How practice finances will be affected by the Covid-19 crisis
Accountant Deborah Wood explains how the changes to general practice work priorities and funding in response to COVID-19 could affect practice income and expenditure
On 19 March NHS England and NHS Improvement (NHSE/I) wrote to GPs to explain the workload impact of the COVID-19 pandemic on general practice. The guidance advised practices to focus on six urgent priorities and ensure sufficient 2020/21 flu vaccine stocks were ordered prior to 31 March 2020.1
What GP practice income is protected?
Core contract payments will continue at rates that assume the continuation of pre-COVID-19 levels of activity, even though practices are encouraged to suspend, if necessary, non-urgent or routine matters. The BMA has provided a list of suggested work that should be suspended.2
For dispensing practices, the dispensary services quality scheme is suspended but payment is protected.
It is recommended that locally commissioned activity should be suspended. Practices have been asked to stop private work.
What are the key areas of ongoing funding?
QOF 2019/20: As the work for this period was largely completed before the crisis, payments will be calculated as usual. However, if on further analysis a practice earned less from the 2019/20 payments than in 2018/19 due to the impact of Covid-19, a one-off adjustment will be made to top up the payment to the 2018/19 level.
QOF 2020/21: Income will be protected as necessary (likely to be in line with the highest QOF income in either 2018/19 or 2019/20).
CCG LES/LIS activity: Although activity is expected to cease, any funding element for staffing will be maintained and re-directed to support the pandemic response.
Will PCN funding continue?
PCN 2020/21 Investment and Impact Fund: The introduction of an incentive scheme is deferred at least for six months. The funding for that period will not be lost.
PCN 2020/21 DES: Funding is available as practices sign up, but the introduction of Structured Medication Reviews and the Medicines Optimisation Service is deferred until October 2020. Deadlines for workforce templates are deferred until 31 August 2020 and CCG requirements around the redistribution of unused Additional Role Reimbursement Scheme (ARRS) funds are also deferred until September 2020. Extended hours funding will continue.
What should PCN clinical directors do?
PCN clinical directors can delegate their functions to a non-clinician using either the core £1.50 per head funding or the clinical director reimbursement funding.
Will GP partners lose out?
If practices are no longer undertaking private work, they will lose the usual income generated from report fees, appraisal work, private travel vaccinations and so on. Typically this income can generate £3-£5 per registered patient.
Practices that were gearing up to achieve higher QOF points in 2019/20 but were prevented from doing so by the pandemic, or practices with a particularly low achievement in 2018/19 may also lose out.
Funding is protected where some non-urgent services are paused, such as minor surgery. It is anticipated that this will be based on the previous year’s activity level as a minimum base line.
However, there is uncertainty as to whether income from Local Authority funded LES activity will continue to be paid.
Essential clinical activities should continue and immunisations and vaccinations are being paid in the usual way. However, vaccination uptake may drop if, for example, parents are unwilling to bring children to the surgery, meaning practices could potentially lose out on target-based payments in particular.
Practices will need to make adjustments so they can deliver these services while managing the disruption affecting working arrangements for staff and premises.
Will PCNs lose income too?
Primary care networks (PCNs) and their member practices may miss out on funding for additional roles where recruitment of, for example, clinical pharmacists has not been possible. It is likely that many PCNs will be in this position.
Where a GP PCN clinical director supporting the frontline COVID-19 response has delegated their work to a non-GP support then funding for both the clinical director and the manager will need to be found.
Will there be any additional or unexpected expenses?
In the short term we are seeing practices incurring additional costs relating to GP locum and staff cover for those who are on sick leave or are at home self-isolating.
Practices can usually make claims for locum costs in line with the Statement of Financial Entitlements (SFE) rates for cover for GPs who are on sick leave. However, at the time of writing NHS E/I has not announced any additional funding to enable practices to make claims for the cover needed for GPs or other staff members who are self-isolating/shielding but who are not sick.
CCGs have been instructed to provide and deliver additional laptops and associated equipment for practice staff working remotely, following an assessment of regional requirements. Approved video consultation services are to be centrally funded.3 However, it is possible practices may incur additional expenses – for example, to set up video meeting options – and it is unclear if existing IT reimbursement will cover these costs.
Some practices are outsourcing elements of their internal financial management to their accountants, for example payroll and bookkeeping, management accounts and reports for lenders to enable them to continue to meet existing financial obligations.
All of these will bring short term costs to practices and it is unclear what, if any, funding is available to help, although some CCGs and LMCs are agreeing plans to make additional money available to practices on a claim for or loan basis. A loan could take the form of a cash advance to assist cashflow during the current crisis period, with a reconciliation to claw it back at the end of the financial year.
In order to approach CCGs and make claims for additional costs, practices should keep a separate analysis of any additional expenditure incurred as a direct result of dealing with the pandemic, for example overtime payments to cover someone who is self-isolating, and discuss claims for reimbursement with their CCG or health board.
Can practices get financial support from any Government initiatives?
The government has indicated that where a business is funded by public sector money, as GP practices largely are, that funding will continue, and they would not be expected to make claims for other types of support.
In particular, practices are not expected to have to furlough staff and are therefore not expected access to the Government Coronavirus Job Retention Scheme where 80% of furloughed staff costs are reimbursed.4
HMRC has indicated that GP practices may be entitled to apply for the furlough scheme if a practice faces additional costs of cover where, for example, a staff member has to be shielded and cannot be redeployed safely elsewhere. There is still some uncertainty how this will work in practice and whether an alternative mechanism for reimbursement will be introduced by NHSE/I.
Practices can, however, take advantage of the reclaim for statutory sick pay when staff are off sick or self-isolating.
I am anticipating that NHSE/I will recognise that there is an issue regarding additional costs for cover with regard to self-isolation and shielding and will deal with this by way of additional reimbursement funding. Practices should therefore discuss this with their CCGs, and only consider the furlough scheme for staff who are funded from private income sources that have temporarily ceased.
If a practice is in receipt of small business rates relief, they may be eligible for a £10,000 grant for ongoing business costs.5 Local Authorities will contact eligible businesses to arrange payment of grants. Eligible businesses are those with a rateable value of under £15,000 as at 11 March 2020.
Individuals who are partners in a GP practice are self-employed taxpayers and will benefit from being able to defer payment of their business-related 31 July 2020 income tax bill until 31 January 2021,6 which will assist with cashflow.
Deborah Wood is Healthcare Services Partner MHA Moore and Smalley and vice-chairman of the Association of Independent Specialist Medical Accountants
1. NHS England. Coronavirus preparedness letter – primary care. 19.03.20.
2. BMA. COVID-19: Steps for GP practices to take
3. NHS England. Guidance and standard operating procedures. General practice in the context of coronavirus (COVID-19). Version 2.1. 06.04.20
4. UK Government. Claim for your employees’ wages through the Coronavirus Job Retention Scheme. 26.03.20.
5. UK Government; Department of Business, Energy and Industrial Strategy. Grant Funding Schemes – Small Business Grant Fund / Retail, Hospitality and Leisure Grant Fund. Guidance for business. March 2020.
6. UK Government. Pay your self-assessment tax bill – Defer your Self-Assessment payments due to coronavirus (COVID-19). 03.04.20.
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