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July 22, 2012

Extra-Billing at Private Clinics

If talk shows are any indication, discussion of Dr. Brian Day's challenge of the constitutionality of some provisions of the Medicare Protection Act can easily go off on many tangents. For the future of Medicare as we know it, it is important to focus the discussion on the central issue of extra-billing, which is prohibited under the Act.

Extra-billing occurs when a physician bills a patient for a service that could be billed to the Medical Services Plan, whether or not MSP is billed. Sections 17-19 of the Act define direct or extra-billing (synonymous terms). The term double billing is not defined in the Act.

Extra-billing could be for as little as a $20 "tray-fee" charged by a family practitioner who feels the MSP fee is inadequate for the supplies needed for a particular procedure, or it could be thousands of dollars for the use of a private operating room. From time to time the Medical Services Commission (MSC) is made aware of physicians charging tray fees; a letter from MSC to the offending physician is usually all it takes to end those charges. Dr. Day's clinics offer services normally provided in hospitals; consequently, additional fees in those clinics cover the costs of the private surgical rooms and diagnostic equipment. The audit conducted by the MSC did not determine whether a profit was made above and beyond covering those costs, but a bill in any amount to an eligible patient for a service covered by MSP is a prohibited extra-billing.

Some ask what's wrong with people spending their own money to use a private clinic rather than waiting to use a public hospital. After all, the RCMP, prisoners, those with injuries covered by WorkSafe BC and ICBC are able to go to the front of the line. A very important difference is that those who receive services insured through some public plan other than MSP do so under terms, conditions and fee schedules that are negotiated. The clinics and physicians providing those services do not bill their patients extra on top of what those plans pay. That includes work done in private clinics under contract to health authorities to supplement hospital capacity. That is not the case when a physician or clinic bills a patient in addition to whatever MSP pays.

If the courts ultimately agree with Dr. Day's position, then other (possibly most) physicians would begin to charge patients on top of what they bill to MSP. If private insurance steps in to cover those extra charges, then market pressures to keep such extra charges down would be reduced. Fee negotiations would be almost meaningless as physicians would have a blank cheque to top up negotiated fees with whatever additional charges the market would bear. Instead of allowing some people to eliminate pressure on the health system by diverting themselves to private clinics, the primary consequence of eliminating restrictions on extra-billing would be higher costs for everyone due to the elimination of meaningful fee negotiations. For a comparable situation, consider how dental fees are set. The BC Dental Association unilaterally sets fees and issues a guide each year. Many dentists follow it, some charge more but it is very difficult to find any that charge less. If the extra-billing restriction in the Medicare Protection Act is overturned in court, physicians will be able to set fees just like dentists, and many people will find ability to pay will become more important in access to care.