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Don’t miss out on claims for personally administered drugs

Simple mistakes can prove very costly when claiming for personally administered drugs, so it pays to be careful. Accountant Bob Senior takes you through the process

Simple mistakes can prove very costly when claiming for personally administered drugs, so it pays to be careful. Accountant Bob Senior takes you through the process

At a time when GP profits are under pressure, it makes sense to ensure you are not missing out when claiming for personally administered drugs. Surprisingly, many practices fail to keep an adequate eye on this part of their business and, as a result, can find themselves unwittingly subsidising the NHS very generously. There are three things that can go wrong:

• failing to understand what can be claimed for

• failing to produce an FP10 correctly

• administering items where the money the NHS claws back, set by the PPA, exceeds the discount actually obtained.

In general, a practice can claim for the following personally administered items:

• vaccines, anaesthetics and injections

• certain diagnostic reagents, Dick test, Schick test, protein sensitisation test solutions and tuberculin tests

• intrauterine contraceptive devices (including drug-releasing IUCDs, contraceptive caps and diaphragms)

• pessaries that are appliances

• sutures (including skin closure strips).

Getting the claim right

Practices need to ensure all clinical staff understand what can be claimed for. It is important to then make sure the FP10 actually reflects the precise item that has been prescribed. This is particularly the case where a branded item has been prescribed, as it is not unheard of for an FP10 to be produced showing the generic equivalent. If staff fail to spot the error, the practice will simply be reimbursed for the generic item, which may amount to less than the cost of the branded item.

Even when staff are extremely careful and get all the claims right, things can still go wrong financially if the practice is unable to get adequate discounts when it buys reimbursable items.

The amount a practice receives when it administers an item is made up of two parts: first a simple dispensing fee, the rate of which depends on the number of the prescriptions submitted each month (for a practice submitting up to 400 prescriptions a month the fee is about £2.40 each); and second, the reimbursement to the practice of the actual cost of the item.

Unfortunately the PPA does not actually know what was paid for the item so it starts from the list price of the item and applies an estimated discount (the ‘clawback'). The PPA then adds VAT to that figure.

Possible pitfalls

So what can go wrong? First, if the practice gets a lower discount on the item than the PPA expects, it may end up being reimbursed less than cost. The second, more obscure, problem relates to what happens when VAT rates change.

Imagine a typical scenario where a practice buys items, holds them in stock for a while, then uses them. The supplier would charge VAT at the rate applicable when it sold the items (17.5% up until 30 November 2008). When the items were eventually used the PPA would reimburse the VAT at the rate in operation at that point (15% after 1 December 2008). Therefore, if practices bought items before 30 November and then used them after 1 December they would lose out by the 2.5% differences in the VAT rates.

Of course, under the well-understood law of swings and roundabouts, this process may offer a small opportunity when VAT rates go the other way. If the Chancellor enacts his plan to put VAT back up to 17.5% (or more) after a year then any items bought while VAT is 15% would be reimbursed at the higher rate when they are actually administered.

Bob Senior is medical director at specialist medical accountant Tenon

Simple mistakes can prove costly when claiming for personally administered drugs

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