Blended Funding Mechanism
Primary Care Toolkit for Family Physicians
The College of Family Physicians of Canada
The following information was produced by the CFPC in 1994 and continues to be a resource to family physicians. This was requested as an additional item for the Primary Care Toolkit.
General Principles re-Alternate Payment Mechanisms
- They should encourage the maintenance or improvement of quality of care.
Physicians accept the need for budgetary restraint in the current healthcare system. Budget cutbacks however, are often perceived by the profession to occur at the expense of quality of care. There is a need for cooperation between the profession and government to develop programs of quality assurance that are credible. Our role as patient advocate should not oppose the need for cost effectiveness. Indeed, the effective use of healthcare dollars is essential if we are to achieve an appropriate level of funding.
- No single system should be imposed on physicians without the participation of the profession. A pluralistic system which allows the development and evaluation of alternative physician payment mechanisms should be encouraged.
No single system of payment in healthcare is perfect. (Ref. Considerations in Physician Remuneration authored by Dr. Roger Butler in the Report of the Task Force on Economics CFPC 1989.) Innovative approaches to payment are required if the goals of government and the needs of both the physicians and our patients are to be met.
- The delivery of essential healthcare should conform to the basic principles of:
Accountability should include not only the financial audit of services rendered but a critical appraisal of what we are presently doing. We must look at the cost effectiveness of walk-in clinics, house call services, high tech and special service clinics. We must also review how we are paid and how costs are generated.
- Long-term planning should include:
- "Needs" composition of the population
- Physical and human resource management
- Budgetary responsibility
must be evaluated. All this must take place within a framework of budgetary responsibility. Again, this requires a critical appraisal of the cost benefit effectiveness of high tech services, hospital care, physician services, the impact of wellness and preventative care, et cetera. Care must be taken to ensure that new concepts of care are not implemented at the expense of old ones, based solely on the assumption that they will be cheaper. Experience to date would indicate that these assumptions are not always true. Furthermore, quality of care should be the ultimate determinant, not just cost.
Who will pay for non-essential services? If budgetary responsibility is to be maintained, education of our patients and their growing expectation for services must be addressed. If public resources cannot maintain high quality for essential services, alternate funding sources will have to be found. Public accountability and budgetary responsibility should not preclude the possibility of private funding. Solutions must also be found to the problem of healthcare costs escalating due to the medico-legal aspects of healthcare. The extent of this problem should also be identified.
- Healthcare revenues and expenditures should be specific and transparent to the public and healthcare providers.
Care should be taken to ensure that the sources of funding and the causes of expenditures in any system are readily apparent to both the users and participants in that system. Any accurate analysis of cost benefit effectiveness has to include all sources of income and all components of cost.
- They should recognize future trends in healthcare and have the flexibility to encourage different practice models to adapt to these trends.
Planning is essential. Payment mechanisms should recognize changing healthcare directions and be capable of adapting both es tablished practice models and new experimental models.
- The mechanism of payment should not be solely volume-driven. Incentives should be incorporated to enhance the quality, availability and comprehensiveness of care. It should also encourage the appropriate use of physician skills.
The criticisms of a volume-driven system are clearly delineated in “Considerations in Physician Remuneration - The Task Force on Economics Report CFPC 1989”. If a payment system is to encourage quality, availability and comprehensiveness of care it must also be cost effective. This has been a major criticism of pure salary and other alternative funding schemes. In this era of economic restraint, any new mechanism must balance the need for maintenance and encouragement of quality of care with the need for efficient use of physician resources. This will require physicians to see a significant number of patients but volume should not be the sole modifier. We believe a system of payment which encourages both volume and quality of care is possible and the enclosed proposal is a “blended” system of payment which we feel is workable within this set of principles.
- They should have a “fair” dispute resolving process.
- Healthcare delivery should be centered on family physicians due to their unique role as primary healthcare providers. Family physicians should therefore play a key role in the administration of the healthcare system.
Family physicians are uniquely positioned at the entry point of the healthcare system. Their decisions greatly influence both cost and resource utilization. They must be equipped with the ability to make appropriate choices for the care of their patients. If these choices are to be cost effective, family physicians must be protected as much as possible from being influenced by increasing consumer demand for a wide range of both essential and non-essential services, demands placed on them by government for services that are perceived to be politically necessary, and finally the need to protect themselves from the ever increasing medico-legal implications of patient care.
The family physician is trained to be an effective team player within the multidisciplinary approach to healthcare. The family physician, if allowed, is capable of assuming the responsibility both for the coordination of services and for the appropriate utilization of these services.
A PROPOSAL FOR A BLENDED FUNDING MECHANISM
This proposal contains four components:
- Overhead Costs
- Non-Volume Modifiers
- Volume Modifiers
The four components could be weighted at different levels depending on the desires of those involved. It would be a negotiated weighting. Negotiations would take place between government and the established negotiating bodies of the medical profession.
A base salary would be paid for a minimum number of office hours. The base amount would be a lesser amount for office hours less than the negotiated minimum number of hours. In addition to the agreed minimum of office hours, a minimum number of work units would be guaranteed either by requiring a number of units of a relative value fee schedule (RVFS) or linking it to a base amount of earnings in a fee for service schedule.
The base salary acts as a guaranteed minimum for defined hours of work and a defined volume of services. A pure salary system, we believe, would provide little incentive to maintain a high volume of services.
- Statutory Holidays: Christmas, Boxing Day, New Year's Day, Good Friday, Easter, Victoria Day, Dominion Day, Civic Holiday, Labour Day, Thanksgiving, and two floating days.
(see Non-Volume Modifiers - (v) On-Call)
- Vacation: Initially - 4 weeks; After 5‑years - 5 weeks;
After 10 years – 6 weeks
(ii) Continuing Medical Education (CME)
- 2 weeks paid CME leave for approved courses
- $1000./wk. travel and expense allowance
- an agreed amount of dollars for journals, tapes, computer library, texts, etc.
There would also be a programme allowing accumulation of leave for CME, i.e.
Allow accumulation of vacation and 1 week of CME annual leave. This, coupled with a government contribution of time for CME once a physician has saved 5 weeks, would allow physicians to take an extended CME break or sabbatical leave every 8-10 years in practice.
These weeks would be deducted from paid vacation leave in (i) (b), i.e.
- After 5 years in plan allow 1 week per year from paid vacation to be accumulated
- After 10 years 2 weeks per year
- After a physician has accumulated 5 weeks, the government contributes 2‑weeks + one week for each ensuing year.
Years of Service
1 - 4
Total study leave with salary 16+ 12= 28 weeks
Guaranteed incentives for CME are a cornerstone in maintaining a high quality of care by keeping family physicians “current.” This can be achieved through professional meetings, tape and/or electronic media. The ability to accumulate leave for long-term learning experiences would be invaluable in learning new skills or upgrading one's knowledge after being away from an academic setting for a long period of time.
- government/physician contribution
- retirement bonus
- portability within Canada
- 1 million dollars Life
- disability insurance with own occupation rider
- drug plan + extended health coverage
B. OVERHEAD Costs
(i) Rental Space
- paid on basis of square footage with a maximum allowed
- compare with regional rents
- rent to include light, water, taxes, heat, maintenance and office overhead insurance
(ii) Equipment Costs
- telephone, fax, photocopy, furniture, computer, (hardware, software, maintenance), stores, examination equipment allowance
- automobile allowance - included would be license, gas, insurance, maintenance, depreciation where applicable
- allowance would be negotiated per physician or per group
- start-up costs for urban, rural, and remote
- allowance for CMPA fees
- insurance premiums related to office liability
- audit fees
- allowance for practice management fee, i.e. business advice and audit
Staffing ratios would be based on:
- hours worked
- volume as reflected in Resource-based relative value (RBRV) schedule
- scope of practice
- salary based as a % or provincial average
- additional help for ministry approved special needs (i.e. social worker for AIDS programme, etc.)
All salary components would include usual fringe benefits (pension, holiday pay, medical/dental, maternity leave, etc.) Minimum standards of staffing would be set.
C. NON-VOLUME MODIFIERS
(i) Isolation Allowance
- Payment of locum salary when on CME
- relocation expenses if physician remains in under-serviced area greater than 5 years
- all documented costs of approved CME
- increase in car allowance
- an increase in leave for CME with pay, i.e. 3 months leave after 5‑years of service in a remote or isolated setting
- 2 weeks over standard vacation outlined in A(i)(b)
A major problem today is the unequal distribution of family physicians in urban, rural and remote settings. Incentives allowing physicians to escape the pressures of remote practice with the long hours on call, isolation, lack of backup, etc. would do more to encourage people to establish practice in these locations than pure dollar incentives which do not provide time away from practice for family as well as the physician.
- 15 deliveries/year = bonus $$
A large number of family physicians are leaving obstetrics creating a void that not even the new midwives can fill. This aspect of family practice is one of the most undervalued services that we provide in current fee for service payment mechanisms.
(iii) Maintenance of Certification (CCFP)
An incentive for teaching should be paid. Undergraduate student teaching should be remunerated at a rate higher than postgraduate.
The creation of new practice sites for teaching would allow students more flexibility in their programmes and allow more exposure to practice in non academic, rural and remote settings.
(v) On-Call: in addition to minimum number of office hours (see A)
Time of day
Holidays + Sat. & Sun
F = a fixed number of units in a RVFS
a fixed dollar amount in the Fee for Service schedule
Continuity of care is a major component of quality of care. Family physicians must be encouraged to provide services in other than “social” hours. Fragmented care through episodic treatment in Emergency departments and walk-in clinics is expensive and not quality care if one believes in the principle of continuity of care. Continuous care by a family physician who knows the patient well, will result in less duplication of investigations and less need for referrals.
(vi) Nursing Home/Residential Care
For each nursing home visit a bonus would be paid per patient seen. A limit as to the number of patients seen per visit would be established to prevent abuse.
(vii) Hospital Practice
For maintenance of privileges a bonus would be paid.
Hospital practice is an important part of peer review and is therefore part of any family physician's quality assurance. We also believe that the involvement of the family physician in hospital care will decrease the demand for referral and therefore reduce cost.
(viii) Hospital Committees, District Health Councils or Equivalent
- this bonus should be shared by an individual hospital and the government.
- a sliding scale based on the level of involvement would be established.
(ix) Acquisition and Maintenance of Special Skills
A bonus would be paid for maintenance of ACLS, ATLS, etc.
A decision to pay this bonus would be based on local need.
(x) Ambulatory Care
A bonus would be paid to encourage and maintain a wide range of services which allow the patient to be maintained in a non-hospital or nursing home setting, i.e. house calls, palliative care, AIDS care, post stroke rehabilitation.
Ambulatory care is less expensive than institutional care. As more and more patients are cared for in the home, family physicians are forced to provide time away from their offices. They are also required to coordinate different types of services such as home care, hospice, social work, physiotherapy, etc.
A bonus to reward academic pursuits in approved research projects.
Limited research in family practice is occurring in Canada. More studies are required to evaluate treatment patterns, outcome assessment, efficiency of different practice models, etc.
(xii) Quality Assurance
A bonus to develop initiatives in family practice to enhance the quality of care, i.e. ongoing practice audit, utilization of practice guidelines, utilization of approved computer programmes in practice management, etc.
(xiii) Special Community Needs
Bonus units could be given for special needs and services. These would have to be approved by a joint management committee of physicians and government. This provides the flexibility for government and physicians to experiment with different practice models.
D. VOLUME MODIFIERS
- payment based on RVFS but could be used in provinces without RBRV. One would assume current fee schedules have an inherent relativity developed over time. A numerical value could be placed on individual fees instead of a dollar value.
- no monetary value would be assigned per RVFS unit.
- instead of a direct link between service and fee amounts, physicians would be rewarded increasing amounts dependent on which category they achieved, i.e.
- 0 - 1000 RVFS units - would be category I and would be paid $X
- 1000-2000 RVFS etc. units - would be category II and paid $
As volume increased beyond what is considered possible for quality care the incremental increase from category to category would decrease or alternatively no increase would be given above a certain number RVFS units.
The proposal is not as volume-driven when compared to the fee-for-service mechanism. Services are not directly linked to fees. Instead bonuses are paid for different categories based on a volume of services. As one's volume of services increases, you achieve a higher category with a higher financial reward. Where volume of services rendered detracts from the delivery of quality healthcare, this incentive structure would flatten out.
The CFPC hopes that the information provided in this document on principles of alternate payment and the blended funding mechanism proposal will be helpful to individual family physicians in making personal decisions with respect to their preferred method of remuneration. The CFPC also hopes to stimulate discussion and possible collaboration with other stakeholder organizations interested in doing research on alternate methods of paying for and delivering healthcare.