Frequently Asked Questions

The Quebec Pooling System

Larousse defines the verb “to pool” as the action of transferring (a risk, an expense) to the responsibility of a mutual insurance company or group.

Under the Basic Prescription Drug Insurance Plan (BPDIP) in effect in Quebec, Pooling consists of sharing, among all group insurance carriers and third-party administrators offering drug cost coverage, part of the claims for the amount exceeding a predetermined threshold (called threshold per certificate). As a result, the cost of major claims for one group is absorbed by the industry’s financial results.

Pooling is carried out according to the Terms and Conditions, which are revised annually and communicated to the Ministre de la Santé et des Services Sociaux.

Pooling is done to protect a plan and its members from the consequences of costs related to the risk of having one or more major claims.

A very high claim may result in a big increase in premiums that may prove impossible for the group to absorb. By pooling claims exceeding the threshold per certificate among all Pooling Participants,

  • we prevent there being too great an increase in premiums;
  • we protect the plan’s financial health;
  • and, therefore, we protect accessibility to private coverage for all members and their dependents.

 

Pooling is an obligation prescribed in section 43 of the Act Respecting Prescription Drug Insurance.

Any insurance carrier who offers supplementary group health insurance in Quebec and any third-party administrator offering coverage for the cost of pharmaceutical services and drugs, must participate in Pooling. It is an obligation stipulated in section 43 of the Act Respecting Prescription Drug Insurance. 

To qualify for Pooling, groups benefitting from drug coverage must meet the standards stipulated in sections 15.1, 42.1 and 42.2 of the Act, and the plan must offer coverage at least equivalent to that of the General Plan. For additional details, refer to QDIPCInfo–Compliance Criteria.

It consists of pooling all the drug claims from private industry in Quebec beyond a predetermined threshold per certificate and compensating Pooling Participants among themselves. Calculations are made annually. Those Pooling Participants who have paid out more claims will be compensated by those who paid out less. Compensation always totals zero and therefore, neither a deficit nor a surplus is created from one year to the next. For additional details, see QDIPCInfo–Process.

Yes, absolutely. All groups benefitting from insurance coverage that includes drug insurance must be subject to Pooling.

You must contact the Quebec Drug Insurance Pooling Corporation (QDIPC) and register as a Pooling Participant. You can reach us through the “Contact us” section of our website.

We will then ask you to submit information supporting your Pooling participation application.

After becoming a Pooling member, you will receive access to the area of the QDIPC’s website that is for Pooling Participants only. In addition, in February of every year, you will receive a letter from the Compensation Manager reminding you of the rules and the time for sending in the information required for compensation purposes.

All private group plans must at least cover the drugs on the List of Medications of the Basic Prescription Drug Insurance Plan (BPDIP). This list is drawn up and updated periodically by regulation under section 60 of the Act Respecting Prescription Drug Insurance. It contains three sections:

  • The general list section, which contains drugs whose cost is guaranteed without any specific restrictions, as well as certain supplies essential to the administration of prescription drugs and expenses for eligible pharmaceutical services;
  • The exception drug section, containing drugs whose cost is covered in cases, under conditions or for therapeutic indications that the Ministre de la Santé et des Services Sociaux determines by regulation;
  • The exception patient section, which provides for the cases, conditions and circumstances under which any other drug not appearing on the general list or exception drug list may be covered.

In addition to these drugs, a private group plan may cover additional drugs of its choice.

Pooling goes further than the legal minimum in this regard because all drugs so reimbursed are covered by Pooling on the basis of the established Terms and Conditions.

All Quebec members of a group plan within the meaning of sections 16, 42.1 and 42.2 of the Act Respecting Prescription Drug Insurance  are covered in accordance with the rules and Terms and Conditions established by the QDIPC.

The Drug Insurance Pooling Corporation (QDIPC) and its Role

Since its founding in 1997, the Quebec Drug Insurance Pooling Corporation (QDIPC) ensures the smooth operation of the Pooling system. Its mandate  includes, among other things, the annual review of the Terms and Conditions of Pooling, which comprise annual factors, as well as rules of application, and the supervision of their application in the resulting compensation process. 

The QDIPC is a non-profit legal entity that was created originally by the life and health insurance industry to meet the obligations of Section 43. Its members are made up of insurers and third-party administrators. The QDIPC has an independent Board of Directors that consists of directors, most of whom are industry outsiders who have expertise relevant to the performance of their mandate, and insider directors, representing industry. This composition ensures a fair balance of skill with healthy representation and a healthy distance with respect to industry.

The Pooling threshold and the annual factor are both determined on the basis of group size (i.e., the number of certificates that a group has, with one certificate corresponding to one member and their dependents, if applicable). The assumption being:

  • The bigger the group, the better able it is to reimburse large claims from the premiums paid by its members; therefore
  • The larger the group is, the higher the threshold above which Pooling is applied, and the lower the Pooling factor is (see the Terms and Conditions for the year in progress). 

 

Using actuarial formulas, the QDIPC takes into account changes in the profiles of the groups whose claims are pooled and changes in their numbers, as well as new drug therapies and their impact on the groups. Inflation, new drugs and changes in practices are therefore taken into consideration.

In addition to adjusting the Terms and Conditions, the QDIPC determines rules of applications, as well as the maximum size under which all groups are subjected to the Terms and Conditions. Beyond the maximum size, the QDIPC believes that groups have the financial capacity to handle large claims.

The QDIPC’s proposals are subject to consultation by all Pooling Participants. The Terms and Conditions are therefore designed with the input of broad industry consensus.

Impact on the market

There is no direct impact for the policyholder.

Pooling has an impact on the determination of rates. In fact, Pooling protects the employer’s premiums in the event of costly claims. Beyond a certain threshold, the costs of costly claims are shared with the entire industry. Because these costs are pooled, all employers are exposed to the same risk, regardless of the total value of the claims reimbursed by the carrier.

Pooling has an impact on the determination of rates and the presentation of groups. Pooling operates in excess of a threshold, which depends on group size. The rules concerning the determination of group size regulate practices.

They are the same for everyone and must be applied uniformly and without adverse selection. The group size must be the same, regardless of the business or administrative approach used in a particular file. A Participant cannot group together or divide up employers to take advantage of Pooling.

For additional details on the determination of group size, refer to QDIPCInfo–Terms of Application–Group Size.

No, but for Pooling purposes, groupings are allowed in certain very specific cases and under several conditions. There must be significant financial ties between the entities, joint financial results, and several criteria are applied to avoid adverse selection. All this is done to ensure fair Pooling among all the employers. Pooling is a consequence of insurance and not the way a group is determined. For additional details about determining group size, refer to QDIPCInfo–Terms of Application–Group Size.

The terms and conditions of pooling provide that the size of an eligible group is determined by the number of certificates in effect in Canada on December 31 of the year in question, even though only Quebec certificates are subject to pooling.

The number of certificates for a group that ends during the year is determined by taking the average of the number of certificates in effect on December 31 of the previous year (or the date the group came into effect, if it was during the year in question) and those in effect at the time the plan ended.

The average used is a simple arithmetic average, without weighting.

For Pooling purposes, this type of grouping is not allowed because the criteria of the existence of significant financial ties between the employers is not met. Unless there are common shareholders or a common union or unless there is a particular situation, as described in QDIPCInfo–Terms of Application–Group Size, this type of grouping cannot be made. The determination of group size and, as a result, of the pooling threshold level, is therefore made based on each of the employers and not on the basis of the size of the grouping.  

By definition, a multi-employers group must comply with the principle of joint liability, among others, for group size to be determined in a comprehensive way and not on the basis of the size of each of the employers that make up the group. A jointly liable group should not try to find out which employers cause premiums to rise or fall. Trying to get this information is considered adverse selection by the QDIPC. The QDIPC asks Pooling Participants to refrain from disclosing this information, including employers and market intermediaries. Only the overall experience of the group can be made available. To see possible exception cases of groupings, refer to QDIPCInfo–Terms of Application–Group Size.

When the individual experience of an employer or set of employers is made available, the QDIPC considers that access to the information could lead to adverse selection. The employers must then be reported individually at the end of the year and the pooling threshold must be determined on the basis of the size of each of the employers. The group therefore loses their multi-employer group status and loses it permanently. Groups must be preapproved by the QDIPC. For additional details, refer to QDIPCInfo–Terms of Application–Group Size.

A group is never « one » in group insurance. The expression is sometimes used when there is only one certificate in the group covered for drug insurance because the other policyholders are exempt from coverage or when the other policyholders are not Quebec residents. For example: a company outside Quebec with one employee in Quebec or a small group, all of whom have insurance through their spouse except for  « one » single person among them.