The Financial Emergency Measures in the Public Interest Act 2009 was passed by the Irish legislature on Friday 27 February 2009, and was signed into law by the President the following day. The Act attracted most public attention for being the means by which the Irish Government has introduced the "pensions levy", effecting deductions from the pay packets of public sector employees. However, possibly more contentiously, the Act introduces potentially far-reaching powers for Government Ministers to reduce payments to those who provide services to the State, covering not only health professionals but also general service providers. The powers override existing contractual arrangements in place between the State and those service providers. It is clear that the Government intends to use the new powers immediately and to their full extent. Indicative of this, the Minister for Health commenced a consultation process under the Act on 4 March 2009 intended to effect reductions in payments to all health professionals.
Payments to health professionals are dealt with as a specific category under Section 9 of the Act. Section 9 permits the Minister for Health to introduce regulations to reduce payments to health professionals (defined to include medical practitioners, dentists, pharmacists, optometrists, ophthalmologists, podiatrists and chiropodists), in respect of any services they render to health bodies including to the Health Service Executive and State-funded hospitals. This power overrides any existing legislation, circulars, contracts or other documents or expectations which cover current arrangements for payments to these professionals. Prior to making any relevant regulations, the Minister is subject to a 30-day consultation requirement. This requirement is arguably not absolute, nor must the consultation be extensive. Rather, Section 9(4) of the Act states that the Minister may herself or via the relevant health body "engage in such consultations as [she] considers appropriate". As long as she is satisfied that payments designated by her under the regulations are "fair and reasonable", the Minister retains the ultimate discretion about the amounts involved. Certain matters are listed under Section 9(5)(a)-(f) of the Act for the Minister to consider in terms of setting the payments, including the impact on the State's ability to continue to provide health services at existing levels if the reductions are not made. These considerations are neither compulsory nor exhaustive. Further, the Minister's powers under Section 9 are deemed to be without prejudice to her existing ability to negotiate or amend payments to health professionals under other agreements or arrangements. This means, for example, that the Minister may utilise the Section 9 payment reduction mechanism in order to side-step the procedures which currently exist to reduce fees under agreements with Irish GPs, consultants and pharmacists, an issue which is bound to be contentious for those health professionals. Equally, though, she may choose to utilise those existing mechanisms either instead of or in parallel to Section 9. The current consultation process is underway since 4 March 2009, and is due to complete by 3 April 2009, following which the Minister has declared her intention to introduce the relevant regulations although there is no specific deadline on her within which to do so.
Section 10 goes on to grant a general power to all Government Ministers to utilise a similar mechanism to that designated under Section 9 in order to reduce payments to anyone rendering services to the State. The Government has not flagged any intention to use this power in respect of particular service providers, and it may be that contractors will take a commercial approach to their dealings with the State and offer pre-emptive reductions, rather than expose themselves to unilateral action by the Government Department or agency in question. Again, the only requirement on the relevant Minister is to consult and to determine payments which the Minister considers to be "fair and reasonable".
Prior to promulgating the Act, the Government announced on 3 February 2009 that it intended to pursue an 8% general reduction in fees to legal, medical, veterinary and other professionals engaged by the public service, envisaging that this policy would result in savings of approximately €80 million in 2009 out of the €1 billion average spent on professional services procured on behalf of the State. The State's policy in this regard was to be effected by way of consultations through appropriate channels, however it is fair to say that it was unclear in many cases whether State agencies were in a position to force through the required reductions given that their contracts with service providers may not have provided for payment adjustments either with sufficient notice or at all. In other words, in many cases, it would have been at the service provider's discretion as to whether they agreed to an 8% reduction in their contract fees and they were not necessarily bound to do so. The powers now available to Government Ministers under Sections 9 and 10 have arguably put paid to those concerns, allowing Ministers to override contractual hurdles to achieving costs savings. That said, the deployment of Section 9 and 10 mechanisms may encounter resistance from certain service providers such as pharmacists and doctors who claim to have grievances with the State over the level of their reimbursement and remuneration and over the State's desire to reduce payments to them.
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