Update on allocation and Retention Benefit partial payment

September 19, 2018

Hello Members:

I’m sure you’ve been wondering about plans for allocation of the retroactive cost-of-living increase to the Schedule of Medical Benefits that was included in our latest agreement with government – in addition to payment of the partial Retention Benefit. I last wrote to you about this work in my July 31 President’s Letter.

At our June meeting, the Board of Directors provided direction about what it wanted to achieve with the allocation. This fed into development of the proposal that the Allocation Working Group subsequently took to the Management Committee. Remember that allocation is a joint process and both sides bring positions and contribute to decision making.

What did the Board want to achieve? We had very lengthy and in-depth discussions prior to making our decisions. There were quite a few priorities that needed to be balanced and were competing for attention with the limited funds available. We are satisfied that the final decision made by the Management Committee accomplishes the priorities we identified for the allocation. Here are the components:

• We wanted to distribute a large portion of the funding in an equitable fashion. With our income equity model currently under construction, the Board felt the best way to accomplish this was by emphasizing the dollars-per-physician payment (i.e., each section receives an increase according to the numbers of full-time equivalent physicians in the section – using our Section Allocation Equivalent formula).
• We also had to consider that overhead costs have been rising and that net income has fallen for those affected. Accordingly, a component of the increase goes to overhead. With the amount available it won’t fully offset increased costs, but it will help.
• The Board wanted to look at some targeted items to help make things better for patients. Again, there were many options but we thought the best choice would be to look at the electronic codes, increasing both the numbers allowed as well as the amount paid for each. We also have an increase to codes for after-hours payments (based on the recommendations of our After Hours Working Group).
• The Board wanted to honor our commitment to consider the impact of the SOMB Rules Changes initiative and the fact that some sections (and individual physicians) were impacted more than others. This component generated the most discussion by our Board, as there were several dimensions to consider, not the least of which was the overall amount of allocation funds available. Our proposal balanced these issues and priorities to recognize sections for their contributions.

In looking at the overall allocation, what the Board wanted was to bring all these elements together. We believe this approach balances competing priorities with limited funds and distributes the increases broadly to be as fair as possible.

Details of these changes will be provided in an upcoming AMA Billing Corner and Alberta Health Bulletin, but for now you can find more information below.

Regarding the Retention Benefit, (a retroactive amount of $45 million to be paid out for the 2017-18 fiscal year), the new agreement doesn’t specify how to pay it out. The Board felt it would be best to follow the structure that has been in place according to years of service. We don’t have the final figures yet, but on this basis we expect the individual payments would be about 60% of what physicians would have received last year.

The Fall Representative Forum and Annual General Meeting takes place Friday and Saturday this week. Dr. Alison Clarke will be installed as your 2018-19 President on Saturday at the AGM. I will have one more letter about my thoughts at the end of this very busy and complex year.

In the meantime, I would still be glad to learn what you think.

You can reach me in the usual three ways:

• Communicate with me privately and directly by email if you would like a reply: president@albertadoctors.org.
• Comment publicly below on this President’s Letter.
• Share your perspectives with colleagues in our Discussion Board for members only (member login required).

At your service,

Neil D.J. Cooper, MD, FRCPC, Dip. Sport Med.
President

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NOVEMBER 1, 2018 ALLOCATION BACKGROUNDER

The recent AMA Amending Agreement provided for $45M in fee and program adjustments to recognize cost of living increases retroactive to April 1, 2017. After adjusting for program increases, approximately $42M is available for SOMB and ARP increases (overall, a 1.05% increase).

The Management Committee has agreed to the following distribution, as consistent with the Allocation Working Group’s recommendation:

1. Targeted / Priority Items

• Electronic contacts – to support access to care through appropriate use of technology, fees and weekly limits on electronic and telephone communication codes with patients will be increased as follows:
  a) Fees will increase from $15.88 to $20 for all eligible telephone/video/e-mail contacts with patients
  b) The maximum number of billable events per week per physician will increase from 7 to 14 for all eligible telephone/video/e-mail contacts with patients
• After-hours fees – to support the delivery of medical services outside of regular working hours, the 03.01AA after-hours time premium will be increased by 2.0 percent.

2. SOMB Rule Changes

• $4M in allocation funding (approximately 10 percent) is earmarked to provide recognition of section contributions under the 2016 SOMB Rule Changes initiative. This is consistent with the AMA Representative Forum’s perspective that there should be some consideration of section differences in contributions in a future allocation.

3. Overhead Costs

• One-third of remaining funding (approximately $10.7M) is targeted to provide some compensation for increases in physician overhead expenses. As the new overhead model is currently under development, this funding provision is based on inflation estimates from the previous (2009) Physician Business Cost Model.

4. Section Allocation Equivalent (AMA measure of full time equivalent physicians)

• Two-thirds of remaining funds (approximately $21.4M) are allocated to sections according to their number of full time equivalent physicians. This component helps promote equity as each section will receive the same amount per full time equivalent physician (approximately $2,605).

The table below shows the impact of the macro allocation on individual sections.

Working with sections, the AMA and Alberta Health have determined the distribution of these increases across fees in each specialty (i.e., using a micro allocation process based on each section’s intra-sectional relative values). This Allocation also introduces a number of section-requested amendments to the current Schedule of Medical Benefits, including rule changes, fee code wording changes, and the addition and deletion of fee codes. Details of these changes will be provided in an upcoming AMA Billing Corner and Alberta Health Bulletin.

Alternative Relationship Plans (ARPs) and Physician Incentive Programs

Consistent with the AMA Agreement, clinical and academic ARP Provincial Base Payment Rates will receive increases this year linked to the fee-for-service macro allocation increases for the same specialty and these increases will be applied retroactively to April 1, 2017.

The Business Cost Program (BCP) rates, CME maximum benefit, Parental Leave Benefits and Rural & Remote Northern Program (RRNP) fixed rates will also be increased by 1.05 percent consistent with the AMA Agreement. RRNP variable rates are expressed as percentages of fees and therefore receive an automatic adjustment when Schedule of Medical Benefits rates are increased.

Retroactivity

The AMA and Alberta Health are developing a plan for distributing retroactive payments to physicians for fee-for-service, alternative relationship plan (ARP) and various program benefits. This includes $45M COLA set aside under the AMA Agreement for 2017-18, as well as a prorated amount to recognize the April 1 2018 to October 31 2018 period, plus another $45M Retention Benefit for 2017/18.

We anticipate that fee-for-service retroactive payments will be distributed in two payments. The first will occur in November 2018, covering the 2017/18 fiscal year and likely a portion of the 2018/19 fiscal year. A second, smaller payment will be made in the May/June 2019 timeframe to retroactively pay increases on all remaining claims that were submitted using the old rates. The timeframe allotted for this final retroactive payment will allow sufficient time to ensure all claims submitted within 180 days are appropriately paid at the new rates.