and I'll ask Mr. Yeates to talk in particular about some of the work that he has under way.

We have a fairly rigorous process to follow as a result of the passage of the User Fees Act, so it is a process that takes some time, but we do have that work under way.

Maybe, Mr. Yeates, you'd like to add a word or two.

[Neil Yeates]

Certainly. Fees represent about 25% of our budget in the Health Products and Food Branch. They were set in the early to mid-1990s and have not been adjusted since, so there's been no accounting, even for inflation, during that time.

We are preparing to launch a consultation process. We expect it to be next month. As you will know, through the User Fees Act, that's a very extensive process, so we will be engaging strongly with stakeholders. It will come back through Parliament as proposals. They will include, I think, both an expansion of the areas where we think it's reasonable to set fees as well as service standards—performance standards, if you will—that stakeholders should expect. Then, of course, at the end of the day, those fees have to be approved by Parliament, so we'll have to see what Parliament deems to be a reasonable fee level.

In terms of how we compare, we're actually on the low end internationally for food and drug regulators, at about 25%. The FDA is closer to 50%. Europeans are at about 75% and Australia is at 100% fee revenues, so I guess we'll see where we will end up. That is a very important part of the work we're doing.

[Patricia Davidson, Conservative, Sarnia—Lambton, ON]

Thank you.

[The Vice-Chair, Bloc, Christiane Gagnon]

Ms. Gallant.

I have a proposal to make to the committee. After Ms. Gallant, there will be about a half hour left. If we proceeded by alternating, everyone would be entitled to a second, three-minute round of questions.

Is that fine with you? After Ms. Gallant, we'll alternate. It will be Mr. Martin's turn, then we'll alternate between the government and the opposition. All right? Thank you.

Ms. Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Madam Chair.

Through you to the witnesses, I just want to clarify what exactly First Canadian Health did or does for their $45.7 million over five years? Do they receive the claims submitted by the providers and the pharmacies and then cut cheques? Is that it? What else is done?

[Ian Potter]

Madam Chairman, I'd be pleased to answer.

First Canadian Health monitors and administers the benefits, and it has established an online computerized system that interacts with all the pharmacies. When a client approaches with a prescription, the system allows the pharmacist to enter that prescription. It immediately goes into a databank managed by First Canadian Health. That databank provides information to the pharmacist about adverse drug reactions and possible multiple prescriptions. So there's an important part they play in terms of helping the health system deliver a better product and protect the patients.

It also manages the payment system. So it collects the bills from each one of the providers, whether they be pharmacists or dentists or medical suppliers. It then makes payments to them, I believe, on a monthly basis, and then sends a bill to Health Canada, which we process and then provide them with the funds.

They also do for us a number of audit provisions. I talked earlier about how they do the next-day review.

So they manage a number of systems that look at the large—

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Very good, thank you.

Ms. Cartwright, you mentioned that Health Canada audited First Canadian Health, or was Health Canada auditing the individual providers?

[Susan Cartwright]

I think the reference I made was to a number of internal reviews we conducted in 2003 of our own management of the contract—not of First Canadian Health but of our management of the contract.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Okay.

Mr. Potter, your group audited the providers, going into their offices and comparing charts against the billings?

[Ian Potter]

We do two things. We review First Canadian Health, the bills they send us, and determine whether First Canadian Health are actually remitting to us a valid bill from a dentist or a pharmacist. First Canadian Health acts on our behalf and they send auditors in—these are usually contract people—to a selected group of pharmacies or dentists or other providers. In those audits, they actually look at the books of the pharmacist to make sure they show there was a valid prescription on hand, that there is a record that the drugs were dispensed, etc.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

In any of these cases, was any fraud or incorrect information or any overpayment to the providers found? And was money returned to the consolidated revenue fund if it was found?

[Ian Potter]

We do find a certain number of cases. Sometimes they're mistakes. Perhaps sometimes they are what we believe to be volition, in terms of intended misrepresentation. Where we think it's misrepresentation, we refer the cases to the RCMP. Often, though, we first follow through a process where we identify it with the provider and say, on the basis of this audit, we find that a certain amount of the billings you have sent us are unjustified, and we ask for a refund. In many cases we do get that refund. We collect that money and remit it to the consolidated revenue fund.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

With many insurers that is part of the contracted service they provide a business, and they do the due diligence themselves. So those are extra efforts on the part of the Canadian taxpayer.

Now, several parliamentarians have been briefed on how your auditors imposed themselves on the businesses of some of the providers. They demanded to see the charts of the patients in the billings, and then compared the charts to the billings. That's the logical way of doing it, but insofar as these patients are concerned, they would perceive that as a significant breach of privacy.

Can any insurance company do that, or was Health Canada or its contracted auditors doing this with special powers, being the federal government?

[Ian Potter]

Madam Chair, in response, generally that is the behaviour of all insurance companies. They often want to make sure they are reimbursing valid bills.

The advice we have with respect to privacy is this. When people seek reimbursement from our program, they obviously give us the right to inquire that the payments we're making on their behalf are legitimate. There are some complaints from providers who feel we may be too aggressive, but we believe we have an obligation to the government to account for the resources.

For example, at random, let's pick a dentist who has billed us for the replacement of crowns. We would go into his or her offices. We would check the X-ray records to see that the X-ray records when the patients arrived showed they had this and when they left they had that. Obviously, there's a record that a service was provided that they asked us to pay for, and that's the end of it.

It's only a method of determining that the service was supplied to us and the government paid for something that was a legitimate claim.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

The money is returned to you or returned to the consolidated revenue fund.

Thank you.

[The Vice-Chair, Bloc, Christiane Gagnon]

Ms. Gallant, your time is up.

Mr. Martin.

[Pat Martin, NDP, Winnipeg Centre, MB]

Thank you, Madam Chair.

I think it's worth noting at the outset that it very clearly states that there has never been any indication of fraud or overpayment related to the payments Health Canada has made, etc. We accept that.

As a matter of policy, at least from our party, the NDP, we believe first nations organizations, to the greatest extent possible, should be awarded the contracts for the delivery of services to their own population.

Having said that, the Auditor General's comments today were clearly that they therefore concluded that Public Works should not have awarded the contract to any of the bidders in relation to the non-insured health benefits program.

But we hear from Mr. Potter that everything was really—I don't want to put words in his mouth.

It seems there's an uneasiness on the part of the Auditor General that's not necessarily shared by Health Canada on the delivery of this.

To finish the point I was making when I ran out of time last time, in Manitoba, we're very sensitive to the delivery of health services to first nations after the horrific scandal at the Virginia Fontaine treatment centre. Committee members would benefit from knowing that it was a Health Canada official who told first nations that the way to get the contract was to buy him a Jeep Cherokee, then buy his son another Jeep Cherokee, and then give him $50,000. It was the Health Canada official who went to jail, not first nations individuals, who were misled.

I guess I'm still not comfortable with paragraph 13 of the Auditor General's comments today that clearly says, “We concluded that PWGSC should not have awarded the contract to any of the four bidders”.

What was the reasoning at the time it was in fact awarded to First Canadian?

[Susan Cartwright]

It's difficult for me to respond to an observation that the Auditor General has made about Public Works as opposed to Health Canada. I think if the committee would like to pursue that with Public Works, it would be appropriate, Madam Chair.

[Pat Martin, NDP, Winnipeg Centre, MB]

But doesn't Public Works award the contracts for you on your behalf?

[The Vice-Chair, Bloc, Christiane Gagnon]

You have 40 seconds left.

[Susan Cartwright]

Public Works provides contract management and contract awarding services for departments in government.

As I said, with respect, I think it would be more appropriate to direct questions about what Public Works did to Public Works officials.