Sunday, November 26, 2006

Extra Billing: the doctors' view
















Battle-lines are drawn on the future of Medicare
By FRANK S. BOYD

Before Medicare in 1969, only patients worried about medi­cal costs. Today, only re­sponsible politicians seem concerned about them, but the weight of patients' anxiety is mount­ing over uncertain access to physi­cian care. Once physicians ulcerated over growth in uncollectible fees. Today income is secure. Thanks to government, uncollectibles are cher­ished heirlooms of the past. Relics of free enterprise that to some in the profession are beginning to look good.

Open market conditions pre­vailed before Medicare. A fee in­crease could result in patients mov­ing to a rival doctor. There were inequities - those who could. pay demanded physician care and got it; those who could not, did not de­mand it and perhaps went without. In those days demand for physician care grew slowly and a physician catered to his paying patients to keep them.

Medicare changed all that. It produced a sharp increase in physi­cian-care demand and the clientele changed too. The new demand was undifferentiated, now the poor as well as the rich demanded and got treatment. Physicians' income rose with demand and has continued to increase.

The medical profession's alliance with government was good. It was good even though in most provinces physicians were asked to accept 85­90-per-cent of the fee-for-service as full payment, in lieu of uncollect­ibles. Still, the 10-15-per-cent of the unrecovered tariff were collected by billing the patient directly, thus ex­tra billing was born and through it physician incomes took another boost.

The problem of tariff increases gave new life to medical societies, formerly fraternal clubs. Today they are powerful unions negotiat­ing with government, paymaster of what are still technically "self-em­ployed" professionals. But Medicare wasn't perfect. Arise in government


"We're not Missionaries basically, doctors are free-thinkers, used to being their own bosses and doing their own thing."


red tape and insufficient tariff in­creases left physicians still with un­collectibles. To maintain their eco­nomic status, they began ~to work harder, lay-off more staff and see more patients. Fee-for-service and extra billing income went up, at the expense of professional freedom and, some say, the quality of care.

Statistics Canada shows that over a 28-year-period (1951-1979) physician incomes have stayed ahead of inflation and kept pace with other professional groups. Rapid, early­1970-growth was slowed by modest mid-1970-gains, h9wever, physi­cian-income--increases have exceeded the change in earnings of other self-employed professionals, even den­tists. (See table p. 35)

In Atlantic Canada the income picture roughly parallels the na­tional situation. Physician income continues to lead the way among self-employed professionals.

"We're not missionaries. Doctors are free-thinkers, used to being their own bosses and doing their own thing." said Nova Scotia Medical Society president Dr. Murdock A. Smith of Sydney.

Dr. Smith said overhead costs are rising constantly. In specialities like opthalmology, which requires high-priced technologists and expen­sive equipment, start-up and con­tinuing overhead costs are high. In addition, he said, a high demand is placed on doctors' services. They feel the fees they receive are insuffi­cient to meet overhead, to pay staff and to provide for their families.
''I'm a bargain; the government's got a good buy in me," said Dr. Smith. ''I'm providing a lot of medi­cal care, about 80-hours a week, and I'm keeping a lot of other people going." He said he is putting a lot of money back into the economy as well as paying taxes. He describes himself as a working-harder-than­average general practitioner, who is at the peak of medical proficiency after 13 years of experience. He said that a physician in a group practice who is well-established is making a little more than $100,OOO-a-year. Of this about 25-per-cent goes to the taxman, another 33-per-cent pro­vides overhead and the physician retains about 42-per-cent as earn­ings. From this must come pension allowances and other expenses which self-employed professionals must pay.

"I need every cent I can get my hands on to run my house and fam­ily," he said with a chuckle during a telephone interview, ''I'd like to get a little time off every now and then, and take care of the future a bit."

Total fee-for-service payments, since Medical Services Insurance (MSI) began in Nova Scotia, have been vast. The Nova Scotia Health Services and Insurance Commis­sion's executive director, Jack G. Hare, denies that expenditures are out of control. The Commission's responsibility is to audit the system, although the audits are performed by Maritime Medical Care Inc. The Commission's main concern is with fraudulent claims and their detec­tion. A claim is fraudulent when the Commission is billed by a physician for unnecessary and unrendered ser­vices. The easiest to prove, Mr. Hare said are where services have not been rendered by the physician.

"No one is ever completely satis­fied that they are doing everything." Mr. Hare, an experienced chartered accountant said. "But you have to balance the cost of doing that other, against the amount you're liable to detect."

Fee-for-service payments have increased 178.0-per-cent over the 10­years since Medicare began, while billing-above-tariff, or extra billing, has increased 167.2-per-cent. While, as Provincial Health Minister Ger­ald Sheehy has repeatedly said, ex­tra billing is small, only about 3.0 - ­per-cent of total fee-for-service ex­penditures, inequities of the system lie in who and how many physicians extra bill their patients. (See chart p.35)

The financial incentives of Medi­care could prove to be the seed of its own destruction. The more the phy­sician works the more he earns in fee-for-service income, the more he extra bills, placing greater and greater financial burden on the provincial treasury.

The man responsible for nego­tiating the tariff increases for the Nova Scotia Medical Society is its executive director, Douglas D. Pea­cock, a busy man in his fifties. Be­tween 1951 and 1979 physician workload increased 252.4-per-cent while the number of physicians in­creased by only 148.9-per-cent, he said. Despite improvements in productivity since 1951, there has been an increase in public demand for physician care of 96-per-cent. But government, instead of using finan­cial deterrents to limit excessive de­mands, are attempting to control physician manpower.

"Who do you think is paying the taxes in this country?" he asked. "If you examine the MacEachen budget you'll find the people who are using Medicare excessively are not the ones paying the taxes by any stretch of the imagination; they really are not!"

The ones putting the pressure on the system and increasing costs are not paying taxes he said, they are on welfare and unemployment insur­ance. He has no statistics to prove his point, but he has talked to doc­tors and this is the "type of clientele they have." Doctors, he said, are unable to do anything about it. It is not the physicians who should be re­quired to provide the deterrent, but government. Doctors are required to report excessive users to M.S.l. so that restraint can be implemented.


"We've got a large-scale problem on our hands." Mr. Peacock said. However, the commission's execu­tive secretary D. H. Waller knows nothing of this.

"No, I can't say we have any system like that in effect," he said. "There has been a rare case where a physician has had an occasion to write the commission, making a complaint, maybe one or two times in all the years its been in opera­tion."

"It's up to the physician, we can­not tell him not to see the patient," he said. There have been more occa­sions when the commission has writ­ten physicians asking if all the calls a patient made were necessary. Phy­sicians are not always paid for all the visits they bill for.

The issue of extra billing turns on whether or not Medicare is per­ceived as an insurance program or socialized medicine. The medical society takes the view that Medicare is an insurance program, requiring user participation in the form of 'balance billing.'

The Canada Medicare Act and matching provincial statutes make it clear, Mr. Peacock said, that Medicare is an insurance program and government's role is that of a carrier, the body obligated to pay its share of medical costs. The society denies that extra billing is a barrier to reasonable access 'to health care despite suggestions to the contrary by two recent federal inquiries.

'The provincial act says that physicians can bill the patient what­ever they want," Mr. Hare said. "Therefore, as long as physicians follow the rules nobody can com­plain. They may not liKe it ... but what can they do?"

The only protection for the con­sumeris that the law says the physi­cian must make the patient aware that he does bill, the patient must agree to the billing and the physician must report the amount of the bil­ling to the commission. It is on the basis of these reports that the com­mission's civil servants make month­ly reports to the minister.

"Of course too, there's always the possibility that we are not get­ting full records." he paused, and then added, "But I would think that anyone that's reported to us $40,000 of extra billing hasn't hidden any of the rest of it."

"Balance billing is a discretion­ary thing on the part of the doctor." Mr. Peacock said, "There's no doubt about it, errors in judgment are made and somebody without two nickles to rub together is asked to pay an additional fee."

The society's policy is tha t peo­ple on provincial and local welfare, war veterans allowance and most pensioners are not required to pay extra billing. The society has also established a Billing-above- Tariff Review committee to examine and mediate disputes that arise and to evaluate extra billing data on an on­going basis. The committee has no sanctions in mediating disputes but it can bring peer pressure to bear on physicians who go too far.

The distribution of extra billing revenues seems to be highly concen­trated and while it is a small per­centage of fee-for-services payments to physicians, it raises some ethical questions: The physicians who extra bill most also receive the greatest share of fee-for-service income. Do they really need it? The fact is that extra billing has increased in all but one of the 10-years of MSl. The dol­lar amount of extra billing fell only in 1977. Since 1977, the number of physicians extra billing has con­tinued to rise. (See table p. 39)

It is important to note that not all physicians extra bill. That is why examining the distribution of extra billing revenues is important. In ad­dition, some of the extra billing is probably uncollectible. But in 1979­80, 32.S-per-cent of extra billing was recorded by only 7.6-per-cent of physicians and who were earning $100,000-a-year or more.

In the following year the trend continued. In 1980-81, 43.1-per-cent of extra billing was recorded against 1l.8-per-cent of physicians in the same income bracket. By the end of this fiscal year the total will be larg­er. The extra billing average income in 1980 was $8,098 for $100,000-earners from MSI; (They may have earned more from Workers Compen­sation.) and in 1981 it was $8,249.

The range of extra billing moved from a high of more than $40,000, reported by one physician, to a low of less than $10, recorded by others. Although the absolute number of middle income physicians fell, by 16 doctors, the amount of extra bil­ling in dollar terms was about the same.


"What it indicates to me at least," Mr. Hare said "is that they are not extra billing because they need it to meet their overhead. They're extra billing for some other reason ... dollars and cents."

"In all honesty, there are some physicians who charge every patient who comes in the door," said the medical society's Doug Peacock, "they have declared in their own minds that they will not accept the society's policy."

There are some who come to know their patients well, he said, and either do not or would not extra bill them. Ordinarily, new physi­cians do not extra bill because of the red tape associated with doing it. It is only when they become more established that physicians extra bill, he said. The society has no dis­ciplinary authority over its mem­bers, he said, it is a matter of per­suasion.

"I don't think it is entirely the doctors' responsibility to control fees." said Dalhousie associate pro­fessor of health economics Murray G. Brown, "They're operating within the rules of the game as set down by the legislature of this province and as long as the Medical Services Insurance Act does not prohibit extra billing it is hard to claim that this behaviour is wrong." It is im­portant not to draw the conclusion that high incomes mean that physi­cians are practicing excessively, he warned, some service items especi­ally those of specialists have a very high unit price associated with them.

"Extra billing is a matter of inter­nal discipline and it is very difficult," Mr. Brown said, "for the medical society to get agreement among its members to discipline themselves."

Still, the Nova Scotia govern­ment shows no sign of a willingness to ban extra billing. 'They're in bed with us on this issue." Doug Peacock said and he added, "Medicare is not sick but as far as this issue is concerned we may be sitting on a time bomb. We don't know what the federal government has in mind for Medicare."

A look ahead

Atlantic Canada's most estab­lished profession has a very uncer­tain future. Economic committees of Atlantic Canada's medical socie­ties will be meeting, pondering what impact British Columbia's settle­ment - the society's loss of extra billing - and the recommendations of the Parliamentary task force on federal-provincial fiscal arrange­ments will have on tariff negotia­tions and the future of their profession. There is also the MacEachen budget to be concerned about. Hope within the profession is dwindling that the island of free-enterprise can withstand the onslaught.

Among other things, the task force recommended the banning of extra billing. Legitimate interests of doctors must give way, the report says, to the broad public perception that uncontrolled billing of patients beyond the levels of provincial med­ical plans will ultimately destroy medicare.

"You cannot fight the times; the federal government is a socialist government." the medical society's executive director said, "It has a majority and can pass any laws it likes in the House. We know quite clearly what the feelings of Monique Begin are but the feelings of a lot of her confreres will be a levelling force. Fortunately, the entire Liberal government is not as socialistic as Monique and Marc Lalonde are."

Only nationally can Atlantic Canadian physicians deal with the federal government threat to social­ize their profession. The Canadian Medical Association (CMA) is their national voice. It must wait until the federal government makes the first move; only then will the medical profession know what it has to face. "It will be part of our game plan to do all we can," Mr. Peacock said, "to prevent the banning of extra bil­ling."


"Who do you think pays the taxes? People using Medicare excessively are not the ones paying taxes."

The medical society claims that extra billing has served an important function in its working relationship with government. Physicians say that the power of extra billing has kept their options open in tariff and other negotiations with government and rather than strike, they say, as long as they have extra billing they can offer their services directly to patients by billing them. In this power war the patient is in the mid­dle. In Quebec, where that govern­ment has imposed income ceilings the system has not worked, said the Nova Scotia medical society presi­dent Dr. Murdock Smith. In that province recently doctors have gone on strike because they lacked the option of billing patients directly and, he said that this, government bureaucracy, combined with income ceilings placed on earnings, have stifled physician initiative there.

In Montreal there is a doctor who left the plan altogether, he said, and high-income executives are wil­ling to pay him $100 a shot.

"There are always elitists in every society you know. You don't think that the Commissars in Russia go to the feld­shers (Soviet nurse practitioners) for treatment, and in England there are at least two systems of health care, public and private."

Total ban
Active community, consumer and labor groups across Atlantic Canada are opposed to extra billing. New Brunswick's Health Coalition chairman Bill Petrie suggests a total ban be put on it. Nova Scotia Feder­ation of Labour president, Chester Sanford, said that there should be no deterrents to health care. Health care costs should be met totally by government, he said. The Federa­tion's position has not changed since ­the program began and its position is that extra billing should be ban­ned.

Nova Scotia's Health Coalition chairman Ian Johnson said it op­poses extra billing because it creates a two-tiered system of health care delivery, one for the rich another for the poor. It is a problem not just in Nova Scotia and in Atlantic Canada but across the country, he said.

"I've seen some very sympathetic doctors who are willing to work with consumers," said Ian Johnson, "and they are not out to gouge the consumer; they are concerned first about quality of their service and second about their incomes."

Medical societies throughout At­lantic Canada claim their members are falling behind in income relative to other occupational groups. Truck drivers, carpenters and plumbers, they say, are closing the gap on them and they are angry about it.

Federal Finance Minister Allan MacEachen has given them nothing to smile about. He has taken from them, and all other self-employed Canadians, some important tax fringes: income averaging and tax write-offs on the cost of money bor­rowed for RRSPs.

The finance minister's budget brought the two-sides, physicians and their opposition, together mo­mentarily by his expressed intention to eliminate provincial transfers from Established Programs Financ­ing's revenue guarantee portions, but as the dust settled it became clear to the national federation of provincial health coalitions, the Canadian Health Coalition, that the two-billion-shortfall would mean increased extra billing. So the war goes on.

"Physicians say they are fighting for a way of life they call free enterprise. But if Monique Begin has her way, they may be denied the right to extra-bill."

Altantic Canada physicians say that they are fighting for a way of life they call free enterprise not just, increased income. But if the health minister Monique Begin has her way
physicians may be denied the right to extra bill. They say that judging from past performance the health minister seems determined to change their way of life and the face of health service delivery in Canada. The response from the nation's phy­sicians is uncertain. They wait on pins and needles for the next move from the federal government.

Socialized medicine, salaried physicians with no additional money incentives to spur them on, moves steadily closer and closer. Mean­while, dentists and other health professionals, not quite in the physi­cians' plight, stand by and watch. AB