Reconciliation Process and Retention Benefit

July 17, 2017

Dr. Padraic E. Carr, AMA President

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.

6 comments

Commenting on this page is closed.

  • #1

    Will Flexer

    Physician

    2:01 PM on July 17, 2017

    Regarding today's email from Dr. Carr, "Reconciliation Process and Retention Benefit"

    Thanks for giving away my retention payment.

    Please stop sending me email applauding the "savings" you have negotiated. These are not "savings" This is nothing more than a savage cut in my daily wages. Calling them 'savings' is disingenuous and suggests that we we were somehow wasting money. This was simply a cut to what I am paid to provide 24hour a day medical care to Albertans in need.

    Further as an anesthesiologist who regularly performs in house night call in a busy hospital, I can't help but feel that the cuts to my section are disproportionate to the medical profession as a whole.

    I recognize these are tough times financially in Alberta, but please stop with the Orwellian language - these were pay cuts, pure and simple. And they have not been fairly applied.


    Will Flexer
    Edmonton

  • #2

    Doug Watson

    Physician

    3:30 PM on July 17, 2017

    Padraic, I find it irksome to give up my retention benefit after 40+ years as a physician in exchange for a new title (steward-of-the health-care-system), and not be at all re-assured that the money will be used more efficiently than to fund increases to the wages and benefits for unionized health care employees, fund propaganda extolling the goodness of a carbon tax, and pay out-of-province consultants to come change the lightbulbs in my bathroom.

  • #3

    Edward Papp

    Physician

    8:09 AM on July 18, 2017

    Following is the website description of the RBP. The AMA continues to give away previously negotiated benefits and now the longer you have been a dedicated Alberta physician the more it will cost you. Which bracket are you in? At least we are not completely eating our young even though there still is considerable risk for our new grads in many areas including finding training positions!

    The Retention Benefit Program supports and promotes the retention of physicians by rewarding their continuous years of service to Albertans.

    Years of service Benefit amount
    1–5 $5,141
    6–15 $7,711
    16–25 $10,282
    26+ $12,852

  • #4

    Tom Gillis

    Physician

    10:59 AM on July 22, 2017

    Please stop trying to placate me that we " may" still receive a retention bonus. The reality is that it is gone forever. You flushed it with the Amending Agreement.

    I heard our Provincial Finance Minister tell the media that the " cost Savings" from the Physician amending agreement was $500 million this was significantly higher than the AMA told us, yet it seems convenient that we saved the Government less when it comes from the AMA. If we believe the Finance Ministers comments then we should receive the retention bonus.

    Where did the additional cost savings go or did our Finance Minister not get the numbers right?

    The AMA also negotiated with the Gov. of Alberta an agreement concerning Professional Corporations, now the Gov of Canada is proposing significant changes. What action will the AMA undertake?

    We are such low hanging fruit.

  • #5

    John Keohane

    Physician

    10:02 AM on July 24, 2017

    Agree 100% with Dr Flexer After 28 years in practice I can now look forward to steadily decreasing reimbursement for providing tertiary care to Albertans. Many specialists interests are not protected or promoted by our present AMA board. We need to think of a different model to negotiate with AHS and government.

  • #6

    Padraic Carr

    Physician

    1:49 PM on August 05, 2017

    Thanks for joining in to post some comments on the loss of this year's Retention Benefit (RB). The RB was an at-risk payment under the agreement, selected because it is a one-time amount that could be withheld without negatively and permanently affecting the base Physician Services Budget.

    Risk-sharing was a new element with the Amending Agreement. It was negotiated in part to help the province decrease the rate of spending. In exchange for taking on some of the financial challenges government faces, physicians gained influence in key areas regarding our health care system.

    The strategy to place the final two RB payments of the seven-year agreement at risk was seen as a way to limit risk exposure for physicians. The RB program was not evergreened in our Master Agreement and were due to expire in March 2018. Additionally, in the case of losing an RB payment (because we had not reduced Actual Expenditure to match the Available Amount), the RB was a one-time, defined amount that could be put at risk without affecting the base Physician Services Budget. Other approaches (such as clawbacks of payment based on savings targets) would have reduced the PSB base permanent, negative impact for the entire membership.

    When the Amending Agreement was ratified, members were advised that given the lateness of the year, it was unlikely that the 2017 RB would be paid. The loss impacts individuals and sections differently. The Board absolutely realizes that losing the 2017 payment is difficult. We hope that members see some value in the loss being limited. This, however, feeds into the bigger subject of income equity that the profession is pursuing.

    We are working closely with sections with respect to equity. There will be more information to all members and the fall Representative Forum will review a proposed plan for moving toward income equity.

    These are difficult times. Physicians are not the only profession or industry being challenged to adapt and evolve to meet changing circumstances. We have all seen increased taxation kicking in, while in the last few weeks, new threats have emerged of changes to professional corporation tax rules. (The AMA is working with the Canadian Medical Association to oppose these changes, so watch for more information.

    There is room for some optimism, though. The Reconciliation Process for 2016-17 was completed in June and showed that the growth rate of expenditures has indeed dropped from around 10% (where it has been for several years) to about 4.5%. If this trend continues there is good opportunity for the final 2018 RB payment to be made along with the other at-risk payment, the April 1, 2017 SOMB adjustment.

The Alberta Medical Association stands as an advocate for its physician members, providing leadership & support for their role in the provision of quality health care.