The Alberta government, fresh off failed contract talks with doctors, is ending its long-standing master agreement with them and putting new rules in place April 1.

Changes include new fee rules on extended patient visits that doctors have already said will devastate the bottom line for some family and rural practices.

Health Minister Tyler Shandro says ending the agreement is a difficult but necessary move, given that the province was at an impasse with doctors on how to reduce costs and improve service in the $20.6-billion health system.

"It's not a decision we take lightly, but since May we've been talking to (the Alberta Medical Association) about our fiscal imperative," said Shandro in an interview Thursday.

"Unfortunately, we weren't successful in being able to get them to work with us on that issue."

Agreement ends March 31

The current master agreement with physicians ends March 31.

Both sides have tried and failed to agree on new terms in negotiations since November.

Last fall, Premier Jason Kenney's United Conservatives passed Bill 21, which gives the government the right to unilaterally end the agreement.

Starting April 1, physician compensation will remain at its current level of $5.4 billion a year. But the changes are expected to prevent $2 billion in added costs tied to physician services over this current fiscal year and the three after that.

Complex modifiers

The key change, which has also been the focus of a fiery dispute between doctors and the government, will be to a billing designation known as complex modifiers.

Under Alberta's current fee-for-service model, doctors can bill $41 as a base fee for each patient visit no matter how short or how long.

A decade ago, Alberta added in an extra fee — called a complex modifier — to recognize that some patients have multiple or complex issues and doctors should be compensated for overly long visits.

If a visit went more than 15 minutes, doctors were able to extend it 10 minutes and bill the province a complex modifier fee of $18, for a total of $59.

As of April 1, the fee will be halved from $18 to $9, for a new total fee of $50.

As of April 1, 2021, the $18 complex modifier will return. But physicians won't be allowed to bill for it until the 25-minute mark.

Doctors warn of cutting visits

Shandro's ministry says the change is necessary for two reasons: more time is needed to assess complex patients and the current complex modifier is being abused, with too many doctors billing the $59 right at the 15-minute mark.

At a news conference announcing the changes, Shandro said the modifier was being used for almost 50 per cent of visits.

"We don't think that the population of Alberta is that complex," he said.

The Alberta Medical Association, the bargaining arm for doctors, has said extending the length of a visit to 25 minutes would reduce fees by a total of $200 million and devastate many family and rural practices.

The AMA has argued the complex modifiers are not only for exceptional cases and take into account all the work — preparation, follow-up and face-to-face time — needed for patients with complex needs. It also says it keeps those patients out of the hospital.

The issue has riled up some doctors, many of whom have put up signs warning patients they may have to cut future visits short to recoup funds needed to keep their practices going.

AMA response

Dr. Christine Molnar, head of the AMA, said the move marked a first in Alberta and a "sad day" for health care.

"It became clear today that government is not interested in collaboration," Molnar wrote in a statement provided to CBC News. "Moving forward will be difficult and I am genuinely concerned for patients. This attack on physicians — particularly the disproportionate attack on family physicians — is disturbing."

The AMA said it made several offers throughout the negotiating process, such as offering "substantial short-term savings" worth over three per cent, which would equate to more than $150 million per year.

"We appreciate that there was still a way to go, but we had informed the minister that we were going to put another offer forward tomorrow," Molnar said. "At the same time, we indicated that we would be suggesting a movement to arbitration."

NDP calls talks a "spectacular failure"

During a press conference held Thursday, NDP health critic David Shepherd said the failed negotiations between the provincial government and the AMA would "create chaos" in the healthcare system.

"It's a spectacular failure of this premier, his minister, his entire cabinet, that they couldn't reach an agreement with physicians, or even find a basis for further talks," Shepherd said. "They couldn't even agree on a basic set of facts for the discussion.

"During the previous government, we spent a long time at the table with physicians, and as a result we got a deal that returned hundreds of millions of dollars into the healthcare system and helped to contain growth."

NDP health critic David Shepherd said one group's access to Health Minister Tyler Shandro and other government officials shows there is "direct political interference in the procurement process" for private surgical facilities. (CBC News)

Shepherd said the speed of the mediation spoke to the "bad faith" the government had going into the process.

"I'm left feeling very worried about the ability of Alberta families to get medical care," he said.

Other changes

Other changes include an end to double billing for overhead, no more duplicate billing for diagnostic imaging and a cap of 65 patients a doctor can see and bill for in a day.

Starting this summer, the province will introduce a new alternative relationship plan, with built-in transition benefits, to encourage doctors to move away from charging fee-for service to new three-year contracts.

The alternative plan includes having physicians tied to specific services, locations and times rather than billing for specific visits or procedures under the fee-for-service model.

Shandro suggested a move to an alternative relationship plan could help doctors concerned about the impact of the complex modifier changes.

The government has made the changes based on two reports that say Alberta is paying more on physician services than other provinces, but has too many performance measures below national averages.

It estimates gross clinical earnings for an Alberta doctor at almost $390,000 a year — about $90,000 more than a comparable one in Ontario.

The AMA says the government's position is built on flawed data that doesn't take into account differences in fee rules and that Alberta doctors are paid in line with those other provinces.