Alternate Payment Plans

Learn about APPs, including:

  • What they are
  • How they function
  • Why they’re important
  • How they can be effectively applied across a range of health-care settings

This page will focus exclusively on APPs outside of primary care. Primary care compensation structures will not be addressed here. 

Learn more about these compensation structures.

Questions?

If you're considering an APP or want to learn more, reach out to the OMA team supporting APPs. They can help guide you through the process, answer questions and connect you with the right resources.

alternatepaymentplan@oma.org

What is an APP?

Learn about the non-fee-for-service funding arrangement

Who uses APPs?

Specialties where APPs are commonly implemented

Structures

Types of APPs that are widely adopted in Ontario

Mechanisms

Review the shared compensation principles of APPs

What is an APP?

An APP is a non-fee-for-service funding arrangement involving two or more physicians working under contract with the Ministry of Health, the OMA, physician groups and often a hospital.

APPs often emerge from necessity, particularly when traditional fee-for-service models are unsustainable due to:

  • Low patient volumes (e.g., obstetrical care in rural regions)
  • High service complexity (e.g., vascular surgery)
  • Gaps in the Schedule of Benefits

APPs are voluntary. Because an APP is a contract between a group of physicians, hospital(s) and the ministry, implementation of an APP typically requires group consensus to ensure the funding model and the agreement reflects shared priorities.

Where fee-for-service billing is unsustainable, APPs provide physicians with a reliable funding structure that moves beyond volume-based billing. While most APPs have some FFS or volume-based incentives to reflect clinical workload, APPs also acknowledge a broader range of activities that are often overlooked by traditional FFS models, such as:

  • Teaching
  • Research
  • Administration
  • Complex clinical care

Advantages of APPs for physicians and communities include that they:

  • Provide sustainable funding, ideal for specialties with low volumes or high complexity
  • Reduce financial uncertainty for physicians and ensure consistent service delivery for communities
  • Support both clinical and non-clinical services
  • Help address regional disparities in access and funding
  • Guaranteed ongoing operational support from hospitals that are signatories

In an APP, the ministry issues payments to physician groups, rather than directly to individual physicians. These physician groups are then collectively responsible for service delivery and financial stewardship.

The group’s governance agreement sets out how payments are distributed among participating members, ensuring decisions are transparent, responsibilities are clearly defined, and accountability is shared. This collaborative model supports fairness and adaptability within each group, while promoting high-quality care across diverse settings. It also provides guaranteed ongoing operational support from hospitals that are signatories.

Who uses APPs?

Many specialties use APPs. They are commonly implemented in specialties or settings where traditional FFS models may not adequately support clinical complexity, patient needs or regional access, such as:

  • Anesthesia
  • Emergency medicine
  • Geriatrics
  • Neurosurgery
  • Obstetrics and gynecology
  • Oncology
  • Pediatrics
  • Palliative care
  • Services provided in homeless shelters
  • Vascular surgery

The specific funding structure of each APP varies by specialty, practice setting and service delivery model.

APP structures

Types of APPs that are widely adopted in Ontario include:

  • Academic health sciences centres: Support academic physicians with extra responsibilities; closes gap with community incomes
  • Care of the elderly APP: Supports comprehensive, in-home or consultation-based primary care for frail elderly patients
  • Department/practice plan/region-specific APPs: Applicable to eligible physicians within a specific department or specialty group; tailored to practice plan needs and activities
  • Emergency department AFA: Stabilizes ED staffing and funding; volumes and acuity evaluated, and funding adjusted annually. Offered to every ED in the province
  • General practitioner HIV focused practice APP: Provides comprehensive primary care and HIV-focused services to people living with HIV and at-risk populations. Requires a minimum patient roster requirement
  • Homeless shelter APP: Applicable to shelters offering integrated, multidisciplinary primary care to unhoused individuals, supporting community-based health needs
  • Northern specialists APP: Support the recruitment and retention of specialist physicians in northern Ontario by offering stable, predictable compensation through a mix of base funding, retention bonuses and periodic conversion of fee-for-service billings into monthly payments
  • Provincial agreements: Applicable to eligible physicians provincially, often for a specialty or service; standardizes funding and expectations
  • Regional/community APPs: Applicable to eligible physicians serving a defined geographic region; addresses local service gaps
  • Site/hospital-specific APPs: Applicable to eligible physicians at a particular hospital site; supports site-wide service needs

APP compensation mechanisms

APP compensation mechanisms vary by contract type, but all share the following principles:

  • Transparency: Payment elements and workload expectations are clearly defined
  • Equity: Compensation aims to be competitive with comparative-based practices
  • Accountability: Funding is linked to service delivery, teaching, research and other measurable activities.

APPs do not rely solely on fixed figures. Instead, they typically combine clinical or volume-based incentives with non-fee-for-service payments. The proportion of each funding type can differ significantly: Some physicians may receive most of their income through non-fee-for-service arrangements, while others rely primarily on FFS payments with an APP supplement. This flexibility allows APPs to adapt to the diverse needs of physicians and specialties.

Some APPs may include a shadow-billing requirement where physicians submit claims to track clinical activity. They may also offer a shadow-billing premium to provide a volume-based incentive.

Different types of APP compensation mechanisms include:

Blended model

  • Physicians receive a fixed base payment through an APP plus a shadow-billing premium
  • This blended approach combines: 
    • Block funding (predictable monthly payment for in-scope services)
    • Volume-based incentives (shadow-billing premium encourages continued service delivery and reporting).

Sessional-based model

  • Hourly or daily payments for specified services (set time blocks)
  • Common for psychiatry, anesthesia or non-billable services in underserviced areas

FFS plus

  • Physicians receive a combination of traditional FFS billing with modifications or top-ups
  • Designed to address:
    • Lower patient volumes and/or higher complexity (especially in rural/remote areas)
    • Support for activities not funded through Schedule of Benefits (i.e. clinical teaching and research)
    • Recruitment and retention of physicians in specific practice types

Examples: Radiation Oncology APP, Academic Health Sciences Centres.

Salary-based contracts

  • Physicians are paid on annual scales (full-time or part-time)
  • Includes income tax deductions and benefits (e.g., vacation)
  • Creates an employee-employer relationship with an organization
  • Provides fixed salary-based funding for physicians in specific roles or settings

Examples: In-hospital pathologists.

Block funding

  • Lump-sum funding to physician groups for clinical and non-clinical activities (teaching, research, admin)
  • Most APPs began as block funding; now blended with volume-based incentives

Sessional based

Sessional reimbursement is paid to fee-for-service physicians who provide psychiatry, anesthesia and non-billable geriatric physician services to underserviced areas and high-risk populations.

  • Provide predictable, stable compensation for work an hourly or sessional (multi-hour) rate for treating patients 

Examples: GP anesthesiology APP, mental health sessional payments

Specialized primary care contracts

  • Provide stable funding for community-based primary care physicians in various models
  • Supports comprehensive, team-based care in specialized settings

Examples: Care of the Elderly, homeless shelter and General Practitioner HIV focused practice APP

Emergency Department AFA

ED AFA Workload model:

  • For larger EDs with >24 hours of coverage/day
  • Uses Canadian Triage and Acuity Scale data to calculate workload based on both volumes and acuity

ED AFA 24-hour model:

  • For low-volume EDs (<25,000 annual visits)
  • Funding based on annual patient volume

Key terms

Many physicians are familiar with the acronyms APP, AFP and AFA — but the distinctions between them aren’t always clear. Historically, each term referred to a specific type of funding agreement:

  • APP (Alternate Payment Plan): Applied when insured services listed in the Schedule of Benefits were converted from fee-for-service to an alternative payment model
  • AFP (Alternate Funding Plan): Historically used for non-insured activities such as teaching, research, innovation and indirect patient care. AFP often covered contracts that include both clinical and non-clinical services
  • AFA (Alternate Funding Agreement): Specifically associated with Emergency Department funding models

Over time, these terms have evolved. Today, APP is the standard term used across the board to describe non fee-for-service funding arrangements — whether clinical, non-clinical or emergency-based.

Getting started

The application process involves several key steps:

  1. Expression of Interest: Submit an EOI to the ministry. The ministry will provide OMA contact details and instructional materials.
  2. Business case development: With OMA support, the physician group prepares a business case outlining service gaps, proposed solutions, and funding needs.
  3. Submission and review: The business case is submitted to the ministry and copied to the OMA. The ministry conducts analysis and discusses results with all parties.

For guidance, physicians can contact the OMA’s Alternate Payment Plan team, which offers support with data analysis, billing reviews and literature research.