Joint letter on the minimum practice income guarantee (MPIG)
17 April 2003
Dear Doctor
New General Medical Services (GMS) contract
We are writing to you today in order to clarify the position in respect of the new GMS contract.
Following the distribution of individual practice weighted populations in mid-March, many practices have expressed serious concerns that the introduction of the global sum payments will lead to a reduction in the basic income of a practice and threaten practices’ viability. Although the global sum is only one part of the increase in resources coming into primary care we understand these concerns and have taken action to address them. It is for this reason that we issued a joint press statement on Monday 17 March delaying the ballot until the issue has been resolved to the mutual satisfaction of the General Practitioners Committee (GPC) and NHS Confederation negotiating teams. A joint proposal to correct these problems has been agreed by the GPC at its meeting on 27 March and, as a result, we can now guarantee that no practice will lose out if the new contract is accepted, providing it delivers a minimum level of quality.
The two main problems that have arisen are the:
- proposed redistributive effect of the global sum, which appears to cut across our commitment in the contract document that existing practices must not be destabilised. An effective mechanism which will continue for as long as is necessary to ensure that commitment is delivered is essential
- method for tackling the differences between registered and census populations, which exacerbates this problem.
In order to address these concerns, the original transitional protection scheme will be replaced by a new Minimum Practice Income Guarantee (MPIG). This will mean that, in line with the principles of the Gross Investment Guarantee, the overall unprecedented level of investment in primary care will be supported by an income guarantee at practice level. This guarantee will continue for as long as it is necessary. Under this arrangement, any practice that would otherwise lose out as a result of the introduction of the global sum arrangements will receive a guarantee that its allocation will reflect its previous level of income from those aspects covered by the sum, but with a deduction of the value of 100 quality points in 2004/05 and 150 points in 2005/06. This means that all practices meeting these minimum levels of quality points will not lose and will gain through the extra investment in other funding streams, including seniority, the quality and outcomes framework and extra enhanced services.
How the MPIG will work
For all practices the global sum equivalent income will be calculated from the relevant items payable under the Red Book including direct practice staff reimbursements. Inducement scheme practices, or those in receipt of chapter 10.5 payments in Scotland, will have the relevant monies included in the calculation of their baseline income.
In 2004/05, this global sum equivalent will be uplifted to 2004/05 prices. This figure, minus a sum set at the value of 100 quality points, will then be compared to the global sum allocation made under the formula.
Where this latter figure is less than the global sum equivalent figure practices will automatically be protected by the MPIG. Protection will be achieved by applying a financial correction factor equal to the difference on 1 April 2004, and uplifted annually by the same percentage as the global sum. The correction factor will be paid in addition to the practice’s global sum.
This means that although practices in receipt of the MPIG will have their global sum equivalent reduced by the value of 100 quality points, they will receive full payment for all the quality points they achieve.
In 2005/06, the sum will be uplifted by the same percentage as the global sum. This figure, minus a sum set at the value of 150 quality points, will then be compared to the global sum allocation made under the formula. Where this latter figure is less than the global sum equivalent figure practices will automatically be protected by the MPIG as above.
As a result of this new agreement we can now confirm that the MPIG payment will continue beyond 2005/06 and its application will be considered in light of the review of the formula and each practice’s overall financial position. This guarantee will ensure that whenever changes to the formula are made, potential losers will continue to receive protection. This fundamental principle of guaranteeing practice income will be a permanent feature of the new contract.
The MPIG will not affect those who stand to gain under the new global sum allocation – such practices will receive the global sum. Winning practices will move immediately to the level that their global sum determines.
Other funding flows
It is important to be clear that the global sum payment is only one part of the total income (approximately half) that practices will receive. The global sum is not a simple read-across from all existing fees and allowances.
The global sum excludes separate payments currently delivered under fees and allowances such as Primary Care Organisation (PCO)-administered payments including seniority payments, rewards for immunisations (which will in future be delivered through directed enhanced services), and premises and IT costs which will be paid separately. Practices must take all these separate funding arrangements into account, including their anticipated level of income from the quality framework, quality preparation payments, and other enhanced services, when calculating their income rather than considering the global sum in isolation.
With the additional 33% investment and the new Minimum Practice Income Guarantee, GPs’ earnings will increase significantly from the new contract as they progress up the quality framework and take on the provision of enhanced services. In order to make absolutely plain how this can be achieved we will be issuing clear guidance for each practice to calculate how the financial opportunities are delivered through the new contract and how existing earnings translate across.
Consideration of the allocation formula
We have reviewed the impact that the application of the current formula is having at practice level. As paragraph 5.19 of the contract makes clear, the formula, like any formula, is inevitably not a perfect model of future workload and of the costs that practices may incur.
Although we believe that the formula is as robust as possible in the current circumstances, it will be reviewed and modified in the light of better data. We will consider all of the factors in the formula, including reviewing the additional needs adjustment to reflect practice level information on disease prevalence generated through the quality framework.
There has also been concern around the application of the formula, and in particular the use of census-based lists rather than registered lists. An immediate move to registered lists would relatively disadvantage those with accurate patient lists. The ultimate aim is to base allocations on registered rather than census-based lists, and this will also be considered as part of the review of the formula.
We have therefore committed to an earlier review of the formula itself and the application of the formula, commencing in October 2004. Additionally, in the next two years there will be money available, through a Directed Enhanced Service, to invest in the summarising of patients’ medical records for quality purposes which should also have the effect of producing more accurate lists.
The next steps
We will send you clear guidance on calculating financial opportunities, including a new ready-reckoner that will include all the various funding flows, to allow you to make a more comprehensive estimate of how your practice is set to gain under the new contract.
We have listened to and are responding to your concerns and fears by introducing a guarantee that no-one loses from the new arrangements, by committing to a formula review from October 2004 and by providing funding to make practice lists more accurate in order to ensure movement to registered lists as soon as possible. Many GPs support the shape of the contract but have recently expressed concerns about practice level resources. We hope that the changes we propose will directly address these concerns and that we will be able to announce a resumption of the ballot as soon as possible.
John Chisholm
Chairman
General Practioners Committee
Mike Farrar
Chair
NHS Confederation negotiating team