Michael Rachlis MD

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The OMA deal will cost a lot more than the province is saying

16 November 2012, 10:28 AM

The media coverage has so far focussed on meta political repercussions of the OMA Provincial Government Agreement. The implications of the agreement on the province’s relations with teachers, nurses, and other public sector groups have grabbed the headlines. So far, it seems generally accepted that the Liberals have gotten away with a freeze on the $11.1 Billion bill of doctors. Yes the government coughs up another $100 Million for new doctors, but the government gets it back with a 0.5% decrease on all physician fees and other payments.

The problem with this math is that it doesn’t include utilization increases and fee drift. Utilization of medical services has been increasing at 2-3% per years per person beyond any increases in inflation or OHIP fees. Fee drift means that fee for service doctors have certain discretion to provide higher fee for time paying services if there are other threats to their incomes.

In the 1990s in Ontario and some other provinces, there was a so-called “hard cap” on billings. That meant that the province would not pay out more than a certain amount to doctors every fiscal year. As the year went on, if the total billings showed signs of breaching the agreed to or imposed figure, then the provincial medical insurance plan would start to pay only 95% or 90% of the value of claims. The old physician sponsored insurance plans in Ontario in the 1950s used to do the same thing. Otherwise you go over your budget.

But the OMA has expressly reassured its members that, “Physicians will not bear the costs associated with the increased provision of medical services to our growing and aging population (utilization).”

And, with the failure to achieve reductions in fees associated with self-referrals and other goals of negotiations, it appears that the physicians’ services budget will rise by at least $200 Million and probably more.

Finally, we don’t know yet what the parties have agreed to or will agree to on the new primary health care models such as the family health teams. The government had an aggressive plan to turn over funding for family medicine including the new family health teams to the Local health Integration Networks.

The government also planned to change the basic capitation payment system. Currently, the capitation payment of roughly $130 per year per person is only adjusted for age and sex. Younger women are worth more than younger men because they have reproductive health care issues. Middle aged and older men are worth more than older women because they tend to be sicker. But adjustment for just age and sex only explains 5-10% of the variation in costs between different persons. However, using the Johns Hopkins Ambulatory Care Groups (ACG) adjusters explains over 50% of the variation in spending. Ontario has continued to use only age sex adjusters for over twenty years after the Johns Hopkins ACG system became available. This approach essentially steals money from practices with sicker patients to over fund those with healthier people.

Hopefully more news will made available shortly about the primary health care models. But, Ontarians should really be asking why primary health care policy, so important for the future of the province’s health system, is negotiated behind closed doors with the OMA.

 

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