Government Operations Committee on Dec. 7th, 2023

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Welcome to meeting number 95 of the House of Commons Standing Committee on Government Operations and Estimates, also known as the "mighty OGGO", the only committee that matters.

Pursuant to Standing Order 108(3)(c) and the motion adopted by the committee on Monday, October 17, 2023, the committee is meeting for its study of the changeover of the public service health care plan from Sun Life to Canada Life.

I will remind you to not put your earpieces next to the microphones, as it causes feedback and potential injury to our highly valued translators.

The next round of witnesses is already online, and I'll let you know that they have completed the required mic checks.

At the very end of the meeting, I will need about 30 seconds to approve a budget item.

We have two opening statements, one by Ms. Royds and one by Ms. Girard.

Please go ahead, Ms. Royds, for five minutes.

[Mollie Royds, Associate Assistant Deputy Minister, Procurement Branch, Department of Public Works and Government Services]

Good afternoon, Mr. Chair and committee members.

I am pleased to be here today, alongside my colleagues from the Treasury Board Secretariat, to support your important study into the Government of Canada contract awarded to Canada Life for the administration of the public service health care plan.

Let me begin by acknowledging that given that we are meeting in the national capital region, we are gathered on the unceded territory of the Algonquin Anishinabe peoples.

With me today is Pascale Archambault, acting director general of the business and technology solutions sector at Public Services and Procurement Canada, or PSPC.

As a common service provider for procurement, PSPC plays an important role in the daily operations of the Government of Canada, supporting federal departments and agencies to deliver their mandates.

As the central purchaser, PSPC has managed approximately $25 billion in procurements of goods and services on behalf of client departments in the past three fiscal years.

Therefore, our support to the Treasury Board Secretariat in ensuring the delivery of the public service health care plan, the largest health care plan in Canada, is a core priority for us.

I would like to outline a few key facts related to the procurement of the administrator for the plan.

As part of our commitment to open, fair and transparent competitive processes, Canada began the process to retender this requirement in 2018.

This extensive, multi-year procurement process included multiple rounds of industry engagement on the administrative service requirements, industry best practices, socio-economic objectives—including indigenous participation and greening—and our proposed procurement approach. In addition, at the request of industry, we postponed the RFP release by six months due to the onset of the COVID-19 pandemic.

Three bids were submitted by major players in the health care plan administration space, which were evaluated against the government's technical and financial criteria. Significantly, all three bids were found to be compliant, with the bid from Canada Life ultimately ranking first. The contract was awarded to Canada Life on November 30, 2021. The current contract is valued at $514 million for eight and a half years, and there are options available to extend the contract.

I would like to underscore the fact that this was a competitive process with three compliant bidders, evaluated against rigorous criteria established by both the technical authority at Treasury Board Secretariat and the contracting authority at PSPC.

Of note, the contract included a start-up phase of 18 months for Canada Life to take the necessary steps to prepare to administer the plan. The operations phase began July 1, 2023 and includes a six-month transition period.

As with any large switch from one service provider to another, especially on programs of this magnitude, issues with transition are not unexpected and are therefore planned for by all parties.

PSPC and the Treasury Board Secretariat have worked in close collaboration with Canada Life through this period to improve service for members, as well as to ensure communications on plan design changes that are the responsibility of the Government of Canada. In fact, as of today, Canada Life has advised the government that call centre wait times are one to three minutes, and their average claim processing time is 2.2 days.

There is still work to do, and we have lessons learned that will be applied both to this contract and to other major transitions. However, we are trending towards the service level that members expect and have the processes and mechanisms in place to respond as issues arise.

Mr. Chair, in everything we do, our overriding aim is clear: It is to provide the goods and services that departments need to deliver their programs at the best value to Canadians. We are committed to continuing to work closely with both the Treasury Board Secretariat and Canada Life to ensure that plan members receive the services that they deserve.

Thank you.

I'll now turn to my colleague.

[The Chair, Conservative, Kelly McCauley]

Thanks.

Ms. Girard, before you start, congratulations on your appointment as president of the Public Service Commission. Imagine the things people will do to get away from appearing at OGGO more often.

Congratulations, sincerely, and we'll turn the floor over to you for five minutes.

[Marie-Chantal Girard, Senior Assistant Deputy Minister, Employee Relations and Total Compensation, Treasury Board Secretariat]

Thank you, sir.

I will indeed look forward to the validation by the two Houses of this appointment.

Thank you for your kind words.

Good afternoon.

Thank you, Mr. Chair and members of the committee, for inviting me to appear before you today.

Before I begin my remarks, I would like to acknowledge that we are gathered on the traditional unceded territory of the Algonquin Anishinabe people.

With me today is David Prest, executive director of benefit plans, policies and programs at the office of the chief human resources officer at the TBS.

I'm pleased to be here with my colleagues from PSPC.

Mr. Chair, the public service health care plan, better known as PSHCP, is a negotiated, optional employer-sponsored health care plan. It provides supplementary coverage following coverage paid by the provinces and territories where plan members live.

The plan is part of the total compensation package that the Government of Canada provides to employees to help it recruit and retain talent.

My department supports the President of the Treasury Board and the Treasury Board itself as the plan sponsor. The TBS is also the project authority, meaning it oversees the performance of the plan administrator in collaboration with the PSHCP administration authority and PSPC.

The Government of Canada has an obligation to competitively retender the benefit plan contracts, and PSPC, as Mollie said, awarded the contract to Canada Life.

Our colleagues will be able to speak in more detail about that process.

Canada Life took over as the new plan administrator on July 1 of this year. It was a large-scale undertaking affecting 1.7 million plan members and marked the first time in 27 years there had been a new plan administrator.

Regardless of the change in administrator, the plan itself, meaning the coverage it offered, had not been updated since 2006, despite significant advancements in health care.

Therefore, through the Public Service Health Care Plan Partners Committee, the employer, bargaining agents and the association representing retirees negotiated and recommended plan changes to Treasury Board, which approved them.

The updated plan, which came into effect on July 1, 2023, provides enhanced support for mental health and well-being as well as supports for seniors, families, young adults, persons with disabilities and members of the 2SLGBTQIA+ community.

In addition, market-tested mechanisms to administer the plan in a more rigorous and modern way were introduced to align with industry standards and ensure the long-term viability of the plan. The measures include mandatory generic drug substitution and a prior authorization process.

We knew that switching to Canada Life, the new plan administrator, would be a complex and extensive undertaking. That is why we began working with our Canada Life partners 18 months before the contract came into effect.

That is also why, within days of our staff and Canada Life flagging problems such as claims processing delays and reimbursement issues, we set up a mechanism whereby Treasury Board Secretariat, PSPC and Canada Life representatives met daily. We continue to meet on a regular basis, jointly developing an action plan to address these problems.

This further illustrates why the contract included a six-month transition period, which is standard practice in the industry.

Canada Life informed us that, as of December 1, average call centre wait times were between one and three minutes, as mentioned, and claims were being processed much more quickly. This is thanks to its action plan, which included hiring additional staff to answer calls and process claims.

Other measures have been taken by Canada Life over the last several months to minimize the risk of delays with claims refunds and to improve the member experience.

At our end, and in collaboration with PSPC, bargaining agents, and the National Association of Federal Retirees, we strengthened our communications efforts to clarify and distinguish between plan changes and administrator changes.

Mr. Chair, there are always lessons to be learned from an undertaking of this size that can be applied to future large projects. For example, although a significant number of communications—

[The Chair, Conservative, Kelly McCauley]

I apologize. I have to ask you to wrap up.

[Marie-Chantal Girard]

Okay.

Although we communicated broadly, it seems that it was still not enough, so we're redoubling efforts in that regard.

I'll close by emphasizing that we continue to work with Canada Life. We see a clear path forward towards a steady state, and I'll be ready to answer any questions that you have. Thank you. Meegwetch.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

We'll start with Mrs. Kusie for six minutes, please.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair, and thank you very much to our witnesses for being here today. I think it's very courageous that you're here, but also very important, because we have heard—Canadians have heard—so publicly and so insistently how this transition has not been ideal and how it has caused suffering for many public servants who have served Canada, as well as for their families. I'd like to mention a couple of stories in the media.

Kari Hentzelt, who suffers from Ehlers-Danlos syndrome, says in an article published by the CBC that without specific medication, she can suffer up to 20 migraines a month:

I am a chronically ill public servant in the midst of medical retirement. Every month I rely on medications for cardiac, neurological, musculoskeletal and pain reasons. Along with my husband's PSHCP and my own, we *were* adequately covered under Sun Life.

Since July 1, however, it has been nothing short of a nightmare.

I've been able to get through to a representative ONCE since July 1, after being on hold for ages.

I'm now almost two weeks late on my Emgality injection for migraines because they state that BC PharmaCare now covers it. I've talked to PharmaCare and they state my insurance should continue to cover it until my deductible is met.

Both myself and the drug company have sent them the special authority letter, as well as my pharmacy, but they still continue to deny this treatment to me.

Without it, I have approximately 15 to 20 migraines per month.

We are definitely not getting what we are paying for, and it's unacceptable.

The article continues:

Adam Shales spoke...about his nine-year-old son who relies on weekly intensive physiotherapy to counteract the debilitating nature of cerebral palsy.

Under the terms of the PSHCP, the family was covered at 80 per cent for claims up to $500 and claims over $1,000.

As of July 1, it's capped at $1,500 annually.

“It's a major source of stress”....

“We don't have pots of money sitting around. So it's either we have to borrow for that or we have to reduce the amount of physio..., which then will have consequences and impacts on his body, his muscles, his range of motion and ultimately his quality of life.”

We are hearing first-hand from public servants about how this is affecting them and their families, and of course we want to care for Canadians.

Why was it reported by Minister Anand at the beginning of November that there was only one bidder for the contract, despite the involvement of three competitive bidders in the process being confirmed here today?

That's for whoever would like to take it, please.

[Mollie Royds]

I'll start by addressing the question in relation to the number of bidders.

There were three compliant bidders associated with this particular process. I don't know the context of the comment by the minister, but I can confirm that we had a separate tendering process associated with the dental care plan for public servants' and pensioners' dental plan, where there was one compliant bidder, and Canada Life was the winning bidder in that scenario.

Perhaps there may be a misunderstanding between the two plans, but I can confirm that for this one there were three compliant bidders.

I believe my colleague wants to address the beginning portion of your question.

[Marie-Chantal Girard]

You indeed raised some of the difficulties that have been experienced in the implementation of the plans, but the two cases that you presented to us speak about exactly the two situations that were happening, the two types of changes that were happening at the same time.

The first one relates more to what the plan covers. This refers to the modernization of the plan, which had not been done since 2006 and which we did separately, meaning that we negotiated it separately and asked Canada Life to implement as of July 1.

It represents a new plan. Of course, it requires some training, and we understand that the previous administrator had 27 years of implementing the same plan.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you.

Ms. Girard, I want to go back to the negotiation process, specifically regarding physiotherapy and drug substitutions. Can you provide some insight as to what that process was, please?

[Marie-Chantal Girard]

Yes. I'll begin, and maybe David will want to supplement my response.

The physiotherapy modernization of the measure is an enhancement for the vast majority of plan users, particularly for physio services. We had the Canadian Physiotherapy Association providing us with data. Prior to the negotiations, we had benchmarking studies and usage analysis. For physio, we covered $500 before. Then you had a corridor where you had to be out of pocket for $500, which then took you to a larger amount. For many people, $500 of physio was insufficient.

What was negotiated was to abolish the corridor and offer $1,500 to all plan members for physiotherapy, allowing the vast majority.... The industry standard is much lower. I believe it's $1,200.

[David Prest, Executive Director, Benefits Policies and Programs, Employee Relations and Total Compensation, Treasury Board Secretariat]

I think it's actually twice.

[Marie-Chantal Girard]

We're covering twice the average amount.

[The Chair, Conservative, Kelly McCauley]

Thanks very much. That is our time.

Mr. Bains, you have the floor for six minutes.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Thank you, Mr. Chair.

Thank you to our witnesses for joining us today.

Indeed, this changeover has caused considerable concerns for my constituents, family members, friends who work at CBSA and other public servants.

My first question I'll direct to Ms. Royds.

During our opening remarks, you noted that there was a period of transition to Canada Life that began in July. Is it normal to have a transition period, and did you plan for a transition period as part of this contract?

[Mollie Royds]

Thank you for the question.

As I indicated in my opening remarks, when we are embarking on a program of this complexity, we absolutely would expect there to be a transition period, given some of the uncertainty that would be associated with the planning parameters that go into it. We have a transition period of six months, which will come to an end in January, within the contract. We have been working with Treasury Board Secretariat and Canada Life to make the necessary adjustments through this transition period.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

What measurables are available to the federal government should the Canada Life Insurance company continue to be unable to administer the public service health care plan in accordance with its contractual obligations?

[Mollie Royds]

In terms of the measures that are available to Canada, we do have provisions in the contract associated with performance under the contract. That is something we will be looking at after we exit the transition period, which ranges from anything between.... We have some fee credits and some other provisions available to us.

I would stress that given the uncertainty and the transition period that we are in, we will be looking at that together with our colleagues from the Treasury Board Secretariat and taking stock of the situation once we enter into the January period.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

For the six-month period of transition, what's the lead-up time?

[Mollie Royds]

Prior to the transition period, there was a start-up phase of approximately 18 months, during which Canada Life prepared to take on the claims administration. That's when they would have undertaken the work necessary, including standing up the call centre and some of the solutions necessary to do the benefits processing. There were deliverables associated with that as well.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

Do you think that the 18-month lead-up was enough?

[Mollie Royds]

As we entered into the transition phase, there was no indication of any concerns. I think we have some important lessons learned about the transition phase, but I think at this stage it's too soon to say whether there was more time needed than the 18 months.

I don't know if my Treasury Board colleagues have a view on the length of time for the start-up phase at this stage, but I think it's too soon for us to make a comment on that.

[Marie-Chantal Girard]

We certainly observed that the combination of the new plan brought additional pressure on the administrator to deliver, although it had to be managed this way. However, 18 months gave a lot of opportunity to discuss and find solutions. There were dozens of committees working together to prepare for that, but we do realize that for a plan of this magnitude—1.7 million members, the largest employer benefit plan in Canada—it's a massive endeavour.

[Parm Bains, Liberal, Steveston—Richmond East, BC]

During that 18 months, with the hiccups that you saw action taken on, were there measurables on how many? Were there 150 times or instances that this didn't work or that didn't work? Is there a number attached to that?