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JOINT COMMITTEE ON HEALTH AND CHILDREN debate -
Wednesday, 17 Dec 2003

Vol. 1 No. 21

Risk Equalisation (Amendment) Scheme 2003: Ministerial Presentation.

The first item on the agenda is the consideration of the Risk Equalisation (Amendment) Scheme 2003. I welcome the Minister for Health and Children, Deputy Martin, and his officials, and I ask the Minister to outline the background to the draft scheme, after which the members may ask questions.

At a recent meeting, the joint committee indicated dissatisfaction with the consideration of the risk equalisation (amendment) scheme. On 11 December the committee took a decision not to consider the scheme until the new year. The committee was then instructed by the Whip's Office that because the matter had been listed on the Order Paper, it must consider it. The committee's decision was made because the Clerk to the committee was informed of the need for the committee to consider the matter only on 10 December, and had then to ask for briefing papers and a copy of the draft statutory instrument for members' information as these had not been sent to the committee. This was despite the fact that the Order compelling the committee to consider the scheme was to be listed on the Dáil Order Paper the following day. There had been no communication of any kind with the committee.

The joint committee felt it should have been informed some weeks previously of the imminent need to consider the matter, and did not have sufficient time to consider the matter properly. The committee therefore asks the Minister to appoint an official to liaise between the Department and the committee in order get a clear flow of information in the future. There have also been difficulties in the past.

Members are reminded of the long-standing parliamentary practice that members should not comment on, criticise or make charges against a person outside the House, or an official by name or in such a way as to make him or her identifiable.

The risk equalisation scheme took effect from 1 July, 2003 and ensures that VHI, BUPA and the ESB staff scheme will, by the end of January 2004, and for each six month period thereafter, make data returns under the scheme for the six month period 1 July to 31 December. The returns to be made under the scheme at this time do not involve financial transfers between insurers, as this can arise only on returns submitted after a decision to commence actual risk equalisation in accordance with the terms of the scheme. The amendments relate only to data returns to be made under the risk equalisation scheme and not to changing arrangements between insurers and service providers.

The claims cost to be included in data returns by insurers under the risk equalisation scheme are set out in the first schedule. These include costs that arise when a private patient is maintained in accommodation other than private hospital accommodation. Arising from further consideration of this scheme, the Department is determined that there is a need to address the extent to which public hospital costs, those that arise in respect of statutory charges, and consultants' fees, incurred by an insured person, are to be included in returns. It has formed this view notwithstanding the fact that the first schedule to the scheme, setting out maximum equalised payments to be included in returns from insurers, explicitly provides for such costs.

The proposed amendment arises as the existing definition of a hospital stay, which is in Article 3, refers to maintenance in private hospital accommodation, but not stays in accommodation other than private accommodation. Article 8 of the scheme provides that undertakings shall determine amounts for inclusion in the periodic returns in respect of each settled claim, and this definition is related to that of a hospital stay. The proposed amendment to the definition of a hospital stay, to specifically refer to charges arising when the insured person is maintained in accommodation other than private hospital accommodation, would fully reflect the provision contained under 1(a) of the first schedule. Without the amendment, insurers would be obliged to exclude these claim costs - the statutory charges and consultants fees - from their returns to the health insurance authority in cases where a private patient did not occupy a private bed in a public hospital during their stay. It would be administratively more difficult for insurers to effect such omissions than include them, given the maximum equalised payment specified in the first schedule to the scheme.

A minor change to the definition of a period is also proposed, to facilitate interpretation of the scheme. Appendix 1 to this note sets out the relevant definitions currently contained in the scheme. We have liaised with the European Commission on this matter. The notification of the original risk equalisation scheme was made to the Commission before it was submitted to the Oireachtas in May. That submission stated that eligible costs on which any equalisation transfers would be calculated would include, in the case of public hospitals, full charges for private and semi-private accommodation, statutory charges applicable to public and private patients, and medical consultant fees. The proposed amendment is being presented again following further consultation with the European Union's competitions director general. The amendments proposed are fully consistent with the approval given to the scheme by each House of the Oireachtas. They do not involve any change in the principles of the scheme nor in the basis of its implementation.

Before I comment on the proposed changes, I reiterate what the Chairman said earlier about how the committee was treated on this issue. I think I speak for all members of the committee in expressing our outrage at receiving initial notification less than 24 hours before we were to deal with this matter, which did not seem to us then, nor seems now, a matter of life and death. It was not of such urgency that it could not wait, so that we could be allowed the usual notice. There are many items of the committee's agenda which in the views of its members are much more important than this matter. However, we were promptly told by the Whip's Office that we had a legal obligation to deal with the matter, which is why we are here this morning.

This is a minor matter, and I do not know why it is so urgent, but I object to the substance of the proposal. It is a measure which deals specifically with costs incurred by insurance companies when patients are treated in public beds. Most of us are aware that such a practice goes on. It is legally questionable. If it is not downright illegal, it is certainly sharp practice on the part of consultants, and hospitals condone and collude with the practice because they also benefit. They can charge, if not for the hospital beds, then certainly for treatments such as x-rays, lab results and so on. It is a cosy arrangement that has never been challenged. I object to the State, through the Minister and his Department, condoning the practice and giving it a legal standing which it should not have. Instead of dealing with it in this manner and ensuring that the data returns include these costs to insurance companies, the Minister should clarify the position and prohibit the practice of allowing consultants' charges for people being treated in public beds.

People are entitled to free treatment when in public beds. The practice referred to is driving up the cost of insurance with no benefit to anyone except the consultants. The practice is usually perpetrated on people who are vulnerable. Such people are usually treated after being admitted as a matter of emergency. It often happens that on the day before they are due to go home, they are persuaded to switch to being private patients. In fact they have had their treatment and are never switched to private beds. They are discharged from the public beds in which they were treated, but suddenly, at the stroke of a pen, a fee is due to the consultant. This is then passed on to the insurance companies. With everything going up in price, this is just another stealth tax being perpetrated on the public, a tax to which I object.

The manner in which this matter is being dealt with is unfortunate. I understand that the issue before us is not of major importance in itself, but is a matter of making sure that the legislation is clear and watertight. One cannot argue with that, and there is logic to what the Minister is proposing. However, this is about a central illogic in our health service. The proposal is to ensure that all charges to private patients are included in data returns from insurers. In terms of the risk equalisation scheme, that makes sense, but what is under discussion - which should be highlighted, now that we have the opportunity to do so - is charges levied on a patient who is in a public hospital bed. Under our legislation, such a patient has an entitlement to hospital care. It must be asked whether such a person is a public or a private patient. Such people have rights as public patients once they are in public beds, but under the change proposed it is clear that they are being treated as private patients. In the way they are dealt with by the hospitals, they are certainly treated as private patients, because the consultant is being paid twice for the care that he or she provides. Can the Minister say if that is legal? What is the legal position?

We all know the outcome of the central point. We know we have a two-tier system that is grossly unfair, which incentivises the use of public beds by private patients. We know that hospitals and consultants are rewarded for the care they give to private patients, whereas if they care for too many public patients, they are in effect penalised because the hospital goes over budget. We know from ESRI research that public facilities are over-used and that there is excessive use not just of beds, but also technology, for the care of private patients, because incentivisation is inherent in the current system. There is a danger too in prioritising private patients where there is minimal private capacity in a hospital. Paediatric hospitals provide the obvious example.

This gets to the heart of the problem of our two-tier hospital service. It is a problem from which the Government has run away. We just happen to have an example before us of where the evidence of this failure to deal with the core issue emerges, by way of a discussion on risk equalisation and making sure the legislation is clear-cut. It exposes the reality of a situation where a patient is in a public bed in a public hospital, paid for by the taxpayer, and is being charged for the care given, with the insurer covering the charge, because of the person being defined as a private patient. I have argued many times that the way to deal with this is to get rid of the differentiation between public and private when it comes to hospital care, by means of extending insurance. That would deal with this issue permanently.

We need to know whether the current practice is legal. A woman recently complained to me that she was charged as a private patient for occupancy of a day bed in a hospital. She never saw a bed when she was in hospital. She goes there on a regular basis. We all know of the case where a private hospital was charging the insurer for expensive drugs that the hospital was getting free from the company as part of a research project. The insurer was paying that charge. Collusion is a strong word, but the practice has been that, for example, the hospital consultant, the insurer and indeed the Minister have all maintained this grossly unfair system. In effect we are now clarifying that situation in this legislation. We must make the point that in effect, something that certainly has legal implications needs to be questioned. We are talking of a situation that should be disallowed, whereby somebody can become a public patient, while a private patient still occupies the same bed.

I am perhaps unusual as a member of this committee in never having been fully convinced of the need for risk equalisation.

The Deputy is not unusual.

I am delighted to hear that I have so many supporters here.

I was not particularly supporting the Deputy.

Deputy Mitchell is supporting me on this issue.

I thought the Deputy was supporting me.

What we have before us is an example of the peculiar hybrid system that we operate in our health service, the sort of public private partnership that we see. This is the only country in the world with such an odd system. Today, we are giving further recognition to this system. Professor Niamh Brennan recently made a recommendation to this committee, one which will probably not be implemented, regarding the need for some consultants to operate in the public system alone, without the sort of crossover referred to.

Along with other colleagues, I regret how this matter is being rushed through. Such rushing seems to be a feature of this Government. I will not get too party political, but we are rushing all the time. The result is that Deputies do not have adequate opportunity to analyse matters coming before them.

Can the Minister tell us how widespread is this charging practice, and in how many hospitals it operates? It seems to involve consultants being once again on a gravy train. That is unacceptable. The Minister might clarify the situation before we proceed.

I echo the sentiments of the Chairman on the contempt with which this committee has been treated - not by the Minister I hasten to add. The Department should treat this committee better. I also object to the fact that in the Clerk's letter summoning us to this meeting, we were told that as committee members we are legally obliged to follow this matter through. I do not necessarily hold the Clerk responsible, because it is obvious that higher powers are at work. We are all wasting our time here. What functions have we if we are legally obliged to do this? It matters very little what discussion takes place here. I make that point because I am seeking to defer this matter. A decision is being pursued in haste. We all received the relevant papers only yesterday. Why are we acceding to this? The Minister said at the end of his statement that the issue was a minor one and did not involve any change in the principles of the scheme. Why the haste if it is not terribly important?

When told that we must do something by a certain date, I am always inclined to test that ruling and see what happens. Will the sky fall if we do not ratify this matter by the end of the year? I greatly doubt it. I also support the points made by previous speakers on the issue of private patients in public beds. What is proposed in the changes and definitions of the scheme pushes transparency very much further away. I would have thought we were seeking to make the scheme much more transparent, that we could define very clearly and establish when a patient is either a private or public patient and the basis for the charges.

As Deputy Gormley pointed out, members rely on briefings and it would have been helpful if members had been briefed on this issue. What attitude has the Health Insurance Authority taken to this amendment? Was there consultation with the health insurers with a view to establishing what the practitioners require? May I have the details of the consultations that took place? The Minister would probably agree that consultation is very important. Members have queried the charging practices, but we have no idea how widespread the dubious semi-legal practice of double charging is. We need to be clear about this.

I object to this legal imposition when the committee had decided to postpone discussing the scheme. I look forward to hearing the Minister's replies. I may have supplementary questions to put, but I suggest that the committee defer consideration of this measure.

Who defines a hospital bed as a private bed? Is it possible for management to make a bed interchangeable? For example, can wards be defined as private wards? I have been told, but I do not know whether it is true, that some hospitals have defined public wards as private to generate income by treating patients from the waiting list initiative. It is important to remember that for hospitals, charging the insurance companies for private patients in public beds is a very important source of income. There is a very loose definition of a hospital private bed. How will the system deal with a sick person who wants to remain in a public bed, to which he or she is entitled, even though he or she may be a private patient and will not transfer to a nursing home?

The use of the word contempt is a bit strong as it was never the intention of officials from the Department of Health and Children to treat this committee in such a manner. I was made aware only this morning of the level of angst among members at bringing forward this measure. I had not realised the committee had taken a decision to defer it. I wrote to the Opposition spokesperson offering an oral briefing on the scheme in advance of this meeting. The EU finished its deliberations at the end of November and we were anxious to get the measure through before Christmas so that there would be a period before the returns would be made.

The central issue identified is the public-private mix. We are all around long enough to know this did not just happen yesterday. In fact, prior to 1991 - although Senator Henry might be more experienced on this issue - I understand that consultants could charge hospital patients above a certain income level. In 1991 it was formalised through an industrial relations agreement to what is now called the 80:20 split. We have a policy position of an 80:20 split in public hospitals, which the national health strategy that we published in 2001 confirms. In the preparation and formulation of the national health strategy, the issue was examined in detail by the then Government. I was the Minister at that time and am well aware of those discussions on how we would marry the consultants common contract to the 80:20 split which allows consultants to charge consultant fees for patients in public hospitals or in public wards. Sometimes a public patient would be given a private room, if the need arose. What emerged from the health strategy discussions was that more vigilant management of the 80:20 split in the acute hospital sector was required than had heretofore been the case.

There is a number of options in dealing with a fundamental policy issue, renegotiation of the consultants' contract in such a manner as to clearly separate and delineate the consultants' private work from public work. It has been argued in some of the reports that were recently published that all consultants should do their private work in private hospitals and all public work in public hospitals. The rationale behind the original split consultants' contract is that it enabled us to succeed in attracting some very fine consultants to return and we have a high quality staff. The health strategy confirmed the continuation of the 80:20 split but qualified it by stating that additional beds provided would be for public patients only. This has been a feature of our system for a quite considerable time and we are not adding to or changing it. The situation has been commented upon. Deputy McManus has a different solution in terms of universal health insurance.

Will the Minister tell us about the additional beds; will we see any this year?

There are 568 in already.

We are not seeing any this year?

We are working on the others.

It is handy; the Minister does not have to designate them as public or private beds.

The Health Insurance Authority was advised of the situation. This measure relates to statutory charges; if a private patient were in a public bed, the statutory charge and the consultants' fees would be returned, not the accommodation charges.

The Minister is being disingenuous in answering a question we were not raising. Nobody is objecting to consultants coming back and having private practices and we are not objecting to the 80:20 split. What we are objecting to is the sharp practice of charging people twice.

That is wrong.

The consultant is being paid to do the public work; the public work has been done in a public bed, to which the person is entitled. It is forcing the patient, usually on the last day in hospital, when the person has had all the treatments, to use his or her health insurance. The patient never moves bed but is forced to use insurance and that is driving up the cost of health insurance. The consultant has been paid to do the work and has carried out the work as a consultant operating in the public sector and now will be paid after the event because the patient has health insurance. Often he or she is put under undue pressure to use insurance cover.

I wish to raise a separate issue.

We will deal with this issue first and then return to the Deputy.

When Deputy Mitchell mentioned double charging, I thought she meant the anecdotes we have all heard where people get a bill from the insurance company for treatments they cannot immediately recognise whether a bed night, medication or various fees. That is what I was referring to when I said, "that is wrong".

They are two separate matters.

That is a matter of honesty in making returns, in making submissions and in charging. The 80-20 split does facilitate the charging of consultants' fees. If a patient decides to be a private patient and accesses a consultant on the basis of being a private patient, that person when admitted may not be in a private bed. The patient may be in a public bed but he or she is still a private patient.

The patient does not decide to be a private patient. What happens is that the hospital decides it needs the bed and asks the patient to move to the private part of the hospital. It does not actually move the patient.

My understanding is that the choice is made on admission to the hospital.

No. It happens after the event; after the treatment.

That is one issue. The other issue is that many patients attending accident and emergency departments are insured patients. Coming through accident and emergency departments are public patients and they become private patients because once they are private patients the money follows the patient and the hospital and the consultant are rewarded. The incentive for the patient to become a private patient is huge, not from the patient's point of view but from that of the hospital, the service provider. That happens. We are not making this up. It is inevitable because of the way the system operates.

I know that. However, if the patient is paying insurance, the patient will opt as well.

How is the determination of that status facilitated in terms of the legal framework?

I understand it has been a policy position of successive Governments over 30 or 40 years in terms of the practice of consultants charging in public hospitals. Patients make the choice on admission. Quite a significant number are en route through accident and emergency departments. However, if a patient has an insurance policy taken out with a particular insurance company, he or she will very often want to avail of the facility for which he or she is insured if in hospital. Having paid into a scheme, people believe they might as well benefit from it. That is the natural response of the individual.

I appreciate what the Deputy is saying about the degree of incentivisation for consultants to move patients towards the private arena. That is an issue that was identified in the health strategy. It is an issue on which we are working with hospitals in terms of better management of the split between public and private, mainly in our teaching hospitals. It is important to point out that the risk equalisation scheme is not doing that and has not been responsible for that.

I accept that. The Minister opened up the can of worms by coming back here.

I certainly did.

Is it agreed that that the committee adjourn for a vote in the Dáil? Agreed.

Sitting suspended at 11.53 p.m. and resumed at 12.22 p.m.

Will the Minister respond to the issue raised?

The public private issue of a consultant charging patients who are in public beds was raised. Under the 1970 Health Act patients who choose to avail of services as private patients forego their entitlements as public patients and are liable for accommodation charges when maintained in private or in semi-private accommodation and for the statutory charge and consultants' fees but not for accommodation charges when maintained in a public bed.

Patients are charged for the use of the hospital facilities such as laboratory costs and other such costs.

Private patients would be charged for that. I presume such costs would form part of the fees of the various professionals.

That concludes this debate.

I thank the members of the joint committee for their understanding tolerance, and undertake effectively to put in place a liaison arrangement.

I thank the Minister for that.

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