On November 13, 2012, the board of directors of the Ontario Medical Association (the “OMA”) and the Ontario government (the “Government”) tentatively agreed on a new Physician Services Agreement (the “Agreement”).[1] This past weekend, on December 9, 2012, the OMA announced that the Agreement had been ratified by the province’s physicians. Nearly 21,000 of Ontario’s physicians voted in the referendum and 81% of the voters endorsed the Agreement. Approximately 84% of the province’s physicians voted in the referendum, representing the highest voter turnout in the OMA’s history.

The Agreement will be retroactive to October 1, 2012 and will run until March 31, 2014, and marks the end of a dispute between the OMA and the Government which has been ongoing since early 2012. Negotiations between the parties were suspended in May of this year (and resumed in September, as will be discussed below) as a result of regulatory changes made unilaterally by the Government to cut fees and premiums under the Ontario Health Insurance Plan’s Schedule of Benefits and Fees (the “OHIPFee Schedule”).

Included in the regulatory changes made by the Government was the reduction in fees for 37 physician services[2] under the OHIP Fee Schedule, which the Government estimated would save $338 million in 2012-2013. The fee cuts which occurred in May 2012 (but which were retroactive to April 1, 2012) focused heavily on high-paid specialists such as radiologists, ophthalmologists and cardiologists. The fee cuts included:

  • a reduction in fees for electrocardiograms, cataract surgeries and interpreting results of diagnostic radiology;
  • a reduction in fees for colonoscopy and gastroscopy;
  • the introduction of a flat fee for anaesthesia of $60; 
  • a 50% reduction in fees for “self-referrals” made by physicians (i.e. fees paid where a physician refers a patient back to the physician’s own practice for diagnostic services); and
  • the delisting of certain services including joint/spine manipulation.

In July of this year, the OMA launched a constitutional challenge against the Government in response to the fee cuts, alleging violation of the OMA members’ right to freedom of association under the Canadian Charter of Rights and Freedoms by the Government.[3] The action, which was brought in the Ontario Superior Court, sought to end the fee cuts and order the Government back to negotiations. Negotiations between the parties resumed in early September and led to the tentative deal reached by the OMA’s board of directors and the Government in mid-November.

As part of the Agreement, amendments were made to six of the 37 fee cuts imposed by the Government in May. In summary these amendments: 

  • reversed the reduction in the fee for self-referral;
  • increased the anesthesia flat fee from $60 to $75;
  • restored an “appropriate” laparoscopic surgery premium[4];
  • adjusted the optical coherence tomography fee (such fee will remain lower than it was prior to April 1, 2012 but will be higher than the current fee);
  • adjusted the after-hours premium (such fee will be restored to the fee in place prior to April 1, 2012); and
  • adjusted the intensive and coronary care premium (such fee will be restored to the fee in place prior to April 1, 2012).

In addition to fee-related elements of the Agreement, the Agreement also provides for:

  • the expansion of access to family doctors for seniors and patients with higher needs;
  • new evidence-based changes including: (i) reducing unnecessary pre-operative cardiac testing for low-risk, non-cardiac patients; (ii) modernizing the annual health exam, personalizing it to the individual needs of healthy adults, and reducing unnecessary tests; and (iii) aligning the frequency of colonoscopies and cervical cancer screening to meet Cancer Care Ontario guidelines;
  • a payment discount of 0.5% on all physician payments (including professional fees, technical fees, primary care payments, specialist alternative payment plans, other physician clinical payments such as mental health sessionals and stipends)[5];
  • a revocation of the obligation set out in the April 1, 2012 OHIP Fee Schedule of ordering physicians to repay for CT/MRI studies of the lumbar spine if such service is subsequently determined not to  be medically necessary; and
  • physician-influenced reforms such as:  (i) reducing unnecessary lab testing; (ii) streamlining physician-influenced hospital equipment purchases; and (iii) additional evidence-based drug prescribing. These physician-influenced reforms alone are expected to allow the physician services budget to increase by a cumulative $100 million over two years.

The Government also plans to increase fees for physicians who make house calls, to allow physicians, for the first time, to bill OHIP for patient consultations done by e-mail or telephone.

While the Agreement adds $100 million to the total compensation package for physicians, Deb Matthews, the Minister of Health and Long-Term Care, stated that this additional compensation will be completely offset by savings in other areas, which in total amount to $400 million. 

Representing just over 20% of Ontario’s health-care spending, physicians’ compensation is second only to hospitals in terms of budget allocation. The fee-freeze at $11 billion per year for two years resulting from the Agreement would help the Government eliminate its deficit of $14.4 billion. 

In response to the negotiation difficulties faced by the parties in May, the OMA and the Ministry of Health and Long-Term Care (the “Ministry”) have also finalized a standalone Memorandum of Agreement that provides a framework for all future negotiations between the parties.[6] Among other things, the Memorandum of Agreement gives the OMA the power to engage a facilitator to deal with a dispute with the Ministry and also to proceed to conciliation[7] if the former fails to resolve the dispute. Under the Memorandum of Agreement, the Ministry commits not to implement any unilateral changes prior to the completion of the facilitation and conciliation process. 

Both the Agreement and the effect of the Memorandum of Agreement on future negotiations between the OMA and the Ministry will undoubtedly have relevance beyond the borders of Ontario as similar tensions have arisen between physicians and governments in other provinces. For instance, in Alberta, fee negotiations between the province’s physicians and government have been at an impasse since last year, and in November, Alberta’s physicians rejected fee changes which were said to be unilaterally imposed on them by the government of Alberta.