Arbitration award implementation will hurt physicians and patients

Disclaimer: The information below is based on what a non-lawyer (i.e. me) was able to sort out after reading the OMA and Ontario Ministry of Health’s (MOH) 2024-2028 Procedural Agreement, the OMA legal counsel’s summary of the award, and attending the OMA Zoom session on the award. This may not be accurate (and I will correct the blog if more relevant information becomes available). I encourage all OMA members to contact the OMA directly with specific questions (info@oma.org) and not rely on this blog as your sole source of information.The numbersFirst, let’s again review the numbers (approximated for simplicity).Physician services budget, fiscal year ending March 2024: $16 billion +Arbitration award: 9.95%— approximately $1.6 billionOMA/MOH agreement on split of funds: 70% ($1.12 billion) to fee increases and 30 % ($480 million) to targeted programs.Previous contract (no guarantee this will repeat): 25% of the fee increases ($280 million) would go to across the board fee increases for entire profession. The remainder ($840 million) would be distributed on the basis of relativity (giving more of a raise to low-earning specialties and less to higher-earning specialties). If this pattern repeats, this equals a 1.75% increase for everyone. Then each specialty would get assigned an additional percentage (let’s say X) based on relativity. Ergo everyone should get 1.75% + X, where X varies from zero (for high billers) to higher (for lower billers).Read: Dr. Sohail Gandhi: The arbitration award: The good, the bad, the uglyThe implementationAccording to the OMA webinar, the OMA and ministry have yet to agree how to distribute the award. Mediation starts early October and all of this might wind up in arbitration in March of 2025. My sense from watching the webinar is they are not close on an agreement.So what happens to the money for this year? We are all supposed to get a raise now, right? Well, that’s when the procedural agreement takes effect. It states (sorry for the legalese):The Year 1 price increase will be implemented as follows:The entire price increase under the Year 1 2024-28 physician services agreement (PSA) will be implemented prospectively as an across-the-board increase to the fee-for-service payments identified in paragraph 1a above, with a target date of the RA in the month 90 days following the issuance of the arbitration decision and will flow through to non-fee-for-service payments as soon as practicable.A lump sum payment equal to the entire increase awarded for Year 1 for the earlier period from April 1, 2024 through to the implementation date under paragraph 12(a), will be paid as soon as practicable following the arbitration award with a target date of October 2024.To the extent practicable, the permanent year 1 non-targeted price increases will be implemented at the same time as the April 1, 2023, price increases under Year 3 of the of the 2021-24 PSA i.e. April 1, 2025, and in any event no later than October 1, 2025. These increases will be calculated on a base of 2023-2024 expenditures. . . . The distribution as between across the board increases and relativity increases will be determined in such manner as the parties agree or, failing agreement, as the board of arbitration awards.OMA staff confirmed at the webinar that this is in fact what will happen. They even had a complex schedule of prospective payments/lump sum payments/retroactive payments and so on that left me, frankly in need of high doses of Zofran.To try and simplify things, let’s look at how this will affect two imaginary doctors.Meet Drs. Alpine and ValleyDr. Alpine and Dr. Valley both completed four years of an undergraduate degree. They then completed four years of medical school, and each did a five-year residency in the field of their choosing. Dr. Alpine was always someone who liked to “do stuff.” He wound up in a speciality that does a lot of procedures and as technology has improved, has been able to treat more patients in a day than his specialty could 20 years ago.Dr. Valley, who is no less smart, really enjoys patient interaction. She chose a specialty that requires more intensive time with patients, and as such, is not able to see more people in a day than someone in her field could 20 years ago.With our aging population and increasingly complex health care needs—both Dr. Alpine and Dr. Valley are swamped and have long waiting lists.Dr. Alpine was able to bill OHIP $1 million for fiscal year ending March 2024. This represents his gross income, and to be fair, his office has a lot of leased medical equipment, along with staff that he has to pay for out of that $1 million. Dr. Valley billed OHIP $350,000 for fiscal year ending March 2024. She too has staff and other overhead expenses, but not as much equipment.What happens to Dr. Alpine and Dr. Valley under the procedural agreement? While the schedule for payments for the award is a convoluted mess, the reality is that for the fiscal year ending March 2025—Dr. Alpine will gross $1.1 million, and Dr. Valley will gross $385,000.Now the OMA states that the goal is to have new permanent fees in place based on relativity and targeted funding for April 1, 2025. The only way this could happen is if the government negotiations team completely capitulates its positions in the next couple of weeks. Seriously people, the schedule shows that if there is no agreement this thing goes to arbitration in early March 2025. If that happens, it’s part and parcel of arbitration for the 2-4 years of the contract. So the arbitrator probably won’t even make a ruling until September 2025. Then another six months to re program the ancient OHIP computers and while the fees may be retroactive to April 1, 2025, you likely won’t see the money until Spring 2026.Let’s assume that the arbitrator follows the precedent set where one quarter of the increase ($280 million) should indeed be across the board, and then distributes the rest based on relativity. And let’s assume that Dr. Alpine’s speciality was assigned an X of 0% and Dr. Valley got an X of 18.25%. Therefore Dr. Alpine for the fiscal year ending March 2026 will gross $1.0175 million—a reduction of $82,500 dollars from the year before. While Dr. Valley will get bumped to $420,000.No matter how often the OMA reminds people that the increase for the first year is one time only, and not a permanent increase, the reality is that many members will have budgeted around their increase, and Dr. Alpine will be very miffed at a $82,500 reduction in income for doing the same work.But it’s not all that great for Dr. Valley either. She will have missed one year of a substantial increase that should have gone to her earlier. Not only that, but her office’s cost pressures and admin workload have been skyrocketing. She needs the stability a relativity-based formula provides right now, not in March of 2026.Because of the delay in stabilizing her practice, she actually chose to leave her practice and do a different kind of medicine. Her patients now have to go back on a waiting list, and who knows when they can find someone to take over their care.I understand why this procedural agreement was put in place. It was to ensure that doctors got a much need cash injection sooner rather than later. But unfortunately there are unintended consequences of this and those are coming to fruition. Specialists like Dr. Valley who need the relativity increases right now will not be able to hold out and may leave their practices. Dr. Alpine will be understandably miffed at the yoyoing of his income.And all of this uncertainty will do nothing to help the healthcare system.Dr. Sohail Gandhi is a former president of the OMA and opinions are his and not necessarily the opinions of the OMA board or of anyone at the Canadian Healthcare Network. This article is a reprint from his blog: justanoldcountrydoctor.com.

Arbitration award implementation will hurt physicians and patients

Register for free access or login.

Related Topics