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Practices and consortiums need to be aware of their entitlements to successfully negotiate with PCTs and make PBC a success in 2007/8, writes Dr Chaand Nagpaul

Practices and consortiums need to be aware of their entitlements to successfully negotiate with PCTs and make PBC a success in 2007/8, writes Dr Chaand Nagpaul

1. Claim component 2 payments for the 2006/7 Towards PBC DES

If practices have not already done so, they should ensure that they have claimed their entitlement to component 2 (C2) payments of the 2006/7 towards PBC DES. This pays practices for their achievement against targets set in their DES plans, to the value of 95p per registered patient, based on the practice list size as of 1 April 2007.

Practices need to submit a claim in writing to the PCT by 30 June 2007 at the latest, having sought prior agreement with their PCT that the specified objectives had been achieved.

C2 payments need to be used for ‘practice activity designed to ensure continued or improved achievement against the targets and objectives agreed in the practice plan', according to the Department of Health. The GPC believes such activity legitimately includes GP and practice staff time in engaging in PBC, such as in-house meetings for referral analysis, or attending local PBC meetings.

Practices should be aware that PCTs can retrospectively seek confirmation from practices that C2 payments have been spent as intended, although the GPC would not expect this to be done as a matter of course. Payment should be made promptly, with the next due global sum monthly payment.

For practices that made underspends, known as freed-up resources (FUR), in 2006/7 that are greater than the value of the C2 payment, then the practice will receive the FUR instead of the C2 payment. If the FUR value is less than the C2 payment, the PCT is required to make up the shortfall to the C2 value.

2. Don't accept local incentives that are worth less than the PBC DES

In 2007/8 PCTs are required to operate local incentive schemes that as a minimum should encompass the provisions of the previous Towards PBC DES arrangements. Practices should not agree to schemes offering any lesser levels of funding.

Payments can legitimately be regarded as practice income (unlike the criteria placed on C2 payments of the DES). Schemes need to be ‘clinically appropriate, affordable, and cash releasing' and any award is dependent on practices not overspending their indicative budgets. Practices should negotiate and agree incentive schemes at an early stage, and consider this a vital resource to fund the GP and practice staff time involved in PBC and service redesign.

3. Look elsewhere if your PCT doesn't provide adequate management support

The department's guidance, Practice-Based Commissioning: Practical Implementation, is clear that practices are entitled to adequate HR and IT support from their PCT for PBC implementation (paragraph 4.3). It stipulates that the entire PCT budget is notionally devolved to practices, with elements ‘blocked back' to the PCT for management and support overheads. In return, the PCT needs to set out details of the support practices can expect.

If PCTs do not deliver adequate or timely support for practices, there is provision for practices to negotiate a budget from the PCT to procure the services independently (paragraph 4.4). Where this occurs, practices should submit invoices to the PCT for payment of agreed management costs.

This puts practices in a strong negotiating position to demand the requisite management support needed for PBC implementation, and in the event of non-agreement with the PCT, cases can be referred to the SHA for arbitration.

4. Ensure your PBC budget has been fairly set

It is important to agree a fair budget with the PCT, since it will form the basis of calculating any FUR at the year end. Furthermore, entitlement to any awards for incentive schemes requires practices not to overspend.

From April 2008 there is a commitment to ‘fair shares budgets', but for this year, budgets will be based upon historical activity.

Additionally, the department has developed a tool to calculate indicative weighted capitation practice budgets, with an accuracy tolerance of +/-10%. For practices whose historic budget falls outside this range, the department proposes that PCTs undertake a simple review with the practice to try to identify and understand reasons for the variation. PCTs can adjust the practice budget towards the tool's ‘fair share' range by up to a maximum 1% (paragraphs 3.15-3.18). Practices should be satisfied that their budget has been set in accordance with this approach.

5. Tendering is not normally required for new community services

Practices can apply to be providers of new services in the community, provided they meet national quality criteria as set out by the Healthcare Commission.

Tendering will not normally be required, on the understanding that ‘any willing provider' is content to provide the service.

Tendering is only required when the contract will be for a single monopoly provider, such as if a whole service was moved from a local hospital with no alternative equivalent in the PCT area.

However, new providers cannot expect guaranteed income or volume of activity, with income based on a local tariff in an environment of a choice of providers. These local tariffs can be below Payment by Results tariffs, unless the service is to be the same as an existing hospital service – which would be highly unusual given such new services will be provided in primary and community premises, and led by GPSIs and primary care clinicians.

By charging below-PbR tariffs, there is opportunity to achieve cost savings and generate FUR. Although it is welcome that tendering will not be an obstacle to development of new services, the financial risk of setting up a service, within a competitive arena, with no guaranteed income, needs to be understood.

6. Practices can retain 70% of Freed-up Resources

The department's guidance makes clear that practices have a right to retain 70% of any FUR at the year end for reinvestment in primary care. This includes unexpected savings not covered by original plans. Practices should not be coerced into accepting a lower percentage of any savings.

An exception to this is where PCTs are in significant deficit – such as those under formal ‘turnaround' arrangements – where practices will need to use their 70% proportion of FUR for national and local priorities as agreed with the PCT.

The guidance does not specify eligible uses of FUR, but earlier guidance permitted FUR to be spent on primary care premises for service provision. The GPC believes this to be an important opportunity for investment in primary care estate, especially in the context of lack of alternative income streams for premises development. PCTs are required to approve practices' proposals for use of FUR within four weeks and no later than eight weeks.

7. Strategic health authorities will arbitrate where PCTs are unsupportive

SHAs will performance manage PCTs on the implementation of PBC, with one criterion being the level of engagement by practices, which will be assessed by an independent quarterly survey of a sample of practices from each PCT. The SHA will also provide an arbitration role on behalf of practices where PCTs are not fulfilling their requisite support.

8. LMCs and the GPC can provide advice and support

Where PCTs are not facilitating PBC as per the guidance, practices can seek advice and support from LMCs. LMCs may also hold useful information, such as examples of incentive schemes operating in other parts of the country.

The GPC's commissioning and service development subcommittee regularly publishes guidance on PBC.

Dr Chaand Nagpaul is chair of the GPC commissioning and service development subcommittee and a GP in Stanmore, Middlesex

Hampshire PCT's approach to PBC financial support Hampshire PCT's approach to PBC financial support

Hampshire's PBC package of financial support to GPs is considered attractive by the GPC's commissioning and service development subcommittee, Dr David Balfour, Hampshire PEC chair, writes:

While many voice the mantra that ‘practice-based commissioning is the future', it is equally clear that the understanding of and enthusiasm for it varies hugely. Hampshire, as the biggest PCT in England covering 1.2m patients and more than 500 GPs, experiences the full range of engagement, from early adopters through to hardened cynics.
The PCT's reconfiguration gave us an opportunity to take a fresh look and conclude that PBC can only be meaningful if its elements include genuine clinical engagement, and incentives that deliver.

For 2007/8 we envisage
• Just over £2m (£1.65 per head) available to support locality leads and management input. Localities have freedom to use the money as they wish but will need to demonstrate proper use within agreed criteria
• The Towards PBC DES replaced by a £2.375m (£1.90ph) incentive scheme, related to engagement with and delivery of genuine outcomes.
• A £2m pump-priming ‘seed' resource. A huge historical frustration with attempts to deliver change has always been the NHS Catch 22. There has been no money to invest in new pathways and the potential funds raised from redesigns cannot be realised as the timelag has stopped any development. The business adage of needing to invest to develop has always been too constrained and regulated. Therefore the PCT is making the fund available, some of which will be at the discretion of the PEC, while the rest will be available to three areas in Hampshire to get plans started that have the full support of the clinical executive.
• All practices given both historical and indicative budgets and access to Dr Foster and Cognos – systems relating to historical activity.
• An end to the old concept of a PEC acting as simply a rubber-stamping committee and a new clinical executive embedded in the trust's structure.
• A PEC committee, the service redesign board, will support high-level strategic planning at county-wide and locality levels to bring business cases to fruition.
• An intranet site for exchanges of views and information in order to mitigate the risk of a people reinventing the wheel within such a large county.

It is always difficult to predict anything in the NHS and there is always the shadow of the next reorganisation or change of political direction hanging over us.

However, if clinicians can begin to work together across the spectrum of care and develop genuine improvements, then it would be very difficult for anyone to stop them.

Practices have a right to retain 70% of any freed-up resources at the year end for reinvestment

Entitlement to any awards for incentive schemes requires practices not to overspend

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