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October 8, 2019 3:40 pm EST
Updated: October 9, 2019 8:40 pm EST

EXCLUSIVE: Federal government cuts reimbursements for military health care, hospitals on the hook for millions

WATCH ABOVE: After a Global News exclusive report, the Canadian Armed Forces now admits it shouldn't have made cuts to health care funding for its members without proper consultation. Mercedes Stephenson explains what changes are being proposed.

The federal government has quietly rolled back what it pays hospitals to take care of military members, according to multiple sources.

Global News has confirmed with sources within the military, provincial and federal governments that the federal government made major changes this spring to the fees it reimburses to hospitals when they provide health care to military members — and that’s leading to fears some members could be denied health care services.

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Under the Canada Health Act and provincial health acts, members of the military are not eligible for public health coverage under provincial plans.

Instead, the federal government is constitutionally responsible for providing comparable medical care to all members, although more advanced medical care like surgery or MRIs is provided at the same hospitals used by civilians.

The military then reimburses the cost of providing those services to the hospital.

It’s effectively the same model used for treating out-of-province patients.

But sources tell Global News that the Department of National Defence ordered a cut to military healthcare spending earlier this year, and the fees reimbursed to hospitals for seeing military patients was one of the first items on the chopping block.

WATCH: Ottawa cuts reimbursements for military health care, hospitals on the hook for millions

READ MORE: Canadian military bans sexually explicit, discriminatory tattoos

Set fees for services are laid out by provincial health plans.

For example, Ontario has one set of rates for services to provincial residents — those covered through OHIP — and uses a set of fees laid out by the Ontario Medical Association for services not covered by OHIP, which would apply to military members not covered by the provincial plan.

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The federal government used to reimburse the cost of those at Ontario Medical Association rates, which can be roughly three times more expensive than OHIP rates.

Physicians could bill $105 for a psychiatric assessment under OHIP fees, for example — but under the OMA fees, they can charge $240 for providing that same service to those not insured through provincial health plans.

READ MORE: Changes to OHIP take effect — what you need to know

What those changes mean concretely is that the military will cover less of the fees physicians charge for services, leaving hospitals on the hook for millions of dollars.

Documents obtained by Global News show many of those hospitals are already bracing for the hit.

Pembroke Regional Hospital, located near the Canadian Forces Base at Petawawa, projects a shortfall of $3.4 million as a result of the change.

Sources say at least one hospital is no longer accepting military patients for some specialized services.

The Kingston Health Services Centre, located near the base at Kingston as well as the Royal Military College of Canada, estimates a shortfall of $2.3 million.

In total, Ontario hospitals are estimated to take a hit of at least $10 million.

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In August, Ontario Health Minister Christine Elliott wrote to her federal counterpart, Ginette Petitpas Taylor, as well as Defence Minister Harjit Sajjan, to express her concerns.

“I am sure we can agree that our brave men and women of our Canadian Armed Forces and veterans make countless sacrifices to protect our country and uphold our democratic values. They deserve our respect and gratitude for keeping us safe,” Elliott writes in her letter, a copy of which was obtained by Global News.

“That’s why I was surprised and extremely disappointed to learn that the federal government, through the Canadian Armed Forces, is attempting to unilaterally impose a new fee schedule for the delivery of health care to serving members and veterans. These changes, which were communicated without consultation, could result in either undue burden on hospitals or, worse yet, military members and veterans being charged to access health care services. Neither of these options are acceptable.”

A spokesperson for Alberta Health Minister Tyler Shandro also said that province had not been consulted and would be pushing the Department of National Defence to reconsider the change.

“We recently received new rates for payment by the Department of National Defense (DND) for hospital services provided to eligible Canadian Armed Forces (CAF) members,” said Steve Buick, press secretary to the minister.

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“The new rates do not accurately reflect the full cost of delivering health care to CAF members. We were not consulted about the change.”

He added the new rates “will likely lead to a shortfall of at least $2 million in revenue to Alberta Health Services versus their actual costs” and added they will also lead to an income reduction for physicians.

Buick also noted the change had been discussed among provincial and territorial deputy health ministers at a recent meeting, and there are plans for the provinces to issue a joint statement of concern.

A spokesperson for Quebec’s Ministère de la Santé et des Services Sociaux said the province is currently in negotiations on the matter with the federal government, and declined to comment.

Daniel Lebouthiller, a spokesperson for the Department of National Defence, said the military is engaging with the provinces and territories.

“The Canadian Forces Health Services Group has been actively working with provincial and territorial governments, and civilian hospitals and institutions with respect to recent billing changes for Canadian Armed Forces (CAF) members who receive health care from non-military facilities or providers,” he said.

“The CAF will continue to ensure that all its eligible members have access to appropriate health care, whether it is provided directly by the CAF or by non-military facilities or providers.”

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Military sources say the health care budget has been ballooning for years and they are under pressure to bring down the costs.

The question being raised now by sources is whether those cuts could lead to military members being denied services or having to pay a greater amount to access the services they need.

“It all kind of depends on the way things get structured out,” said David Perry, vice president of the Canadian Global Affairs Institute and a defence expert.

“Because we tend to locate military members in areas that are more rural, more remote, harder to get specialized talent, the end result in this could be that you do have some increases in the demand for service, folks that are outside of the major metropolitan areas having to move, to travel to seek specialized care.”

He added that he isn’t surprised to hear the change isn’t landing well.

“For a Department of Defence that’s spent several years saying its people are its priority, it’s going to look bad if one of the areas where there is an effort to reduce spending is on the health side,” he said.

A spokesperson for Defence Minister Harjit Sajjan sent a statement on his behalf late Tuesday night. It says:

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“I can assure you that high quality health care services are and will continue to be provided to the women and men of our Canadian Armed Forces. Our government reversed the cuts that the Harper Conservatives put on the women and men of our armed forces. Our Defence Policy put people at its heart.

“As it stands, when a member of the Canadian Armed Forces gets care in a hospital, they are charged more for the same service than a Canadian because they wear a uniform. That is wrong.

“Currently, the Canadian Forces Health Services Group is actively working with provincial and territorial governments, and civilian hospitals and institutions concerning the fee structure between the federal government and the provinces and territories.

“We will always ensure that all members have access to the highest quality care, no matter who it is provided by.

“Let me be clear, no institutions are going to be negatively impacted by this.”

At a campaign stop in Mississauga, Conservative Party Leader Andrew Scheer alluded to this story shortly after it broke Tuesday evening.

“We know that not only do these endless deficits lead to higher taxes, we also know that they threaten services,” he told a crowd of supporters. “And just again today, we found out that Justin Trudeau’s government was cutting back on services to veterans.”

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Jeers and cries of “Shame!” can be heard as Scheer brings up Trudeau.

Scheer then says the Conservatives would “make sure” veterans “get the health care they need.”

© 2019 Global News, a division of Corus Entertainment Inc.

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