Canadian doctors get compensated in a variety of different ways. Depending on how you practice medicine (and where), your income may be variable and complex.
97% of doctors in Canada receive all, or at least some, of their payment through the fee-for-service (FFS) model. Some may receive a salary, while others get reimbursed under new alternative plans.
Although these models differ between provinces and territories, knowing how you’ll be paid as a physician is important as you weigh your career and practice options.
Below we cover the most common payment models you’re likely to encounter:
1. Fee-for-service (FFS)
In a traditional fee-for-service model, you are essentially a small business. You operate as a self-employed professional and submit ‘invoices’ of who you saw, and what you did, for payment.
Your province’s ministry of health then reimburses you through their provincial health insurance plan. Worker’s compensation boards and federal government departments pay for their related insured services.
While fee-for-service works in a similar way across the country, each province has a different list of fees and services. This list is known as the schedule of benefits (SOB) and it outlines all the services, procedures and dollar amounts that are available for all family doctors and specialists within that province.
Let’s say you’re working in Ontario as an anesthesiologist and you have a consultation with a patient. You would submit a claim with the fee code A015A (Consultation – Anaesthesia). This fee code has a dollar amount of $106.80, which is how much you’d be paid for.
***Any claim you submit through your provincial ministry of health must include a diagnosis code. Having a diagnosis code helps the ministry of health verify claims and identify specific medical conditions. It also helps generate statistics about illnesses and death.
While diagnosis codes differ from province to province, each one is outlined in that provinces’ schedule of benefits. For example, in the claim above the diagnosis is 005 which represents ‘Food Poisoning.’
2. Enhanced fee-for-service
Most provinces and territories offer bonuses and extra incentives on top of the regular fee-for-service codes. These are typically referred to as premiums or modifiers (depending on the province).
Each premium has its own code, to be used under specific circumstances. For example, there are premiums for services like complex and chronic disease management, working in rural areas or working at night and on weekends.
Enhanced FFS services are outlined in your province’s schedule of benefits, along with the regular fee codes.
Enhance Fee-for-service Examples
On Tuesday at 2pm you’re at home having lunch when you get a call for an ER consult. You would bill the following:
A130 – Consultation
K960 – Travel Premium
K990 – First Emergency Patient Seen
If you admit your patient, you can also add E082 (an Admission Premium).
On a Saturday at 2:00am, you get a call from the hospital to see a patient in the non-rotation duty emergency department on a priority basis. Due to the nature of the illness/injury, you take a full history and perform a complete physical (appropriate to your specialty), the service lasts for 50 minutes. The claim would look like this:
- 03.03MD Callback (24:00-07:00).
- 03.04A (Modifier) CMXC30.
- 03.01AA (Modifier) TNTA04 (shown in the photo).
For an explanation of Alberta after-work premiums check out this article.
If you get called from outside of the hospital to come and care for a patient you can add a ‘Call Out’ premium. If you continue to see additional patients once there, then you can also add a ‘Continuing Care’ premium.
Your Medical billing software should offer the option to automatically apply the correct premiums to your claim. Here’s an example of what it looks like on Dr. Bill:
The FFS Learning Curve
When you’re just starting out submitting claims to the government can get complicated. It’s a lot of additional paperwork that was never taught in medical school – so we get why most doctors find it confusing.
In saying that, the CMA themselves suggest that every doctor should familiarize themselves with understanding FFS billing, as almost 95% of family physicians, and the majority of specialists, will be paid directly or indirectly (see shadow billing below) through the provincial specialty-specific schedule of benefits.
Even if you are salaried, if you work in a hospital setting or a government-sponsored clinic, the institution has to collect data regarding the equivalent services provided under the FFS model.
3. Alternative Payment Plan (APP)
Some provinces are now using other ways to compensate physicians. Increasingly popular are the various alternative payment plans (APP). They may also be referred to as “alternative funding plans” or “new payment models”.
Basically, an APP is a mutual agreement between a physician (or group of physicians) and their provincial health authority. The agreement outlines your salary, incentives, and various after-hour bonuses.
Alternative Payment Plans are most popular for family physicians (in solo or group practice) and sometimes in rural areas where there’s not enough patient inflow. Without a high number of patients, working fee-for-service becomes a bit unrealistic, as you wouldn’t be able to generate an appropriate income.
APPs are attractive in that they offer income stability as well as options to maximize earnings through bonuses and incentives.
While they are constantly evolving, and vary from province to province, APPs are generally made up of a combination of:
- Fees for clinical services
- Time-based payments (hourly, daily, monthly etc.)
- Rewards for participation in specific clinical initiatives
- Population or capitation funding
- Payment for admin costs
- Bonuses for achieving specific targets (usually in preventative or quality care)
- A Guaranteed Minimum
If you’re going to be working under an alternative payment plan most likely you still need to submit claims to the provincial government. These claims won’t be reimbursed for payment, instead they’re used for administrative purposes (i.e.: as a record of services provided). They are sometimes called “Evaluation Claims.”
Most shadow billings use the same FFS codes (just without the $ amount). If you’re going to be shadow billing, it’s best to ask the facility you’re contracted under for specific details (as it can vary depending on location and centre). You might also be required to submit an annual activity report that outlines all the work you did outside of your shadow billing.
There’s also the possibility of getting a regular fixed salary, which is usually paid in ‘time-based payments.‘ These can vary from simple annual salaries to shift stipends, sessional payments or hourly rates.
Although physicians at academic institutions, community health centres and hospitals can all work under this model, in general, only a small number of physicians work under a fixed salary.
If you do work under this model, your contract will outline both your minimum expectations and typically a maximum limit of payment.
Being employed also means you’d get the regular benefits of employment such as, your employee contributing to the Canada Pension Plan (CPP), Employment Insurance (EI), medical/dental coverage, disability coverage, paid vacation and sick leave.
There are obvious pros and cons of working under salary. An obvious plus is that it’s great to know how much you’d be making each pay period, and not having it fluctuate whatsoever! It’s also nice to know you don’t have to learn how to bill or be fearful of rejections and late payments.
On the other hand, there’s almost no incentives or extra bonuses when compared to the other three models. There’s also usually no motive to bring on new patients, so this might not be the most encouraging model if you’re looking to grow and maintain a lifelong practice.
Working on a salary means won’t have a lot of control over your working environment, such as who you work with, the office/clinic’s policy, the patients you see, and your on-call schedule.
Lastly, not being self-employed means you’ll miss out on business income and tax deductions. For example, if you are only being paid salary you cannot deduct any association dues or malpractice insurance premiums. However, here are two ways that Joule (a division of CMA) suggests around this:
- Ask your employer to reimburse your expenses as a benefit outlined in your contract.
- Negotiate with your employer to do additional FFS work on the side, so that you can earn business income. For example, if you work once a week under the FFS model you’d be able to deduct malpractice insurance premiums, convention costs, automobile deductions and association dues (when in reasonable amounts and allowed through the Income Tax Act).
In summary, if you’re offered a salaried position we suggest going over it carefully, and in great detail with your lawyer, in order to make sure you 100% agree with the benefits that are both included and excluded.