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Physician funding framework

The Alberta government is managing growth in physician spending by making practical changes to how we compensate physicians.

Alberta will maintain government’s current level of spending on physicians at $5.4 billion, and implement a new funding framework to avoid $2 billion in cost overruns by 2022-23.

The new physician funding framework was introduced March 31, 2020. It's a multi-year process that will require consultation with the Alberta Medical Association (AMA) at all stages. It will include:

  • implementing changes proposed during negotiations to prevent cost overruns
  • aligning benefit programs and administrative fees with those of comparable provinces
  • improving services for patients

Changes will also include government’s 11 Consultation Proposals based on appropriate patient care and use of insured services budget. The AMA, physicians, and other providers were consulted on these proposals. They were also brought to the AMA negotiations table. Nine of the proposals are currently moving forward.

New funding framework

Table 1: Practicing medicine under the old Alberta Medical Association Agreement vs. the new Physician Funding Framework.

  OLD
AB Medical Association Agreement		 NEW
Physician Funding Framework
$5.4 billion in annual funding    
Competitively paid physicians in Canada, including compensation for extra time with patients    
As small business owners, choice and autonomy in how to practice, including hours of work and business model    
Voluntary participation in a range of funding models (i.e., Alternative Relationship Plans)    
A range of taxpayer funded benefit programs, including subsidized medical liability insurance and overhead costs, parental leave and compassionate care    
Support for physicians in rural communities including recruitment, retention and training    
Management of unsustainable taxpayer funded spending growth    
Alignment of physician compensation with patient care    


Timeline

  • September 2019
    • Government provided notice to the AMA that it intended to begin negotiations on the AMA Agreement. The notification provided time for the AMA to prepare its proposals.
  • November 2019
    • Negotiations began with the AMA to reach a new agreement and government began consultations on 11 proposed changes primarily related to the schedule of medical benefits (SOMB, or “insured services”).
  • January 2020
    • Negotiations and consultations proceeded with no agreement reached.
    • Mediation, on both the negotiation and consultation proposals, began January 31 and continued into February.
    • The parties were not able to reach an agreement during mediation.
  • February 2020
    • Government announced it will implement its final offer from the negotiating table, including the 11 consultation proposals, and some changes to benefit programs.
  • March 31, 2020
    • The new Physician Funding Framework came into effect March 31, 2020.

Physician costs

A new funding framework will address growing costs so government can address important frontline health care priorities like reducing surgical wait times, improving mental health and addiction services, and expanding the number of continuing care beds.

  • The MacKinnon Report found that payments to Alberta physicians are significantly higher than comparable provinces like Ontario, BC and Quebec. It also found that more Alberta physicians are paid through a high cost fee-for-service model than other provinces.
  • Alberta spends nearly 25% more per capita on physician services than comparable provinces.
  • A doctor in Alberta earns roughly $90,000 more than a doctor in Ontario.
  • Physicians’ fees have almost tripled since 2002. Without any changes, the current model would have cost taxpayers an additional $2 billion by 2022-23.

Spending growth on physicians is not sustainable and provides no better health results for Albertans.

Family physician gross-clinical payments

Table 2: Average Gross Clinical Payment per Physician FTE (2017-18)

Province Gross Clinical Payment
Alberta $443,091
British Columbia $375,880
Ontario $348,708
Quebec $414,120
Data Source: Canadian Institute for Health Information (CIHI)
Alberta data reflects FFS payments only. BC, ON, QC data reflects clinical payments from FFS and ARPs. Calculated for a full time equivalent physician.

11 consultation proposals

The Government of Alberta made 11 consultation proposals to the AMA to enable Albertans to realize better health outcomes and build a stronger and more sustainable health system, while managing physicians spending growth. The 11 consultation proposals will not change how doctors practice medicine. Nine of the proposals are currently moving forward.

  1. Complex modifiers
    On March 17, 2020, the Government of Alberta announced changes for complex modifiers will not go ahead as planned on March 31. Read the news release.
     
  2. Comprehensive annual care plans
    This redundant billing code will be removed as physicians can bill for a comprehensive annual visit to provide patients advice on how to manage complex conditions.
     
  3. Driver medical exam for patients 74.5 or older
    Having these drivers pay for their medical exam is consistent with other patients and will align with coverage in other provinces.
     
  4. Diagnostic imaging referrals
    Only practitioners providing publicly funded services through the Alberta Health Care Insurance Plan will be able to refer for diagnostic imaging services, which is consistent with the approach taken by some other provinces. There is no change to the scope of practice of practitioners.
     
  5. Diagnostic image billing appropriateness
    Streamlining physician fee codes for areas like diagnostic imaging will ensure services are billed the same way.
     
  6. Implement daily office volume caps
    We are capping the number of daily patient visits to enable physicians to practice within reasonable patient loads.
  1. Overhead
    Ensures physicians are not billing overhead costs such as equipment, supplies, leases and technical staff for work delivered in an AHS facility, as these costs are already covered by the public health facility.
     
  2. Clinical stipends provided by AHS
    The practice of payment top-ups is a carry-over from when Alberta had several regional health authorities and is no longer appropriate as physicians are already compensated under the Alberta Health Care Insurance Plan. Note: In light of COVID-19, AHS has been given more time to prepare an implementation plan for recommendations coming out of the AHS review, including the clinical stipends it provides to physicians. Clinical stipends will continue until a final implementation plan decision is made.
     
  3. Submission of claims within 90 days
    Giving practitioners 90 days to submit their payment claims, instead of 180, will improve budget forecasting, policy and planning decisions, an earlier publication of the Statistical Supplement and the inclusion of AHCIP benefits on the Statement of Benefits Paid – a product used by patients.
     
  4. Non-invasive diagnostic test fees in AHS facilities
    Directing AHS to standardize the fees paid for non-invasive diagnostic procedures will ensure consistent compensation between hospital and non-hospital physicians.
     
  5. Stop accepting non-emergency good-faith claims
    Ending the practice of submitting claims for services provided to patients who cannot provide proof of AHCIP coverage or Alberta residency will reduce the number of unpaid billing claims and ensure services are provided to eligible residents. Four other provinces do not provide good faith claims.

Benefit program changes

  1. Continuing Medical Education Program
    Effective March 31, 2020, this program was eliminated. This program currently reimburses eligible physicians for costs incurred for the maintenance and enhancement of knowledge, skills, and competency. This brings Alberta in line with Ontario.
  1. Medical Liability Reimbursement Program
    Effective March 31, 2020, funding for this program was reduced. This program is administered by the AMA, and reimburses eligible physicians for costs incurred for medical liability insurance premiums set by the Canadian Medical Protection Association. Alberta is moving to a model with a fixed funding amount, which will move Alberta’s medical liability payment in the direction of peer comparators. Discussions are underway with the AMA on the amounts that physicians will co-pay for insurance.
  1. Business Costs Program
    Effective March 31, 2021, changes will be made to limit payments for the Business Costs Program (BCP) to the base rate for each visit. Physicians will no longer be able to claim BCP for modifiers paid in addition to the base rate.
  1. Rural Remote Northern Program
    Effective March 31, 2021, eligibility criteria will be revised to ensure that only rural and remote communities are eligible for payments. Payments will change to a variable fee based on the isolation of a community. The program currently provides funding supports to urban communities, for example, Spruce Grove.

Other compensation options

The Fee-For-Service model isn’t right for everyone. Clinical Alternative Relationship Plans (ARP) enable physicians to spend more time with patients and address complex needs, without worrying about their compensation being tied to delivering specific services.

Alberta Health is streamlining the process for creating an ARP:

  • Once we receive an acceptable application, a Clinical ARP can be implemented within 6 weeks.
  • The Expression of Interest and application forms will be updated to reduce the amount of information required. The updated forms concentrate on service delivery and how a Clinical ARP will improve patient care.
  • A dedicated phone number and email has been set up to make it easier to inquire about Clinical ARPs

Common questions

  • Why are you doing this?

    Alberta’s physicians are essential partners and leaders in delivering our province’s health care system. The changes do not alter the key role that physicians play. The status quo is not sustainable and our ability to maintain high quality health care services now and into the future is in jeopardy.

    • As per the terms of the agreement, Government provided notification that we wanted to negotiate in September 2019. Negotiations and consultations began in November 2019. After failing to reach an agreement through negotiations, voluntary mediation began on January 31, 2020.
    • There were many meetings between the Minister, the AMA President and other members of both Alberta Health and the AMA.  In addition, Minister attended the AMA Representative Forum in September 2019 and outlined the government’s fiscal position and need for change in front of 150 AMA leaders.
    • Despite all of the official and unofficial discussions on this topic, the AMA proposal came nowhere close to managing growth in physician spending. Unfortunately, mediation talks ended after the same result.
    • The existing model has not provided meaningful improvement to Alberta’s health outcomes.  They still lag in serious ways, while spending increases each year. If things don’t change, then we are not going to achieve the breakthroughs we need on improving health outcomes for Albertans.
    • We not only have a fiscal responsibility to deliver these changes, but we have a governance responsibility.  We can no longer afford unreasonably high compensation for physicians that restrict us from being able to set and fund priorities across the health system.
  • What exactly is the new framework?

    The new framework has 3 elements including:

    1. 11 changes, primarily to insured services, that concern physician compensation. The proposals are based on appropriate patient care, appropriate use of insured services budget, and alignment with other jurisdictions. Nine of the 11 changes are currently moving forward.
    2. Proposals tabled in negotiations with the AMA focused on reducing or eliminating benefit programs that exceed jurisdictional comparators.
    3. Savings identified through the Ernst and Young’s review of Alberta Health Services.
  • Are you cutting health spending?

    No, the budget for physicians will remain at 2018-19 levels until 2022-23.

    In Budget 2020, the government delivered on its commitment to maintain or increase the level of overall health spending, rather than making a hard cut. Health's operating budget is $20.6 billion in 2020-21, an increase of $5 million from the previous year.

    It will take all partners in the health system acting together to work within this overall budget. This includes the government and physicians. Alberta will maintain government’s current level of spending on physicians at $5.4 billion.

  • What does this mean for doctors?

    While there are some important structural changes in the new framework, the majority of physician programs, policies and benefits will remain unchanged. For example:

    • Physicians will continue to be paid for their services.
    • We will continue to compensate physicians for extra time spent with complex patients.
    • Government supports for physician overhead costs, medical liability insurance, locums, rural incentives, and many other benefit programs will continue.
    • Physicians and the AMA will continue to influence health care policy and delivery through participation in more than 60 AHS and Alberta Health committees.
    • Physicians will continue to be paid at some of the highest rates in the country.
  • Is this really about improving patient care?

    This is about putting in a new funding framework that’s been needed for a long time. One that drives the right dynamics and is respectful to doctors, affordable to taxpayers, and helps the system get better health results for Albertans.

    This funding framework will control physician spending so unsustainable growth does not squeeze out spending on Albertans’ health priorities like reducing surgical wait-times or investing in continuing care.

    Under this framework, Alberta physicians will still be among the highest paid in Canada.

  • Will doctors leave Alberta to go work in other provinces?

    Alberta will remain an excellent place to practice medicine. We have:

    • a long established primary care network that provides supports to family practitioners and their patients
    • a single health authority
    • an advanced IT infrastructure that allows physicians to share information
    • an active partnership with the Rural Health Professions Action Plan to recruit and retain physicians in rural areas
    • a generous benefits package that includes compassionate leave, parental leave, and medical liability
    • two faculties of medicine
  • Can I still go to the doctor?

    Yes, you can still go to the doctor, and your doctor will still be paid for your visit.

    The new physician funding framework will not have an impact on physicians getting paid for their services. The Alberta Health Care Insurance Act requires the government to pay doctors for their services.

    Albertans will still be able to visit their physicians, and physicians will continue to bill taxpayers.

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