For any physician practicing in Canada, it is important to understand how doctors actually get paid. In this post, we review how physician compensation works in Canada, the various sources of income available, and what physicians should expect when starting their practice.
Funding for Healthcare in Canada
Many people know that Canada has a large public healthcare system, but this is actually better understood as a public health insurance system. This means most Canadians are covered by some type of health insurance plan. Public healthcare insurance coverage includes most Canadian citizens, permanent residents, people on work visas, and refugees. This healthcare coverage can be:
-
- Provincial Healthcare Insurance (most Canadians)
- Federal Healthcare Insurance plans (RCMP, Military, Federal Inmates, Refugees)
- Worker’s Compensation Board (specific healthcare for worker’s injured on the job. This coverage usually duplicated other healthcare coverage, but it pays for healthcare services differently to incent the provision of faster healthcare service to get workers back to work sooner).
For people in Canada without public healthcare coverage or for healthcare services not covered by public healthcare insurance, payment for healthcare services can be:
-
- Private healthcare insurance (eg. health coverage from an employer for dental care or travel insurance for a tourist to Canada)
- Private out-of-pocket payment
Although most healthcare in Canada is publicly funded, a substantial portion is private. The Canadian ratio between publicly funded healthcare and private healthcare is 70-30 (https://www.cihi.ca/en/how-does-canadas-health-spending-compare). The Canadian ratio of publicly funded care is lower than some European countries (German 84% public, Sweden 84% public, France 83% public) but about average for wealth countries (OCED 73% public). Even the US which is widely perceived as predominantly private healthcare system is 49% publicly funded.
Provincial Health Insurance Plans
Canadian healthcare is provincial, so most publicly funded healthcare is paid for by the provincial healthcare insurance program. Examples of Canadian healthcare insurance plans are:
-
- BC – Medical Services Plan (MSP)
- Alberta – Alberta Health Care Insurance Plan (AHCIP)
- Saskatchewan – Saskatchewan Health Authority (SHA)
- Manitoba – Manitoba Health Services Insurance Plan (MHSIP)
- Ontario – Ontario Health Insurance Plan (OHIP)
- Quebec – Québec Health Insurance Plan (RAMQ)
- Nova Scotia – Medical Services Insurance Programs (MSI)
- Newfoundland and Labrador – Medical Care Plan (MCP)
- PEI – Health PEI (HealthPEI)
This provincial administration of healthcare also means that rules and compensation systems differ by province. But there are broad similarities across provinces.
There are two main compensation models used by provinces to compensate physicians discussed below.
Fee-for-Service
Fee-for-Service (FFS) compensation models are based on paying physicians based on each service they provide. Physicians submit billing codes to the healthcare insurer for each service they provide for the patient. For example, billing codes are submitted for each patient visit or procedure. The billing codes have specified monetary values that are usually described in a Schedule of Medical Benefits (SOMB). These billing codes can have modifiers attached to them that change the value of the billing code, either increasing or reducing the value of the basic code. A modifier may reflect the complexity of the service provided, age of patient, time taken, difficulty of service, time when the service was provided (evening, night, weekend) or if the service was provided along with other services (usually reduces the value of the billing code). In order to submit billings to a provincial insurance plan, physicians must be registered as a practitioner in good standing with the provincial physician body and as an approved medical provider with the provincial insurance plan.
Alternative Relationship Plan (ARP) or Alternative Payment Plan (APP)
Alternative Relationship Plan (ARP) or Alternative Payment Plan (APP) are compensation models where physicians are paid alternate compensation scheme to a fee-for-service model. They may attempt to compensate physicians for work that is otherwise not covered in the fee for service schedule – with the goal of aligning incentives for better patient care.
ARP / APP models vary widely and are generally the result of a negotiated between physicians and payors. Physicians are usually paid a salary, a fixed hourly rate, or a fixed amount per patient they manage. Physicians on ARP / APP models may be required to “shadow bill” – that is, submit billing codes for their work to demonstrate the value they are providing for their salary. ARP APP models may include capitation payments, salary and incentive bonus or other forms of compensation.
Fee-for-Service vs. Alternative Payment Plans – what’s more common?
Fee-for-Service is more prevalent in Canada. Over the $28.2 Billion spent on clinical payments in Canada in 2019, Fee-for-Service payments totaled $20,5 Billion (73%) and alternative payments totaled $7.7 Billion 27%. The ratio between Fee-for-Service and alternative payments has generally been steady for the past 10 years. There are however significant differences between provinces. Alberta has the highest ratio, with around 90% of clinic payments as Fee-for-Service. In contrast, Nova Scotia has over 50% of clinic payments on ARP / APP.
Most physicians are compensated using some combination of both models. 96% of Canadian physicians receive some Fee-for-Service compensation and over 65% receive some compensation under an Alternative Payment model.
For more information on physician compensation in Canada, the CIHI produces an excellent annual report available here: https://secure.cihi.ca/free_products/physicians-in-Canada-report-en.pdf
Other Healthcare Insurance Plans:
Not all patients visiting physicians in any given province will be covered by the local provincial healthcare insurance plan. Patients may have coverage from a federal healthcare insurance plan (eg. RCMP, military, federal inmates, refugees), they may be covered by a different provincial health care insurance plan (ie. the claim must be submitted as an Out-of-Province claim) or if they may not have any publicly funded Canadian healthcare insurance (eg. a visitor to Canada).
A physician must know what coverage a patient has prior to submitting a claim. For most patients, this means a physician must verify the patient is covered by the provincial healthcare insurance plan before submitting a claim. If the patient isn’t covered, the physician must gather information on their relevant insurance plan.
For new physicians, this can sound stressful. How do I keep track of all this extra information?! Don’t worry, we’ll cover the supports and tools available for managing all this billing information later in the article.
Uninsured Healthcare
Provinces break healthcare services into insured and not insured. Provinces are required to insure certain services by the Canada Health Act although they may insure additional services beyond what is required.
Common non- insured services include:
- Services that are deemed to be not medically required; such as cosmetic surgery
- Dental services
- Routine Eye Exams
- Eyeglasses, hearing aids, equipment or appliances
- prescription drugs
- Acupuncture, chiropractic, massage therapy, naturopathy, physical therapy, non-surgical podiatry services.
- Services for counselors or psychologists
- Medical Examinations, certificates or tests for driving a motor vehicle, employment, life insurance, school or university, sports activities, immigration purposes.
- Immunizations
- Transfer of medical records
- De-insured procedures (circumcision, wart removal).
For services not covered by public healthcare insurance, a physicians must receive payment either private insurance or from the patient directly.
How Physician’s Submit Insurance Claims
If this all sounds a bit overwhelming, it can be, but not to worry! There’s are systems and services in place to help. Most public hospitals and private health clinics use some type of EMR software to track patient billing information. Patient insurance information is usually entered at admittance and so most billing information is available for physicians without having to directly ask the patient. Most physicians then use a billing agent to help process, submit and track their claims. We’ll review the different processes based on insurance type below.
Provincial Healthcare Insurance Plans:
Provincial healthcare insurance plans usually require physicians to send in claims via an accredited submitter who is pre-approved by the provincial healthcare insurance plan administrator. At a minimum, these billers will submit your claims. Many provide addition services, including claim coding and transcription, follow-up on rejected claims, and software for viewing and tracking claims.
For patient with healthcare insurance from a different province, claims are usually submitted as Out-of-Province (OOP) claims to the local provincial health insurance plan. The provincial insurance provider will pay the physician and then seek payment from the other provincial healthcare insurance plan. OOP claims are processed in a very similar manner to regular local provincial claims, but they do usually require a physician to submit additional demographic information to have the claim paid. Quebec is the one exception that opts out of this system. OOP claims for Quebec are not paid by the local provincial insurance plan must be sent directly to the Quebec healthcare insurance plan.
Other Healthcare Insurance Plans:
WCB insurance plans, federal healthcare insurance and private healthcare insurance plans usually don’t require a pre-approved accredited billing submitter. Physicians can process these claim themselves. However, given the complexity of rules for each insurer and the time required to submit and follow a claim, many physicians use a billing provider. Not all billing companies provide these services.
Private payments:
Private payments without any insurance provider are processed directly with the patient. The patient pays before or after the services are provided. Issues arise around payment processing (ie actually charging the credit card), invoicing, and collecting on non-paid invoices. Some billers provide private billing services to support physicians.
Conclusion
No matter where you work in Canada, you’re likely going to be submitting insurance claims as a physician. There can be a learning curve to this process, but you can get plenty of support from your colleagues and the right billing provider. We highly recommend getting a billing provider who provides full support for what you need and provides you with full transparency so you understand what your billing for and what is and isn’t being paid. If you have questions or comments about physician billing in Canada, let us know. We’re always happy to hear from readers.