You're correct. The government already has the ability to reduce or withhold monies under the Canada health transfer—what we refer to as “deductions” against a province. This is to allow that money to be refunded to the province after it has taken action to eliminate the problem that led to the withholding or reduction in the first place. Right now we have only a negative incentive.
If provinces are not in compliance with the Canada Health Act, money can be withheld or not given to them. This would put a more positive incentive in place, such that if they were subject to withholding of money but then took the corrective action to bring their province back into compliance with the Canada Health Act—eliminating charges to patients, for example—they could get money back, and it could be put back into their health care system.