The Consequences of How We Pay Doctors

Bad incentives

By Christina Frangou

At approximately 9:21 p.m., on May 18, 2015, a couple driving on Edmonton’s Yellowhead Trail called 911 to report a suspected impaired driver. They said he appeared “like someone high on drugs.” At 9:33 p.m., two police officers in an unmarked vehicle pulled up behind the Nissan Maxima, which was now stopped in the curb lane on Victoria Trail. The officers got out of their vehicle and approached the driver, 31-year-old Michael David Perreault. He was sweating profusely, the officers reported, “as if you had poured a bucket of water over his head.”

Perreault refused to get out of the car and the situation escalated. Four minutes later Perreault was dead, shot in the head by an officer after he’d shot one of the constables in the leg.

An autopsy revealed Perreault had therapeutic levels of two prescription benzodiazepine medications, clonazepam and lorazepam, in his blood. It also revealed “moderately high” levels of oxycodone, along with methamphetamine and its metabolite, amphetamine. 

In 2017 a fatality inquiry into Perreault’s death called for his medical records and pharmacy printouts for prescriptions for the years preceding his death. It showed Perreault had been addicted to opiate pain medication for roughly a decade after a long history of pain complaints. More than one physician in the 18 months preceding his death had refused to see Perreault or refill his prescriptions, accusing him of what’s known as “double doctoring” (seeing more than one physician so as to get more medications than a single doctor would prescribe) or breaching terms of an opioid treatment agreement (given positive urine screens for cocaine and oxycodone).

But at least one physician continued to see Perreault. In the two months prior to Perreault’s death, Vincenzo Visconti, a family physician at Brentwood Medical Clinic in Sherwood Park, saw the man on 10 separate occasions, seven of them billed to Alberta Health Services (AHS) as home visits. Visconti refilled prescriptions for benzodiazepines, a muscle relaxant and an opiate, “oxyneo.” He wrote Perreault a prescription for 14 tablets of 80 mg oxyneo, or the equivalent thereof, every seven days in the weeks preceding his death. A forensics expert testified that the combined effect of the prescription drugs with the methamphetamine ingested by Perreault enhanced their toxicity.

When Visconti’s name came up at the fatality inquiry, he was already known to the College of Physicians and Surgeons of Alberta (CPSA). They’d first been alerted to him in 2004 after an Alberta Health and Wellness report of suspected billing infractions.

In an ideal world, the way we pay doctors would align perfectly with the healthcare needs of the population. Doctors would be reimbursed fairly for caring for patients in a way that’s compassionate and personalized, skillful and beneficial, and timely yet unhurried. They’d be rewarded for services that prevent illness as well as those that treat it.

That isn’t always the case. Woven into our current system of payment for physicians is a financial incentive structure that encourages them to see more patients, to attain more specialization and to treat illness (including by prescribing drugs) rather than prevent it. This system—wherein doctors bill the government for services—often runs counter to the provision of high-quality primary care, which is considered the foundation of a strong public health system.

Fee-for-service compensation has been part of Canadian healthcare since the system’s inception in 1966. It allows doctors to practise medicine with professional autonomy. They’re not employees of the government; they use their clinical judgment in delivering patient care and are paid for each specific service. Among the benefits of a fee-for-service system are that it encourages doctors to see many patients (valuable in a health system with wait lists); it rewards industriousness; it’s familiar to doctors across the country; and it can be used across specialties. The premise is simple: A physician does X and therefore receives Y. Do more of X, receive more of Y.

Generally speaking, the fee-for-service system, the predominant form of compensation for physicians throughout Canada—and especially in Alberta—gives higher monetary rewards to doctors who see a higher volume of patients. It does not, for example, amply reward physicians who take extra time to counsel patients with chronic pain.
What happened in Visconti’s practice is extremely rare. (He declined an interview and has not spoken publicly.) But his story illustrates the worst harms that can come from a system rife with financial incentives for physicians to provide high-volume care.

On August 25, 2004, Alberta Health alerted the CPSA to concerns about Visconti’s practice. These were about billing, recording and his failure to make timely referrals. The College carried out an investigation over the next two and a half years that showed Visconti sometimes had very high patient volumes, including two periods in 2004 when he saw more than 100 patients a day over several consecutive days.

It took another five years for the investigation to be resolved. Visconti and the College went back and forth in a case that ended up several times at the Alberta Court of Appeal when Visconti disputed the charges. He said his inappropriate billings were made in error. However, in February 2012, following a decision by the Court of Appeal, the College found Visconti guilty, among other things, of submitting inappropriate billing claims to the Alberta Health Care Insurance Plan on more than 400 occasions.

The College Council discussed at length the appropriate penalty. There were no criminal charges but they felt that the number of proven allegations related to billing for services not rendered showed misuse of public funds, impugned the reputation of the profession and was unbecoming conduct for a physician. “These are serious offences… Given our trusted relationship with our patients and the public, it is extremely important that a physician be scrupulous in their billing practices.”

In the end, Visconti was required to pay for and submit to a peer review at six, 12 and 24 months after the order of council. He was suspended for 30 days and went back to his clinic.

 Fiona Clement is a health economist at the University of Calgary who studies evidence in decision-making and health policy. She says one of the inherent problems with fee-for-service is the financial incentive for physicians to perform services with the greatest rewards, and do so at high volumes. “The majority of physicians don’t think like that,” she cautions. “I think most doctors go into their office to take care of patients to the best of their ability. But underlying that is this financial incentive structure, and we do know that most humans are motivated by money, among other factors.”

Her concern is shared. In 2007 Pincher Creek family physician Tobias Gelber joined the faculty of AIM Alberta—which stands for the rather wonkish Access Improvement Measures. It’s a roll-up-your-sleeves, put-on-your-thinking-caps course of practical tips that get at the basics of healthcare: how to reduce the time patients spend waiting to see a doctor, how to improve communication when patients move between their family docs and specialists, how to organize a day of appointments so a physician has time to sit and talk and listen to patients.

To Dr. Gelber’s mind, these things are key to high-quality healthcare. They reduce expensive hospital visits, thereby cutting down on the number of people waiting in the emergency room, and improve outcomes for patients with complex chronic diseases. Studies from around the world have shown that when primary care is strengthened, life expectancy increases, mortality falls and hospitalization rates go down.

Over the next decade, Dr. Gelber met regularly with physicians, nurses and clinic staff across the province, sharing ideas and teaching AIM courses. But there was a catch that bothered him. The things he was advising doctors to do were “diametrically opposed” to the way doctors are paid. A doctor’s office that followed the goals of Alberta AIM might be offering higher-quality care to patients but potentially at an income loss for the physician.

Dr. Gelber believes this is wrong. Under the current model for physician compensation, “physicians [are] on a treadmill,” he says. “And the more patients they push through, the more money they make, with absolutely no regard whatsoever for quality of care.”

“There are literally clinics in this province where a thousand patients a day are seen,” says Dr. Gelber. “In a 10-physician clinic, each physician is pushing through 100 patients during business hours and generating massive amounts of money… That’s an extreme example, but there is a significant incentive to put through volume at the expense of patient care.”

Numerous physicians interviewed for this story gave examples of fee-for-service being “gamed”—used to the financial benefit of doctors but without clear benefit to patients. This can be what’s called “cream-skimming”—selecting patients with minor conditions who can be treated more quickly instead of caring for patients with more complex needs. It can be breaking down the steps of procedures into smaller services to bill for multiple codes. It can be overbilling by performing full physical exams on patients who do not require full physical exams, or billing for procedures that aren’t recorded in a patient’s chart. It can be refusing to perform certain low-reimbursing tasks. It can be performing excessive diagnostic tests on patients who don’t need them—actions that aren’t illegal but are not best practice.

Fee-for-service may have worked well in primary care 40 years ago when patients had fewer chronic diseases, but health needs have changed. More Albertans today live for decades with diseases requiring long-term management; 44 per cent of Canadians over the age of 20 now have at least one chronic condition. Physicians ought to discuss with patients a growing list of preventive services such as cancer screening and vaccinations. They’re encouraged to talk to patients about mental health and the social determinants of health, but issues such as housing, poverty and food security don’t fit into a 10-minute window. The entire nature of the doctor–patient relationship has changed. We’ve shifted from the scenario where physicians told patients what to do to one in which patients want more interaction with their doctor.

Fee-for-service rewards higher patient volumes. It does not reward physicians who take extra time to counsel patients

That kind of primary care cannot be easily accomplished under fee-for-service, says James Dickinson, a family physician at the University of Calgary. In its place, many physicians focus only on a person’s most acute problem—for which they can bill—and not a person’s health over time. “There are doctors in this town who have ‘One problem per visit’ posted on the wall,” says Dr. Dickinson. “When you see that, you know it’s one sign they might be a bad doctor, a doctor who is focused on money, not on care. If they’ve got that on the wall, you should be very cautious.”

Doctor bills the Health Care Insurance Plan for a patient visit based on the Schedule of Medical Benefits list. This is a publicly available, 770-page schedule of fees that has been hammered out in negotiations between the Alberta Medical Association (AMA) and Alberta Health.

Within the house of medicine, there’s tremendous rancour over the Schedule of Medical Benefits. Many primary care physicians complain they are compensated at a much lower rate than specialists, an inequity that harms primary care delivery. Specialists counter that they undergo more years of postgraduate training and many of the things they do for patients are complex—ergo, their compensation should be higher.

This issue is not specific to Alberta, but the pay gap frustrates many physicians. “People say, well, they’re specialists, they deserve more. There’s no good evidence in the world that that’s true,” says David Moores, a professor of family medicine at the University of Alberta. “The most effective healthcare system, the most cost-effective and better outcome healthcare systems, are those that are based on strong primary care.”

In the early 2000s Dr. Moores led a study that looked at the quality of care in primary care clinics across the province. Today, 15 years after the study finished, Dr. Moores still recalls a scenario described by one of the physicians in the study. A primary care doctor felt that a young man needed an urgent MRI; he didn’t want to send him to a hospital’s emergency department, where he might continue to wait. That afternoon, the physician made call after call to get a same-day MRI for the patient. No reimbursement for this kind of effort is built into the fee-for-service system. In the three and a half hours the physician spent on the phone, patients waited in his clinic, wanting care for minor ailments he could have billed for. By the time the doctor got help for the man, he’d lost hundreds of dollars in potential income.

Dr. Miriam Berchuk offers another telling example. As an anesthesiologist and a specialist in obesity medicine in Calgary, Dr. Berchuk has worked for the last several years with a primary care doctor to provide group counselling in weight management for people waiting for joint replacement surgery. Their goal is to counsel people on lifestyle changes such as weight loss that could improve their outcomes after surgery—and ultimately save healthcare system resources, adds Berchuk. She was astonished, however, by the difference in fees for her work in hospital as an anesthesiologist compared to a family doctor’s. A family doctor—who pays for staff, office space and equipment in her practice—can bill $15.85 per patient for a group counselling session slated to last two hours and attended by 8–12 patients. An anesthesiologist with no overhead can bill $30.35 for initiating an IV line when she’s called to help nurses. It takes Berchuk five minutes to do this, maybe 10 in a difficult case. This simple, fast service is, according to the fees, far more valuable than counselling a patient on lifestyle changes. “[But] how do you quantify the counselling aspects, the sitting and listening to people?” asks Dr. Berchuk. “What is that worth?”

She adds that the inequity between different specialties under fee-for-service disproportionately penalizes female physicians. Women tend to go into family medicine at a higher rate than men, and currently account for 45.5 per cent of all family physicians in Canada. Studies show that female primary care physicians engage in more patient-centred communication and have longer visits than their male colleagues. These practices can reduce income in a fee-for-service system.

Income inequity also deters medical students from pursuing primary care in favour of specialties where their earning potential is greater. Every March the Canadian Residency Matching Service matches graduating medical students to residency training spots across the country. And every year the most sought-after residencies are found in highly specialized, high-paid fields with more agreeable work hours—radiology, dermatology and plastic surgery among the top. Family medicine struggles to attract enough students. This year, 209 residency spots across Canada went unfilled, meaning there weren’t enough students interested in pursuing that kind of practice. Of these, 138 were in family medicine, including 11 spots in family medicine at the U of C. “We have 52 vacancies for family physicians in northern Alberta,” Dr. Moores says.

The AMA is trying to find a way to address these problems. In 2016 the association established an initiative to reduce income disparities among physicians. The process has been thwarted repeatedly, however, by disagreements among different specialties. In 2018 ophthalmologists and dermatologists even hired a law firm to challenge the AMA’s authority to proceed with the income equity initiative. The effort remains stalled. “Nobody wants to give up income. So if it’s a question of redistributing, it gets tricky,” says Dr. Berchuk.

The NDP government brought in a new compensation model for primary care, blended capitation, and set up a pilot program for family clinics across the province. Blended capitation allows doctors to bill fees for some services but also provides them with fixed funding to care for a roster of patients over a set time. In the end, few clinics signed up. Every physician in a practice had to join the new pay model if a clinic signed up, while the clinic was required to have a minimum of three physicians operating out of a single location. Pincher Creek’s Dr. Gelber was interested in joining but his practice wasn’t eligible. “[The government] has thrown up some barriers, which have been difficult to overcome for many physicians,” he says.

Alberta has the highest number of physicians in the country paid by fee-for-service. As of 2017 only 17 per cent of doctors here received some payment by an alternative method (such as salaries or hourly rates), compared to 68 per cent across the rest of Canada. This province’s physicians are also the highest paid in Canada. The average gross clinical payment per physician, according to the Canadian Institute for Health Information, was highest in Alberta at $386,000. Lowest was Newfoundland at $274,000.

Health economist Amity Quinn, who studies how physician payments affect patient care, says there’s no clear answer about the relationship between physician reimbursement and the quality of patient care, thus no easy solution. Studies have shown mixed results for patients when physicians are paid in bundled payments rather than fee-for-service, and other studies show that payment models that encourage team-based approaches to care did not change how physicians delivered face-to-face patient care.

One thing is certain: Getting rid of fee-for-service entirely isn’t a solution. Quinn believes the best option is a combination of compensation models across the province—some fee-for-service, some alternative pay models, but with more transparency and more discussion about health system value. “We definitely need to be clearer on our goals, and align payments models with what those goals are.”

The existing system is getting more scrutiny. As part of a 2016 amending agreement between the province and the AMA, the latter set up a peer-review system to monitor physician billings. It’s designed to be physician-led, non-punitive and focused on education. The goal is not to audit physicians—on that, the AMA is very clear. Rather, it’s supposed to educate physicians in order to cut down on inappropriate billing. The AMA says Alberta’s physicians have slowed health expenditures in the province since 2016, claiming physician stewardship has led to a savings of $544-million.

The AMA’s regular publicly available reports on billings reveal how inappropriate billings quickly add up to hundreds of thousands of dollars. One ICU physician, who mistakenly charged for multiple encounters with the same patient over a day during a hospital stay, billed nearly $200,000 in surcharge payments over a year.

The AMA isn’t the only overseer of physician reimbursement. Alberta Health regularly conducts compliance reviews and audits to detect errors, overbilling or fraud. The reviews can be prompted by complaints from Albertans and by risk assessments and data analytics. And when criminal activity is suspected, a Special Investigations Unit (SIU) of Service Alberta is called in. Since 2012 the SIU has investigated an average of 25 health files per year. In the last five years, criminal charges filed as a result of SIU investigations include one physician charged with several counts of fraud, two people charged with personation or uttering (i.e., using or passing along) a forged document and seven cases in which the SIU assisted police agencies in regards to Controlled Drugs and Substances Act.

Online reviews of Vincenzo Visconti’s practice over the years don’t paint a picture of a bad doctor. Many of his former patients say the opposite. But after the inquiry into the death of Michael Perreault, the College of Physicians and Surgeons saw otherwise. In October 2017 a senior medical adviser from the CPSA reported that the latest review of Dr. Visconti’s practice revealed concerns with his opioid prescribing. The amounts were drastically higher than other physicians’ and showed an upward trend over time instead of decreasing as recommended by chronic-pain guidelines.

In Alberta only 17 per cent of doctors receive some payment by an alternative method (such as salaries) compared to
68 per cent across Canada.

In a statement, the college noted that Visconti’s clinic’s roster of 3,500 patients was unusually large. Studies of primary care suggest a well-resourced physician practising with a support staff can safely and appropriately manage a patient roster of somewhere between 1,200 and 1,600. Visconti had directed at least some of his patients to only use a specific pharmacy in downtown Edmonton to fill prescriptions—for reasons unknown, but a practice not permitted. And, again, the College found irregularities in Visconti’s billing practices.

In April of 2018 the College gave Visconti two weeks’ notice that his licence would be suspended indefinitely. He was asked to spend the next two weeks helping patients transition to other physicians. Two dozen of his patients twice staged a rally on the steps of the Alberta legislature calling for his reinstatement.

One week after the College gave Visconti two weeks to end his practice, it announced his licence was suspended immediately. He’d been restricted to seeing patients five hours a day, banned from initiating any new treatments and had his prescribing privileges limited. But the College said he had failed to abide by the conditions.

On April 27, 2018—14 years after the first concerns about his practice were reported—the College took the rare step of suspending Visconti’s licence indefinitely under s. 65 of the Health Professions Act. Rather than proceed to a disciplinary hearing, Visconti agreed to a formal resolution of the complaints in December 2018. He is currently facing two criminal charges for allegedly defrauding the government of Alberta of more than $5,000 by deceit, falsehood or other fraudulent means.

Christina Frangou reports on health, medicine and social issues. Send story feedback to


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