Chapter 5 – Financial Implications in England

Introduction
5.1 This chapter summarises the financial impact of the changes to the General Medical Services (GMS) contract for 2006/07.

Overview of changes
5.2 Chapter 1 outlines the changes agreed to the contract for 2006/07 and these include:
  • no uplift to any element of the contract for inflation or cost pressures in 2006/07
  • changes to the Quality and Outcomes Framework (QOF), which include several new or revised clinical areas and higher thresholds. 166 points have been recycled of which 138 go into new areas and 28 are incorporated into existing indicators
  • a new directed enhanced service for access which recycles the current QOF access points and the current access Directed Enhanced Services (DES) funding
  • additional investment for new directed enhanced services for practice based commissioning, choice and booking and adopting information management and technology systems in England
  • an increase in the maximum discretionary locum reimbursement for maternity, paternity and adoption leave from week three
  • changes in payments to dispensing doctors.
Inflation/Cost Pressures
5.3 There will be no uplift to any element of the contract for inflation or cost pressures in 2006/07 (unless otherwise specified in this chapter).

5.4 NHS Employers and General Practitioners Committee (GPC) negotiating teams agree, with the full support of the four Departments of Health, that the 2006/07 GMS review contract package addresses the perceived value for money issues associated with the original nGMS contract. These will not be revisited in future negotiations.

Funding
5.5 NHS Employers and the GPC have agreed that all future negotiations will explicitly include consideration of efficiency consistent with all other commissioning arrangements across the NHS.

5.6 Importantly, all financial values and resource envelopes quoted in this chapter include the effect of any current associated superannuation payments, ie the 14% employer’s superannuation contribution is included within the figures quoted.

Global Sum and Carr-Hill Formula
5.7 Global sum and Minimum Practice Income Guarantee (MPIG) payment will continue to be payable from Primary Care Trusts’ (PCTs’) unified resource allocation.

5.8 There will be no change to the amount per patient payable to practices under existing global sum and correction factor payment arrangements. Therefore global sum payments to practices remain at 2005/06 levels.

Normalisation
5.9 For England and Wales, arrangements covering global sum payments to practices from April 2006 will be subject to normalisation nationally, rather than just at PCT level, on a quarterly basis. Such an approach should help prevent the significant fluctuations to income experienced by some practices in the first quarter of a new financial year. No action is required of PCTs or practices as the new normalisation process will be taken forward automatically through the Exeter system.

Formula Review
5.10 The GMS Formula Review Group is continuing its work and will report the outcome of the review and any recommendations during 2006.

Quality and Outcome Framework (QOF)
Efficiency Savings
5.11 PCTs remain responsible for meeting the full cost of payments due to providers under the Quality and Outcomes Framework in 2006/07. The value of each point remains at 2005/06 levels.

5.12 The equivalent of a further 166 points is provided within the QOF through the re-use of existing indicators or (for 138 of these points) re-focusing them in more critical, clinical areas. For PCTs this means that the new clinical areas identified within the 2006/07 QOF are financed through the redistribution of the 138 QOF points.

Access points
5.13 The current 50 points that relate to access have been removed from the QOF and amalgamated within the access DES. The 2006/07 QOF will therefore revert to a total of 1000 points.

Contractor Population Index (CPI)
5.14 The Contractor Population Index (CPI) reflects the national average practice list size. It is used primarily to allocate QOF payments to practices relative to their list size. With the following proviso, the SFE will be amended so that from 1 April 2007, the CPI mechanism becomes an in-year resource neutral redistributive tool based on an average list size updated in January each financial year. Such a change in the SFE would be dependent upon a separate mechanism being agreed and funded as appropriate as an integral element of future GMS negotiations to recognise changes to the QOF workload as a result of an increase or decrease in population numbers.

2006/07 Central Budget Allocation
5.15 The Department of Health in England will be issuing guidance on how the QOF central budget will be distributed on a fair shares basis to Primary Care Trusts (PCTs) in 2006/07. However, it is likely that the approach taken will replicate that taken in allocating the QOF central budget in 2005/06, ie PCT allocations will be based on the previous year’s achievement. However, the methodology will need to take into account the removal of the 50 points relating to access (that are now amalgamated into the new access DES). For planning purposes only, PCTs should assume that they will receive the same level of funding in 2006/07 as they received in 2005/06.

Enhanced Services
Introduction
5.16 PCTs must offer as a minimum, the funding levels indicated, to practices choosing to provide the required service levels under the Directed Enhanced Services set out within the new arrangements.

2006/07 Enhanced Service Floors
5.17 A number of additional DESs have been agreed for 2006/07. The arrangements that relate to these new DESs, and their supporting financial framework, supersede previous guidance, issued alongside the 2006/07 allocations, regarding the level of uplift to be applied to enhanced service floors.

5.18 Enhanced service floors will be frozen at 2005/06 levels. Expenditure on the new 2006/07 DESs will be monitored over and above the 2005/06 floor but as practices may elect not to provide services under these DESs, or they may fail to achieve target payment levels, the 2006/07 enhanced services are only an indicative figure.

5.19 Expenditure on the new access DES should be apportioned so that the 2005/06 enhanced service floor still includes the full value of the previous access DES and that expenditure on teh 2006/07 access DES above this level (ie utilising the funding ransferred from the 50 QOF access points) shoudl be recorded against the new 2006/07 indicative DES levels.

5.10 Any local disputes regarding investment in GMS should, if all local routes have been exhaused, be referred by strategic health authorities (or equivalent) and local medical committtees (LMCs) to the NHS Employers/GPC Implementation Co-Ordination Group (ICG), or equivalent.

5.21 Consequently, the Departments of Health will be monitoring PCT spend on enhanced services in 2006/07 based on a combination of:
  • individual PCTs’ enhanced services floord set for 2006/07, ie frozen at 2005/06 levels
  • take up at PCT level of the additional DESs agreed for 2006/07.
5.22 In practice, PCTs will be asked to separately account within their normal 2006/07 Financial Information Management Systems (FIMS) and annual accounts returns for:
  • all spend on Enhanced Services excluding that which relates to the new DESs (2005/06 floor)
  • the additional expenditure on each of the new DESs.
5.23 The established criteria according to which a service can be funded from the enhanced services floor, for examp[le that it directly provides patient services, remains unchanged. This criterion is detailed in Chapter 2 of Delivering Investment in General Practice (December 2003)

5.24 Details of each of the new directed enhanced services in England, including financial arrangements, can be found in other chapters of this guidance. A payment summary for the DESs can be found at Annex 3 .

Premises and IT
5.25 For 2006/07, £132 million is available for locally agreed investment into premises (£111m) and IT (£21m) and this is already included, on a weighted capitation basis, in PCTs growth allocations for 2006/07.

5.26 The distribution of these monies are matters best decided upon and managed by PCTs in a way that makes the most effective use of resources in meeting locally agreed priorities.

5.27 However, PCTs may wish to adopt a multi-PCT approach to the development and improvement of primary care premises. Clearly, it is important that PCTs continue to invest in order to improve the quality and capacity of the primary care estate.

Maternity
5.28 Through the Statement of Fees and Entitlements (SFE), PCTs currently have discretionary powers to fund locum cover for maternity, paternity and adoptive leave for GP principals. The SFE currently recommends a maximum amount payable of £978.91 per week for such payments.

5.29 The SFE for 2006/07 will be amended to recommend a maximum discretionary amount payable of £1,500 for such locum costs from week three of the potential entitlement.

5.30 The PCT’s protocol in respect of locum cover payments (as detailed in the SFE) should be updated.

5.31 In deciding on the level of payment to a practice, PCTs should also take into account the ability of the practice to reclaim Statutory Maternity Payments from HM Revenue and Customs (HMRC).

5.32 The likely costs of this change will vary according to local circumstances. The Department of Health will monitor, as part of the normal FIMS returns, the extent of PCT discretion exercised in making these payments in 2006/07.

VAT allowance for personally administered items
5.33 There is more detailed information in Chapter 4 about the changes to the arrangements for dispensing doctors; however as part of these changes VAT costs relating to all personally administered items will be paid through the Prescription Pricing Authority and the Department of Health. This will result in a small increase in such charges to PCT’s prescribing budgets for both dispensing and non-dispensing practices.

Gross Investment Guarantee
5.34 The Gross Investment Guarantee will cease at the end of March 2006.

In-Year Financial Monitoring
5.35 The Department of Health will continue to undertake normal in-year monitoring of PCT positions (through the FIMS returns) and the results will be reported to the Technical Steering Committee of the health departments, British Medical Association (GPC) and NHS Employers. The Department of Health will issue guidance on the timetable and format for collecting such information in due course. Whilst the Department of Health will look to rationalise the collection of financial information, changes to the current financial monitoring arrangements are likely to be minimal.

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