Joint letter from the GPC and the NHS Confederation
30 May 2003
To all GPs
Dear Colleague
New General Medical Services (GMS) contract - clarification of issues
Since the publication of all the contract documentation, there are a number of issues on which the profession has asked for clarification. The General Practitioners Committee (GPC) and NHS Confederation negotiating teams have now had a chance to consider a number of these issues and this letter details the results of these discussions. In discussing the proposals we have been conscious of the original principles of the contract and the need to work within the cost envelope set aside for the contract.
In summary, we have agreed to:
- apply the allocation formula for the global sum to registered populations from 1 April 2004
- remove the 100/150 quality points offset for those practices requiring the Minimum Practice Income Guarantee (MPIG), funding this through the quality preparation payments for 2004/05 and 2005/06 and by not uplifting the global sum between 2004/05 and 2005/06
- maintain the incentive to improve quality
- introduce disease prevalence as a basis for weighting quality payments for the clinical domains from 2004/05
- consider all factors as part of the review of the allocation formula starting in October 2004, with preparation beginning as soon as possible, and to consider ‘damping’ the financial impact of future changes to the formula
- introduce a local appeal mechanism for seniority payments, which will include Local Medical Committee (LMC) (or equivalent) involvement
- develop an equitable mechanism for calculating eligibility for seniority
- clarify the implications for Personal Medical Services (PMS) doctors.
Application of allocation formula using registered lists
Many GPs do not understand why there should be a move from using registered lists (as currently) to ONS projections, especially when there is a commitment to use registered lists in the near future. The original rationale was to try to ensure that practices with relatively accurate lists were not penalised unfairly - at a UK level registered lists are 6% higher than the ONS census population and this is due to a combination of list variation and census underenumeration. By using ONS lists, practices in Primary Care Organisations (PCOs) with relatively accurate lists should have relatively lower scaling back of their populations than in PCOs with higher list variation and/or census underenumeration.
Despite this practices with accurate patient lists feel they are being penalised. It is also more generally perceived as penalising all practices, given the deduction of 6% on average across the UK. This has been a particular issue for GPs in London and larger cities across the UK. Using registered lists is currently viewed by most GPs as the fairer method.
As a result, we have undertaken further modelling to determine the effect of moving to registered lists from 1 April 2004 compared to using ONS projections. In England, the agreed size of the global sum envelope is £2,635m in 2004/05 and £2,674m in 2005/06. The total ONS population is around 49 million, and the total registered list population is around 52.5 million. Assuming the global sum envelope remains the same size, a move to registered lists will therefore reduce the average price per patient from £53 in 2004/05 and £54 in 2005/06 to £50 and £51 respectively.
There will be similar effects, in the order of a reduction of 6% in the global sum price, in the other three countries.
To maintain the global sum price as published in April and move to registered lists, we will need to find an additional £150m in England. We have considered funding this by diverting money from other funding streams within the contract as follows:
i. using the £53m set aside for the off-formula London adjustment. £35m of this was specifically made available to counteract the financial adverse effects of moving to ONS projections on London practices and for this reason should be used to fund the change to registered lists nationally;
ii. reducing the value of the quality points. This is not an acceptable option to the NHS Confederation because of the wider context of pay modernisation and our original agreement of targeting new investment on improved quality and outcomes.
As a result a large proportion of the £53m (approximately £35m) previously set aside for London practices and a significant reduction in the global sum price per patient will be required to support this financially.
The change will also have a redistributive effect. At PCO level before the MPIG is taken into account, 70 per cent of PCOs will have smaller global sums and 30 per cent will have larger global sums. The broad effect is a redistribution of resources towards urban areas. The MPIG will then have a ‘damping’ effect on the redistribution, and we estimate that the number of practices requiring an MPIG will increase from 77 per cent to 78 per cent in England, Wales and Northern Ireland. In Scotland, the change is 78 to 79 per cent.
Given the implications set out above it is absolutely essential that practices’ lists are cleaned as a prerequisite. In addition to the funding available through the Directed Enhanced Service for summarising records and cleaning lists, we have agreed that all available methods (e.g. the NHS Strategic Tracing Service or its equivalents in other countries) should be used as soon as possible to support the cleaning of lists. Furthermore, as part of the negotiations on implementation, should the contract be accepted, the criteria for assessing clean lists and the timescale for achieving this across all four countries will be defined.
GPs should note that, given the constraints of the legislative timetable, there is no possibility of the GPC issuing revised global sum figures and a new ready-reckoner ahead of the ballot. However, given the redistributive effect of using registered lists compared to the global sum figures already sent out, this will be done as part of the preparation for implementation.
Despite the implications for the London payment and the global sum price, it has been agreed that registered lists should be used from 1 April 2004.
Quality points offset
A central feature of the MPIG was that practices receiving the guarantee would have the value of 100 quality points in 2004/05 (150 points in 2005/06) deducted from the calculation of their MPIG. This meant that although all practices would be eligible to achieve and be paid for all 1050 quality points, those practices requiring the MPIG would be starting from a lower baseline. The rationale for this was to provide an incentive within the income protection system to encourage practices to engage in the quality framework as well as providing the funding needed to support the new transitional protection arrangements. However, GPs felt that those practices in receipt of the MPIG were being unfairly penalised on their earnings opportunities as a result of the move from a historical doctor-based funding arrangement to a patients-needs-based arrangement.
To correct this there will no longer be a deduction of the value of 100/150 quality points when calculating the MPIG. This means that all practices, whether or not they require the MPIG, will receive payment for the full number of points achieved through the Quality and Outcomes Framework in the normal way.
We estimate that the costs of ending the offset are £51m in 2004/05 and £122m in 2005/06. We have considered ways of funding this from elsewhere in the envelope. The funding to support the removal of the 100/150 quality points offset from the MPIG will come from the quality preparation payments for 2004/05 and 2005/06 (set out in paragraphs 3.14 to 3.16 of the February contract document) which amounts to £80m each year between 2003/04 and 2005/06. This means that practices will continue to receive the quality preparation payment of £9,000 per average practice in 2003/04 but this will reduce to £3,250 per average practice in 2004/05 and in 2005/06 the whole of the quality preparation payment will be transferred into the MPIG to fund the removal of the quality offset. We have agreed that the additional cost of the change should be met from the global sum. The consequence is that the global sum will not be uplifted between 2004/05 and 2005/06. The overall effect of this change is to redistribute money from those who do not need the MPIG to those who do.
Maintaining the quality incentive
To ensure there remains an incentive for all practices to participate in the Quality and Outcomes Framework we have agreed that any practice, whether or not it is in receipt of the MPIG, which achieves less than 100 quality points in 2004/05 (150 in 2005/06), will have the value of 100/150 quality points deducted from its global sum/MPIG. However, it will continue to receive the value of any points achieved. For example, in 2004/05, an average practice receiving its global sum/MPIG but only achieving 50 quality points will have its global sum reduced by £7,500 (100 x £75) but will receive £3,750 through its quality payments (50 x £75).
This means that all practices will be encouraged to achieve at least 100 points in 2004/05 and 150 points in 2005/06. There is no penalty for a practice achieving more than 100/150 points and the quality points are paid in full. As soon a practice achieves 100/150 quality points or more, the penalty is discounted from the calculation.
Quality payments and disease prevalence
Many GPs believe that weighting the payments only on the allocation formula, whilst reflecting workload costs and to some extent disease prevalence, is insufficiently fair and that direct disease prevalence is a fairer factor to use. We will apply a disease prevalence factor to the quality payments for the ten clinical domains from 2004/05 using relative practice-recorded prevalence data collated from practice disease registers introduced through the Quality and Outcomes Framework in 2004/05. We have had initial discussions on how this will work in practice. Should the profession accept the contract, further work will continue during the negotiations on implementation, including de-linking the allocation formula from all quality payments.
GPs and PCOs have reported their concerns about the potential adverse impact on practices’ cash flows arising from the aspiration and achievement quality payments system. It has therefore been agreed to address this as part of the negotiations on implementation.
Review of the allocation formula
GPs have expressed some serious concerns with different aspects of the formula, the data used to inform it and the data applied to determine practices’ global sum allocations. Many who criticise the formula do so because they find deficiencies with the current version, as it appears to exclude other factors with face validity, and believe it should not be introduced until such factors are included. The inclusion of these factors has not been possible due to the lack of practice-specific data. However, as these data become available through the operation of the contract, we are committed to a full review of the formula, including those factors currently included and those in the original commission, and the introduction of additional factors where this is supported by evidence. Such factors to be investigated include deprivation, diseconomies of scale, ethnicity, patients whose first language is not English, and the additional costs of split-site practices. The review will also specifically look at the treatment of list variation in major cities such as London.
We are keen to promote a more equitable redistribution of resources compared to the Red Book system and so do not want to delay the introduction of the formula. However, given the concerns amongst many GPs about financial instability, there is a commitment that the review will also consider opportunities for ‘damping’ the effect of factors which could cause extreme fluctuations.
The preparation for the review will begin as a matter of urgency and the review will formally begin in October 2004. To allow for a full and comprehensive review of all factors and appropriate modelling at practice level and to tie into the timing of future financial settlements for primary care, a revised formula could not be implemented before 1 April 2006.
Seniority – pay thresholds
There has been some concern that the thresholds set as part of the agreement for the new seniority scheme could exclude a number of GPs working in low-income practices whether as full or part-time GPs. We have therefore agreed that those GPs who believe that they are not receiving the seniority payment to which they are entitled can apply to the PCO which, together with the LMC (or equivalent), will examine the entitlement to ensure the GP is not disadvantaged and correct it upwards where evidence supports this. The intention is that seniority payments should reflect doctors’ time commitment to general practice and not simply their earnings. Only the GP would be able to initiate a review. PCOs would not have the power to do so. National guidance on the local process will be produced as part of the negotiations on implementation, should the contract be accepted by the profession.
Seniority – calculation of seniority entitlement
In order not to exacerbate the eligibility difficulties for low-earning GPs, it has been agreed that, for the purpose of calculating seniority entitlement, seniority payments will be excluded from the calculation of average superannuable income at both the national aggregate and individual level. In addition, as part of the negotiations on implementation should the contract be accepted by the profession, we will be considering the treatment of previous NHS work that is now deemed superannuable but was not in the past, in relation to the determination of seniority entitlement.
PMS doctors
We are fully aware that PMS doctors need to be fully informed of the implications and benefits of the new GMS contract to them and Ministers will be writing an open letter to all PMS doctors on this issue very shortly. In addition, it is appreciated that clarity is required on the arrangements and the implications for doctors moving between GMS and PMS and this will be provided following a successful outcome to the ballot.
Conclusion
We can confirm that the Health Ministers in England, Scotland, Wales and Northern Ireland are fully committed to taking forward the agreements set out in this document.
We apologise for the piecemeal distribution of information on the contract. We are sure that you will realise that the negotiations have been a long and complex process and, in clarifying the issues above, we have given serious consideration to the concerns raised by the profession. This joint letter along with the previous documentation sent to all GPs – the contract documentation in late February, the joint letter of 17 April about the MPIG and the supporting documentation in early May – represent the complete information about the new contract. It is on this documentation that the profession will be asked to vote.
Yours faithfully
John Chisholm
Chairman
General Practitioners Committee
Mike Farrar
Chair
NHS Confederation negotiating team