Community Pharmacy Finance Events

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Community Pharmacy Finance Events

• London 19th May 2005
• Chair Marion Pullen
• Primary Care Contracting Advisor

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Aims

• Ensure an understanding of the background and
  basics to the financial flows of the community
  pharmacy contract
• Develop understanding of the risks and
  responsibilities of PCTs
• Answer questions and develop an FAQ for the field

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Quick Questions

• On your tables discuss the questions that you
  have come with today - if you cannot get an
  answer from within the people on your table
  write it down and well collect them
• Well theme these and come back to them through
  the afternoon (and develop an FAQ from them)
• 10 minutes

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Community Pharmacy Contractual Framework - Finance

• Mark Wilson
• Finance and legal support
• nGMS

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Scope of presentation

• Policy context
• Interdependencies
• Payment structure
• Financial risk
• Payment process

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A vision for pharmacy

• An integral part of the NHS
• Planning and delivering local services
• Support self-care
• Respond to diverse needs of patients
  communities
• Source of innovation in delivery of services
• Help deliver aspirations in NSFs
• Help tackle health inequalities

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New Contractual Framework

• Why change?
• Current arrangements in place for nearly two
  decades
• Need a framework that better reflects modern
  service requirements
• Community pharmacy is an integral part of NHS
  services
• What changes?
• Definition/range of services
• More flexible/versatile, with focus on higher
  quality services, less on prescription volume
• Better fit with PCT role in developing local
  service provision

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Benefits

• Improved patient choice convenience
• Widening access
• Supporting people with long-term conditions
• Tackling health inequalities public health
• Driving up quality patient safety
• Better value for money

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Interdependencies

• ETP better pharmacy IMT
• New arrangements for reimbursing generic
  medicines
• Office of Fair Trading (OFT) report on retail
  pharmacy control of entry

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ETP better pharmacy IMT

• ETP electronic transmission of prescriptions
  between prescriber, dispenser and PPA
• Connectivity e-mail/internet eg NeLH, NPSA
• Read/write access to the patient record
• Sharing of patient information is sensitive
• Patient consent
• Maintaining confidentiality during data access
  and transfer

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Reimbursing generic medicines

• Newly out of patent medicines
• more responsive to market forces
• Existing generic medicines
• reductions in reimbursement prices
• Implement alongside new pharmacy contract

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Control of Entry

• Introduction of competition choice into the
  current test of adequacy
• Modernise application appeal process
• Four exemptions
• Shopping centres over 15,000m2
• One stop primary care centres
• Open more than 100 hours a week
• Wholly internet or mail order

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Range of services

• Essential Services
• Expect to see generally available through
  pharmacies e.g.
• Dispensing and repeat dispensing, including
  electronic transmission of prescriptions
  compliance aids under DDA
• Disposal of medicines
• Promotion of healthy life styles
• Self care for patients with minor ailments
• Sign-posting to other NHS services
• Clinical governance in place
• Support for continuing professional development

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Range of services

• Advanced Services
• Accreditation of pharmacist
• Specific requirements of premises
• Medicines use review (MURs) prescription
  interventions

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Range of services

• Enhanced/Local Services
• Commissioned by PCTs to meet local needs
• Including, but not limited to, those listed in
  Directions, eg.
• Out of hours services
• Minor ailment schemes,
• Anticoagulant monitoring
• Stop smoking schemes
• For full list see The Pharmaceutical Services
  (Advanced and Enhanced Services) Directions 2005.
• Only those services included on this list may be
  required of providers who are exempt from the
  control of entry test.

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Payment structure

• Item fee 90p
• Repeat dispensing fixed payment and transition
  allowance
• Establishment payment
• Support for small pharmacies
• Practice payment
• ETP allowance (not yet finalised)
• Medicines use review fee 23

Global Sum (central budget)
PCT budget
17
Professional fees

• Item fee 90p
• Changes to Extemporaneous Dispensing Fees
• Removal of Bulk Prescription Fee
• Abolition of Urgent Fees
• Removal of the Special Fee
• Standardisation of endorsement codes

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Repeat Dispensing

• Annual payment 1,500
• From 1 April 2005, paid to all contractors,
  irrespective of whether or not they have
  dispensed any repeatable prescriptions.
• Transitional Payment

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Establishment payment

• adjusted annually to reflect the increase in
  dispensing volumes and the balance of the Global
  Sum.

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Small Pharmacies

• Small pharmacies (1,100 - 2,000 items pcm) that
  received Professional Allowance payments in 04/05
  (max. 18,000) continue to be eligible for
  payment for further 3 years until 31 March 2008
• If they wish to close, exit payment available
  until 31 March 2006 (greater of 10,000 or
  Professional Allowance range is 10,000
  18,000)

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ESPS

• Essential Small Pharmacy Scheme (ESPS) remains
  for 05/06 with the target payment set at 57,021.
• Essential small pharmacies will be open 40 hours
  per week, like other pharmacies, unless the PCT
  directs less hours.
• Essential small pharmacies opening between 35 and
  40 hours per week, with the PCTs agreement, will
  receive full payment.
• Essential small pharmacies opening less than 35
  hours per week, with the PCT's agreement, will
  receive reduced payment, but the new denominator
  of 35 hours (currently 30 hours) will not be
  introduced until 1 October 2005.
• Expected standard LPS for ESPS in 06/07 and
  additional standard LPS for low volume pharmacies
  not eligible for ESPS

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Practice payment

• Must meet minimum staffing level for number of
  items dispensed per month.

23
Minimum staffing levels
Pharmacy contractors will be required to
employ an extra 0.5 FTE dispensary staff for each
additional 1,500 items the pharmacy contractor
dispenses per month above 11,000 items.
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Payment

• Transitional period to 1 October. From then on,
  payment made on basis of declaration on FP34C.
• If pharmacy is below minimum level required, then
  payment reduced to lowest level in the band that
  corresponds to its declared number of dispensing
  staff.
• If no declaration, pharmacy paid at the minimum
  level for that month (i.e. 1/12th of 500).
• Pharmacy can apply for top-up payment where total
  monthly payments between 1 April and 31 March in
  any year are less than the amount which would
  have been paid if payment calculated on an annual
  basis.

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Focus for PCTs

• Commissioning, support monitoring
• Roll-out repeat dispensing (paper then ETP)
• Identify health promotion campaigns
• Develop strategy for compliance support
• Provide information for sign-posting
• Arrange collection of waste medicines
• Engage community pharmacy in clinical governance
• Prioritise patient groups for MURs

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Funding principles

• Greater transparency
• Fair funding
• Global sum remuneration
• Unrecovered margin on generics reimbursement
• PCT commissioned local services, including nGMS
  enhanced services

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Funding for Service Elements

• England for 2005/6
• M
• Essential Services 1669
• IT/ETP 58
• Advanced Services 39
• ____
• 1766

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Sources of Funding

• M
• Global Sum (managed centrally) 966
• Money released from price reductions
• in generics (PCT budgets) 300
• Retained generics margin 300
• Retained medicine purchase margin 200
• ___ 1766

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Financial Risk

• Global sum - No impact held
• centrally
• Money released from - Overall cost neutral,
• generic medicines differential impact on
• individual PCT basis
• Retained generics margin No impact within
• Retained medicine margin contractors profits

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Risk Assessment

• Indicative information provided to PCTs/SHAs
• Estimated savings from generics
• Based on historic prescribing pattern in each PCT
  (prescribing data Sept 2003 Aug 2004)
• Estimated outgoings from pharmacy contract
• Based on number of pharmacies located in each PCT
  in 2003, with dispensing volumes adjusted to
  predicted 2005/06 volume

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Key factors

• Generic prescribing pattern
• Number and size of pharmacies
• Cross boundary flows

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Winners/losers

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Losses trimmed

• Non-recurrent (05/06 only) adjustment to limit
  potential impact.
• For 05/06 maximum loss represents 0.15 of PCT
  total allocations.
• AWP(05-06)PCT22 sets out detail

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Financial impact
NB These are untrimmed gains/losses
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Enhanced Services

• Funded from PCT resources
• Crossover from nGMS
• Services provided by pharmacists can count
  towards the nGMS enhanced services floor
  (provided services are deliverable and
  contestable by G/PMS contractors)

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Payment process

• Prescriptions dispensed declaration of
  additional activity and staffing levels submitted
  to PPA monthly
• PPA calculate payment, notify and recharge PCT
  where pharmacy located
• PCT monitor using MI provided by PPA

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Timing of payments
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Further information

• Primary Care Contracting
• www.primarycarecontracting.nhs.uk
• Department of Health
• www.dh.gov.uk/mpi
• Pharmaceutical Services Negotiating Committee
• www.psnc.org/contract
• NHS Employers
• www.nhsemployers.org/PayAndConditions/pcc_communit
  y_pharmacy