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Publication, Part of

Proposed Dispensing Feescales for GMS Contractors, England and Wales - 2020, October release

Publication Date:
Geographic Coverage:
England, Wales

Calculation of New Feescales

The calculation follows the six-step approach set out in the methodology agreed by the negotiating parties (see Annexes A and B). All data used are for England, but it is anticipated that the new feescales will also be accepted for use in Wales.

The formula used to calculate the new feescales for the second half of 2020/21 is:

new fee = current fee x (E-Y) / Z

where             

E =   envelope for 2020/21

Y =   anticipated spend for first six months of 2020/21

Z =   anticipated spend for second six months of 2020/21 based on current feescales   

This calculation and associated feescales can be found in the Calculation of October Feescales section.

 

A similar calculation is carried out to establish what the feescales would have been if implemented from 1 April 2020 for the whole of the financial year.

The formula used was:

new fee = current fee x (E / X)

where 

E = envelope for 2020/21

X = anticipated full year spend for 2020/21 based on current feescales.

This calculation and associated feescales can be found in the Calculation of April Feescales section.

Please note calculations are performed on unrounded data but figures are rounded for presentational purposes.

Step 1

Calculate the envelope [E] for 2020/21 in line with negotiated agreement

For 2012/13 it was agreed that the envelope should be re-based to a starting figure of £170.00m.

Since 2012/13 this new methodology has been used to calculate the envelope. Future envelopes will be split (60:40) into two elements, cost and profit, and each element will be separately uplifted:

  • The cost element (60%) will be uplifted each year using a two-year average of the volume increase/decrease of fees

(for 2020/21 = 1.160%)  

  • The profit element (40%) will continue to be uplifted by the agreed net pay uplift [1]

(for 2020/21 = 1.8%) 

Calculating the envelope:

Variance between 2019/20 Envelope and 2019/20 Outturn

     = 2019/20 Envelope - 2019/20 Actual Outturn

     = £180.96m - £174.13m 

     = £6.83m (underspend)


Adjustment (increase of Envelope) to be made in 2020/21 for 2019/20 underspend

     = Variance x 60%

     = £6.83m x 0.60

     = £4.10m


Adjusted 2019/20 Outturn

     = 2019/20 Outturn + Adjustment for 2019/20 underspend

     = £174.13m + (£4.10m)

     = £178.23m


Cost Element of 2020/21 Envelope

     = (Adjusted 2019/20 Outturn x Cost Element Percentage) x Average annual change in

    volume of fees 2019/20 (see Average Annual Volume Change)

     = (£178.23 x 0.60) x 1.0116

     = £108.18m

 

Profit Element of 2020/21 Envelope

     = (Adjusted 2019/20 Outturn x Profit Element Percentage) x Agreed Uplift

     = (£178.23 x 0.40) x (1.018)[1]

     = £72.57m


Envelope for Year 2020/21

     = Cost Element for 2020/21 + Profit Element for 2020/21 + Adjustment for 2019/20 underspend

     = £108.18m + £72.57 + (£4.10m)

     = £184.85m

E = £184.85 million  

 

[1]Until 2019, this was either the figure recommended by the Review Body on Doctors' and Dentists' Remuneration (DDRB), or the figure implemented in England if the recommended figures was not used.
In 2019, a five-year GP contract was agreed in England  with fixed practice contract funding and the GPC England and NHS England and NHS Improvement  agreed that DDRB will not make recommendations on  the uplift figure for GP partner net income for the duration of the deal but that the agreed uplift figure of 2.0% would be used in 2019's calculation of the dispensing envelope.
In 2020, GPC in England and NHS England and NHS Improvement have agreed that an uplift figure of 1.8% should be used.

Step 2

Calculate anticipated spend for the first six months (April - September) of 2020/21 [Y] based on current feescale

Actual spend for the first six months 2019/20 = £86.41 million

Adjustment for price change in October 2019 = 0.805 (i.e. the adjustment factor for 2019/20)[2]

Adjust for forecast volume change for 2020/21 = 1.160 per cent (i.e. average annual change in volume of fees, see Average Annual Volume Change for details)

Therefore

Anticipated spend for the first six months of 2020/21

     = Actual spend for first six months of 2019/20 x Adjustment factor for 2019/20

     = £86.41m x 0.805

     = £69.55m

     = Adjusted actual spend for first six months of 2019/20 x Average annual change in volume of fees

     = £69.55m x 1.0116

     = £70.35m

Y = £70.35 million

Step 3

Calculate anticipated spend for the second six months (October - March) of 2019/20 [Z] based on current feescale

Actual spend for the second six months 2019/20 = £87.71 million

Adjust for forecast volume decrease for 2020/21 = 1.160 per cent (i.e. Average annual change in volume of fees, see Average Annual Volume Change for details)

Therefore

Anticipated spend for the second six months of 2020/21

     = Actual spend for second six months of 2019/20 x Average annual change in volume of fees

     = £87.71m x 1.0116

     = £88.73m

Z = £88.73 million

Step 4

Calculate remaining envelope available for the second six months of 2020/21 [E-Y]

Proposed 2020/21 dispensing envelope (E) = £184.85m  

Anticipated spend for the first six months of 2020/21 (Y) = £70.35

Therefore

Remaining envelope available for the second six months of 2020/21

     = Proposed 2020/21 dispensing envelope - Anticipated spend for first six months of 2020/21

     = £184.85m - £70.35m

     = £114.50m

E-Y = £114.50 million

Step 5

Calculate the “adjustment factor”

Given that:

E = £184.85 million

Y = £70.35 million

Z = £88.73 million

Then (E – Y) / Z =

(184.85 - 70.35) / 88.73 = 1.290 i.e. the ‘adjustment factor’

The “prices per prescription in pence” for each feescale, taken from the most recent proposed feescales, are then multiplied by the ‘adjustment factor’ [new fee = current fee x (E-Y)/Z]. The resulting figures are shown in the Proposed New Feescales section, in the right-hand column of the Table 1 and 2 entitled “Prices per prescription in pence”.

Step 6

Fees are paid on a sliding scale according to the numbers of items dispensed which are placed into bands each year.  Changes in the numbers of items dispensed may cause practitioners to move bands which are therefore adjusted to take account of volume changes, i.e. each band’s width is increased/decreased by the two-year average volume change.

The average annual change in volume of fees = 1.160 per cent

The top and the bottom of each of the bands in both of the feescales were changed by this average annual change in volume.

The resulting figures are shown in Tables 1 and 2 in the Proposed New Feescales section in the left-hand columns of the tables entitled “Total prescriptions calculated separately for each individual dispensing practitioner, in bands”.

Last edited: 7 October 2020 3:34 pm