NHS Employers, the GPC and the DDA met to discuss a revised methodology for calculating the dispensing feescale for 2012/13 and future years. They also discussed how the underspend of £8.5m in 2010/11 and the anticipated underspend in 2011/12 (estimated to be c. £7m) might be treated. This paper sets out the proposed way forward for England and Wales.
The dispensing doctors “envelope” will in future be uplifted each year by reference to:
- Cost and Profit Elements
The envelope will be split (60:40) into two elements, cost and profit, and each element will be separately uplifted.
- Profit Element
- Cost Element
The cost element (60%) will be uplifted each year using a 2 year average volume. This will be the average volume increase of dispensed items.
After the end of each financial year the actual spend data (available approx June), will be compared to the envelope.
If there has been an underspend for that year then the cost element (60% of the underspend) will be owed to the dispensing doctors. In calculating the feescale this money will be added non-recurrently to the envelope. Such an approach assumes that dispensing doctor costs are all fixed and require funding.
The corollary to the above is that where there is an overspend then the cost element (60% of the overspend) will be deducted non-recurrently from the envelope.
In either circumstance, there will be no adjustment for that part of the under or overspend that relates to profit (40%). The profit figure will not be made good if there is an underspend. Dispensing doctors will retain the profit element if there is an overspend.
Calculation of Envelope
In summary the elements involved in calculating the dispensing envelope are:
- Adjusted outturn brought forward from previous (or baseline) year (split 60:40 between cost and profit elements) – this is the outturn +/- any adjustment made in the previous year for over/underspends
- Plus (exceptionally minus) Volume and Net Pay Uplifts to component parts
- Plus/Minus the cost element of any under or over-spend
- Equals Total Envelope
To allow the envelope to be calculated using the actual outturn spend data of the previous year (normally available in June), changes to the feescale will continue to be made in the October of each year in order to deliver the calculated envelope. A new methodology will be introduced to ensure that the monies spent in the first half of each year are correctly taken into account on calculation of the 1 October feescale. This methodology is set out in Section 1.
If possible, GPC would like there to be a feescale change in April 2012 (with a change in October 2012 too if required). After this, feescale changes will take place in October of each year.
Trigger for review
Should there be an annual over or underspend of 3% on the envelope for two concurrent years, then the methodology is suspended and referred back to negotiators for renegotiation.
A number of examples are set out in Section 2.
NHS Employers and GPC negotiators explored a number of approaches whereby efficiency could be formally recognised in the methodology including the current methodology used for the GMS contract and the DDRB formula.
As no agreement could be reached, no explicit efficiency savings are included in the new methodology. However, GPC believe that this methodology already delivers efficiency savings akin to those negotiated on the wider GMS contract as no increase is made to the envelope to take into account inflationary increases (see Section 3).
NHS Employers and GPC propose that the envelope for 2012/13 should be rebased to a starting figure of £170m. The new methodology would then be used to calculate the envelope for 2013/14 and future years.
2010/11 and 2011/12
As part of this agreement, £10m would be paid to GP Practices in England as a one off payment. This should be paid to all GP practices pro-rata on fees based on the 2010/11 outturn. A proportionate amount of funding would be repaid in Wales in the same manner.
There has been a change to the drugs tariff which means that dispensing GPs no longer receive additional payments for dispensing specials. NHS Employers and the GPC have agreed that Dispensing Doctors will receive £20 for each special they dispense. GPC have requested that this payment be back dated to the date of the drugs tariff change (1 November 2011).