This site is intended for health professionals only

GP indemnity costs ‘set for hike’ after ministers uplift compensation payouts

GP indemnity costs are set to rise further after the Government announced a change in legislation that will see people receiving higher compensation payouts for personal injuries, medical defence organisations have warned.

The Government announced it was making a change to the way the courts calculate compensation payments to victims of life-changing injuries, arguing that the victims are being disadvantaged by low inflation rates – meaning long-term investments are yielding less money than they should.

But the MDDUS said that the effect of the change would lead to ‘significant new costs for the NHS and medical defence organisations’.

The ‘discount rate’ – which is the method for calculating the claims – has been unchanged since 2001.

A spokesperson for the Department of Health said they ‘would work closely with GPs and MDOs to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of NHS’.

They added that the Government is to launch a consultation ‘in the coming weeks’ which will ‘consider whether there is a better or fairer framework for claimants and defendants, with the Government bringing forward any necessary legislation at an early stage’.

But MDDUS chief executive Chris Kenny said that the Government’s decision, based on a consultation undertaken in 2013, ‘does not reflect that fact nor anything which has happened in the economy and healthcare in the intervening period – nor what is likely to occur in the coming years as a result of Brexit and other pressures’.

He said: ‘Everybody agrees that those who suffer medical accidents should be properly and promptly compensated. The increase in claims awarded show that this is already happening.’

Mr Kenny said the Government’s decision ‘takes no account of the interests of the NHS, facing acute financial challenges’ and ‘ignores the impact of unavoidably high indemnity fees on morale and recruitment in primary care’.

Medical Protection CEO Simon Kayll said he was ‘extremely disappointed’ by the decision to reduce the discount rate ‘so significantly’.

He added: ‘This decision will increase the cost of settling future loss claims against our members at a time when the cost of clinical negligence is already at a worryingly high level… Without sufficient support from Government this increase in costs will need to be reflected in GP membership subscription rates, and we know this will be very troubling news for our members.

‘We are talking with the DH about how GPs can be protected from this increase.’

And GP out-of-hours providers said that the impact on their services could be substantial – warning the Government to set out plans to avoid a crisis of GP coverage during the upcoming Easter weekend in April.

Urgent Health UK chief executive John Horrocks said: ’[This] will be another critical blow to the cost of GP indemnity insurance – to the extent that it will simply be uneconomical for GPs to work in out-of-hours and other urgent care roles.

’Urgent Health UK acknowledges that the Government is looking seriously at remedial action but urges an immediate response if GPs are to be available to work over the busy Easter period.

‘The NHS is able to solve this problem by providing indemnity cover for GPs working in urgent care as it does for other clinical and non-clinical staff.’

Announcing the change on Monday, lord chancellor and justice secretary Elizabeth Truss said: ’The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants.

’I am clear that this is the only legally acceptable rate I can set.’

Amid concerns about how the changes would impact hospitals’ clinical negligence costs, the DH said that ‘the Govermnent has committed to ensuring that the NHS Litigation Authority has appropriate funding to cover changes’.

The RCGP said in a statement that it has ‘already received assurances from Government that appropriate funding will be made available to meet additional costs to GPs arising from this change in the discount rate’.  

Mitigating GP indemnity costs

The news comes as indemnity providers have linked steep indemnity cost inflation in recent years to rises in legal claims against GPs, amid a growing trend for increased litigation.

The Government has acknowledged the effect this has had on GP recruitment, especially out of hours, via a £2m scheme to subsidise costs related to practising out of hours for the past two winters.

The GP Forward View also pledged that hikes to indemnity for core practice would be compensated for the next two years. In 2017/18, this will see practices receiving 52p per patient to cover increases.

Policy makers have said a longer-term approach will see NHS England working alongside the Department of Health, GPs, indemnity providers and the NHS Litigation Authority to bring about ‘fundamental reform’ of the current system.

This includes proposals to cap the fees lawyers are able to charge in low-value compensation claims.