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GMS contract changes for 2013/14 explained

Accountant Laurence Slavin outlines the DH's plans for the GP contract for 2013/14 and assesses how they could affect practices' finances.

The consultation on the contract changes closes on 26 February (Picture: iStock)
The consultation on the contract changes closes on 26 February (Picture: iStock)

In 2003, during negotiations for the new GMS contract, the following upbeat assessment was written by NHS Employers’ Mike Farrer: ‘This package is designed to support practices from all parts of the existing spectrum. This is because the new contract is fairer in the allocation of resources, allows for workload variation and management, recognises and rewards quality and outcomes, not inputs, and puts professional self-esteem and autonomy at the heart of delivery.’

It was hard to find a similarly optimistic statement in last week's letter from the DH’s Richard Armstrong to GPC chairman Dr Laurence Buckman, which set out the government's plans for how the GMS contract would change in 2013/14.

Perhaps the most telling comment is: ‘The government remains committed to enabling fair and equitable distribution of funding to GP practices […] the department therefore proposes to apply any uplift […] prioritising narrowing the funding gap between practices.’

In other words, while the thrust of the 2004 contract was to reward quality and innovation, the thrust of the 2012 changes are to flatten to payments.

Proposed changes

The proposals to ‘narrow the funding gap’ are as follows:

MPIG changes

The MPIG will be phased out over a seven-year period from 2014/15. The phasing will be a straight 1/7th each year. This will be replaced by a new standard weighted capitation funding formula.

For 2012/13, although the methodology has not been agreed, the DH intends to deliver a pay rise of not more than 1%.

QOF changes

There are a number of important changes to QOF. The organisational domain will be discontinued. The DH’s document says this is because the issues covered by this doman represent the basic standards that practices will need to meet for CQC registration.

However, most practices are having to fund changes to conform to CQC demands, sometimes assisted through improvement grants, sometimes not, but it seems radical to move from a system that pays you to have good organisational standards to one where is costs the practice to maintain them.

The thresholds will be raised for 20 QOF indicators for 2012/13 and for all indicators thereafter. There will be new indicators and a new public health domain. There are also some changes to the time period in which the QOF assessed.

At the moment, the total value of QOF is adjusted to reflect the list size of the practice. The current methodology is to uprate/downrate the points achieved by reference to a notional average list size of 5,891.

The DH is proposing to base the weighting on the actual average practice list size at the start of the last quarter before the financial year in question. So for 2014/15, the weighting would be on the actual average practice list size at 1 January 2014. This will lead to distortions in pay for practices with rising/falling list sizes, practices undergoing list cleaning exercises, and may well influence activity and behaviour unrelated to any clinical basis. 

New DESs

There will be new DESs to promote quality and innovation. However this will not be open to all, only on a preferential basis. What that means in practice is not clear.

There will be new DESs for at-risk patients with dementia, care for frail older or seriously ill patients, online access to practice services and supporting patients with long term conditions.

For existing DESs, extended hours, patient participation, alcohol risk and learning disabilities will continue until March 2014.   

Superannuation

There is an odd change in the document relating to the superannuation funding for locums. At the moment, the PCT make the payments and bears the cost of the employer’s superannuation. The proposal is that the practice will make the payments, and that there will be a transfer into GMS global sum funding.

One of the nagging complaints with the current global sum is that the superannuation components are opaque. It is a matter of concern that the employer’s superannuation for locums will be lost in the global sum.

What happens now?

The DH is now consulting on its proposed changes to the contract, which will close on 26 February 2013. It has also said that any increase in GPs’ pay will depend on the recommendations of the Doctors and Dentists Review Body, which is unlikely to report before the 26 February. So effectively decisions will be made about the contract before the cost implications are fully known.

The very reason we have the minimum practice income guarantee (MPIG) correction factor is because the process back in 2003 was flawed.

GPs had to vote on the new contract before it had been priced. The promise of the Carr Hill-based global sum failed to deliver and, as GPs had already voted for the new contract, a 'band aid' solution had to be found. This manifested itself in the MPIG. Is history not being repeated here? The more certainties that exist in negotiations, the more likely the outcome will be successful.

Who will lose and benefit from the changes?

So who will benefit most and who will this cost the most? The pre-2004 contract financially rewarded those GPs who maintained high list sizes and low items of service. The 2004 contract changed that to some extent.

There are still a number of practices with high list sizes and low levels of service that earn considerably more than average (which newspapers such the Daily Mail love to focus on), but at the other end of the spectrum there are GP principals earning less than £50,000 per annum. The 2004 contract made these exceptionally high and low earning practices an exception.

These new proposals are a backwards step. It will be increasingly difficult to attain high levels of QOF achievement. The benefits that good, high performing practices have retained through the MPIG will be withdrawn and replaced with a generalised funding stream across all practices. It will be those high-performing practices that will lose the most. Those practices that offer low services and carry high list sizes will continue to thrive.

The following examples show the points clearly.

Case study A

This practice is an inner-city practice with a list size of 7,068 and three partners. In the last year their profits were £337,106, i.e. £112,368 each. The practice is exceptionally busy. They used to receive deprivation pay, which is maintained in their MPIG. This amounts to £145,614. This will be lost. They will also lose around £35,950 in the QOF changes.

This reduces each partner's profit share to £51,847. Overall a loss of 53.85% This can only be made up by doing more work (there is little capacity for this), or hoping the new capitation model will fund them fully.

To maintain their income the global sum would have to be £91 per patient, but we have no idea with the current timeframe for negotiations to know if this is achievable.

 

Case study B

This practice is a suburban practice, with a history of poor performance. Single handed with 2,347 patients. Profits last year were £140,362. The loss of the MPIG will be £23,486 in total, the loss of the organisation points from the QOF £8,320. Profits will therefore fall to £108,556. Overall a loss of 22.65%.

  • Laurence Slavin is a partner with chartered accountants Ramsay Brown & Partners who specialise in the finances of GP.

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