INCENTIVE SCHEMES & SERVICE LEVEL AGREEMENTS

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1 MAY 2007 INCENTIVE SCHEMES & SERVICE LEVEL AGREEMENTS Practice Based Commissioning North and South Essex Local Medical Committees CLARIFYING THE RELATIONSHIP BETWEEN PBC GROUPS AND PCTS

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3 AIMS The aim of this document, produced by Essex LMCs, is to clarify some of the more confusing elements of Practice Based Commissioning (PBC) and to provide sample templates of the basic agreements necessary for the initiation of PBC. PBC is at various developmental stages across our Primary Care Trusts and this document is intended to be a guide and a contributor to the developmental process. It is not an attempt to tell anyone how best to achieve success in their area nor can its contents be imposed, but then PBC is in any case voluntary for practices. Providing services is not specifically covered as one aim is to clearly separate this role from commissioning.

4 Introduction Practice Based Commissioning (PBC) is a major component of the government s NHS strategy for health reform and as such must be developed by all Primary Care Trusts...PCTs.are charged with ensuring that PBC continues to flourish. Department of Health November 2006 (Ref 1) All the new PCTs have expressed a strong desire to develop PBC, and most have taken practical steps to strengthen their commissioning. Enthusiasm among general practitioners has been variable, but there are now well-organised commissioning groups or clusters across Essex, and each is trying to make progress. Why then do most of those involved express frustration at the apparent lack of progress? One answer could be the continuing uncertainty over roles and accountability, and therefore the allocation of management resources. There is a great deal of discussion over partnership and clinical engagement, but little on the specific structures and processes required to operate any significant management process. The introductory Directed Enhanced Service (DES) was intended to overcome the initial reticence of practices but it was applied in under strict financial constraints. The result was a dilution of PBC to a series of demand management schemes. Some PCTs such as Uttlesford did manage to develop more sophisticated schemes, but these were still largely demand management rather than PBC. Lessons have been learned from such schemes but there is no sense that this has moved away from an exploration of the possibilities. This paper tries to identify the blocks to progress, and suggest possible solutions that will appeal to both PCTs and PBC groups. Expectations placed on PCTs by the Department of Health Locally agreed practice incentive scheme Timely and appropriate information to practices Provide practices with tools and support A DH reporting system incorporating new indicators will be introduced for PCTs in THERE WILL ALSO BE A PCT SUB-COMMITTEE TO OVERSEE CLINICAL AND CORPORATE GOVERNANCE. The composition of this subcommittee has already been broadly stated by the DH, and the new role and composition of the Professional Executive Committee (PEC) has been the subject of national consultation. This paper will therefore not cover these essentially internal PCT structures, although both will have a significant impact on the development of practice based commissioning. Page 4

5 PROPOSAL 1 Use the above national expectations to construct a Service Level Agreement to cover PCT accountability to PBC groups. This should avoid any difficulties over local support within the blocking back of management resources to PCTs. PROPOSAL 2 Produce a menu format PBC Local Incentive Scheme which could be adapted to local circumstances. Expectations placed on PBC groups Clearly separate the commissioning and provider role within the group Agree a PBC Plan with the PCT Establish links with other relevant professionals Involve patients Involve secondary care clinicians PROPOSAL 3 A standard PBC plan format, based on work already available, be agree across Essex. The plan to be agreed in conjunction with the SLA outlined above. Appendices Bullet points taken from DoH PBC document November 2006 PBC Practical Implementation 2. Draft PBC Management Support Arrangements SLA. Draft Local Incentive 4. Scheme. Draft PBC Plan References 1. PBC Practical Implmentation DoH November 2006 The three proposals could be linked in one partnership agreement, but that is not essential. What matters is that both sides understand their interdependence and accept a two-way accountability system. Business cases should be restricted to the provider role of practices or PBC groups. This should be clearly seen as separate to the commissioning function of practices and clusters. Page 5

6 Appendix 1 Action points taken from Practice Based Commissioning: Practical Implementation (Department of Health November 2006) Page 6 PCT INTERNAL ARRANGEMENTS: Establish a PBC subcommittee, which will have delegated powers to approve business cases. PBC plans and business cases will be considered on their own merits and the PCT will make a decision within 4 weeks and no later than 8 weeks. If PBC plans or business cases are not supported the PCT will clearly identify its reasons and any actions that need to be taken to resolve this. SERVICE REDESIGN: The PCT will ensure that PBC representatives are routinely included in partnership meetings between trusts, the local authority and contract meetings with providers. The PCT will support the PBC group in a nonbureaucratic way that is sensitive to the needs and working practices of primary care health teams. The PCT will advise, co-ordinate and inform PB Commissioners of the wider implications of their proposed services redesign while respecting clinical and management decisions taken by practice teams on behalf of their patients. During the early stages of PBC the PCT will avoid agreeing new long-term contracts with service providers that would further cement monopoly provision arrangements and exclude practices from being able to propose service and care pathway redesigns. PBC BUDGETS: Practices will receive an indicative budget that reflects the needs of their population as accurately as possible, using the methodology and timetable set out in Practice Based Commissioning: Practical Implementation. All aspects of the PCT budget will be devolved indicatively to practices. Practices can block back elements of the budget to PCTs, for example, funding for central management team. PCT and PBC group will work together to agree a fair and reasonable

7 timeframe for the transition to fair share practice budgets. The PCT will not allocate indicative budgets with elements top-sliced to resolve PCT deficits. Practices will be entitled to use 70% FUR released for investment in patient care; where the PCT is subject to special circumstances, practices must address specific national or local priorities, determined through mutual agreement between the practice and PCT. MANAGEMENT OF RISK Practices and the PCT will have a shared responsibility to achieve financial balance, focussing on identifying causes of the financial difficulty and agreeing a joint strategy for resolution. PBC plans will reflect the contribution from practice-based commissioners to the PCT recovery plan. The PCT will have robust arrangements in place to manage unplanned inyear variations in activity and cost. The PCT will hold a risk pool to which practices will contribute?% (between 3 & 5%) of their indicative budget. Practice Based Commissioners and the PCT will agree special rules on operating the risk pool and procedures for accessing funds will be transparent and fair. MANAGEMENT ARRANGEMENTS The PCT will set out what services and support practices can expect to receive to support PBC. If the PCT is unable to provide the correct level of management support practices will negotiate a budget to procure these services directly. The budget will be proportionate to the scope of the PBC plan and the size of the consortium. The PCT will hold the budget and practices will submit invoices to support agreed management costs. INFORMATION The PCT will provide practices within the cluster with the minimum data on financial and clinical activity as required in PBC: practical information. The PCT will continue to develop the data needed to support PBC or will contract with others to achieve this objective. PBC INCENTIVE SCHEME To be agreed. Page 7

8 Appendix 2 Practice Based Commissioning Management Support Arrangements 2007/8 Memorandum of Agreement / Service Level Agreement (SLA) between Commissioning Group and Essex PCT PURPOSE This SLA details the arrangements that the PCT will put in place to provide management support to Commissioning Group. The SLA also identifies the costs to the PCT of providing each element of the support arrangements. Page 8 MEETING AND GENERAL SUPPORT ARRANGEMENTS The PCT will provide the following:- Convene regular meetings of the Commissioning Group at a time and frequency agreed with the Chairman of the group. If necessary, to arrange and pay for a suitable venue. Provide administrative support, produce minutes and undertake agreed actions following each meeting. Identify a lead officer who will act as a point of contact with the PCT. Meet on a regular basis with the Chairman of the Commissioning Group THE COST OF PROVIDING THIS SERVICE IN 2007/08 ACTIVITY INFORMATION The PCT will provide the following activity information to practices on a monthly basis:- Elective activity Inpatient and day cases Non-elective admissions, including length of stay First outpatient appointments and follow up appointments Consultant to consultant referrals A&E attendances Use of diagnostic tests and procedures Prescribing Community and mental health services and Enhanced PMS and GMS services THE FOLLOWING BENCHMARKING DATA WILL BE PROVIDED TO PRACTICES/ GROUP NO LESS FREQUENTLY THAN QUARTERLY:- Referral rates Admission rates First out-patient attendances Follow up rates The PCT will assign an information officer/data analyst who will provide support to the Commissioning Group for eight sessions per month. The utilisation of sessional time will be agreed with the Chairman of the Commissioning Group. FINANCIAL INFORMATION (B) 0.00 THE COST OF PROVIDING THIS SERVICE IN 2007/08 BUDGET SETTING In 2007/8 the Budget will be set on the basis of : Actual activity for the last six months of 2005/6 and the first six months of 2006/7, converted into 2007/8 prices. Current formulae for prescribing including the appropriate inflationary uplift; and Weighted capitation for any services within the agreed scope for which no historic activity data are available. Resources released through PBC activity in the previous year will not be deducted from the 2007/8 budget. Budgets will be set for,

9 and agreed with, individual practices. All aspects of the PCT budget will be indicatively devolved to practices. Practices/ Commissioning Group will agree the amount to be handed back to the PCT which will include the cost of the management support arrangements agreed as part of this SLA. Budgets, including money to be handed back, will be agreed and formally signed off with practices by 31ST MAY 2007 (B) FINANCIAL MONITORING The PCT will provide financial information on a monthly basis to enable practices/ Commissioning Group to monitor expenditure and activity. The PCT will assign a finance officer who will provide support to the Commissioning Group for eight sessions per month. The utilisation of sessional time will be agreed with the Chairman of the Commissioning Group THE COST OF PROVIDING THIS SERVICE IN 2007/08 PUBLIC HEALTH SUPPORT The PCT will ensure that practices/commissioning Group receive regular information on the needs, demands and demographics of the local population to help inform their commissioning decisions. The PCT will ensure that practices/commissioning Group have access to the services of a public health specialist for 4 sessions per month. The utilisation of sessional time will be agreed with the Chairman of the Commissioning Group THE COST OF PROVIDING THIS SERVICE IN 2007/08 BUSINESS CASES The PCT will ensure that decisions on all PBC plans, business cases and requests for use of freed up resources are made within four weeks. In exceptional circumstances, and following discussion with the Commissioning Group, decisions might take up to eight weeks. MONITORING OF THE SERVICE LEVEL AGREEMENT (SLA) The terms of the SLA will be monitored on a quarterly basis by the Commissioning Group and the PCT. Where terms of the Agreement are not being met the problem will be rectified by the PCT within one month. In cases where problems are not rectified to the satisfaction of the Commissioning Group within the agreed timescale then the money relating to that support activity as identified in the SLA, will be returned to the ARBITRATION Commissioning Group. The money will be returned within Fourteen days and the Commissioning Group will make alternative arrangements for the provision of the service. If local arbitration involving the Commissioning Group, PCT and LMC is unable to resolve any dispute arising out of the SLA then the matter will be referred to the SHA. PCTs and the Commissioning Group will be expected to follow the decision of the SHA s Arbitration Group. N.B. It is important to note that the staff referred to in this agreement will be: Employed by PCT Accountable to PBC Leads Page 9

10 Key Elements Appendix 3 Practice Based Commissioning A Local Incentive Scheme Introduction The current one year Directed Enhanced Service (DES) for Practice Based Commissioning (PBC) ends on 31st March The latest guidance produced by the DoH, PBC Practice Implementation (November 2006) states that PCTs should put in place a local incentive scheme to replace the outgoing DES. The scheme strikes a balance between EFFORT i.e. the work and time spent by practices on PBC activities and ACHIEVEMENT which represents an additional payment to practices for meeting an agreed reduction in secondary care activity. In 2007/8 the scheme concentrates on three service areas that form part of the Ten High Impact Changes identified by the NHS Modernisation Agency First outpatient Appointment Emergency Admissions Outpatient Follow ups Payments under the scheme will be classed as income for practices. Achievement payments will be dependent on practices meeting the Activity Targets detailed in the scheme and not overspending on their indicative budgets. Details of the Scheme The Incentive Scheme is divided into three components as follows:- COMPONENT 1 Practice Participation PBC remains voluntary for practices. This component recognises the importance of engaging with practices and of the need for practices to offer a certain level of commitment to the PBC process. Actions Required Production of a practice plan or formal sign up to the Plan produced by the Commissioning Group/Cluster Identification of a Practice Lead who will also be the nominated point of contact for PBC issues. Attendance of Practice Lead at meetings of the PBC Group/ Cluster and with the PCT where necessary. (Payment 75p per patient) Page 10

11 COMPONENT 2 - Data Validation The validation of data by practices is a crucial element of any commissioning process. Errors in coding, which are estimated as being high as 30%, have the potential to make a significant impact on the funds available to commissioners. An important first step of the new arrangements is to ensure that commissioners pay no more than the appropriate tariff price for the service provided to patients. Actions Required The practice will undertake the following:- Verify that each Invoice does relate to a patient registered with the practice. Check that the date of the discharge as per the Hospital letter tallies with the length of stay being charged for by the provider. Confirmation, using clinical discharge summaries, that the service provided to the patient is the one being charged for as per the Invoice. (Payment 75p per Patient) COMPONENT 3 High Impact Changes The NHS Modernisation Agency has highlighted Ten High Impact changes that can be adopted by healthcare organisations in order to make significant, measurable improvement in the way care is delivered. In 2007/8 the Scheme concentrates on three service areas all of which, if addressed in a concerted manner, have the ability to reduce the amount of patient activity in secondary care and free up resources for the provision of local accessible services in primary care....any scheme should have at its key aim to encourage practices to involve themselves in PBC, particularly service redesign. This proposed local incentive scheme is considered to be clinically appropriate, affordable and cash releasing, whilst at the same time recognising that the provisions of the previous DES are considered to be the minimum requirements of any future scheme. Page 11

12 First Outpatient Appointment Actions/Effort Establish a referral review process within the practice, monthly peer review meetings to be held by the practice/cluster. Explorations of possible alternative care pathways, utilising skills/experience within clusters (PAYMENT PER PATIENT) Achievement Up to 10% reduction in first outpatient activity from the baseline budget. (PAYMENT PER PATIENT) Over a 10% reduction in first outpatient activity from baseline budget. (PAYMENT ADDITIONAL PER PATIENT) Cont d... Appendix 3 Practice Based Commissioning A Local Incentive Scheme (a) Emergency Admissions Actions Analyse emergency admission data to identify high cost patient/frequent users Regular review (possibly quarterly) of patients having more than one emergency admission in the last six months. (PAYMENT PER PATIENT) Achievement Reduction in number of emergency admissions for these patients (PAYMENT PER PATIENT) and/or Reduction in number of emergency admissions by 5% or more from baseline budget (PAYMENT PER PATIENT) (b) Outpatient follow up Attendances Actions Evidence of review of Out Patient follow ups Identify Post Operative Checks/Follow up work that could be undertaken in primary care. (PAYMENT PER PATIENT) Achievement Reduction in the number of Out Patient follow up appointments of up to 10% (PAYMENT PER PATIENT) Reduction in the number of Out Patient Follow Up appointments of over 10% (PAYMENT ADDITIONAL PER PATIENT) Page 12

13 Conclusion The scheme aims to encourage the increased involvement of practices in PBC, which remains voluntary. The basis on which payments are made reflects both the effort and commitment required by practices at the same time as recognising that given the financial position of the NHS locally, achievement payments will only be made where agreed reductions in activity take place. The Scheme is entirely separate from the use of Freed up Resources which needs to be the subject of further discussions between practices/pcts. It is accepted that the percentage levels referred to as part of the Achievement Payments may need to be amended following discussions with practices/pcts/lmcs to reflect the different historical positions that exist within practices and PCTs. Page 13

14 14 Appendix 4 Practice Based Commissioning Plan Essex Format The Practice Based Commissioning (PBC) Plan should be simple and helpful to both practices and the PCT. This guide gives a list of basic headings and suggestions that should allow practices to tailor their own plans. p g Clinical Area Indicative Budget Activity Proposed Change Reduction/Redesign (care pathways) Reason for Change Intended Efficiency/Freed Up Resources Quality Assurance Milestones & Targets Information Requirements Calculation and Intended Use of Freed Up Resources Monitoring Arrangements: Within Consortium Via PCT Page 14 Patient Involvement & Communication Plan. Possible annex for commissioning group activity

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16 North & South Essex Local Medical Committees 5 Whitelands, Terling Road, Hatfield Peverel, CM3 2AG Tel: : Fax info@essexlmc.org.uk Web:

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