The confusing case of CT scan fee reductions

I remain entirely confused by the whole diagnostic fee debate.  Honestly there hasn’t been much clarity on the issue.  Here’s my current understanding and thoughts with the wholesale admission that I don’t have all the facts and am not certain what the real situation is.

  • The Health Council recommended a reduction in fees
  • The OBA opted to reduce fees beyond this recommended rate (their PR statement on the issue glossed over this entirely which was wholly disappointing.  I would link to it, but I can’t even find it, especially not on their website which hasn’t been updated since the election)
  • Premier Burt and Health Minister Kim Wilson believe the rates set by the OBA were unreasonable.  They have taken the step of stating that they will return the fees to the Health Council’s recommended amount and reimburse the various providers the difference between the OBA’s rate and the rate originally recommended by the health council.
  • Dr. Brown and his various supporters do not agree with the Health Council’s proposed rates and that they should be returned to where they were.

One of the biggest questions I have is how the prices are set.

  • Are these fixed rates?  Ie. all diagnostic providers are only allowed to charge these rates and nothing different.
  • Are these fixed reimbursement rates?  Ie, diagnostic providers are free to charge what they like but insurance companies are only required to reimburse at the set rates.

This is a key point I haven’t been able to verify as of yet.

The first is a very firm price control which I am not in favor of except in very special cases where due to our size a provider has a complete monopoly (eg, Belco’s rates would be a whole different discussion).  However, in this case, similarly with grocery prices, I am not convinced a firm price control is the answer.

The second is more reasonable in terms of a soft price control.  It would mean Dr. Brown is free to charge what he likes but he really has to convince people or insurers to choose to pay extra for his service.  In cases where the hospital facility is down or busy that would certainly be an outcome.

Personally, I believe firm price controls should be an absolute last resort and usually are a sign of a poor regulatory environment rather than a good solution.  A soft price control is more reasonable though still not absolutely ideal.  It points to inefficiencies in the process that should likely be examined.

Ultimately we need proper regulation to ensure a fair and equitable free market and price controls don’t achieve that any better than a complete lack of regulation.  It’d be great if we had more clarify on how this is being achieved.