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Independents' Day

Why the QOF square root formula must go

The square root formula is perverse, indefensible and must be reformed or scrapped, argues Professor Bruce Guthrie

The square root formula is perverse, indefensible and must be reformed or scrapped, argues Professor Bruce Guthrie

What is usually called the ‘square root formula' was created with the best of intentions – to relate payment to workload.

But it has done so in a way that has reduced the variation in payment between practices with the highest and lowest workload, with some rather strange effects.

Take an example. Two practices each have 30 patients with coronary heart disease, and each achieves 100 points in the CHD domain.

One practice is very remote, has a list of 560, and an above-average CHD prevalence of 5.4%. The second is a university practice, has a list of 23,324, and a CHD prevalence of 0.13%. The small practice earns £850 for the CHD domain. The large practice earns £25,063.

This is an extreme example, but it is a real one. And we routinely see two-fold variation in payment for the same quality delivered to the same number of patients1.

The impact of the square root formula is difficult to understand because, to quote Winston Churchill, its three elements are ‘a riddle wrapped in a mystery inside an enigma'.

The first element is square root transformation. It does what it was intended to do, which was to reduce interpractice variation in QOF payment.

As a result, practices with the highest prevalence of disease get paid less per patient treated than their peers with lower patient workload.

Among those practices affected are those serving deprived populations, and also some serving more elderly populations.

Although both groups attract higher capitation in the global sum, this is intended to account for their greater non-QOF workload, not to compensate for QOF underpayment. The square root transformation is one reason that payment varies for the two practices described.

The second planned element is the truncation of prevalence that occurs before applying transformation. If there were 100 practices, and the five lowest prevalences were 2%, 3%, 4%, 5% and 6%, these would all be treated as if they had a prevalence of 6%, increasing their QOF payment.

The intention is to recognise the fixed costs of running disease management in practices with small numbers of patients on disease registers.

However, truncation of prevalence fails to achieve this, because small practices with small registers generally get no protection. In the example above, the large practice benefits considerably from truncation, but the small practice does not, even though its registers are the same size.

The third element was (presumably) unintended. In addition to the effect of truncation and square root transformation, payment also varies by the square root of list size, so larger practices are paid more even if prevalence is the same. This is a major contributor to the difference in payment in the example. It has no justification.

What reward?

The QOF is meant to reward work done, but the current payment system makes this link opaque and unfair. What should be done? The link between payment and list size should be removed. Truncation of prevalence should be removed.

If there is consensus that fixed costs are important, alternative options could be to pay a fixed amount to each practice for participation, or protect practices with small numbers of patients on registers.

Personally, I do not find the arguments for square root transformation convincing.

Unfortunately, change will not be easy, because for every practice that gains from any change, there will be another that loses. But the current system is perverse and indefensible.

Professor Bruce Guthrie is professor of primary care medicine at the University of Dundee

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