Ontario's lengthy dispute with its doctors escalated Wednesday as the province's medical association dismissed as "unreasonable" a government proposal that would see fee cuts for high-billing specialists and more money for family physicians.

The proposed plan is the latest attempt by the Liberal government to work toward a physician services agreement with doctors, who voted overwhelmingly earlier this year to reject a tentative agreement.

Under the plan the government handed the Ontario Medical Association on Wednesday, the approximately 500 doctors who bill over $1 million would see fee cuts, while those savings would go toward an increase for family physicians.

The government is also proposing to fully review all 7,000 fee codes, as technological advances have made some procedures and tests easier and less time consuming.

OMA president Dr. Virginia Walley said the latest government proposal is a rehash of the tentative agreement that physicians roundly rejected in the summer.

"In response to this absolutely unreasonable and absolutely unfair unilateral action by the government this morning, all options are on the table for physicians in the province."

Walley said doctors are not ruling out any "options" at this point, including some sort of withdrawal of services.

Doctors have said they won't return to negotiations unless the government puts binding arbitration in place. Health Minister Eric Hoskins said he's willing to discuss it, but won't accept it as a pre-condition for negotiations.

The OMA had asked for time to sort out internal issues after the tentative deal was rejected -- many doctors expressed shock when that deal was reached, unaware talks had even been happening due to an OMA-prompted non-disclosure agreement. Four months have now passed with the government waiting for the OMA to signal it would resume negotiations, Hoskins said.

The relationship between doctors and the government has been acrimonious since the province last year imposed some fee cuts, prompting the doctors to waged a social media and advertising campaign against the government.

Hoskins said he is optimistic the doctors will accept the new proposal and that it could form the basis for a new physician services agreement, but when asked if he is willing to impose such conditions on the doctors, he said, "I owe it to Ontarians to move forward to make these important investments."

The proposed three-year budget would cut any physician billings over $1 million by 10 per cent, and any billings over $2 million by 20 per cent. It would also cut the amount doctors could bill for certain procedures and tests that can be performed more quickly due to technological improvements.

Digital imaging has shortened the reading time for diagnostic x-rays, CT scans and MRIs, and surgical improvements mean cataract surgery and laser eye procedures take less time.

Ontario would also allow 40 doctors per month to join the family health team model, after restricting it last year to 20 per month. Family doctors would be given an additional 1.4 per cent per year -- $185 million -- as compensation for specifying evening and weekend hours they must work.

The changes would boost the physician services budget from $11.7 billion to $12.6 billion in 2019-20, which is roughly what the earlier tentative agreement had earmarked.

The proposal comes as Premier Kathleen Wynne is asking the federal government for Ottawa's health transfers to the provinces to increase by 5.2 per cent a year, instead of the scheduled three per cent.