The Ontario government and the province's doctors have reached a tentative four-year agreement that provides a "predictable and sustainable" budget of $11.5-billion with annual increases of 2.5 per cent, according to a confidential document obtained by The Globe and Mail.

The agreement also includes funding to increase the number of doctors and a modernization of Ontario Health Insurance Plan fees that will result in $200-million in reductions.

In addition, the government has agreed to "one-time payments" to doctors of $50-million in 2016-17, $100-million in 2017-18, $120-million in 2018-19 and $100-million in 2019-2020. These payments are an incentive for the doctors to stay on budget – and the money gets paid out only if they stick to the budget.

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The two sides will "co-manage" the physician services budget – and the government has agreed not to unilaterally cut the fees it pays to physicians, as it has in the past.

The tentative deal, which was announced on Monday, was reached after an intense series of negotiations that ended late Thursday. It will now be presented to the province's 33,000 doctors, who are represented by the Ontario Medical Association. The details will not be made public until it is approved by the OMA Council in early August.

However, both sides confirmed the contents contained in the confidential memo.

The doctors have been without a contract for two years.

"We have secured important safeguards for members that will protect physicians against additional unilateral cuts and other actions by government, and provide much-needed stability and predictability for our practices, our patients and the health-care system over all," OMA president Virginia Walley says in the confidential memo.

The OMA has given up its insistence on binding arbitration, or a binding dispute resolution mechanism, which had led to an impasse in the talks. But its Charter of Rights and Freedoms challenge against the government on this issue will continue. The association believes that doctors are entitled to binding arbitration, and has gone to court to ask for a legal declaration.

Health Minister Eric Hoskins, himself a doctor, said in an interview on Monday that the tentative deal goes beyond compensation and addresses other important health-care issues, including funding for more doctors, which will help with an aging population.

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"For those Ontarians who currently don't have a primary care provider [and] who want one, we are going to work together to actually achieve that goal," he said.

A key piece of the tentative agreement for the government was addressing the relativity gap – for example, is one doctor, such as an ophthalmologist, more important than a family physician? The fee structure now is such that the eye specialist can earn much more than his or her colleague in a family practice.

On average, Ontario doctors' gross compensation is $368,000 annually, making them the best paid in Canada, according to the Canadian Institute for Health Information.

Dr. Hoskins has long been concerned about the fee codes and disparities in billing; there are 7,300 procedures for which a doctor can bill. It has meant a disparity in what some doctors earn.

In a remarkable news conference in April, the minister disclosed that more than 500 doctors billed OHIP more than $1-million each last year, including an ophthalmologist who billed $6.6-million. His revelations caused much controversy, but might have restarted the talks with the physicians.

The two sides got back to what they called "exploratory" talks after that, eventually leading to the tentative deal.

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In his interview on Monday, Dr. Hoskins said the deal "tackles the issue of relativity and undervalued doctors, and allows us to make investments in them so they are respected."

The tentative agreement calls for $200-million in "permanent reductions" as part of the modernization process of the OHIP Schedule of Benefits, according to the OMA's memo.

However, a Health Ministry official characterized this as a savings exercise. On background, the official said the two sides are committing to $200-million "in savings from modernization of how physicians are compensated."

The savings, according to the official, will be found through "updating fee codes, accounting for technological change, identifying efficiencies where they can be found without impacting access."

In his interview, Dr. Hoskins noted that if the two sides cannot reach an agreement on the fee issues, there is a provision in the tentative agreement for a permanent facilitator with health expertise to make the decision for them.

Dr. Walley, the OMA president, said in an interview that there are some fees that are overvalued, "but there are many fees that are undervalued."

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"That's why we've agreed in this tentative agreement to a co-management model going forward. It's in that kind of partnership that we will be able to determine the best use of scarce resources available to health care and make sure they are dedicated in the best way possible to patient care," she said.

"We're putting behind us the last two years of unilateral actions and we're going to operate in the best interests of patients."

The tentative deal stays within the government's fiscal plan. Compensation to doctors accounts for 25 per cent of Ontario's health-care budget and 10 per cent of the province's budget.