The Canadian Medical Association (CMA) provides this submission in response to Finance Canada’s consultation on Legislative Proposals Relating to Income Tax, Sales Tax and Excise Duties (Draft Tax Legislative Proposals).
The CMA is the national voice of Canadian physicians. On behalf of its more than 83,000 members and the Canadian public, the CMA’s mission is helping physicians care for patients. In fulfillment of this mission, the CMA’s role is focused on national, pan-Canadian health advocacy and policy priorities.
As detailed in this brief, the CMA is gravely concerned that by capturing group medical structures in the application of Clause 13 of the Draft Tax Legislative Proposals, the federal government will inadvertently negatively affect medical research, medical training and education as well as access to care.
To ensure that the unintended consequences of this federal tax policy change do not occur, the CMA is strongly recommending that the federal government exempt group medical and health care delivery from the proposed changes to s.125 of the Income Tax Act regarding multiplication of access to the small business deduction in Clause 13 of the Draft Tax Legislative Proposals.
Relevance of the Canadian Controlled Private Corporation Framework to Medical Practice
Canada’s physicians are highly skilled professionals, providing an important public service and making a significant contribution to our country’s knowledge economy. Due to the design of Canada’s health care system, a large majority of physicians – more than 90% – are self-employed professionals and effectively small business owners.
As self-employed small business owners, physicians typically do not have access to pensions or health benefits, although they are responsible for these benefits for their employees. Access to the Canadian-Controlled Private Corporation (CCPC) framework and the Small Business Deduction (SBD) are integral to managing a medical practice in Canada. It is imperative to recognize that physicians cannot pass on any increased costs, such as changes to CCPC framework and access to the SBD, onto patients, as other businesses would do with clients.
In light of the unique business perspectives of medical practice, the CMA strongly welcomed the federal recognition in the 2016 budget of the value that health care professionals deliver to communities across Canada as small business operators. Contrary to this recognition, the 2016 budget also introduced a proposal to alter eligibility to the small business deduction that will impact physicians incorporated in group medical structures.
What’s at risk: Contribution of group medical structures to health care delivery
The CMA estimates that approximately 10,000 to 15,000 physicians will be affected by this federal taxation proposal. If implemented, this federal taxation measure will negatively affect group medical structures in communities across Canada. By capturing group medical structures, this proposal also introduces an inequity amongst incorporated physicians, and incentivizes solo practice, which counters provincial and territorial health delivery priorities.
Group medical structures are prevalent within academic health science centres and amongst certain specialties, notably oncology, anaesthesiology, radiology, and cardiology. Specialist care has become increasingly sub-specialized. For many specialties, it is now standard practice for this care to be provided by teams composed of numerous specialists, sub-specialists and allied health care providers. Team-based care is essential for educating and training medical students and residents in teaching hospitals, and for conducting medical research.
Put simply, group medical structures have not been formed for taxation or commercial purposes. Rather, group medical structures were formed to deliver provincial and territorial health priorities, primarily in the academic health setting, such as teaching, medical research as well as optimizing the delivery of patient care. Over many years, and even decades, provincial and territorial governments have been supporting and encouraging the delivery of care through team-based models.
To be clear, group medical structures were formed to meet health sector priorities; they were not formed for business purposes. It is equally important to recognize that group medical structures differ in purpose and function from similar corporate or partnership structures seen in other professions. Unlike most other professionals, physicians do not form these structures for the purpose of enhancing their ability to earn profit.
It is critical for Finance Canada to acknowledge that altering eligibility to the small business deduction will have more significant taxation implication than simply the 4.5% difference in the small business versus general rate at the federal level. It would be disingenuous for Finance Canada to attempt to argue that removing full access to the small business deduction for incorporated physicians in group medical structures will be a minor taxation increase. As taxation policy experts, Finance Canada is aware that this change will impact provincial/territorial taxation, as demonstrated below in Table 1.
Table 1: Taxation impacts by province/territory, if the federal taxation proposal is implemented
In Nova Scotia, for example, approximately 60% of specialist physicians practice in group medical structures. If the federal government applies this taxation proposal to group medical structures, these physicians will face an immediate 17.5% increase in taxation. In doing so, the federal government will establish a strong incentive for these physicians to move away from team-based practice to solo practice. If this comes to pass, the federal government may be responsible for triggering a reorganization of medical practice in Nova Scotia.
Excerpts from physician communiques
The CMA has received as well as been copied on a significant volume of correspondence from across our membership conveying deep concern with the federal taxation proposal. To provide an illustration of the risks of this proposal to health care, below are excerpts from some of these communiques:
“Our Partnership was formed in the 1970s…The mission of the Partnership is to achieve excellence in patient care, education and research activities….there would be a serious adverse effect on retention and recruitment if members do not have access to the full small business deduction…The changes will likely result in pressure to dissolve the partnership and revert to the era of departments services by independent contractors with competing individual financial interests.”
Submitted to the CMA April 15, 2016 from a member of the Anesthesia Associates of the Ottawa Hospital General Campus
“The University of Ottawa Heart Institute is an academic health care institution dedicated to patient care, research and medical education…To support what we call our “academic mission,” cardiologists at the institute have formed an academic partnership…If these [taxation] changes go forward they will crippled the ability of groups such as ours to continue to function and will have a dramatic negative impact on medical education, innovative health care research, and the provision of high-quality patient care to our sickest patients.”
Submitted to the CMA April 19, 2016 from a member of the Associates in Cardiology
“We are a general partnership consisting of 93 partners all of whom are academic anesthesiologists with appointments to the Faculty of the University of Toronto and with clinical appointments at the University Health Network, Sinai Health System or Women’s College Hospital…In contrast to traditional business partnerships, we glean no business advantage whatsoever from being in a partnership…the proposed legislation in Budget 2016 seems unfair in that it will add another financial hardship to our partners – in our view, this is a regressive tax on research, teaching and innovation.”
Submitted to the CMA April 14, 2016 from members of the UHN-MSH Anesthesia Associates
The CMA recommends that the federal government exempt group medical and health care delivery from the proposed changes to s.125 of the Income Tax Act regarding multiplication of access to the small business deduction, as proposed in Clause 13 of the Draft Tax Legislative Proposals.
Below is a proposed legislative amendment to ensure group medical structures are exempted from Clause 13 of the Draft Tax Legislative Proposals:
Section 125 of the Act is amended by adding the following after proposed subsection 125(9):
125(10) Interpretation of designated member – [group medical partnership] – For purposes of this section, in determining whether a Canadian-controlled private corporation controlled directly or indirectly in any manner whatever by one or more physicians or a person that does not deal at arm's length with a physician is a designated member of a particular partnership in a taxation year, the term "particular partnership" shall not include any partnership that is a group medical partnership.
125(11) Interpretation of specified corporate income – [group medical corporation] – For purposes of this section, in determining the specified corporate income for a taxation year of a corporation controlled directly or indirectly in any manner whatever by one or more physicians or a person that does not deal at arm's length with a physician, the term "private corporation" shall not include a group medical corporation.
Subsection 125(7) of the Act is amended by adding the following in alphabetical order:
"group medical partnership" means a partnership that:
(a) is controlled, directly or indirectly in any manner whatever, by one or more physicians or a person that does not deal at arm's length with a physician; and
(b) earns all or substantially all of its income for the year from an active business of providing services or property to, or in relation to, a medical practice;
"group medical corporation" means a corporation that:
(a) is controlled, directly or indirectly in any manner whatever, by one or more physicians or a person that does not deal at arm's length with a physician; and
(b) earns all or substantially all of its income for the year from an active business of providing services or property to, or in relation to, a medical practice.
"medical practice" means any practice and authorized acts of a physician as defined in provincial or territorial legislation or regulations and any activities in relation to, or incidental to, such practice and authorized acts;
"physician" means a health care practitioner duly licensed with a provincial or territorial medical regulatory authority and actively engaged in practice;
1. Protection and disclosure of the information
This is a foundational component of any regulatory framework for both practitioners and patients/requestors. The CMA recommends placing greater emphasis on the protection of privacy by
a. conducting a privacy impact assessment, with input from the Federal Privacy Commissioner (if that hasn't already been done).
b. requiring, as part of the regulations, privacy/data sharing agreements in instances when
o data is shared to meet the objectives outlined (p. 2); and
o information collected under the framework will be made available to designated provincial and territorial government bodies for their use (p. 3). This is particularly important given that this involves the collection of identifiable (private) information about practitioners and patients/requestors.
c. using aggregate data where applicable.
d. providing greater detail on how the "Rigorous protection of all personal information (patient and practitioner) will be a paramount feature of the monitoring regime" - such detail is essential even in the preliminary stages of developing a monitoring and reporting system.
2. Further specification of what constitutes a request
As is currently stated, what constitutes a request is not sufficiently defined, i.e., what constitutes a "written request"? Is any written request a request? What about for those who can't (or who can no longer) write? Further specifying what constitutes a request is especially important since the practitioner has to document the circumstances of the request in every instance, including where follow-up is required and a report has to be filed as part of a follow-up.
A timeframe of 10 days to file a report is alarmingly short. It is commonly known that physicians already feel burdened by paperwork and it is highly likely that they would find it nearly impossible to meet this requirement. This could conceivably deter physicians from choosing to provide assistance in dying or participate in an assessment under threat of criminal sanction, potentially significantly impacting patient access.
Information required for this category includes "results of the eligibility assessment". It should be required to explicitly include reasons why the patient/requestor was deemed ineligible.
5. MAiD self-administered
a. The application of safeguards should be a specific category requiring reporting (and not simply used an example).
b. To assess (in)consistency of emerging practices and the variability of provincial legislative or regulatory requirements, it would be worthwhile to require stating whether the practitioner was present during the self-administration.
6. Coroners and medical examiners
When the monitoring regime (periodically) requests information from Chief Coroners or Medical Examiners:
To assess (in)consistency of emerging practices and the variability of provincial legislative or regulatory requirements, it would be worthwhile to gather data on who completes the death certificate and the information included on the death certificate.
The Canadian Medical Association (CMA) is pleased to provide input on the proposed regulations of the federal monitoring of Medical Assistance in Dying in Canada.
The CMA fully supports the proposed intent of the regulations, in particular, public accountability and transparency and safeguards for vulnerable patient populations. Tracking trends and carrying out research is very important to monitor the implementation and implications of medical assistance in dying.
The CMA further supports the intent to provide electronic reporting and guidance documents, and to leverage any synergies between the federal and provincial/territorial governments, especially to prevent duplication and to promote consistency in reporting across the country.
The CMA would like to raise the following critical areas for your consideration:
1. Definitions/parameters of terms
There continues to be a need to more clearly define several terms to ensure consistency of reporting. For example:
a. Who constitutes a “practitioner”? One can argue that there is a broad scope of who is “a medical practitioner or nurse practitioner”. Is it the practitioner who provides MAiD? Or he practitioner who first reads a patient’s request for MAiD? Or is the first practitioner? Or second practitioner who assesses the patient?
b. What constitutes a therapeutic relationship (as one of the eight proposed items to be collected about the practitioner)? A therapeutic relationship is not required to access MAiD. This criterion should be removed and if not, given the differences in opinion in the health professions as to what constitutes a therapeutic relationship includes, it should be clearly defined.
c. What constitutes a request, a written request, the receipt of a request? If reporting obligations are “triggered” by a patient’s “written request”, at what point is that request actually triggered? The very first practitioner who receives the patient’s written request? Or the practitioner who conducts the eligibility assessment upon receipt of the written request? Or the practitioner who provides the prescription or carries out the procedure?
d. On a related point, without clear definitions, any future comparative analysis of research or trends will be difficult as there will be no common starting point.
e. There continues to be confusion on how to count or when to start counting the required 10 clear days. There are many reasons why this requires more clarity.
2. Collection and protection of data
We applaud Health Canada for further reducing and revising data requirements. We submit, however, that further reductions are required for several reasons, including adherence to privacy best practices that require the collection of the least amount of data necessary to achieve reasonable purposes. In particular:
a. In view of the quantity and highly personal and sensitive data that will be collected about patients and practitioners, data sharing agreements should be required; for example, agreements between the federal government and provincial/territorial governments or between researchers and others requesting use of the data to facilitate the appropriate sharing of data.
b. Collection of personal information should be limited to what is relevant to the purpose of monitoring medical assistance in dying. Personal information, such as the patient’s full postal code, marital status, or principal occupation is beyond the scope of the eligibility criteria outlined in the legislation and thus beyond the scope of the purpose of monitoring the impact of the legislation.
c. Any “characteristics” of the patient should refer only to the eligibility criteria. If other data will be collected beyond that scope, the justification for doing so, and the characteristics themselves, should be clearly outlined.
d. The scope of the information collected about the practitioner could be narrowed. As is, it is very broad – a list of eight items – while the Quebec regulations, as a comparator, have only three-four items that must be collected in relation to the physician who administers MAiD.
3. Additional requirements
Schedule 4 [section 2(i)] of the proposed regulations requires that the practitioner opine as to whether the patient met, or did not meet, all of the eligibility criteria outlined in the legislation – with two significantly expanded requirements; the requirements that the practitioner: 1) provide an estimate as to the amount of time MAiD shortened the patient’s life; and 2) indicate the anticipated likely cause of natural death of the patient.
These additional requirements are beyond the letter and spirit of the legislation and, in many ways, are in direct contradiction to the legislation. The Legislature was not unaware when it drafted the Act that it did not follow other jurisdictions’ criteria requiring either a terminal illness or a prognosis of time within which the practitioner believed the patient would die, e.g., “within the next 6 months”.
It is specifically the lack of a timeframe that makes the legislation unique and provides flexibility for both patients and practitioners. By adding these two additional criteria for reporting, in effect, they become additional criteria for eligibility which is, as stated above, beyond the scope, and in contradiction to, the legislation.
4. Lack of clarity of reasons for ineligibility
There is a potential for misunderstanding as to whether reasons are required when the patient does not meet the criteria under Schedule 4, section 2(a) – (h). The introduction to section 2 speaks to the practitioner giving an indication as to (a) whether the patient met or (b) did not meet the criteria. However, in the itemized criteria [2(a)-(h)] it only speaks to the practitioner having to provide reasons when the patient meets the criteria (and not when the patient has not met the criteria). It would be helpful to specify that reasons should be required when the patient does and does not meet the criteria. This is also crucial for the publication of the Minister of Health’s annual report requiring that the reasons, and which eligibility criteria were not met, be addressed.
The CMA recognizes the importance of regulations to capture the provision, collection, use, and disposal of information for the purpose of monitoring MAiD. The CMA cautions against introducing reporting requirements that are beyond the scope of the legislation.
As noted in the legislation, practitioners who fail to provide information under the regulations may be found guilty under the Criminal Code and subject to possible imprisonment. It is thus imperative that the federal government drafts clear regulations that respect the legislation, privacy, research ethics, and a de minimus approach.