Reconciliation Process and Retention Benefit

July 17, 2017

Dear Member:

I am writing to update you about the status of the 2016-17 Retention Benefit. As you may recall, this was one of three at-risk payments under the two-year Amending Agreement. At-risk payments (the “holdback amounts” for 2016-17 and 2017-18) are amounts that are held pending an annual Reconciliation Process. The reconciliation considers Actual Expenditures against an Available Amount to determine whether the at-risk payments are to be paid to physicians.

Savings, reconciliation and the Retention Benefit

The intent of our Amending Agreement is to promote fiscal prudence, while still supporting quality care. Various aspects of the agreement seek ways to improve efficiencies in providing that care. Ultimately, the goal is that a number of different initiatives will contribute toward savings, thereby reducing the growth rate of expenditures – and increasing the probability that at-risk payments would go back to physicians.

The first savings strategy was the Schedule of Medical Benefits (SOMB) Rules Savings Initiative. This was a collaboration between the parties focused on rule changes to the SOMB. Physicians were integrally involved in identifying the rule changes that were implemented. I want to thank sections and individual members who participated. With your leadership, we succeeded in updating the SOMB to better reflect how services are provided today and identified some services that could be eliminated without impacting access or quality.

As of the June 2017 reconciliation date set by the Amending Agreement, the 2016-17 Available Amount was $4,230 million and total expenditures were $4,352 million. This means that the Available Amount was exceeded and therefore the 2016-17 at-risk payment – the $73 million Retention Benefit – will not be paid this year.

Members were advised that, because the savings initiative began so late in the fiscal year, it was possible that this year’s Retention Benefit might not be paid. That being said, the Board of Directors recognizes that the impact of the savings initiative and loss of the payment has not been evenly dispersed across sections. Accordingly, the Board has directed that the contributions of sections should be recognized in future allocations and with consideration of broader discussions about equity.

On a more positive note, the growth of expenditures did slow! Since 2014 physician service expenditures have been growing at a rate of 10% year-over-year. This rate shrank considerably in 2016-17 to 4.5%. What has been accomplished speaks to a good opportunity for achieving targets for 2017-18 (with a full year to accumulate savings).

Encouraging prospects for 2017-18 through stewardship

While the loss of the 2016-17 Retention Benefit payment is disappointing, physicians still deserve commendation and should be encouraged by the considerable savings that have been achieved. Over the year ahead (and with additional impact from other initiatives such as peer review) there is an opportunity to reach the targets that have been established within the 2017-18 Available Amount. This would trigger the final two at-risk payments to physicians, consisting of the 2018 Retention Benefit and the April 1, 2017 cost-of-living adjustment to the SOMB. We will know the final outcome following the Reconciliation Process to be completed in June 2018.

This reconciliation process model (and the SOMB rule initiative impact it includes) is an illustration of a collaborative relationship between the profession and government. It is a demonstration of physicians’ role in stewardship of resources as a professional responsibility. Ultimately, stewardship is about ensuring that patients receive the quality care they need in a system that we can afford to sustain.

I want to commend our AMA members for their efforts and contributions in supporting our health care system. The SOMB savings and loss of this year’s Retention Benefit are tangible demonstrations of this spirit that have a real impact. The doctors of Alberta are doing their best to protect and manage health care.

Staying in communication

You have received a number of President’s Letters from me very recently. I don’t expect to continue at quite such a pace, but I will be in touch over the summer and into the fall to tell you more about work on income equity, physician supply, informatics, peer review, integrated care and other aspects of the Amending Agreement that have the association occupied.

In many ways, the Amending Agreement has brought an unprecedented level of input and influence. To maintain these, we will need to continue to be willing to take on some of the problems in the system, including helping to manage what have been unsustainable increases in the growth rate of health expenditures. I believe that physicians are best positioned to do this because we can identify how changes will impact patients on the front lines. There is opportunity now in difficult financial times to be leaders and stewards. I am pleased to see great progress in this area and look forward to continuing it.

As always, please let me know what you think. Email president@albertadoctors.org or leave a comment below. As I mentioned in my last letter, if you have meetings coming up with colleagues over the summer months or beyond and would like a chance to discuss AMA activities and direction directly, please let me know and I will do my best to participate.

Yours truly,

Padraic E. Carr, BMedSc, MD, FRCPC, DABPN
President

P.S. I wrote recently regarding the income equity initiative and promised to keep you informed. The AMA website is one place where you will be able to learn about what’s happening. There is a new income equity initiative section that you can find HERE. You will receive status updates from the AMA Compensation Committee co-chairs by email. I will update you from the Board as we move forward to the Fall RF where a proposed plan will be presented.