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How GMS contract changes will hit practice profits

Russell Finn assesses the impact of the government's plans to abolish the MPIG and radically change the QOF.

Tearing up the GMS contract will cost practices dearly (Image: iStock)
Tearing up the GMS contract will cost practices dearly (Image: iStock)

The DH's proposals to overhaul the GMS contract seem driven by its determination to eliminate the minimum practice income guarantee (MPIG) compromise it agreed to persuade GPs to accept the 2004 contract.

However, the transition to an MPIG-free zone will have a serious effect on most GMS practices' core funding.

Proposed changes

The DH intends to:

  • Deliver equitable core funding to GMS and PMS practices by phasing out the MPIG over seven years starting in April 2014.
  • Make changes to the Carr-Hill global sum formula and move to standard capitation-based (payment per patient) funding.
  • Accept NICE's changes to QOF indicators including dumping the organisational indicators points.
  • Raise QOF thresholds and alter the relative list size adjustment. Increase the value of the remaining QOF points by 16%.
  • Establish new enhanced services to promote quality improvement and innovation.
  • If a negotiated settlement is agreed, there will be a 1.5% uplift of core contract income. This is designed to give a 1% pay increase to GPs and practice staff and to offset rising practice costs.

Minimum practice income guarantee

This so-called 'fudge factor' was introduced in 2004/5 to ensure that no practice lost out in the major changes to the GMS contract introduced that year.

The intention was to withdraw the MPIG through phased uplifts to the global sum. However, changes in the years that followed did not come close to achieving this. Today the MPIG makes up, on average, around 10% of GMS practices' core contract income.

By gradually removing the MPIG, the DH wants to move towards paying a single capitation price for both GMS and PMS, and to link this to changes in the Carr-Hill formula to increase the weighting for areas with high social deprivation and for the management of longer term diseases.

Five-figure losses

There will be winners and losers. Practices with no MPIG will benefit fully from the funding uplift, but of the two-thirds of GMS practices with an MPIG, the ones that will suffer the most will be the 36% with a high dependency on it.

The impact on an average five-partner, inner city practice relying heavily on the MPIG could be a core funding drop of £200,000 over seven years. The changes to the Carr-Hill formula would be unlikely to be offset this, and the partners could each suffer a net fall in profits of £40,000.

It is likely that some practices will see their GMS income drop below 2004 levels.

QOF changes

The planned changes to the QOF are for 16 new clinical indicators and the retirement of 14 old ones. However, there is a lot of controversy over the new indicators as achieving some of them relies on referrals of patients for services, such as rehabilitation schemes, not yet available in all areas.

Where the services concerned do not exist, this might possibly present an opportunity for practices with spare capacity to contract to provide them. Outcomes for these services will probably be linked to the commissioning outcomes framework (COF) in future. In England, the local clinical commissioning group (CCG) could provide funding for them.

This change to QOF indicators is be coupled with a further increase in the achievement thresholds to above the increase for 2012/13.

QOF pay calculation adjustment

The relative list size adjustment will also change. Currently this is based on a fixed average list size and the proposal is to change it to practices' actual average list size in the January before the start of each assessment year. This also involves putting up the value per QOF point. What this will be has not been announced, but it could go up from £133.76 (in England) to an estimated £155.16 per point.

On this assumption, a practice with a list size of 10,000 would see its QOF payments decrease by £24,000 – as shown in the example - simply due to the effect of the list size adjustment.

Example: 2013/14 estimated total QOF payments
  • Practice with 10,000 patients
  • 960 QOF points achieved for 2012/13
  • 820 QOF points achieved for 2013/14

QOF payment = points achieved x value of QOF points x list size ÷ average GP list size

2012/13: fixed average list size 5,891 and QOF pay per point £133.76

960 x £133.76 x 10,000 ÷ 5,891 = £217,976 total QOF pay

2013/14: average practice list size 6,487 and QOF pay per point £155.16 (estimated)

810 x £155.16 x 10,000 ÷ 6,487 = £193,741 total QOF pay

Organisational points to go

The plan to get rid of the organisational indicators, apart from the quality and productivity indicators, are another problem. These indicators are seen as a soft target as practices often score 100% with them.

The cash from retiring these indicators will be put into funding new enhanced services and increasing the value of a QOF point. The new services will promote the management of longer-term conditions, which will take up more clinical time and cost more to provide than the older QOF indicators.

When the new CCGs in England commission these new services, could this bring to the fore conflict of interest problems as each CCG decides how best to allocate income to its member practices that has just been taken away from them?

Replacing lost income

Unfortunately, the scope for GPs to replace lost GMS income is limited. Given that in the past few years most practices have been able to grow only by diversifying into non-core income areas, such as teaching and GP appraisals and non-NHS clinical work these may be the very income sources that in future GPs do not sufficient time for as their core workload expands.

External link
DH letter about proposed changes to the GMS contract for 2013-14

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