Financing a First Nations and Inuit Integrated Health System
- A Discussion
First Nations and Inuit Integrated Health Funding
Why is it needed?
This paper's overview has introduced some of the main catalysts
to the establishment of an integrated health funding model. The
justification to a further evolution of financing arrangements
is multifaceted and as described in this section, is based on Aboriginal
desires for enhanced control over health services, the need for
flexibility in designing health programs, the current policy directions
of the federal government and the limitations imposed by the current
system to proactively meet the fiscal realities of capped resources
and a growing Aboriginal population.
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Cost Shifting Concerns - The Example of the non-insured
health benefits (NIHB) Program
As stated above, First Nations and Inuit are
particularly vulnerable to cost shifting as two governments, comprising
three main ministries (provincial ministry of health, Health Canada,
Indian and Northern Affairs Canada) independently and without mutual
consultation, provide resources for First Nations and Inuit health
and health related services. This has very real consequences, for
example, provinces which have aggressively promoted hospital downsizing
or closures, are downloading costs to the home care sector as patients
are discharged earlier. Home nursing costs on-reserve are a federal
responsibility in the view of most provincial governments, and
therefore the existing federal envelope of funds must accommodate
increases to home care expenditures. In reality, the federal envelope
is already being squeezed through the increased demands of the
NIHB Program, and there is little or no room for any community
health expenditure increases.
In a closed system created by integrating all
health resources, First Nations and Inuit would have the means
to deal proactively with jurisdictional issues such as cost-shifting.
The following analysis looks in depth at the NIHB Program in Ontario
Region for evidence of cost-shifting from the provincial government.
In the preparation of this report, little real evidence was found
of cost-shifting from the federal government to the provincial
or territorial governments. Some persons might say that the arbitrary
enforcement of a funding cap for the Medical Services Branch (MSB)
services to a population in great need which is experiencing sizable
population growth is, in essence, creating a climate for cost-shifting
to the provinces, if indeed there are services to shift to. The
small amount of information available on First Nations utilization
of Ontario health services does not support a shift to provincial
services. As a subsequent section will show, First Nations' utilization
of Ontario Health Insurance Plan (OHIP) services as evidenced through
per capita expenditures has decreased since the early 1990s, and
is substantially lower than the rest of the Ontario population.
In a closed system created by integrating all health resources,
First Nations and Inuit would have the means to deal proactively
with jurisdictional issues such as cost-shifting. The following
analysis looks in depth at the NIHB Program in Ontario Region for
evidence of cost-shifting from the provincial government. In the
preparation of this report, little real evidence was found of cost-shifting
from the federal government to the provincial or territorial governments.
Some persons might say that the arbitrary enforcement of a funding
cap for MSB services to a population in great need which is experiencing
sizable population growth is, in essence, creating a climate for
cost-shifting to the provinces, if indeed there are services to
shift to. The small amount of information available on First Nations
utilization of Ontario health services does not support a shift
to provincial services. As a subsequent section will show, First
Nations' utilization of Ontario Health Insurance Plan (OHIP) services
as evidenced through per capita expenditures has decreased since
the early 1990s, and is substantially lower than the rest of the
Ontario population.
Provincial Coverage Changes
Cost shifting from the provincial government
to the NIHB Program can occur in two main ways:
(a) Direct delisting of insured services
by the province. The most commonly cited area
for delisting is pharmaceutical insured coverage. For example,
if a provincial drug benefits plan delists certain pharmaceuticals
from its insured list, then eligible First Nations and Inuit
would turn to the NIHB Program for reimbursement of expenditures
relating to these de-insured drugs. Another example is in the
frequency of reimbursement for certain insured services, such
as optometrist care in Ontario, or removal of coverage entirely
such as in dental care or optometrist care in other provinces.
A recent study by William M. Mercer Ltd for the
Health Care Coordination Initiative Secretariat of the federal
government examined health care expenditures of federal clients
(including Health Canada) which are outside of the Canada Health
Act. It found that federal clients should be particularly
concerned about further devolution of health services given the
past trends. Since supplementary coverage for First Nations is
provided through the federal programs, they were seen as potentially
easy targets given that delisting by the provinces would be picked
up by the federal programs. This study looked at seven primary
areas for continued devolution of expenditures : (Note 6: William
M. Mercer Ltd.1996. Report regarding expenditures for federal health
care clients for the Health Care Coordination Initiatives Secretariat.
William M. Mercer Ltd: Ottawa.)
Prescription drugs: Prescription drugs
were rated as the greatest single risk to the federal departments
in provinces where coverage still exists, such as in Ontario, Quebec
and Manitoba. Federal clients were seen as facing a threat of complete
delisting of coverage. When First Nations were delisted from the
British Columbia pharmacare plan, the NIHB Program absorbed a $4
million cost increase.
Vision Care: The Mercer Report predated
the latest change to the vision care benefits instituted by Ontario,
however it warned of impending restricted coverage or tightened
eligibility in this area. As is covered below, the vision care
changes brought in this year in Ontario have had a revenue neutral
effect on the NIHB Program.
Paramedical Services: Provinces such
as British Columbia (BC), Alberta and Ontario have coverage for
paramedical services, which are based on maximum reimbursements
(per visit and annual). The Mercer Report warned of the risk of
further devolution, as these services could be seen as discretionary
and therefore more vulnerable to cutbacks. This is one area which
is outside of the NIHB Program as paramedical or allied health
services are not within the Program's mandate.
Dental Services: There are few dental
services covered by the provinces, other than surgical procedures.
Future changes could impact on the age of children which are covered,
or the limits to coverage based on income. These would all have
a significant impact on the NIHB Program, as dental care is a core
component.
Ambulance: The potential for delisting
was identified in land ambulance services. This would have a great
effect on NIHB Program clients, who are largely rural and who have
a high incidence of hospitalization.
Provincial Mental Health Services: Some
off reserve First Nations access provincially sponsored community
health centres, and the Mercer Report has targeted these services
as potential areas for delisting.
Assistive Devices Program: The Mercer
Report indicated that the Assistive Devices Program in Ontario
could be a future target of delisting by extending coverage based
on income.
(b) Changes to the provincial health
care system. This is more difficult factor from
which to assess quantitative impacts on the NIHB Program, but
nonetheless, it has the capacity to profoundly affect the Program,
both directly through removing patients earlier from the protective
umbrella of the Canada Health Act (i.e. early discharge
to the home) and indirectly through poor health outcomes. Both
of these factors are discussed below:
Poorer Health Outcomes: Although no
provincial or territorial health system would deliberately set
out to institute changes to its health system that would adversely
effect the client outcomes, this has been a concern in all of the
jurisdictions which have restructured their health system. The
creation of a more responsive, cost-efficient, effective and appropriate
health system has been the goal of all reform efforts. Criticisms
of restructuring have largely been centred on its fast pace of
implementation and the inability for new modes of health care delivery
to replace traditional, expensive hospital-based care on a timely
basis.
Within the hospital system which remains, concerns
have been raised over availability of care (less beds and a further
distance to travel to remaining hospitals) and quality of care
(fewer staff to attend to patient needs) by diverse professional
and consumer groups. The more recent health service reinvestment
strategies, both real and proposed, of provincial and federal governments
which now have their fiscal houses in order, gives credence to
the legitimacy of these concerns. Persons who cannot access beds,
do not recover as fast or suffer setbacks due to a reduced LOS
all have cost implications on the NIHB Program.
Replacement of Hospital Services: One
of the most visible effects of restructuring has been the shortening
of length of stays in acute care hospitals. Regardless of a debate
about health outcomes in a post-restructured environment, there
are real costs which have been shifted outside of the hospital
confines. As more day surgeries replace in-patient procedures and
people are discharged earlier to become clients of home care services,
more home care is required and an increased acuity of care is present
in this environment. As Canada Health Act insured services are
often the boundary between provincial and federal jurisdictions
for First Nations and Inuit services, the financial impact of restructuring
is felt beyond the NIHB Program to all community health services
of First Nations and Inuit. However, the effect on the NIHB Program
maybe seen through increased drug costs relating to drugs which
would have been covered under hospitals' global budgets or due
to poorer health status outside of a medical facility, increased
expenditures for medical supplies and equipment needed in the home,
and increased medical transportation costs for patients who have
been discharged early and which return for medical check-ups or
for re-admission.
Other Health System Changes
The broad scope of the NIHB Program which extends
to medical supplies and equipment means that it must respond to
changes in the clinical environment which are independent of restructuring
activities of provinces. These factors include:
Technology Changes: As medical supplies
and equipment are covered under NIHB Program, changing technology
will impact on expenditures. For example, intravenous lines needed
in the home, glucose testing kits for diabetes, and simple supplies
like bandages can be new and improved and increase in price. New,
more effective pharmaceuticals are also implicated in NIHB expenditure
increases.
Clinical Practice Guidelines: As health
care providers standardize treatment protocols in an effort to
provide more appropriate and effective care, the effect may be
an earlier treatment regime and a greater scope of eligibility
for treatment. For example, changes in clinical practice guidelines
for diabetes which incorporate a lower cut off for blood glucose
levels means treatment starts earlier. This treatment can include
a need for glucose monitoring kits, needles and syringes, and the
like.
Changing Demographics
First Nations are living longer, and the population
is increasing; two very important factors when assessing the demand
for the NIHB Program. The aging population has been implicated
in rising health costs, particularly in pharmaceuticals and home
care. As well, lifestyle issues may affect utilization of benefits.
Acquired Immune Deficiency Syndrome (AIDS) is only now beginning
to be seen as an impending epidemic among the Aboriginal population,
and its high cost is felt in all areas of the health and social
system. For example, treatment of AIDS patients who may wish to
stay or return to their home communities will mean increased demand
for home care services, and the need for skilled, appropriate care
in the community.
Rising NIHB costs can be due as well to simply
increased utilization. It is beyond the scope of this analysis
to comment on whether increased utilization is a result of a worsening
of health of First Nations people, increased awareness of the availability
of services, increased access to services which are becoming more
culturally appropriate and First Nations managed, or other factors.
Ontario Region NIHB Program
The Ontario Region NIHB Program has been analyzed
by benefit category over a three year period to investigate the
role of cost-shifting between jurisdictions and it relationship
to expenditure increases. The most recent three year period was
selected (1995-96 to 1997-98). This time period includes the NIHB
mandate renewal of Treasury Board which in essence caused a "delisting" of
its own, as allied health services were definitively placed outside
of the NIHB Program. Although some of the resources, for example,
foot care and chiropractic care, have found a place elsewhere in
the region's budget, the effect on the overall NIHB budget has
been to dampen the increase driven by other components, notably
pharmaceuticals and medical transporation.
As Figure 1 illustrates, the time period of 1995/96
to 1997/98 which has been selected for review avoids the period
of escalating cost increases which occurred in the early 1990s.
By 1994/95, the continuous rise in the NIHB Program had peaked,
with the stabilization thereafter coinciding with the new policy
of a budgetary cap for the MSB program as a whole. The MSB funding
envelope was allowed to grow by 6% in 1995/96 followed by 3% (increase
calculated on 1994/95 levels) in each of 1996/97 and 1997/98.
In the NIHB Program, a decline of 2.6% in total
expenditures was seen between 1995/96 and 1996/97. As will be discussed
below, this decline was somewhat artificial as resources were moved
from the NIHB budget, although the dental program achieved a real,
substantial decrease. Between 1996/97 and 1997/98, NIHB costs rose
by 6.7% due primarily to stabilization of many benefit categories,
counterbalanced by increases in the drugs, supplies and equipment,
and transportation categories.
Figures 2 and 3 provide a visual description
of the expenditure trends in the major categories of the NIHB Program:
dental care; drugs, supplies and equipment; health professional
services; contracts for health professionals; counseling/mental
health contracts; vision care; and transportation. Health professional
expenditures have been split into three categories to illustrate
the changes in the benefit area over the three years depicted.
Figure 2 presents gross expenditures in current dollars, and gives
a macro view of the actual changes in the benefit expenditure areas.
Figure 3 has converted these gross expenditures
to 1986 constant dollars (thereby controlling for inflation by
use of the consumer price index) and also presents these values
on a per capita basis. Therefore, both inflation and population
increases have been controlled, and expenditure fluctuations, in
the absence of changes to the eligible list of benefits, can be
attributed to two main factors: changes in the price of items and
changes in utilization of items.
Figure 2 illustrates that in real terms, substantial
increases to the NIHB Program over the three year period under
review occurred in the drugs, supplies and equipment category (15.5%),
and the transportation category (27.7%). A minor increase was also
seen in the vision care category (2.1%). Overall, however, the
NIHB Program budget increased only 3.9%. To explain this low overall
increase, an analysis by benefit category is required:
Dental Care
Dental care is a benefit category that has historically experienced
unchecked rising costs. For example, for Ontario from 1990/91
to 1994/95, dental costs rose 67.6% (Note 7: Medical Services
Branch Canada. 1996. Non-insured Health Benefits Program Annual
Report 1996/97. Health Canada: Ottawa.) (data not shown), and
previous analysis have suggested a number of factors for this:
an increased eligible population, increased costs of treatment,
and increased utilization per person. However, in 1996/97, a
frequency based program was put in place nationally, where limits
were established for certain procedures such as dental hygiene.
This new policy resulted in a short term dip in total expenditures,
but the longevity of such a program in reducing costs was not
put to the test, as in the following year, a pre-determination
program was instituted for all dental care. Now all dental plans
must be submitted for examination and approval by MSB, and a
holistic look at the dental needs of a patient is encouraged.
These two management strategies have been very effective in holding
down and in fact decreasing the dental budget over the last two
years (Note 9: Auditor General. 1997. Report of the Auditor
General of Canada to the House of Commons. Chapter 13: Health
Canada - First Nations Health. Minister of Public Works
and Government Services Canada: Ottawa. ). In real dollars, it
has decreased 22.3%; when controlling for inflation and population
increase, the constant dollar, per capita decrease was actually
29.1% from 1995/96 to 1997/98.
Drugs, Supplies and Equipment
This category has experienced similar rising costs in the early
1990s as noted in the dental program. In this case, expenditures
rose 59.1% from 1990/91 to 1994/95 in actual dollars (data not
shown). In contrast to the successful management strategies employed
by the dental program which has controlled dental costs, costs
in the drugs, supplies and equipment area have continued to rise
in the past three years, although not quite as sharply. In the
time period under review, these costs have increased 15.5% in
actual dollars, or 5.4% in per capita constant dollars. Ontario
Region has not seen significant delisting of pharmaceutical drugs
from the Ontario Drug Benefit (ODB) plan (Note 8: Interview with
Ida Campbell, Manager, NIHB Program, MSB Ontario Region, October
1,1998.). Ontario Region has not seen significant delisting of
pharmaceutical drugs from the Ontario Drug Benefit (ODB) plan8
. The Ontario government is the only provi()ce to coordinate
benefits with MSB, which means that eligible First Nations clients
are covered under its ODB Plan.
One provincial change to ODB benefits has impacted
the NIHB Program recently. On July 15, 1996, the Ontario government
instituted a $2.00 co-payment for prescriptions filled to low income
and social assistance recipients and a $6.11 co-payment prescription
fee with $100 deductible for ODB clients who are single seniors
earning over $16,000 a year or couples earning over $24,000 a year.
This has been estimated to have impacted the NIHB Program by $2
million over the last two years.9
There are two strategies in place at a national
level that have been implemented to control the rising drug costs.
The Drug Utilization Review process has been developed to evaluate
prescribing, dispensing and utilization patterns and to implement
activities and interventions to optimize drug therapy. Secondly,
the Program has recently implemented a Point-of-Service Claims
Processing system, which allows the capturing and approval of drug
claims in a real-time environment. Currently, 80% of pharmacies
are on-line. Certain categories of drugs require prior approval
for eligibility before release. Both strategies have been described
as helpful in controlling drug costs.(Note 10: Interview with Debbie
Tattrie, Manager Benefit Management, NIHB Program, MedicalServices
Branch Headquarters, October 18, 1998.)
Vision Care
Vision care expenditures have been essentially stable over the
last three years, as real costs rose by 2.1% from 1995/56 to
1997/98, or if constant dollars, per capita expenditures are
considered, a decrease of 6.8% was achieved. This is despite
a recent change in the frequency of eye exams which are covered
under the Ontario Health Insurance Plan (OHIP). The province
of Ontario, at the same time as initiating the frequency-based
policy, implemented an exception process whereby opthamologists
can request an added exam for certain medical conditions such
as glaucoma. This has meant that MSB has not had to pick up extra
eye exam visits which are medically necessary and fall under
the province's exemption list.
Health Professional Services
Allied health services have been a small component of the NIHB
Program, and never were included in the original mandate of the
program. As a result of the mandate renewal with Treasury Board,
allied health services were definitively removed from the Program.
As Figure 2 shows, the expenditure level for Health Professional
Services was just over $1 million in 1995/96, and within two
years, was removed completely from the Program. This category
covered foot care, chiropractic care, emergency speech therapy
and emergency physiotherapy. Approximately $350,000 relating
to foot care was removed in 1996/97 and converted to operating
dollars as part of the nursing budget in the Diabetes Program.
The following year, a similar amount was removed to Basic Health
Services for chiropractic care. The Ontario Region is currently
deciding whether or not it can sustain this chiropractic program.
MSB now picks up the portion of chiropractic costs that OHIP
does not cover. As chiropractic care does not have a regulated
fee structure, chiropractors are charging from $25 to upwards
of $95 for one visit (OHIP covers approximately $10 of this amount).
If this program is sustained at Ontario Region, MSB will have
to establish a uniform co-payment level. Emergency speech therapy
and emergency physiotherapy are no longer covered by the NIHB
Program, as by definition, an emergency service should be covered
by the provincial medical plan.(Note 11: Interview with Ida Campbell,
Manager, NIHB Program, MSB Ontario Region, October 1, 1998.)
Contract for Health Professionals
This category covered mental health contracts, and in 1996/97 was
converted to operating dollars under Building Healthy Communities.
Counseling/Mental Health Contracts
This benefit area shows a 27.7% drop in real dollars over 1995/96
to 1997/98, however the actual drop was between the first two
years of this time period. In 1995/96, the fee for service (FFS)
mental health unit was established and the NIHB Program was analyzed
for services which did not meet criteria. FFS mental health services
which should have been in Building Healthy Communities were removed.
In the last two years, a 30% increase has occurred in this category,
and has been attributed to increased demand for the short-term
crisis intervention services which are now funded under the NIHB
Program.
Transportation
In the three years under review, transportation services have been
undergoing a shift from MSB managed FFS to First Nations contribution
agreements. Overall, transportation costs are up 27.7% in real
dollars or 16.5% in constant, per capita dollars. This increase
has been attributed to client demand, and is the single, largest
increase in the NIHB Program for the time period 1995/96 to 1997/98.
A looming concern expressed at the Ontario Region
is the area of ambulance services. Currently, ambulance services
include a $45 copayment which the NIHB Program covers. The province
is moving the administration of emergency transportation services
to the municipalities. Although the province has assured the municipalities
that only management and delivery of the service, not funding will
change, the response of the municipalities is an unknown at this
time. Ontario's ambulance services are seen as costly and inefficient
by international standards, and recent media attention will force
municipal governments to address this issue. An offloading of costs
could have significant consequences on the NIHB Program in Ontario.
Summary
The two main areas where NIHB Program is experiencing continued
cost increases are the drugs, supplies and equipment, and transportation
categories. Crisis intervention mental health services have increased,
however this benefit category is of far lower magnitude. Overall,
expenses have been controlled in the Program by the establishment
of a pre-determination for dental services, the removal of allied
health services (the majority of which have been transferred
to other expenditure categories) and transferral of FFS mental
health services resources to Building Healthy Communities.
Examples of cost shifting have been seen in:
- provincial copayment requirements in the ODB Program which
are picked up by the NIHB Program
- emergency physiotherapy and emergency speech therapy services
(removed from NIHB Program in Ontario Region)
- increased pharmaceutical, supply and equipment costs and
home care costs presumed to be due to reductions in acute
care hospital services
Potential areas for concern in delisting by the
Ontario government include:
- prescription drugs
- paramedical (allied health) services
- ambulance services
- provincial mental health services
- assistive devices program
Other cost drivers which are impacting the NIHB
Program:
- more expensive technology and pharmaceuticals
- clinical practice guidelines
- changing demographics
- increased utilization of services
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