By Leon Efraim . March 29, 2023 .

Changes to the Legal Framework for Independent Health Facilities in Ontario - Thomas Efraim LLP

Existing Regime for Independent Health Facilities

Privately owned independent health facilities (IHFs) currently operate in Ontario and perform publicly funded procedures (i.e., procedures that are insured and payable by the Ontario Health Insurance Plan (OHIP)),[2] such as diagnostic imaging, sleep medicine, dialysis and gynecologic surgeries. IHFs are licensed under the Independent Health Facilities Act (the IHFA).

New Regime for Integrated Community Health Services Centres

If passed, Bill 60 will repeal the IHFA and enact the Integrated Community Health Services Centres Act, 2023 (the Proposed Act) in its place. Existing IHFs licensed under the IHFA will automatically be licensed as “integrated community health services centres” (which we refer to in this bulletin as Community Health Centres) under the Proposed Act, subject to the same limitations and conditions that applied to the applicable licence under the IHFA. [3]

The Proposed Act sets out a new licensing regime for Community Health Centres. Like IHFs under the IHFA, Community Health Centres will be privately owned but publicly funded, in that the services performed by physicians in Community Health Centres (and in some cases, the operating costs of the centre) will be billable to OHIP. It appears that OHIP funding may be available in respect of Community Health Centres that are newly licensed under the Proposed Act, under both:

• the Schedule of Benefits - Physician Services Under the Health Insurance Act [PDF] (the SOB – Physician Services), by way of payment of professional fees to physicians providing services in the Community Health Centre; and
• the Schedule of Facility Fees for Independent Health Facilities [PDF] or a successor schedule (the SOB – Independent Health Facilities), by way of the payment of “facility costs” to the Community Health Centre itself.

There is no information available at this time to suggest that Community Health Centres that were previously licensed as IHFs will be entitled to additional OHIP funding (i.e. any additional facility costs) solely on account of the transition to the Proposed Act. However, it may be possible that these Community Health Centres receive OHIP funding for any additional services that they are licensed to provide under the Proposed Act (i.e. if the Community Health Centre applies for and is issued an expanded licence for services under the Proposed Act).

Until the regulations contemplated by the Proposed Act (New Regulations) are introduced, it is not clear what charges, fees or payments will be prescribed as “facility costs”.

Application of the Proposed Act

Currently, the IHFA and its regulations expressly exempt certain persons, facilities, services and places from the application of the IHFA. For example, Regulation 649: Application and Exemptions exempts the following from the provisions of the IHFA and its regulations: [4]

• public hospitals;
• long-term care homes;
• services provided by prescribed health professionals, including, for example, chiropractors, dentists, optometrists and physiotherapists;
• services delivered to uninsured persons (i.e., persons who are not covered by OHIP); and
• ambulance services.

We expect that similar exemptions will be contained in the New Regulations given that the Proposed Act, like the IHFA, contemplates the exemption of certain persons, facilities, services and places from its application and that of the New Regulations. We are not aware of any intention of the Ministry to narrow the scope of exemptions that currently exist in the IHFA.

Licensing Application Requirements

Under the Proposed Act, the Minister of Health may authorize a call for applications for the establishment and operation of one or more Community Health Centres. A call for applications may be made to the public generally or be directed at one or more specific persons. A call for applications will specify the service or services to be provided and the location where the centre is to be located, and any applications submitted in response to such call shall, at a minimum (in addition to any other information requested by the Ministry via the call for applications) include the information prescribed by the Proposed Act – for example, the business, clinical and professional experience of the applicant and physical details of the proposed Community Health Centre. [5]

The licensing application process and requirements set forth in the Proposed Act are very similar to the licensing application process and requirements that exist in the IHFA. However, unlike the IHFA, the Proposed Act expressly requires applicants to provide details about how the proposed Community Health Centre will facilitate integrated care and access to care (particularly in respect of diverse, vulnerable and underserviced communities). For example, the Proposed Act requires an applicant to describe:

• how the proposed Community Health Centre will promote “connected and convenient care”, including whether the proposed Centre will reduce patient wait times, increase access to care, and be integrated with the health system;
• the steps that the applicant has taken to discuss the proposed Community Health Centre with health system partners, and whether the applicant has received any endorsement from any health system partner for their application;
• the existing and future need for the services to be provided by the Community Health Centre in Ontario, and in particular, the health equity needs of diverse, vulnerable priority and underserviced populations, considering linguistic needs; and
• any current linkages with health system partners and how such linkages will be maintained or improved to support optimal patient care pathways. [6]

Factors to be Considered in Licensing Decisions

The Proposed Act will require the Director, appointed by the Minister, to consider a number of factors when determining whether to issue a licence, including:

• the nature of the services to be provided, the extent to which they are already available in Ontario, and the current and future need for the services in Ontario;
• the extent to which the services to be provided will promote connected and convenient care;
• potential impacts on health system planning and coordination, including the availability of health human resources; and
• projected costs and the availability of public money to pay for the operation of the proposed centre. [7]

The issuance of a licence is ultimately at the discretion of the Director. The factors to be considered by the Director in issuing a licence for a Community Health Centre are similar to those factors that must be considered by the Director in issuing an IHF licence under the IHFA. However, similar to the required contents of the application, the Proposed Act places more emphasis on the proposed Community Health Centre’s potential to promote integrated care. 

Payment for Services

Currently, in respect of services performed at IHFs, the physicians providing the services may bill their professional fees to OHIP, but it is not always the case that the IHF is entitled to receive payment from OHIP for its operating costs (i.e., "facility fees"). However, as noted above, it appears that under the Proposed Act, fees for physician services performed at Community Health Centres and all or part of the “facility costs” associated with those services will be billable to and payable by OHIP (to the physician, in the case of professional fees, and the Community Health Centre, in the case of facility costs) pursuant to the SOB – Physician Services and the SOB – Independent Health Facilities, respectively.[8]

The entitlement of newly licensed Community Health Centres to receive facility costs is significant, given that the Proposed Act (like the IHFA) prohibits any person from charging or accepting payment of a facility cost for or in respect of an insured service provided in a place that is not a licensed Community Health Centre.[9] Limited exceptions to the foregoing prohibition are likely to be detailed in the New Regulations (as the majority of the exceptions to the equivalent prohibition in the IHFA are).

The Proposed Act defines the term “facility cost” in a similar manner to how the term “facility fee” is defined in the IHFA. More specifically, the Proposed Act defines “facility cost” as:

• “(a) a charge, fee or payment for or in respect of a service or operating cost that, (i) supports, assists and is a necessary adjunct, or any of them, to an insured service [i.e., a service that is insured under the province’s Health Insurance Act and paid by OHIP], and (ii) is not part of the insured service, or (b) any other charge, fee or payment that is prescribed as a facility cost.”[10]

As is the case with IHFs under the IHFA, the Proposed Act provides that Community Health Centres may not:

• charge or receive payment for facility costs except from the Ministry (by way of fees billed to and paid by OHIP pursuant to the SOB – Independent Health Facilities). This means that Community Health Centres are – like all non-Community Health Centres – prohibited from charging individuals or third parties on their behalf for any fees that are deemed “facility costs”;
• facilitate “queue jumping” by charging fees or accepting payment to provide insured patients with faster access to insured services; or
• refuse to provide insured services to an insured patient who chooses not to pay for any uninsured products, devices or services, for example, upgraded cataract lenses.[11]

Oversight and Compliance

The oversight mechanisms and compliance requirements under the Proposed Act are generally similar to those that currently exist under the IHFA. Notably, the Proposed Act will add a new requirement for licensees of Community Health Centres to establish and maintain a process for receiving and responding to patient complaints, in accordance with the New Regulations.[12]

Like the IHFA, the Proposed Act will continue to require that licensees establish and maintain a process for the review and reporting of incidents that result in death, or serious disability, injury or harm to patients that are not the result of the patient’s underlying medical condition or risks inherent in providing the service.[13]

The Minister may designate one or more organizations as inspecting bodies of licensed Community Health Centres, with responsibility for establishing quality and safety standards and carrying out regular inspections of centres.[14] The province is exploring several options for inspecting bodies, including continuing the role of regulatory colleges in quality assurance programs. Inspectors appointed under the Proposed Act will have the power to, among other things, examine records, question persons about matters relevant to the inspection, and (with the consent of the patient) observe the staff of the centre in providing services to patients.

Penalties for offences under the Proposed Act are the same as those under the IHFA. Individuals who contravene certain sections of the Proposed Act may be liable, for a first offence, to a fine of up to $50,000 or imprisonment up to 12 months (or both); corporations may be liable to a fine of up to $100,000 for a first offence and up to $500,000 for a subsequent offence. Due diligence is not a defense for a contravention of the Proposed Act.

We will continue to monitor the progress of Bill 60 and any New Regulations, once tabled, as they make their way through the legislative process.

[1] Ontario News Release, Ontario Reducing Wait Times for Publicly Funded Surgeries and Diagnostics (February 21, 2023).

[2] Payable when performed in accordance with the applicable Schedule of Benefits. Procedures performed by physicians in existing IHFs are billable to OHIP, pursuant to the SOB – Physician Services. Only some IHFs receive funding (by way of “facility fees”) for such procedures pursuant to the Schedule of Benefits – Independent Health Facilities.

[3] Proposed Act, Section 62(2). 

[4] Proposed Act, Section 2.

[5] Proposed Act, Section 5(1) – (4).

[6] Proposed Act, Section 5(4).

[7] Proposed Act, Section 6(2).

[8] This is subject to the limitation identified above in respect of Community Health Centres that are transitioned from the IHFA, which may or may not be entitled to charge or receive payment for facility fees, based on the existing terms and conditions of their licence.

[9] Proposed Act, Section 29(3).

[10] Proposed Act, Section 1(1).

[11] Proposed Act, Sections 29(4), (5) and (6).

[12] Proposed Act, Section 22.

[13] Proposed Act, Section 23.

[14] Proposed Act, Section 43.