The Medical Assessment of Incapacity and Disability Benefits. REPORT BY THE COMPTROLLER AND AUDITOR GENERAL HC 280 Session : 9 March 2001

Transcription

1 The Medical Assessmet of Icapacity ad Disability Beefits REPORT BY THE COMPTROLLER AND AUDITOR GENERAL HC 280 Sessio : 9 March 2001

2 The Medical Assessmet of Icapacity ad Disability Beefits REPORT BY THE COMPTROLLER AND AUDITOR GENERAL HC 280 Sessio : 9 March 2001 LONDON: The Statioery Office 0.00 Ordered by the House of Commos to be prited o 1 March 2001

3 The Natioal Audit Office scrutiises public spedig o behalf of Parliamet. The Comptroller ad Auditor Geeral, Sir Joh Bour, is a Officer of the House of Commos. He is the head of the Natioal Audit Office, which employs some 750 staff. He, ad the Natioal Audit Office, are totally idepedet of Govermet. He certifies the accouts of all Govermet departmets ad a wide rage of other public sector bodies; ad he has statutory authority to report to Parliamet o the ecoomy, efficiecy ad effectiveess with which departmets ad other bodies have used their resources. Our work saves the taxpayer millios of pouds every year. At least 8 for every 1 spet ruig the Office.

4 Cotets Executive Summary 1 Part 1 9 The Departmet outsourced the medical assessmet of beefits to improve the performace ad value for moey of this vital service Medical assessmet is cetral to the Departmet's 9 decisio-makig o customers' eligibility for disability ad icapacity beefits The Departmet were ot satisfied with the existig 12 i-house service The Departmet pursued outsourcig as the best 12 way to improve the service ad reduce costs This report has bee prepared uder Sectio 6 of the Natioal Audit Act 1983 for presetatio to the House of Commos i accordace with Sectio 9 of the Act. Joh Bour Natioal Audit Office Comptroller ad Auditor Geeral 28 February 2001 The Comptroller ad Auditor Geeral is the head of the Natioal Audit Office employig some 750 staff. He, ad the Natioal Audit Office, are totally idepedet of Govermet. He certifies the accouts of all Govermet departmets ad a wide rage of other public sector bodies; ad he has statutory authority to report to Parliamet o the ecoomy, efficiecy ad effectiveess with which departmets ad other bodies have used their resources. There was sufficiet, though limited competitio 13 SEMA Group offered the lowest prices from the start 15 ad the Departmet obtaied further reductios durig rebiddig SEMA Group also offered the highest quality bid 16 ad the most iovatio To secure improvemets i quality the Departmet 16 egotiated a service improvemet pla with SEMA Group, but this has chaged i scope ad has ot yet bee completed The cotract has so far coped satisfactorily with a 17 major chage i the Departmet's eeds For further iformatio about the Natioal Audit Office please cotact: Natioal Audit Office Press Office Buckigham Palace Road Victoria Lodo SW1W 9SP Tel: equiries@ao.gsi.gov.uk Website address:

5 Part 2 19 Sice outsourcig, the efficiecy ad speed of medical assessmet have improved but savigs could be made by reducig delays i Beefits Agecy processes Before outsourcig performace was highly variable, 19 ad backlogs of work had built up Most of the Departmet's paymets to SEMA Group 19 are for deliverig, withi specified timescales, reports that decisio-makers fid usable There was a dip i performace for several moths 19 after SEMA Group took over The time take by SEMA Group to provide reports 22 ad advice has reduced, agaist a backgroud of reducig workloads, but there is still room for improvemet Improvig speed ad cosistecy i the Departmet's 23 overall medical assessmet processes could brig fiacial beefits to both the customer ad the public purse Better matchig of Icapacity Beefit fudig to 26 workloads i the Beefits Agecy could help reduce icosistecy Part 3 27 Improvemets i the quality of assessmets have yet to be fully delivered Achievig cosistetly good quality medical assessmets 27 has cotiued to prove difficult sice outsourcig, but the Departmet are ow focusig o this The Departmet's ability to eforce chage is limited 29 by the lack of effective cotractual remedies but they are ow focusig o moitorig quality more effectively SEMA Group are ow makig efforts to improve 29 professioal stadards The Departmet ad SEMA Group eed to address 30 urgetly the shortages of suitably qualified doctors doig this work The Departmet ca do more to esure that the right 32 kid of evidece is used to make accurate decisios Part 4 35 The Departmet, workig through SEMA Group, eed to improve service to customers There are cocers that service to customers is 35 ot yet adequate The way examiatios are coducted ad the 37 explaatios give to customers ca affect both customer care ad the quality of the medical report The schedulig of examiatios of customers at 38 SEMA Group premises remais a area of particular difficulty There is so far oly limited evidece o how well 41 the service hadles the differet eeds of wome ad ethic miorities I respose to the Social Security Select Committee 42 report, the Departmet ad SEMA Group are takig steps to improve customer satisfactio Appedices 1. Chroology of evets The Natioal Audit Office's methodology Detailed recommedatios Alteratives to outsourcig cosidered by the 52 Departmet 5. Service levels for medical reports The service improvemet pla put i place at 54 the start of the cotract 7. Sources of medical evidece Improvemets to attedace schedulig The Social Security Select Committee's report 59 o Medical Services Glossary of terms 63

6 executive summary The Departmet outsourced the medical assessmet of beefits to improve the performace ad value for moey of this vital service 1 Disability ad icapacity beefits costig over 19 billio are paid each year to some of the most vulerable members of society. It is importat that their eligibility is assessed fairly ad efficietly, ad i a way that causes them miimum axiety ad icoveiece. It is also essetial to protectig the public purse that such expediture is icurred oly i paymets to those who are geuiely etitled to them. Medical assessmet is cetral to the Departmet of Social Security's (the Departmet's) decisio-makig o customers' eligibility for these beefits. I 1999/2000 early 3,000 doctors workig o behalf of the Departmet provided advice or reports for the use of lay decisiomakers o some 1.3 millio cases, early half icludig physical assessmets. 2 The Departmet have bee resposible for medical assessmet of all icapacity ad disability beefit claims sice 1993, before which the Departmet of Health had bee resposible for some of the work. The itroductio of Icapacity Beefit i 1995 highlighted iadequacies i the maagemet, flexibility ad performace of the service. Busiess targets for costs ad turaroud times, ad quality stadards, were ot beig achieved. After assessig several optios the Departmet pursued outsourcig as the best way to achieve a rage of objectives: to improve the quality of reports, speed their throughput, maitai service to customers, lever i ivestmet, ad reduce costs. The lauch i February 1996 of the Departmet's wider Chage Programme made it imperative that the outsourcig should cotribute to deliverig improved services at 25 per cet lower cost over three years. 3 Followig competitio the Departmet awarded SEMA Group cotracts totallig 305 millio to deliver the service for at least five years. Though two of the five bidders withdrew there was still competitio for two of the three regioal cotracts, ad for the third the lack of competitio did ot result i higher prices. SEMA Group offered the cheapest bid, below the cost of the existig i-house service, ad the Departmet assessed this bid as the highest quality ad the most iovative. They obtaied further reductios ad cocessios through additioal biddig rouds ad estimate that outsourcig will save betwee 10 ad 14 per cet compared to the i-house operatio (the public sector comparator). 1executive summary

7 4 The cotract has prove a demadig oe for the Departmet to maage. They prudetly allowed six moths to prepare for trasfer to SEMA Group, but there were still problems i schedulig appoitmets, where the compay's solutio proved to be impracticable ad had to be abadoed. The cotract provides strog icetives to deliver medical assessmets to time, but the Departmet's powers to obtai improvemets i the quality of the service are ot as robust, despite their achievemets i stregtheig quality measures. The Departmet also egotiated a service improvemet pla to help esure that SEMA Group's iovative proposals for developig the service were implemeted. But progress i implemetig it is ot liked to paymets ad has bee patchy ad slower tha expected. A key aspect of SEMA Group's proposals, the comprehesive reorgaisatio of all medical cetres to work more closely with beefit offices, proved uecoomic ad has occurred oly at isolated locatios. Appedix 1 provides a detailed chroology of evets. 5 We examied the medical assessmet service to assess: whether the speed, efficiecy ad quality of medical assessmet have improved, eablig the Departmet to pay "the right beefits to the right people at the right time"; whether the quality of service to beefit customers is adequate; ad the useful lessos that should be leared for other outsourcig iitiatives. I desigig our study we had regard to the work of the Social Security Select Committee, who reported o Medical Services i April Where possible, we have followed up actio take as a result of their recommedatios but, i additio, we looked at the maagemet of medically assessed beefits more widely ad the likage betwee providig a quality service to customers ad effectively protectig beefit expediture. The approach we used i our examiatio is described i Appedix 2. Sice outsourcig the speed ad efficiecy of medical assessmet have improved but savigs could be made by reducig delays i Beefits Agecy processes 6 Icapacity Beefit ad Disability Livig Allowace with its sister beefit, Attedace Allowace, represet over 90 per cet by value of medically assessed beefits. Disability Livig ad Attedace Allowaces are ot paid util evidece (which may take the form of a medical assessmet) has bee provided to demostrate that the customer meets the criteria, so timely assessmet is especially importat to avoid udue delays i customers receivig their beefits. Coversely, Icapacity Beefit customers who meet basic eligibility criteria are paid beefit immediately, ad those subsequetly foud to be capable of work do ot have their beefit paymets recovered. So for this beefit a timely medical assessmet is essetial to protect the public purse. 2executive summary 7 SEMA Group's efficiecy improvemets have cotributed to speedier medical assessmets. Sice outsourcig, the average time take to provide medical reports ad advice has reduced. But workloads i Icapacity Beefit have actually bee reducig, albeit offset by some icreases i disability beefits. There is also still room for improvemet. 8 Medical assessmet forms oly part of the ed-to-ed processig of beefit claims. For Icapacity Beefit, the total time take to process cases due for review rages from 90 to 170 days across differet parts of the coutry. Most of this variatio is due to the variable speed of processig i the Beefits Agecy rather tha medical assessmet. This is partly due to other beefits takig higher priority i local beefit offices, ad also because resources allocated are ot closely matched to caseloads. Delays also arise because evidece provided by

8 customers ad their geeral practitioers is ofte iaccurate or icomplete. Disability Livig Allowace/Attedace Allowace cases, the admiistratio of which is more cetralised i oly 12 locatios, are hadled more promptly, despite some delays i obtaiig evidece. 9 If the Agecy could reduce the processig time i Icapacity Beefit to the levels achieved by the three top-performig Area Directorates they could achieve savigs by reducig paymets to customers who are o loger eligible for beefit. We estimate these savigs to be aroud 60 millio a year i paymets of Icapacity Beefit, which could be reduced to the order of 30 millio to 40 millio through customers goig o to claim other beefits istead. Brigig performace up to the level of the middle performer, which the Departmet cosider more achievable i the medium-term, could brig et beefit savigs of aroud 20 millio. Elimiatig backlogs i cases awaitig review could achieve et oe-off savigs of 20 millio to 30 millio, with further savigs if the ogoig level of backlogs could be reduced. 10 The Departmet have begu to focus o improvig performace ad reducig variatios i the time it takes to process claims ad make decisios through the Performace Improvemet Programme, which was lauched i February The Programme has so far focused o Icome Support ad Jobseeker's Allowace, two large ad complex beefits, but the Departmet ow ited to apply a similar approach to Icapacity Beefit. This will ivolve: idetifyig, sharig ad implemetig good practices from the best performig Areas; Improvig maagemet iformatio to track performace; traiig ad chages i procedure to improve workflow maagemet; ad support from Performace Improvemet Actio Teams for those offices with particular difficulties. Improvemets i the targetig ad quality of assessmets have yet to be fully delivered 11 The Departmet ad SEMA Group have recogised that they eed to focus more o improvig the quality of medical reports, which has bee a cause for cocer sice before outsourcig. Durig procuremet the Departmet decided that it would be too difficult to eforce cotractual clauses relatig to quality. This was because of the iadequate quality moitorig systems the i place ad the difficulty of defiig what actually costituted adequate medical quality - a problem experieced more widely i the medical professio as a whole. Istead, they put i place other remedies, such as the right of decisiomakers to retur reports that were ot usable for rework, at o extra cost. 12 SEMA Group's ow quality assurace systems suggest that the quality of reports has improved sice outsourcig. Ad, prima facie, this is bore out by the Beefits Agecy returig less tha oe per cet of reports as ufit for purpose. Yet our iterviews suggested that staff ofte fail to sed back reports that are techically below stadard because of the delays it causes, ad because they believe the revised report would probably be o better tha the first oe. The Departmet's ow moitorig gives o idicatio that the quality of medical assessmets is ay better tha before outsourcig. 13 Whe outsourcig, the Departmet aimed to make medical assessmet more efficiet ad to avoid the risk of over or uder examiatio by better targetig of physical examiatios ad paper scrutiies of cases. They itroduced ew guidelies for doctors to reduce uecessary examiatios by more clearly 3executive summary

9 defiig the circumstaces whe a scrutiy of papers would suffice. They also deliberately agreed a sigle price for all Icapacity Beefit reports, whether or ot a examiatio had take place, to provide a better icetive to SEMA Group to reduce uecessary examiatios. 14 Too low a level of examiatios may lead to customers beig passed as ufit for work ad eligible for beefit whe they are ot. Because SEMA Group are paid the same price whether assessmets are based o paper scrutiy or examiatio, they make a sigificatly greater retur o the former, a fact of which the Departmet were aware whe they siged the cotract. We foud o evidece that the compay had sought to maximise their profits through a systematic policy of uderexamiatio, but oetheless there is a geeral icetive o medical services cetres ad doctors to opt for the simpler ad quicker method. A Departmetal review has idicated that betwee 20 ad 30 per cet of scrutiy cases did ot meet the agreed guidelies. As a result, SEMA Group are retraiig all doctors doig this work ad the Departmet have redrafted the guidace issued to doctors to clarify the policy o whe to examie customers. This has already resulted i a icreased rate of examiatio. The Departmet are reegotiatig the cotract so that the compay will make a broadly similar rate of retur from examiatios as from scrutiies. 15 Eve the best medical evidece may result i a poor decisio if ot iterpreted correctly by the decisio-maker. The major medically assessed beefits have a high rate of successful appeals agaist decisio to withdraw or reduce beefit. Aalysis by the Appeals Service idicated that i some 25 per cet of those decisios they chaged, the iterpretatio of the medical evidece, whether from SEMA or the customer's doctor, was a importat factor. The Departmet are ow begiig to look at ways of learig from the results of appeals, but they also eed to esure that decisio-makers have access to good quality advice from SEMA Group doctors o medical issues. 16 Improvig the quality of assessmet depeds crucially o SEMA Group attractig sufficiet umbers of suitably traied doctors. SEMA Group have cotiued to suffer shortages of doctors. This stems partly from a geeral UKwide shortage of doctors, which is expected to worse before it improves, ad also from the fees paid for this work. SEMA Group have itroduced higher pay i remote areas where there are particular shortages ad have recetly give a 3 per cet pay icrease to all fee-paid doctors, but rates are still substatially below those paid by other govermet departmets. SEMA Group have itroduced various measures to improve professioal stadards ad have recetly aouced that i future they will pay doctors to atted traiig. 17 The mai threat to maitaiig a viable workforce is i the loger term. Almost half of the fee-paid doctors are aged 55 or over ad could therefore begi to retire i the ext five years. Although doctors retirig from geeral practice could add to the pool from which SEMA ca draw, there are risks attached to such reliace o a ageig workforce. Proposals i SEMA Group's bid to make greater use of urses ad other health professioals have made little progress i the face of legislative ad other obstacles. 4executive summary The Departmet, workig through SEMA Group, eed to improve service to customers 18 While the Departmet require SEMA Group to meet certai stadards of customer service, they have limited leverage through the cotract to oblige SEMA Group to raise stadards, as paymets are ot liked with achievemet of these stadards. 19 There is ot yet sufficiet iformatio available to give a adequate picture of the stadard of customer care. SEMA Group's surveys of customers idicate that most are cotet with the coduct of examiatios, but the umber of

10 recorded complaits is icreasig. Most are about doctors' attitudes ad how they coduct examiatios, particularly where customers are examied at home, which raises cocers about the quality of the resultig reports. There is ot yet eough evidece o how well the service treats customers from ethic miorities ad those who request a female doctor or a iterpreter. 20 The schedulig of appoitmets remais a area of particular difficulty. The cotract icetivises SEMA Group to maximise attedace at examiatios. Despite this the average proportio of customers failig to atted appoitmets has rise slightly to 23 per cet i To compesate for "o-shows" SEMA Group has cotiued to overbook appoitmets as practised by the i-house service. This results i over 1,000 customers (aroud three per cet) beig tured away from examiatios every moth, which ca cause icoveiece ad distress. 21 I respose to the Social Security Select Committee's report of April 2000 the Govermet made a strog commitmet to improvig the stadards of service to customers. The Departmet ad SEMA Group have itroduced improved customer survey methods ad ehaced moitorig of doctors' performace. They are improvig customer iformatio o examiatios, have revised guidace for doctors who carry out home visits, ad begu recordig separately complaits about cultural isesitivity. But these iitiatives are at a early stage ad there is as yet o evidece as to the effect o the service provided to customers. Overall coclusios 22 Before outsourcig, the Beefits Agecy medical service was a uderachievig orgaisatio operatig withi tight resource costraits. Outsourcig has reduced the cost of the operatio to the Departmet ad has see valuable improvemets i the speed with which work is processed. 23 However, the viability of the busiess remais uder acute cost pressure ad this has affected the efforts of the Departmet ad the compay to improve the quality of medical assessmets ad customer service. SEMA Group's prices bega lower tha their competitors' ad were drive lower i rebiddig. Moreover, key elemets of their strategy to improve efficiecy ad reduce the cost base, through automated schedulig of examiatios ad use of urses, have ot yet bee implemeted. Ad chages i the balace of work from more profitable Icapacity Beefit towards less profitable Disability Livig Allowace/ Attedace Allowace have created aother fiacial pressure. 24 The icetives i the cotract that require SEMA Group to make qualitative improvemets are ot as robust as those requirig the fast turaroud of work, despite the Departmet's achievemets i stregtheig quality measures. The busiess is cofroted by a major strategic threat i terms of shortages of doctors, which is forecast to get worse over the ext five years ad requires rapid remedial ad prevetative measures. 25 O a broader frot, the system of assessig ad payig claims for beefit depeds o the effective ad timely cotributio of differet players: Beefits Agecy offices; claimats' geeral practitioers ad cosultats; ad SEMA Group examiatio cetres. Bottleecks curretly exist throughout the system which result i delays i payig some disability beefits to those etitled to them, as well as cotiued paymet to those who are o loger eligible, ad a highly variable quality of service to claimats aroud the coutry. 26 This has bee a iovative project for the Departmet, ivolvig the outsourcig of a service closer to their core busiess tha their earlier procuremets. There are lessos to be leared by all Departmets. The key recommedatios which follow are supplemeted i Appedix 3 by more detailed recommedatios o ways the Departmet could secure improvemets. 5executive summary

11 Recommedatios to the Departmet of Social Security O the quality of medical assessmet ad preservig their medical assessmet capability a) The Departmet should focus more of their maagemet effort o the quality of medical reports. Stroger oversight of SEMA Group's iteral quality assurace arragemets is required from the Departmet's Corporate Medical Group of specialists, ad this may require a review of resources. b) Uusable reports should always be set back to SEMA Group for rework to secure cotiuous improvemet i stadards. The defiitio of a usable report should iclude the requiremet that that it provides evidece to back up the opiios give. The Departmet also requires legible reports which do ot iclude iappropriate or offesive commets, especially sice customers or a tribual may eed to read them at a later date. c) The Departmet ad SEMA Group should cotiue to work closely with the ew Appeals Agecy to further develop the ew arragemets for feedback from idepedet tribuals o the stadards of medical evidece they expect to see. This should ivolve pilotig ways of esurig that: decisio-makers receive regular feedback o the fidigs of appeals tribuals ad the implicatios for their work; SEMA Group doctors also receive feedback o relevat fidigs; ad the Departmet's case is properly represeted at appeals tribuals where beefit decisios are beig examied. This may ivolve a review of the cost-effectiveess of sedig staff to atted tribuals. d) I view of the worseig shortages of doctors available to carry out medical assessmet work, the Departmet ad SEMA Group should look further at the proposals set out i the cotractor's origial bid, to make use of other healthcare practitioers such as urses to carry out appropriate parts of the work. e) The Departmet should obtai as soo as possible a projectio of the demographic ad skills mix ad locatio of the full-time ad fee-paid workforce at the ed of the cotract i 2003 to esure that a viable service ca be delivered beyod the ed of the existig cotract, ad to idetify ay eed for corrective actio. This may ivolve lookig agai at the mix of full-time ad part-time doctors doig the work. O the efficiet maagemet of medical assessmet 6executive summary f) The Departmet should, as part of their focus o reducig variatios i performace, look to speed up processig times i Icapacity Beefit ad reduce the size of backlogs of cases awaitig medical referral, across all regios. This will ivolve addressig the exact causes of backlogs ad processig delays, buildig o the aalysis i this report ad o the expertise from the Beefits Agecy's ow work o performace variatios i other beefits. g) The Departmet should seek to stadardise approaches i districts to reviewig log-term Icapacity Beefit claims. Their "Keepig i Touch" iitiative, curretly i pilot form, may provide valuable iformatio through cotact with these customers to iform the review process.

12 h) Workloads at local beefit offices are volatile ad difficult to predict. The Departmet should avoid situatios where high priority cases comig up for review i certai district offices are deferred through lack of fuds. Ways of achievig this might iclude keepig back a proportio of fudig for medical assessmet work cetrally. O customer care i) The Departmet should seek to build performace measures liked to fiacial icetives o customer care ito their cotract for medical services. This should be part of ay egotiatios to exted the cotract duratio to 7 years, ad might iclude measures to: reduce the icidece of customers beig tured away from examiatio appoitmets usee; esure the waitig time targets of 10 ad 30 miutes for customers attedig a appoitmet are met or improved o; provide a doctor of the same geder or a iterpreter for all customers who request it whe arragig the appoitmet, subject to the customer beig willig to travel to a alterative cetre. j) The Departmet should cosider, with SEMA Group, ways of elimiatig the problem of turig away customers who have bee asked to come for examiatio without seeig them by: implemetig atioally the successful pilots where schedulig of appoitmets is doe locally, ad local kowledge of customers ad geography ca help pla sessios more accurately; recosiderig the way fee-paid doctors are remuerated, the scope to let them examie at their ow practice premises, ad the icetives o them to complete all scheduled examiatios; ad better traiig ad retetio of SEMA Group staff doig schedulig so that they ca more effectively judge the legth of differet types of examiatios. k) The Departmet ad SEMA Group should cotiue to look at ways of further improvig the surveys of Beefits Agecy staff ad customers so that they meet geerally accepted market research idustry stadards. The Departmet should periodically exercise their right to validate these surveys ad esure they provide a represetative picture of the views of all customers. l) The Departmet should obtai robust iformatio, from either improved customer surveys, or more directly targeted research methods, to determie the effect of SEMA Group's activities o differet customer groups, by ethicity ad geder, i lie with the ew provisios of the Race Relatios (Amedmet) Act Where there are differet outcomes for differet groups, they should cosider settig targets for improvemet. m) The Departmet should work with the Commissio for Racial Equality to esure that SEMA Group, as well as their other cotractors, put i place raceequality programmes to esure compliace with the requiremets of the Race Relatios (Amedmet) Act 2000 which itroduces a ew positive duty o public bodies to promote race-equality. These programmes should be i lie with the codes of practice to be issued by the Commissio early i executive summary

13 ) The Departmet require better assurace that complaits received by SEMA Group have bee properly hadled. This might iclude: more detailed categorisatio, by type, of complaits about the coduct of doctors at examiatios; focusig their moitorig effort o serious complaits ad o multiple complaits agaist the same doctor, to esure that SEMA Group have take corrective actio; a firm defiitio of what costitutes a serious complait; (eg. a matter likely to have iflueced the beefit decisio, or which iflicts pai or hardship o the customer or relates to improper coduct by SEMA Group staff); egotiatig with SEMA Group or a subsequet supplier to build fiacial remedies ito the cotract for failures to act i respose to such complaits withi set timescales. Recommedatios to all Departmets o outsourcig o) Objectives should be explicitly prioritised ad miimum stadards set for each so that Miisters ad officials are aware of the likely outcomes. I this case the Departmet pursued several objectives that teded to coflict: to improve the quality of reports, quicke throughput, maitai service to customers, lever i ivestmet, ad reduce costs. Although qualitative criteria were weighted, overall the objectives were ot prioritised, ad the resultig cotract focused o reducig the cost of the service whilst speedig up throughput. p) Where Departmets ited outsourcig to brig sigificat capital ivestmet they should cosider whether the proposed legth of cotract gives the supplier a adequate period to recover worthwhile ivestmet. There is the risk that this cotract will suffer from partial "ivestmet blight" for much of its miimum five-year duratio. q) Where Departmets are uable to defie service quality to cotractually eforceable stadards they should cosider other approaches to icetivisig suppliers. I this case, optios iclude direct paymets for outputs coducive to quality, such as the achievemet of targets for umbers of medical staff attaiig additioal professioal qualificatios. r) Where Departmets embark o iovative outsourcig of specialist services they should cosider loger shortlists, to offset the icreased risk that compaies will withdraw without biddig. I this case the Departmet prudetly shortlisted five compaies, ad therefore maaged to maitai competitio for two of the three cotracts ad the illusio of competitio for the other. 8executive summary

14 Part 1 The Departmet outsourced the medical assessmet of beefits to improve the performace ad value for moey of this vital service 1.1 Medical assessmet is key to the award of disability ad icapacity beefits costig over 19 billio a year. Paragraphs 1.2 to 1.13 explai that the Departmet outsourced their medical service because they wated to improve performace ad reduce ruig costs ad saw a opportuity to achieve this through icreased private sector ivolvemet. Paragraphs 1.14 to 1.28 show that the procuremet yielded substatial price reductios ad proposals for improvig service quality. But service quality improvemets have ot bee implemeted to the extet ad timetable promised. Medical assessmet is cetral to the Departmet's decisio-makig o customers' eligibility for disability ad icapacity beefits 1.2 The Departmet's objective i supportig disabled people is to provide them with the support ad fiacial security they eed to lead a fulfillig life with digity. Disability ad icapacity beefits ad pesios are paid to some of the most vulerable members of society. It is importat that their eligibility is assessed fairly ad efficietly, ad i a way that causes them miimum axiety ad icoveiece. It is also essetial to protectig the public purse that such substatial expediture is icurred oly i paymets to those who are geuiely etitled to them. 1 The Departmet speds over 19 billio o disability ad icapacity beefits ad pesios each year Icapacity Beefit ad Disability Livig Allowace/Attedace Allowace accout for the majority of medical assessmets Beefit or pesio Expediture Estimated umber of Number of cases i 1999/2000 recipiets at mid subject to medical millio 1999/2000 assessmet i (thousads) 1999/2000 (thousads) Icapacity Beefit 7,075 (ote 1) 2, Disability Livig Allowace 5,746 2, Attedace Allowace 2,866 1,290 - (ote 2) Severe Disablemet Allowace 1, (ote 3) Idustrial Ijuries Pesios ad Scheme Beefits War pesios 1, Disabled Perso s Tax Credit (ote 4) TOTAL 18,818 (ote 5) 1,303 Notes: 1. Recipiets of Icapacity Beefit iclude those who have ot made sufficiet cotributios to receive the beefit directly, but who receive Icome Support istead o the grouds of their icapacity. 2. Medical assessmet of these beefits is icluded i Disability Livig Allowace above because these beefits are assessed together. 3. Medical assessmet of these beefits is icluded i Icapacity Beefit because the beefits are assessed together. 4. The umber of these cases requirig medical assessmet is less tha 1,000 a year. Source: 5. May of these customers are also eligible to receive other beefits, such as Icome Support, Housig Beefit ad Coucil Tax Beefit. The Departmet estimates total support for the log-term sick ad disabled to be 24.5 billio, or a quarter of total beefit expediture. Departmet of Social Security 9part oe

15 1.3 Decisios o whether to award disability ad icapacity beefits are made by admiistrative staff i the Beefits Agecy, but they are usually based o medical evidece. Some evidece is provided by claimats ad their geeral practitioers, but ofte a report is provided by a idepedet doctor actig o behalf of the Agecy. Some 1.3 millio idepedet medical reports are completed each year. How well this medical reportig is doe ca affect the speed of decisiomakig, the well-beig of claimats, ad the level of disability beefit expediture. The vast majority of medical reports are for Icapacity Beefit ad Disability Livig Allowace/Attedace Allowace. Figure 2 shows how medical assessmet fits ito the overall maagemet of claims for Icapacity Beefit ad Disability Livig Allowace/Attedace Allowace. 1.4 Icapacity Beefit is the mai cotributory beefit for those uable to work because of illess or disability. It was itroduced i April 1995 agaist a backgroud of rapidly growig spedig o its predecessors, Ivalidity Beefit ad Sickess Beefit. Figure 3 shows that spedig fell by a average of 5.9 per cet a year i real terms over the five-year period up to 1999/2000, owig to the removal of etitlemet for people over pesio 2 Medical assessmet of Icapacity ad Disability Beefit claims INCAPACITY BENEFIT DISABILITY LIVING ALLOWANCE/ATTENDANCE ALLOWANCE New claim or existig claim due for review New claim Cosider whether customer exempt from testig Customer completes self-assessmet form either or Customer completes questioaire Iitial assessmet by Beefits Agecy decisio maker Iitial assessmet ad scorig of claim by beefit office Further evidece from GP, cosultat, carer or other source either or or Examiatio by SEMA Group either or Referral to SEMA Group for Scrutiy or examiatio Decisio by Beefits Agecy decisio-maker o etitlemet to beefit Decisio by local beefit office decisio maker o etitlemet to beefit Beefit ot awarded Beefit awarded for idefiite period Beefit awarded for limited period either Beefit disallowed or Customer etitled to beefit ad give a date for ext referral Exempt from medical testig Before ed of period of award, customer is asked to complete aother self-assessmet part oe Beefit awarded Note: A more detailed process diagram of Icapacity Beefit is icluded at Appedix Source: Natioal Audit Office

16 age as well as the itroductio of a "All Work Test", later replaced by the Persoal Capability Assessmet. 1.5 Disability Livig Allowace is a tax-free, ocotributory beefit paid to customers uder age 65 who because of a illess or disability eed help with persoal care, gettig aroud, or both. The period of etitlemet ad the rate of beefit deped o the extet of the customer's care ad mobility requiremets. Spedig has grow o average by 9.3 per cet a year i real terms sice 1994/95, due mostly to icreasig take-up. Attedace Allowace is a similar beefit for people over the age of Disability Livig Allowace ad Attedace Allowace are ot paid util sufficiet evidece has bee provided to show that the customer meets the criteria. So a timely assessmet is ecessary to avoid udue delays i customers receivig their beefits. I cotrast, Icapacity Beefit customers who provide basic medical evidece are paid beefit before receivig a idepedet medical assessmet, ad those subsequetly foud to be capable of work do ot have their beefit paymets recovered. So for this beefit a timely medical assessmet is essetial to protect the public purse. 3 Treds i icapacity ad disability beefit expediture millios i real terms at 1999/2000 prices / / / / /00 Key Icapacity Beefit Attedace Allowace Severe Disablemet Allowace Idustrial Ijuries Disablemet beefits Note: Sice the itroductio of Icapacity Beefit ad the All Work Test (ow replaced by the Persoal Capability Assessmet) i 1995, expediture o this beefit has reduced i real terms. Expediture o Disability Livig Allowace/ Attedace Allowace has icreased over the same period, though the rate of growth has slowed. Source: Departmet of Social Security part oe Disability Livig Allowace 11

17 1.7 Some 40 per cet of medical reports for Icapacity Beefit, ad slightly fewer Disability Livig Allowace/ Attedace Allowace cases, are completed without the doctor seeig the customer, but by cosideratio of selfassessmet forms ad of supportig evidece usually from the customer's geeral practitioer. I other cases which require a medical examiatio, this is coducted by a doctor at oe of some 200 medical examiatio cetres aroud the coutry for Icapacity Beefit, or at the customer's home i the case of Disability Livig Allowace/ Attedace Allowace. The doctor ormally iterviews the customer, focusig o their disablemet ad how this affects them, records what the customer says, coducts a o-ivasive examiatio ad completes a report o the prescribed form for the decisio-maker i the Agecy. The Departmet were ot satisfied with the existig i-house service 1.8 The Departmet have bee resposible for medical assessmet of all icapacity ad disability beefit claims sice 1993, before which the Departmet of Health had bee resposible for some of the work. By 1995, some 250 full-time doctors ad up to 3,000 fee-paid doctors workig part time for the Agecy provided medical advice ad coducted examiatios. However, busiess targets for the cost, speed ad quality of casework were ot beig achieved. 1.9 I July 1992 the service was placed i the Beefits Agecy's market testig programme. I 1995 a collaborative study with three private sector compaies, Serco, Capita ad BMI Health Services, reported that: the service was i a fragile state, ad the strais ad stresses of deliverig ew beefits had take a toll; there was a eed to develop a distict purchaser/ provider relatioship betwee the Agecy ad the medical service; ad the orgaisatio was costraied by tesios with its customers i the Agecy, ad by a lack of chage maagemet skills ad plaed ivestmet to moitor performace ad improve efficiecy This led, i September 1995, to a recommedatio to Miisters to outsource the whole of the medical service to the private sector, excludig medical policy developmet work. The proposals were developed i the cotext of the wider Chage Programme beig developed by the Departmet at the time, ad lauched i February This programme was iteded to deliver improved services i all areas of activity at sigificatly reduced cost; ad required the Agecy to achieve a 25 per cet reductio i overall ruig costs over three years. The Departmet pursued outsourcig as the best way to improve the service ad reduce costs 1.11 The Departmet cosidered several optios for developig the medical service, (Appedix 4). They elected for outsourcig because it would fully meet the objectives of Miisters for itroducig the private sector ito the medical service ad: trasfer operatioal ad ivestmet risk to the private sector; establish clear accoutability ad maagemet roles, ad a clear purchaser/provider split; allow more flexible staffig arragemets; ad through offerig the whole service to the private sector, maximise ecoomies of scale ad provide the supplier with a base for expasio ito other markets with cosequet reductios i cost to the Agecy Figure 4 shows the objectives of the outsourcig, together with a brief summary of achievemet crossreferred to evidece elsewhere i this report. Noe of these objectives was give priority, ad there was o explicit referece to service to beefit customers i this statemet of objectives. 4 Objects of the Outsourcig Project part oe 12 Objective Award cotracts which require suppliers to take accout of, ad respod to, future Departmet of Social Security operatioal ad policy eeds. Gai ad maitai sigificat cost reductios, while supportig efficiecy improvemets. Award cotracts that provide for the maiteace ad moitorig of the required professioal medical stadards. Maitai ad improve service levels ad existig commitmets, withi the agreed project scope. Effect a smooth trasfer of civil service staff. Source: Natioal Audit Office Summary of achievemet of objectives Arragemets to respod to the Departmet's future eeds were embodied i the cotract. Their experiece i obtaiig a major chage to the service, the additio of a Capability Report, is described i the report (Paragraphs 1.25 to 1.28). Cost reductios estimated at per cet over the life of the cotract have bee egotiated, though most of these should accrue oly over the latter half of the cotract. (Paragraph 1.20). The moitorig arragemets provided have highlighted difficulties i maitaiig the required professioal medical stadards (Paragraphs 3.2 to 3.11). Service Levels are defied maily i terms of achievig timescales for the retur of medical advice ad reports. After a difficult start this aspect of performace has improved ad is closer to targets, though with a lower workload tha uder the previous i-house service. (Paragraphs 2.1 to 2.10). Some 63 per cet of the 220 employed doctors ad 1200 admiistrative staff were trasferred to SEMA Group without major disruptio or complait. Most of the remaiig admiistrative staff were redeployed i the Departmet. Trasfer of fee-paid doctors was less successful. (Paragraphs ).

18 1.13 Miisters approved the decisio to outsource i November 1995 ad asked officials to achieve a award of cotract o later tha April The cotract was actually awarded i February Procuremet took loger tha expected because: a decisio i 1996 to exted the scope of the cotracted service to iclude the paymet of feepaid doctors ad customer travellig expeses, ad the arragemet of examiatios for Disability Livig Allowace/Attedace Allowace, added substatially to the work to be doe; the shortlisted bidders required more time tha origially expected to udertake "due diligece" checks o the service they would have to provide ad the busiess they would take over; i April 1997 EDS Ltd withdrew because they had idetified legal ucertaities i their pla to trasfer staff to their sub-cotractor uder protected terms ad coditios of employmet ad were also cocered that legislative costraits o the way the medical service is delivered would limit the scope for cost efficiecies. i September 1997, Aderse Cosultig (ow kow as Acceture) did ot bid because they still had difficulties with clauses i the Departmet's draft cotract ad, like EDS, with their potetial exposure to liabilities if staff had to be made redudat. Aderse's withdrawal was ot kow to the other bidders util after the Departmet had made their selectio. i May 1997 officials had to put work o hold ad seek guidace from icomig Miisters, who gave their coset i July 1997 to proceed to ivite teders; ad the Departmet were ot satisfied with the iitial teders received, reopeed egotiatios with bidders to idetify scope for further price reductios, ad i November 1997 ivited the three remaiig bidders to reteder. There was sufficiet, though limited competitio 1.14 I Jue 1996 the Departmet ivited potetial suppliers to express iterest. Though the service requiremet was a uique oe i terms of its specialism ad size, 33 parties expressed a iterest ad 14 supplied iformatio o their fiacial stadig ad techical competece. The Departmet produced a shortlist of five compaies or cosortia, largely by elimiatig those of isufficiet stregth to take o cotracts of this size. Durig the procuremet two of the five shortlisted compaies pulled out, leavig three bidders (Figure 5): 1.15 The large scale of the cotract meat that if it had bee let as a whole, there would have bee too few bidders to provide adequate competitio. Therefore, the Departmet broke the service dow ito three separate regios (Figure 6). The Departmet agreed that Capita could bid for two of the three cotract regios, o the uderstadig that they would be awarded o more tha oe. Ad BMI Health Services were shortlisted for all three regios, but decided to bid for oly the South East ad South West. Therefore SEMA Group, which bid for all three regios, had o competitio at all for the largest Norther regio. SEMA Group told us that they had believed that BMI Health Services would bid for all three cotract packages. Sice the compay applied similar prices to this regio as it did to its successful bid for work i the South West, the evidece suggests that it did ot abuse this potetially powerful positio. 5 The compaies biddig for the work Compay Nature of busiess Outcome BMI Health Services A group providig acute ad prevetative healthcare ad healthcare maagemet i the UK. Provide a umber of health testig, screeig ad support services to Natioal Health Service Trusts ad to govermet departmets. Third placed bidder o cost ad quality. Awarded o work. Capita SEMA Group Source: A orgaisatio providig a rage of busiess services particularly experieced i maagig outsourced admiistrative, fiacial ad IT fuctios, may from local ad cetral govermet. Part of a leadig Europea services ad IT compay specialisig i cosultacy, outsourcig, systems itegratio ad busiess recovery. Formed liks iitially with PPP Healthcare, the Nestor Healthcare Group as sub-cotractor, to stregthe the medical aspects of their bid. Departmet of Social Security Secod placed bidder o cost ad quality. Awarded o work. First placed bidder o cost ad quality. Awarded all three regioal cotracts. part oe 13

19 6 Beefits Agecy ad SEMA Group regioal divisios Cotract packages for medical services Norther package South West package South East package Medical services cetres AD13 Beefits Agecy Area Directorates AD1 - East Lodo ad Aglia AD2- Chilters AD3 - Lodo South AD4 - West Coutry AD5 - Mercia AD6 - West Midlads AD7 - Wales AD8 - North West Coast AD9 - Greater Machester AD10 - Yorkshire AD11 - Tye Tees AD12 - West of Scotlad AD13 - East of Scotlad Glasgow Ediburgh AD12 Newcastle AD11 AD8 Bootle Machester AD9 AD10 Leeds Nottigham AD5 Birmigham AD7 AD6 AD1 Cardiff Bristol AD2 Wembley AD4 AD3 Sutto Source: Beefits Agecy part oe 14

20 7 The Departmet s assessmet of the retedered bids i December 1997 The lowest cost optios each ivolved awardig all three cotract areas to SEMA Group. Loger cotract duratios were cheaper ad all SEMA Group's prices were sigificatly lower tha cotiuig public sector maagemet. If the Norther ad the ad the for a cotract the aual cost of the which compared to Regio was South West South East duratio service i all three cotiued public sector awarded to was awarded to was awarded to of (years) regios would be maagemet would save millio (ote 1) each year milliio SEMA SEMA SEMA SEMA SEMA SEMA SEMA SEMA SEMA (ote 3) SEMA SEMA CAPITA (ote 4) SEMA BMI SEMA (ote 5) Notes: 1. Aual costs are discouted at 6 per cet ad iclude the Departmet's ow cotract maagemet costs at some 2 millio a year. The costs show for the optios raked 1, 2, ad 3 with all work awarded to SEMA Group reflect chages from applyig or ot applyig a four per cet real aual reductio i prices. 2. This shows the differece betwee the private sector bids ad the estimated costs i the Departmet's public sector comparator. The comparator was desiged to show the cost of cotiuig the service i-house ad assumed that some cost savigs would be achieved. It was compiled by the Departmet's Fiace Group. We examied the approach used ad foud o errors that would have materially affected the decisio. 3. The Departmet adopted optio 3, but i further egotiatio with SEMA Group obtaied the lower prices of the seve-year bid i retur for a optio to exted to seve years at the Departmet's discretio. 4 The cheapest combiatio of bids icludig a supplier other tha SEMA Group. 5. The cheapest combiatio of bids ivolvig the third bidder, BMI Health Services. This would have cost more tha public sector maagemet. Source: Departmet of Social Security SEMA Group offered the lowest prices from the start ad the Departmet obtaied further reductios durig rebiddig 1.16 The Departmet's evaluatio of the first roud of biddig i September 1997 showed that SEMA Group were already clearly the lowest cost supplier ad below the estimated costs of cotiued public sector maagemet (the public sector comparator). After a further clarificatio phase all bidders submitted lower, revised teders. Also i October 1997 the project steerig group decided to reope egotiatios with all bidders to idetify possible chages i the cotract which could secure further price reductios. Noe emerged The Departmet's evaluatio of the quality of bids did ot chage as a result of the clarificatio ad retederig. However, SEMA Group's prices reduced by seve per cet o average compared to their origial bid. SEMA Group explaied that the chages were very complex ad they could ot poit to specific factors that had cotributed to these reductios. A secod retederig i December 1997 did ot result i further price cuts, but before awardig the cotract the Departmet obtaied a further sigificat cocessio from SEMA Group - that a five year cotract extedable to seve years would attract the lower rates the compay had offered for a fixed seve year cotract The fiacial evaluatio was complex because i the secod roud the Departmet ivited bids for five, seve or te year cotract duratios, ad other variables, to see which permutatios would offer the best value for moey. However, i all these permutatios SEMA Group offered the lowest price (Figure 7) The evaluatio team recommeded awardig all three cotracts to SEMA Group for te years. Although there was a degree of risk, they cosidered that the beefits i price ad potetial for further savigs were sufficietly large to justify this. But the project steerig group ad the Beefits Agecy's Maagemet Team took the view that a te-year cotract duratio was too log, because of the likelihood that major policy chages might impact o the cotract. They therefore approved the cotract for five years, extedable to seve. The cotract allows SEMA Group to receive at the ed of their term a fair market value for ay assets, such as IT systems, that they have created ad that are still required by the service At the Departmet's request the pricig arragemets provide for a aual reductio i fees to match their targets for savigs i ruig costs. Real prices i the fifth year will be some 19 per cet below those i year oe. This is a substatial cost reductio i a service i which over 70 per cet of the cost base comprises doctors' fees ad salaries ad claimats' expeses, ad will require SEMA Group to improve busiess efficiecy if quality is ot to suffer. part oe 15

21 SEMA Group also offered the highest quality bid ad the most iovatio 1.21 I terms of quality the Departmet assessed SEMA Group's proposals as the best of the three bidders i all areas except persoel maagemet ad arragemets to esure medical quality (Figure 8). The qualitative evaluatio was performed by a team icludig staff experieced i procuremet ad medical represetatives. The attractive aspects of SEMA Group's proposals highlighted i the evaluatio were: the reorgaisatio of medical evidece cetres, to be located as ear as possible to the beefit offices which refer cases to them, reducig the movemet of paper files ad eablig more flexible workig. Earlier proposals from SEMA Group, to provide electroic liks betwee medical cetres ad beefit offices, did ot feature i their bid give ucertaity about the future for the Agecy's ow IT; cases would be delivered as part of a ed-to-ed process i which key ratios, such as reducig the proportio of cases beig examied, would be "improved"; SEMA Group would use IT etworks across all their cetres to support the operatio, maage workloads ad provide comprehesive ad timely maagemet iformatio; there would be a higher proportio of full-time medical staff tha at preset, to raise the quality of work, ad SEMA Group would pilot the use of urses to offer further ecoomies; ad this localised service would provide quicker processig, reductios i the rates of customers who fail to atted examiatios or who atted ad are ot see, ad greater team workig. To secure improvemets i quality the Departmet egotiated a service improvemet pla with SEMA Group, but this has chaged i scope ad has ot yet bee completed 1.22 Durig trasitio the Departmet required SEMA Group to draw up a Service Improvemet Pla to be implemeted i the first two years of the cotract. This was iteded to demostrate commitmet ad show how the iovative ideas i SEMA Group's bid would be take forward. The Pla is described i Appedix 6. However, the Departmet lack specific sactios if parts of the pla are delayed. They could exhort SEMA Group to implemet it, which has bee doe through mothly progress meetigs, but they could ot eforce this to a specific timetable The Service Improvemet Pla has ot made fully satisfactory progress, i part because SEMA Group's efforts ad maagemet attetio focused for the first year o meetig its service level targets for processig its caseload. Some elemets of the pla have bee implemeted, particularly those which eable SEMA Group to process cases more quickly ad efficietly. Others, otably to do with improvig medical quality, are still i progress. Elemets of the pla are depedet o other factors such as: the coset ad co-operatio of the Departmet, for example for the use of paramedics rather tha doctors; flexibility to vacate, acquire or remodel accommodatio through the Departmet's cotract with their accommodatio provider Trillium; ad 8 The Departmet s rakig of the quality of bidders proposals The Departmet assessed SEMA Group's proposals as clearly the best of those of the three bidders i all areas except persoel maagemet ad arragemets to esure medical quality. Scores (Highest) Criteria of assessmet of bidders' proposals SEMA Group Capita BMI Health Services Service Quality (icludig orgaisatio, accommodatio, customer service, service levels ad track record) Medical Quality (recruitmet & traiig of doctors, systems, quality assurace, moitorig ad track record) Trasitio, cotract maagemet ad track record Persoel (persoel policies, legislatio ad traiig) Chage (flexibility, iovatio ad chage maagemet) part oe Cofidetiality ad security (geeral security, IT ad data) Assets ad Iformatio Techology TOTAL out of 2,140 poits maximum 1,754-82% 1,654-73% 1,248-58% 16 Source: Departmet of Social Security

22 icreased fiacial resources to ivest i IT, which ca be difficult for SEMA Group to justify i the cotext of the short remaiig legth of the cotract. Whilst the origial bid icluded some fuds for ivestmet i IT, the compay told us that the cotract duratio has ofte made it harder to sustai a case for ivestmet i service developmet because they have little time to recover ay ivestmet with a payback loger tha three years Oe of the key elemets of SEMA Group's proposal was for the complete reorgaisatio of medical evidece cetres. Uder the i-house service beefit offices set their work to oe of 12 cetralised poits, which the arraged for the work to take place at each of the 200 examiatio cetres. Devolvig much more work to each cetre would eable each cetre to work closely with "their" local beefit offices, reduce the movemet of paper files, capture the beefits of greater local kowledge ad eable more flexible workig. SEMA Group ra three pilots i late 1998 ad early But they foud that full reorgaisatio was ot practicable i all locatios, maily because: it would require beefit offices to sort cases for separate dispatch to each cetre; ad it would ot be ecoomic to staff medical cetres hadlig few cases to do all the admiistratio work. Therefore, services have bee reorgaised i oly a small umber of locatios. Istead, SEMA Group have begu to implemet a ew IT ifrastructure which they expect to deliver the same beefits as the origial proposal. The cotract has so far coped satisfactorily with a major chage i the Departmet's eeds 1.25 Oe of the Departmet's objectives i outsourcig the service was to require suppliers to respod to future operatioal ad policy eeds. The most sigificat chage has bee to require Capability Reports as part of the Persoal Capability Assessmet process, as well as advice to the beefit decisio-maker. The ew reports provide iformatio o what the customer ca do despite his or her medical coditio ad what help could be provided to aid a retur to work. They are beig used as part of projects (the "ONE" project ad the New Deal for Disabled People) which provide Persoal Advisers for people receivig icapacity beefits, curretly i the pilot stage The terms o which SEMA Group would provide this additioal product were agreed usig the formal chage cotrol arragemets writte ito the origial cotract. Sice the price is based o the hourly rates that apply to other work, the Departmet's egotiatios with SEMA Group focused o how log o average it should take doctors to research ad complete the 10-page Capability Report. SEMA Group is paid o the basis that this will take 30 miutes i additio to the 47 miutes for the mai report o the customer's icapacity Capability Reports have so far bee itroduced o a partial basis across about oe fifth of the coutry. Iitial experiece has bee favourable: doctors say the assessmet is a more positive experiece for them ad customers recogise that it is desiged to help rather tha remove their beefit. At this stage it is ot yet clear what the resource implicatios will be if it is rolled out atioally. SEMA Group told us that they had bee give o firm idicatio of the likely volume of work ad hece they caot pla the cost, traiig ad recruitmet implicatios accurately. The Departmet recogise the eed for careful plaig of the phased part oe 17

23 rollout to balace with peaks ad troughs of work o other beefits ad are lookig at this as part of the pilot project evaluatios Agreemet of such chages, ad day-to-day maagemet of the cotract, is the resposibility of a dedicated team of some 50 Beefits Agecy staff based i Presto ad Warrigto. This team cosults as ecessary with policy officials ad specialist medical advisers i the Departmet, ad with the users of medical reports withi the Departmet ad elsewhere. They moitor activity agaist cotractual obligatios, validate ivoices received from SEMA Group ad maage ay chages to the cotract through a formal chage cotrol process. The maagemet arragemets for the service are show i Figure 9. 9 Stakeholders i the medical services cotract Secretary of State for Social Security Departmetal Maagemet Board Chief Medical Adviser Beefits Agecy Chief Executive ad Maagemet Team Head of Policy Medical Policy Group (resposible for chages to medical policy ad medical quality stadards) Medical Quality Surveillace Group (resposible for the validatio of medical quality stadards) Beefits Agecy Cotract Maagemet Team (resposible for chages to the cotract, day-to-day maagemet at atioal level) Thirtee Area Directorates (resposible for regioal delivery of beefits) Icapacity ad Disability programme maagemet teams (resposible for operatioal issues ad guardiaship of overall beefit sped) Icapacity ad Disability beefits policy (resposible for developig policy) Medical Services Liaiso Maagers (resposible for operatioal activities at local level) Nestor Disability Assessmet (sub-cotractor resposible for recruitmet ad paymet of fee-paid doctors) SEMA Group (cotractor resposible for providig medical reports ad advice ad hostig examiatio appoitmets for customers) Advice ad reports District beefit offices, Disability Beefit Cetres, Child Support Agecy etc Key Departmetal customers part oe Reportig to cotractors Departmetal maagemet 18 Note: The diagram shows the structures i place durig roughly the first two years of the cotract (to September 2000). Durig late 2000 ad early 2001, the Departmet of Social Security was udergoig a umber of structural chages which are due to be fialised by Jue 2001.

24 Part 2 Sice outsourcig, the efficiecy ad speed of medical assessmet have improved but savigs could be made by reducig delays i Beefits Agecy processes 2.1 Carryig out the work of medical assessmet quickly ad efficietly, ad cosistetly across all regios, is importat to prevet fiacial loss to both customers ad the public purse. This part of the report shows that SEMA Group have improved the efficiecy of their part of the medical assessmet process sice beig awarded the cotract, but that there are still delays ad icosistecy i the system. Before outsourcig performace was highly variable, ad backlogs of work had built up 2.2 Before outsourcig there were cosiderable variatios i performace betwee the 12 regioal medical services cetres ad target turaroud times were ot beig met (Figure 10). Moreover, the performace moitorig regime i place did ot create icetives for medical services cetres to complete a case oce it had exceeded the target clearace time, ad substatial backlogs of older cases had built up (Figure 11). Most of the Departmet's paymets to SEMA Group are for deliverig, withi specified timescales, reports that decisio-makers fid usable 2.3 The Departmet cosidered that commercial icetives would improve efficiecy ad speed up the turaroud of medical reports ad advice. They revised the performace measuremet regime by icludig i the mothly figures ay cases left outstadig from the previous moth, to ecourage the outsourced service to avoid backlogs of work. Ay work outstadig at the ed of each moth is couted agaist performace i the followig moth, so there is ow a stroger icetive to clear all cases withi the target time. Apart from 14.4 millio paid each year to meet the fixed costs of the service (maily maagemet, capital ivestmet ad accommodatio), the Departmet pay SEMA Group maily through a agreed uit price for each report or other product that decisio-makers cosider usable. The fee for Icapacity Beefit is approximately 50 per report, whether or ot a examiatio is required. If the compay provides a report late, this failure is logged ad used to calculate service credits which could, if there are eough failures, result i deductios from their mothly paymets. The Service Level targets maily relate to timeliess of assessmets (Figure 12). They are listed i full at Appedix 5. There was a dip i performace for several moths after SEMA Group took over 2.4 Whe the Departmet awarded SEMA Group the cotract they recogised that such a large, complex ad vital service could ot be safely trasferred to ew maagemet immediately. Durig a six-moth trasitio period startig i March 1998, they udertook a review process to satisfy themselves that the cotractor would be capable of deliverig the service i accordace with the requiremet. Despite this problems still arose i the first few moths after trasfer owig to the supplier's failure to trasmit data effectively to eable effective schedulig of doctors. This caused late or erroeous paymet of doctors' fees ad travellig expeses. I October 1998 SEMA Group brought the schedulig of examiatios back ito their orgaisatio to esure they would meet their cotract obligatios. I the followig six to ie moths these problems were addressed, ad the adverse effect o SEMA Group's processig of work was removed. part two 19

25 10 Regioal variatios i performace of medical services cetres before ad after outsourcig (a) Before outsourcig there were sigificat variatios i performace, particularly i Icapacity Beefit ad War Pesios work Percetage of reports delivered withi required umber of days 100% 80% 60% 40% 20% 0% Icapacity Beefit advice Icapacity Beefit scrutiy Icapacity Beefit examiatios Idustrial Ijuries Disablemet Allowace scrutiy or advice Idustrial Ijuries Disablemet Allowace examiatios War Pesios cosultats' reports War Pesios examiatio reports Severe Disablemet allowace reports Best performig medical services cetre (b) After a iitial dip i overall performace, variatios have bee reduced, but performace is still below target at several medical services cetres Icapacity Beefit advice Icapacity Beefit scrutiy Icapacity Beefit examiatios Idustrial Ijuries Disablemet Allowace Advice Idustrial Ijuries Disablemet Allowace examiatios War Pesios Cosultats' reports War Pesios Examiatio reports War Pesios Specialists' reports Disability Livig Allowace/ Attedace Allowace advice (special rules) Disability Livig Allowace/ Attedace Allowace advice (others) Disability Livig Allowace/ Attedace Allowace examiatios part two Target Worst performig medical services cetre Percetage of reports delivered withi required umber of days 100% 80% 60% 40% 20% 0% Notes: Source: 1. The graph i (a) shows the average for the year to March 1998, except for War Pesios work, where data was available for the moth of March 1998 oly; the graph (b) shows average performace for the year to September The umber of days withi which the report is required varies accordig to type of report. The details of these service level targets are listed i full at Appedix 5, ad a selectio are show i Figure Before outsourcig, the delivery of Disability Livig Allowace ad Attedace Allowace reports was ot measured o the same basis as the other outputs ad the Departmet were ot able to provide correspodig data. Severe Disablemet Allowace cases are icluded, sice outsourcig, withi Icapacity Beefit work. Natioal Audit Office aalysis of Beefits Agecy Data 20

26 11 Backlogs of work awaitig completio at the 12 medical services cetres prior to outsourcig 8.0 Equivalet umber of moths' work outstadig Glasgow Machester Wembley Ediburgh Newcastle Bristol Leeds Nottigham Bootle Birmigham Cardiff Sutto Key Icapacity Beefit scrutiy cases Icapacity Beefit examiatios Idustrial Ijuries Disablemet Beefit examiatios Idustrial Ijuries Disablemet Beefit scrutiy War pesios cosultats' reports War pesios examiatios Notes: 1. The data are take from the ed of the last full year of i-house service: March For examiatio cases, three weeks' worth of work is geerally cosidered a appropriate level, whilst for scrutiy cases, the level would be expected to be much lower. Source: Natioal Audit Office aalysis of Beefits Agecy data 12 Service Level Targets for two of the mai medically assessed beefits Busiess Area Icapacity Beefit Disability Livig Allowace/ Attedace Allowace Referrals cleared by SEMA Group o the basis of scrutiy of documetary evidece Referrals requirig a examiatio Examiatios Advice to the decisio-maker, other tha "special rules" cases (eg termial illess) Target respose times 85 per cet i te days 95 per cet i 25 days 95 per cet i 50 days All Reports Rework of uacceptable reports (ot to exceed 100 per cet i 5 days for 1 per cet i ay moth) paper scrutiy, or 15 days if examiatio is required Note: A full list of service level targets is icluded at Appedix 5 Source: Departmet of Social Security { { { 95 per cet i 20 days 100 per cet i 30 days 95 per cet i 3 days 100 per cet i 5 days part two 21

27 The time take by SEMA Group to provide reports ad advice has reduced, agaist a backgroud of reducig workloads, but there is still room for improvemet 2.5 By Jue 1999 performace had stabilised. The ew emphasis o delivery had also led to less variatio i performace betwee the 12 medical services cetres. I additio, Beefits Agecy users of the service cofirmed that file maagemet by SEMA Group had sigificatly improved compared with the i-house service. To further improve file maagemet, i November 1999 SEMA Group itroduced bar-codig for all files ad electroic recordig of their receipt ad dispatch. 2.6 SEMA Group have also icreased the average umber of examiatios completed i each half-day sessio from 3.8 i September 1998 to 4.4 to improve efficiecy. Part of this improvemet has come from overbookig which was also practised by the i-house service (ie deliberately ivitig more customers for examiatio tha there are slots, to allow for o-attedace), ad by substitutig at short otice replacemet customers who live earby. While this ca help to speed up the process it eeds to be maaged carefully to avoid icoveiece to customers. Appoitmet maagemet ad its effect o customers are discussed i Part These improvemets i delivery eed to be see agaist the backgroud of the reducig volumes of work ad i particular of Icapacity Beefit examiatios (the largest elemet of the workload), because of fewer claims, ad a reductio i the rate of cases beig set for examiatio (Figure 13). 2.8 I about 20 per cet of all Icapacity Beefit referrals to SEMA Group, Beefits Agecy staff specifically request a examiatio of the customer. But i the majority of cases, they refer the papers to SEMA Group for scrutiy, ad SEMA Group doctors cosider whether a examiatio is required, or whether a review of the papers will suffice. Before outsourcig, some 60 per cet of cases referred for scrutiy resulted i a examiatio. Aroud a third of those customers examied were foud to be ieligible. Followig outsourcig, the proportio of scrutiy referrals examied iitially fell to aroud 35 per cet. Istead, more were cleared after a review of the papers by a SEMA Group doctor. With o eed for a local examiatio cetre, or a fee-paid doctor, a paper review is faster ad less demadig of doctors' time: o average two ad a half miutes, compared with some 47 miutes for a examiatio. 2.9 Despite across the board improvemets i service delivery, SEMA Group have ot yet met their performace targets i all areas (Figure 10b o page 20). There remai sigificat variatios betwee medical services cetres i the delivery of all types of examiatios, because of shortfalls i the umber of traied doctors available to carry out the work. Performace i deliverig Idustrial Ijuries Scheme Beefits advice is also below target, partly because of difficulties i obtaiig relevat medical evidece from customers' hospitals ad cosultats Uder the cotract, SEMA Group are required to respod to all variatios i demad, uless these reach 25 per cet or more, whe a cotract variatio will be triggered. But with cotiuig shortages of doctors i some areas, they have had difficulty i respodig to 13 The umber of Icapacity Beefit examiatios has reduced by more tha oe third sice outsourcig 60,000 50,000 48,406 (highest) 40,000 30,000 26,496 (lowest) part two 22 20,000 10,000 0 Sep 98 Oct 98 Source: Beefits Agecy Nov 98 Dec 98 Ja 99 Feb 99 Mar 99 Apr 99 May 99 Ju 99 Jul 99 Aug 99 Sep 99 Oct 99 Nov 99 Dec 99 Ja 00 Feb 00 Mar 00 Apr 00 May 00 Ju 00 Jul 00 Aug 00 Sep 00 Oct 00

28 sharp icreases i local workloads. After September 1999, the Departmet bega to deduct service credits from fees paid to SEMA Group i respect of the failure to meet all targets for delivery of medical reports ad advice. They also deducted service credits for late receipt of maagemet iformatio. I total, they have deducted some 526,000 betwee September 1999 ad October 2000 from total cotract paymets sice cotractorisatio of 163 millio. They could have deducted a additioal 1.6 millio ad did ot, maily where they were satisfied that the compay were takig sufficiet steps to improve performace ad achieve targets. Improvig speed ad cosistecy i the Departmet's overall medical assessmet processes could brig fiacial beefits to both the customer ad the public purse 2.11 Whilst the provisio of medical evidece from SEMA Group is crucial i determiig eligibility for beefit, it is oly part of a wider assessmet process. Delays i the overall processes ca cause both delays to customers gettig their beefits, ad also cotiued paymets to those ot eligible. Ad regioal variatios i the time it takes to process claims ad make decisios ca mea that there is iequality of treatmet for customers i differet parts of the coutry. We looked at what could be doe to reduce variatios ad the overall time take to process icapacity ad disability beefits. Disability allowaces 2.12 For most disability beefits other tha Icapacity Beefit (e.g. Disability Livig Allowace, Attedace Allowace), o paymet is made util the decisiomaker is satisfied as to the customer's etitlemet. This may ivolve obtaiig statemets from the customer's carer, the geeral practitioer or hospital cosultat or seekig idepedet medical evidece from SEMA Group. Therefore, the Agecy's performace i clearig cases withi the target time is importat for customers' obtaiig beefit promptly. Figure 14 shows that the Agecy are geerally clearig i a timely way Disability Livig Allowace ad Attedace Allowace special rules cases, ivolvig people who are termially ill. However, there is cosiderable variatio i the time take to clear the other cases The time take by SEMA Group to deliver medical reports ad advice, where these are used, is a sigificat part of the overall process (most "ormal rules" cases referred to SEMA Group for advice should be retured withi 3 days, ad examiatio cases withi 20 days). But the delays ad degree of variatio betwee medical services cetres has reduced sice outsourcig. However, the remaiig time take withi the Beefits Agecy varies more. From our visits ad discussios with Beefits Agecy staff we oted that: less experieced decisio-makers may seek more detailed medical evidece ad take loger to iterpret it; 14 Variatios i the time take to clear Disability Livig Allowace ad Attedace Allowace claims Average umber of days to clear claim Disability Livig Allowace ew claims (ormal rules) Attedace Allowace ew claims (ormal rules) Disability Livig Allowace ew claims (special rules) 2 Attedace Allowace ew claims (special rules) Target 30 days Target 10 days 4.4 Ediburgh Newcastle Sutto Midlads Wembley Bootle Glasgow Bristol Wales Leeds Machester Notes: 1. The data are take from the aual average as at November "Special rules" cases are those ivolvig customers who are termially ill ad therefore these cases are treated with priority. part two Source: Natioal Audit Office aalysis of Beefits Agecy data 23

29 decisio-makers have discretio over how log they wait for further medical evidece from sources other tha SEMA Group (e.g. the customer's cosultat or geeral practitioer). Some told us they will geerally wait two to three weeks before seekig alterative evidece, ad others that they will oly seek a alterative if the first choice evidece has ot bee provided withi five to six weeks. Icapacity Beefit 2.14 I recet years, the Beefits Agecy have successfully achieved published targets for clearig decisios o the majority of ew claims for Icapacity Beefit withi 30 days. These decisios are geerally made o the basis of certificates provided by the customer's geeral practitioer. But decisios o whether customers should cotiue o beefit whe cases fall due for review take much loger. The average time take at this stage varies betwee about 90 ad 170 days, accordig to a statistical sample of data collected by the Departmet (Figure 15). Part of that process (o average 52 days) takes place withi SEMA Group, icludig arragig a medical examiatio. Though the time take for this varies, greater regioal variatios exist i those stages of the process which take place withi the Agecy itself: the time betwee idetificatio of the case as requirig actio to the issue of the relevat form to the customer varies from 6 to 43 days; the time betwee receipt of the iformatio from the customer to the referral of the case to SEMA Group varies from 3 to 39 days; ad the time betwee receipt of the advice from SEMA Group ad the decisio o whether to allow or disallow beefit varies from 11 to 71 days These variatios are costly. A aalysis i 2000 by the Beefits Agecy showed that the seve-week reductio sice 1996 i the atioal average processig time for Icapacity Beefit saved some 85 millio i aual Icapacity Beefit costs. This represets paymets which would otherwise have bee made to customers who were o loger eligible for beefit. Every week by which the average processig time is reduced would save some 12 millio i uecessary Icapacity Beefit paymets. While the Departmet are cocered about the risk that faster clearace times might result i higher levels of error i beefit paymets, this does ot appear to be the case. For Icapacity Beefit ad other short term beefits, there is o correlatio betwee the clearace time i Area Directorates ad the accuracy of the beefit paymets, all Area Directorates havig accuracy ratigs withi two per cet of the average. So if the Agecy could reduce the processig time i Icapacity Beefit to the levels achieved by the three top-performig Area Directorates they could achieve estimated savigs of aroud 60 millio a year i paymets of Icapacity Beefit. It is likely, however, that some customers would go o to claim other beefits istead ad this could reduce the savigs to betwee 30 millio ad 40 millio. Brigig performace up to the level of the middle performer, which the Departmet cosider more achievable i the medium-term, could achieve et savigs of aroud 20 millio. 15 Variatios i the time it takes the Beefits Agecy ad SEMA Group to process Icapacity Beefit medical assessmets AD12 - West of Scotlad AD2 - Chilters AD1 - East Lodo ad Aglia AD5 - Mercia AD3 - Lodo South AD11 - Tye Tees AD8 - North West Coast AD9 - Greater Machester AD13 - East of Scotlad AD10 - Yorkshire AD7 - Wales AD6 - West Midlads AD4 - West Coutry part two 24 Key AD Note: Source: time from idetificatio of case for actio to issue of form to customer time customer takes to retur form time from customer form retur to referral to SEMA Group time from referral to SEMA Group to retur of report time from examiatio to decisio o etitlemet Area Directorate umber of days The figures used are take from the Departmet's sample-based review which was carried out i July 2000 but used 1999 data. Natioal Audit Office aalysis of Beefits Agecy data

30 2.16 There are also variatios i performace before cases are actioed. Backlogs of existig cases awaitig review have built up i offices across all Beefits Agecy Area Directorates because priority, ad limited resources, are give to processig ew claims where the customer is ot yet receivig paymet. Whilst some offices have reached "steady state" ad review every case at the time recommeded by the medical adviser, most are uable to carry out all their reviews at the recommeded time ad istead "defer" a proportio of them for oe or more moths. Figure 16 shows that the umber of "deferred" cases cosiderably exceed oe moth's work i most Area Directorates. Whilst may cases require o chage o review, a proportio of customers will be foud ieligible. We estimate that if the Departmet could elimiate the backlog of deferrals, this could achieve oeoff savigs o Icapacity Beefit of aroud 40 millio, which could be reduced to betwee 20 millio ad 30 millio because customers might claim other beefits istead. Further savigs could be achieved by elimiatig or reducig the ogoig level of deferrals. But this would require a sigificat commitmet of resources from both the Beefits Agecy ad SEMA Group ad a chage i the priority give to Icapacity Beefit i local beefit offices We looked at whether chages to procedures withi the Icapacity Beefit process could improve workload maagemet, ad hece reduce backlogs. Our work ivolved holdig a cogitive mappig workshop with staff ivolved i Icapacity Beefit work, mappig the process itself through visits to six district beefit offices, each from a differet Area Directorate, ad simulatio modellig of selected parts of the process. We were assisted by cosultats from Strathclyde Uiversity ad Visual Thikig Iteratioal Limited. The results are summarised i Appedix 2. Particular aspects of case maagemet that the Departmet could address are: variable approaches i district offices to settig case review dates; variable approaches to reviewig log-term Icapacity Beefit cases for chages i etitlemet; failures by decisio makers to deal appropriately with cases of repeated o-attedace without good cause, give evidece from SEMA Group that they have admiistered schedulig properly; smoothig the flow of work betwee beefit offices ad SEMA Group to avoid surges impactig o the achievemet of targets; ad maximisig usage of SEMA Group resources give fluctuatig demad from idividual district offices, by directig scrutiy work more flexibly aroud the coutry The Departmet have begu to focus o improvig performace ad reducig variaitos i the time it takes to process claims ad make decisios through the Performace Improvemet Programme, which was lauched i February The Programme has so far focused o Icome Support ad Jobseeker's Allowace, two large ad complex beefits, but the Departmet ow ited to apply a similar approach to Icapacity Beefit. This will ivolve: idetifyig, sharig ad implemetig good practices from the best performig Areas; 16 Backlogs of Icapacity Beefit cases where review actio has bee deferred beyod the recommeded time The figure shows that the umber of Icapacity Beefit case reviews deferred is reducig slightly but still remais high, particularly i some areas. The total umber of reviews deferred i November 2000 was some 185,000 45,000 40,000 35,000 umber of cases 30,000 25,000 20,000 15,000 10, Mercia West West Yorkshire Lodo East Tye Tees East of Chilters Wales Midlads Coutry South Lodo Scotlad ad Aglia West of Greater North West Scotlad Machester Coast Key Deferred cases September 2000 Deferred cases October 2000 Deferred cases November 2000 average umber of cases actioed i a moth Source: Natioal Audit Office aalysis of Beefits Agecy data Beefits Agecy Area Directorates part two 25

31 improvig maagemet iformatio to track performace; traiig ad chages i procedure to improve workflow maagemet; ad support from Performace Improvemet Actio Teams for those offices with particular difficulties. Better matchig of Icapacity Beefit fudig to workloads i the Beefits Agecy could help reduce icosistecy 2.19 Regioal variatios i the backlogs of Icapacity Beefit cases awaitig attetio, ad the speed with which they the pass through the system, are due i part to the way this work is orgaised ad fuded. The Beefits Agecy's 13 Area Directorates admiister Icapacity Beefit ad other "short-term" beefits such as Icome Support ad Jobseeker's Allowace. They have autoomy to maage their huma ad fiacial resources ad prioritise work, withi the Agecy's overall objectives. The Departmet allocate fudig to Directorates for admiistratio of beefits accordig to expected workloads. Directorates the allocate this to districts ad by beefit, also balacig resources so as to deal with ew cases ad review a proportio of existig oes. Whe districts have isufficiet fuds they defer some case reviews to a later date. Some districts have sufficiet fuds to clear eve low priority Icapacity Beefit cases whilst others defer all but the highest priority cases There are two mai reasos why districts vary i the extet to which they defer cases that are due for review: part two differet Area Directorates have differet workload profiles ad differet priorities betwee beefits, ad fudig for Icapacity Beefit is ot rigfeced. Our workshop of departmetal staff idicated that Public Service Agreemet targets to reduce losses from error ad fraud i Icome Support ad Jobseeker's Allowace had led Directorates to accord lower priority ad staff resources to reviewig existig Icapacity Beefit cases. the Departmet have a computer-based model desiged to predict the volumes of Icapacity Beefit work which they updated for the fiacial year to provide more accurate iformatio at Area Directorate level. But it does ot produce statistically accurate forecasts at District Office level. Depedig o the arragemets i each Area Directorate, some offices may receive more fuds to pay SEMA Group for medical assessmets tha they eed, while others receive too little, leadig to deferrals. 26

32 Part 3 Improvemets i the quality of assessmets have yet to be fully delivered 3.1 This part of our report looks at the quality ad appropriateess of the medical evidece obtaied by the Beefits Agecy from SEMA Group ad other sources. It shows that: logical, iterally cosistet ad based o evidece - the coclusios of the report or advice must be cosistet with the evidece obtaied from medical records or examiatio; the Departmet are ow focusig o improvig the quality of the medical evidece provided by SEMA Group. But their ability to eforce quality improvemets is restricted by the lack of effective cotractual remedies; shortages of doctors to do the work of SEMA Group are havig a sigificat impact o the busiess ad are set to worse; ad the Beefits Agecy ad SEMA Group do ot always obtai the most appropriate or sufficiet medical evidece to support the award of beefits. Achievig cosistetly good quality medical assessmets has cotiued to prove difficult sice outsourcig, but the Departmet are ow focusig o this 3.2 Prior to outsourcig the Departmet had put i place a sample-based quality moitorig system which raised cocers about quality (Figure 17(a)). Ad reportig by the Presidet of Appeals Tribuals has idicated that isufficiet or poor quality medical evidece is oe of several key factors affectig the quality of decisios. 3.3 However, before outsourcig there was o agreed defiitio of what costituted a quality medical report from the i-house medical services. Durig trasitio the Departmet developed a framework for defiig acceptable quality, or "fitess for purpose" which requires reports ad other writte advice from its medical advisers to be: legible; complete - all disabilities ad relevat facts must be covered ad documeted; iclusive of details of relevat cliical fidigs (e.g. symptoms) to help support the opiio give; based o up-to-date ad geerally accepted medical opiio; ad free from iappropriate material, so that they ca be read by ayoe without risk of offece. 3.4 The Departmet saw the opportuity through outsourcig to improve the quality of medical reports ad put i place a system which could moitor these stadards effectively, ad SEMA Group have therefore developed a ew quality moitorig system. Based o similar priciples to the previous system, it is more rigorous ad applied more cosistetly across the cotract locatios by full-time medical advisers traied i a revised audit techique. The results i 2000 (Figure 17(b)) appear to idicate a slight improvemet i the quality of reports although compariso of the two sets of data is difficult because of chages i the samplig ad markig approaches. But up to 10 per cet of work still remais uacceptable, most otably for examiatios coducted i customers' homes, which are almost exclusively for Disability Livig ad Attedace Allowaces. 3.5 The Presidet of Appeals Tribuals told the Social Security Select Committee i April 2000 that he saw o evidece of a improvemet i quality ad decisiomakers we spoke to agreed. Moreover, complaits from customers still idicate cocers about the completeess ad legth of examiatios (customer complaits are discussed i more detail i paragraphs ). part three 27

33 3.6 The positio o quality is cofused because although the percetage of reports set back by decisio-makers is low, they told us that they avoid sedig back reports eve where they are uhappy with the quality because: it takes too log to get revised reports ad this prevets them clearig cases quickly; they feel they ca still use their judgemet to make a decisio. The Beefits Agecy have recogised that their staff do ot make full use of the rework facility, ad have ow issued guidace to ecourage them to do so. whe they do retur reports for rework, the revised versio is ofte little better tha the origial; 17 The quality of reports produced by medical services cetres (a) Results prior to outsourcig 69% 70% 76% 54% Key percetage of reports graded A (all essetial ad desirable attributes are preset i the report) 32% percetage of reports graded B (all essetial attributes are preset but some desirable attributes are missig) 27% 6% Icapacity Beefit 24% 6% Severe Disablemet Allowace 18% 9% Idustrial Ijuries Scheme Beefits 14% Examiig Medical Practitioers (at customer's home) percetage of reports graded C (oe or more essetial attributes are missig) (b) Results i % 79% 83% 62% 10% 15% 12% 5% 6% 5% Icapacity Beefit Severe Disablemet Allowace Idustrial Ijuries Scheme Beefits Notes: 1. The data i (a) covers September Data were ot available for medical services cetres at Newcastle ad Nottigham. 2. The data i (b) covers the period February to September Examiig Medical Practitioers (at customer's home) 3. Care should be take i comparig these two sets of data because although the same gradig system is used, the post- outsourcig system uses larger sample sizes, more robust samplig methods ad more striget defiitios of quality. 4. Examiig Medical Practitioers carry out examiatios at the customer's home, the majority of which are for Disability Livig Allowace/Attedace Allowace. 26% 12% Source: Beefits Agecy data part three 28

34 The Departmet's ability to eforce chage is limited by the lack of effective cotractual remedies but they are ow focusig o moitorig quality more effectively 3.7 The Departmet caot reduce paymets to SEMA Group if the quality of the medical reports overall is ot fully up to stadard. I devisig the cotract they decided that it was ot the possible to defie medical quality sufficietly rigorously to be the basis of legally eforceable deductios. As a result their mai cotractual remedies agaist poor quality work are: for the lay decisio-maker to retur deficiet reports for rework. The Departmet do ot pay agai for reworked cases ad have the iitial charges refuded if ay case is ot satisfactorily reworked by SEMA Group withi the 15 day target time. But as oted above rework is comparatively rare - uder oe per cet i ; to withdraw the approval of idividual doctors to do this work; this has bee doe o 15 occasios i the first two years of the cotract icludig two occasios at SEMA Group's istigatio, durig which time some 3,000 doctors have bee employed; to audit the medical quality of reports, which they bega to do i 2000; or i the evet of severe ad persistet quality problems, to termiate oe or more of SEMA Group's three cotracts. 3.8 The Departmet ad SEMA Group have take a umber of iitiatives to improve the quality of medical reports icludig: The Departmet are seekig to reegotiate the cotract so that failure by SEMA Group to achieve the above targets will result i deductios from cotract paymets. SEMA Group are ow makig efforts to improve professioal stadards 3.9 Doctors must satisfy certai Departmetal requiremets before beig approved to work for SEMA Group. As well as satisfyig selectors at iterview, ad providig appropriate refereces, doctors must be fully registered with the Geeral Medical Coucil; ad have at least 3 years' post-registratio experiece icludig oe year i geeral practice ad at least six moths i either psychiatry, rheumatology, rehabilitatio or occupatioal medicie, or have at least five years' post-registratio experiece i geeral practice. Before begiig to carry out assessmets a ew doctor must atted beefitspecific traiig, as well as traiig i professioal stadards provided by SEMA Group, ad be formally approved by the Departmet's Chief Medical Adviser Doctors workig for SEMA Group are also subject to cotiuig radom audits of the quality of their work. If the results, or other aspects of the doctor's performace such as complaits from customers, are uacceptable, SEMA Group will provide feedback ad remedial traiig. If the doctor's performace does ot improve SEMA Group may recommed to the Departmet removal of the approval of the doctor to carry out assessmets Through outsourcig, the Departmet set out to improve professioal stadards amog SEMA Group's doctors. Some progress has bee made i: triallig a survey of users' views seekig specific feedback o the quality of each medical report sampled; targets to reduce by 10 per cet the proportio of C grade medical reports by March 2001, ad by September 2001 to reduce the proportio of C grade reports across all beefits to less tha 5 per cet; a departmetal audit of doctors' compliace with guidace o whe to call Icapacity Beefit customers for examiatio ad whe a scrutiy of papers is sufficiet (the results of this work to date are discussed i more detail at paragraph 3.24). The Departmet expect SEMA Group to have reduced the proportio of reports which do ot comply with the guidace to less tha 5 per cet by Jue 2001; ad settig up a Medical Quality Performace Improvemet Iterface group, with members from the Departmet's cotract maagemet team ad SEMA Group, which will discuss ad progress medical quality issues mothly. Cotiuous traiig. SEMA Group are required to esure that doctors atted five days of relevat traiig each year, the cotet of which is quality assured by the Departmet. Previously, traiig other tha iductio had bee volutary ad ot part of a plaed programme. The Social Security Select Committee oted i April 2000 that the ew traiig requiremet had ot bee delivered for or By October 2000, 80 per cet of SEMA Group doctors had atteded the appropriate traier-led course for , ad 65 per cet had completed distace-learig packages. SEMA Group also udertook to provide the traiig programme i full by August However, some 146 doctors had left the service by October 2000, citig the compulsory upaid traiig course as the reaso, ad a further 116 were still refusig to atted it. The Departmet ad SEMA Group are reegotiatig this part of the cotract, ad SEMA Group i associatio with their subcotractor, Nestor, aouced arragemets from November 2000 to pay doctors to atted traiig courses i future; part three 29

35 Professioal traiig. The Departmet has worked with SEMA Group, ad the Faculty of Occupatioal Medicie ad Royal Medical Colleges to develop a ew Diploma i Disability Assessmet Medicie which was lauched i March Traiig for the Diploma equips doctors with the kowledge ad skills to do a rage of assessmets, ad will cout towards their cotiuig professioal developmet. The Departmet told the Social Security Select Committee that they would set targets for a substatial proportio of SEMA Group doctors to have completed the Diploma withi five years. By November 2000, 11 SEMA Group doctors had bee awarded the Diploma, ad a further 15 were workig towards it; Safeguardig agaist uacceptable medical stadards. Util Jauary 2000, it had bee difficult for SEMA Group to compile a effective record of a doctor's overall stadard of work. But sice the the traiig completed by each doctor, the results of moitorig each doctor's work, complaits received from customers, ad ay actio take or remedial traiig give, are ow recorded. This Medical Skills Database has the potetial, if it is kept up-to-date, to make the moitorig ad eforcemet of professioal stadards more effective. The Departmet ad SEMA Group eed to address urgetly the shortages of suitably qualified doctors doig this work The shortages of doctors withi SEMA Group mirror the wider shortages i the UK as a whole, ad are ot improvig 3.12 To achieve cotiuous improvemet i the quality of medical reports, the Departmet ad SEMA Group require a pool of experieced doctors who have udergoe traiig. Full-time doctors carry out the majority of scrutiy work, ad sice outsourcig, SEMA Group have icreased the umber of full-time doctors they employ. But early all examiatios are carried out by doctors qualified as geeral practitioers, either retired or still i practice, who work several hours each week for SEMA o a fee-paid basis. I additio to the geeral pool of doctors, the service also requires a umber of practitioers specially skilled i respiratory diseases ad metal health, ad to meet customers' reasoable requiremets a balace of both male ad female doctors I recet years the Departmet ad SEMA Group have experieced problems recruitig sufficiet doctors with the level of experiece they eed. The supply of geeral practitioers is set to worse before it improves. The August 2000 Natioal Health Service Natioal Pla shows that i a fifth of health authorities, more tha 4 per cet of geeral practitioers are due to retire by 2005, ad the supply of youger doctors to take their places does ot yet match the demad. The Natioal Pla aims to icrease the supply of geeral practitioers by 2,000 by 2004 with faster growth after the. At the same time, ew revalidatio rules to be itroduced by the Geeral Medical Coucil mea that all doctors wishig to cotiue practisig will be required to satisfy stricter traiig ad moitorig requiremets desiged to keep them up-to-date. The Departmet require that all doctors workig o their behalf must be revalidated ad SEMA Group are takig this forward The SEMA Group doctor workforce has a higher proportio of older doctors tha the UK medical professio as a whole - historically the work has always attracted older doctors. Figure 18 shows that some 46 per cet of all SEMA Group's fee-paid doctors are aged 55 or over ad could therefore decide to retire i the ext five years. Whilst the icreasig umber of doctors 18 Age profile of SEMA Group's fee-paid doctors compared with those i Eglad ad Wales as a whole percetage of doctors % 39.3% 18.9% 32.8% 31.9% 15.0% Key 26.9% Whole of Eglad ad Wales SEMA Group 19.2% part three % age rage (years) 1.5% 30 Note: Eglad ad Wales data as at October 1999; SEMA Group data as at April 2000 Source: SEMA Group ad NHS Executive

36 expected to retire from geeral practice could actually add to the pool of doctors from which SEMA Group ca recruit, such reliace o a ageig workforce carries certai risks. Subject to the Departmet's requiremet that they satisfy the ew revalidatio requiremets, SEMA Group are able to employ doctors of ay age, although they ormally look to retire doctors by age 70. But because of shortages a umber of doctors over 70 are still carryig out examiatios. Although these older doctors may be highly experieced, there is a risk that their medical kowledge may be less up-to-date tha that of more recetly qualified doctors who are still full-time practitioers Over ad above the geeral shortage of geeral practitioers available to work part-time o beefitsrelated work, may fee-paid doctors have left the service sice 1995 whe Icapacity Beefit was itroduced ad ew traiig was required. Sice the, accordig to a survey coducted by the British Medical Associatio, at least 750 more fee-paid doctors have withdraw their services, may at the time of outsourcig. SEMA Group told us that i October 2000 they required additioal fee-paid doctors sufficiet to complete some 4,000 more examiatio sessios, ad over 7,000 more home visits every moth. There were particular shortages i the North West of Eglad ad the Midlads, which had already affected the cotractor's ability to deliver agaist service level targets The mai reaso cited by the British Medical Associatio for members ceasig to work for SEMA Group is the level of pay. I 1992, the Departmet decided to depart from the rate of pay agreed by other govermet departmets for doctors carryig out govermet work, ad to egotiate their ow rate. Betwee 1992 ad September 2000, whe a 3 per cet across the board icrease was itroduced, there had bee o icrease i the rate paid for examiatio cetre work or home visits. Figure 19 idicates that the rate ow paid by SEMA Group has ot kept pace with the rates for similar work. This has led to a cotiuig dispute with the British Medical Associatio, who have advised doctors agaist takig up the work. At the time of outsourcig, a British Medical Associatio members' survey showed that 51 per cet of fee-paid doctors respodig had ot the agreed to sig a cotract with SEMA Group's subcotractor Nestor, ad could therefore have withdraw their services without otice The Departmet ad SEMA Group are cosiderig several differet approaches to alleviatig the shortages of doctors but there is more they ca do: SEMA Group have itroduced, from Jue 2000, special additioal paymets to doctors whose visits to customers' homes ivolve a above average travellig time i certai remote areas. Some 151 doctors made 1,973 claims for these 13 special paymets betwee Jue ad October Ad i September 2000 a 3 per cet pay icrease was itroduced for all fee-paid doctor work. However, o agreemet has bee reached over pay with the British Medical Associatio. Other users of medical advice we surveyed i the isurace idustry told us that they held aual egotiatios with the British Medical Associatio to agree the rates they would pay doctors providig them with reports; SEMA Group ad the Departmet are cosiderig the possibility of carryig out more examiatios durig eveigs ad weekeds, to make it easier for fee-paid doctors to fit the work aroud their other commitmets. Doctors' represetatives told us that allowig doctors i some cases to carry out the work i their ow surgeries could also improve availability, although ot all surgeries would be able to support this additioal activity; ad SEMA Group have proposed the use of other healthcare professioals to carry out medical assessmets. However, plas have ot yet moved forward. Oe problem is that the relevat social security legislatio requires some parts of the work to be doe by doctors ad would have to be chaged, although there are other areas of assessmet where there is o such requiremet. Shortages i these other healthcare professios might prove a obstacle. 19 Comparative rates of pay for geeral practitioers workig outside surgeries SEMA Group rate British Medical Rate agreed by other for fee-paid doctors, Associatio agreed rate govermet departmets as from for locum work i a with the British Medical September 2000 geeral practitioer Associatio 1 surgery Per hour Per 3 ½ hour sessio Per 7 hour day Note: 1. This rate, used by a umber of govermet departmets, is approved by the British Medical Associatio, the doctors' represetative body, ad is icreased aually i lie with the recommedatios of the Doctors' ad Detists' Review Body. part three Source: Departmet of Social Security, British Medical Associatio 31

37 The Departmet ca do more to esure that the right kid of evidece is used to make accurate decisios The most appropriate form of medical evidece is ofte ot available to decisio-makers 3.18 I his 1999 report o the overall stadards of all types of Beefits Agecy decisios goig to appeal, the Chief Adjudicatio Officer said, "Where stadards fell the mai culprit was yet agai lack of evidece to support the decisio". We looked at what factors affect the Beefits Agecy's ability to obtai sufficiet evidece to support decisios i the mai medically assessed beefits. The mai sources of evidece are described i Appedix 7. Iaccurate or icomplete evidece from geeral practitioers ad customers results i uecessary examiatios o Icapacity Beefit cases cleared by SEMA Group o scrutiy are also foud to be exempt. I all these cases, the Departmet are charged a fee uder the cotract. SEMA Group are curretly reviewig their procedures for followig up forms ot retured by geeral practitioers with the aim of reducig the umber of exempt cases which are referred for scrutiy or examiatio Eve whe the geeral practitioer returs the form, the iformatio provided is sometimes ot sufficiet for the SEMA doctor to advise whether the customer is exempt from testig. Geeral Practitioers are expected to be able usually to provide the iformatio required by the SEMA doctor, which icludes the ature of the coditio ad its effect o the patiet, the curret treatmet ad the progosis. But the British Medical Associatio told us that, because the iformatio is kept for cliical ad ot social security purposes, this ca be difficult for doctors. Moreover, our discussios with our workshop group ad Beefits Agecy decisio-makers revealed that: 3.19 Factual evidece provided by the customer's geeral practitioer is a importat compoet i the Icapacity Beefit medical assessmet. It is used by SEMA Group doctors to reach decisios o scrutiy cases, ad also by decisio-makers whe applyig the Persoal Capability Assessmet (Figure 20). 20 Medical evidece requested from geeral practitioers for Icapacity Beefit A medical certificate givig a diagosis of the disorder causig absece from work, provides the evidece to support the customer's iitial claim for Icapacity Beefit. A further certificate may be required showig the customer's mai coditio ad ay others from which he or she is sufferig, alog with other commets o the disablig effects of the coditio. If the certificates do ot give complete ad accurate details of all coditios, these may ot be fully take ito accout i the decisio-makig process. If the iitial evidece idicates that the customer may be exempt from medical testig (e.g. if he or she is metally ill, has a termial illess, or has oe of a umber of other exempt coditios) the Beefits Agecy seds a 3-page medical report form to the Geeral Practitioer requestig iformatio required to establish whether this is i fact the case. The form is retured direct to a SEMA Group medical adviser. SEMA Group ca request further iformatio o a case by cotactig the customer's Geeral Practitioer direct. the geeral practitioer may ot always be aware of the full cliical impact of disease o work ability or activities of daily livig, particularly where the customer has a metal health problem. I such cases the Beefits Agecy may ot be alerted to the ivolvemet of aother healthcare practitioer such as a Commuity Psychiatric Nurse util the customer has bee set a questioaire to complete. Disability rights groups have poited out that accurate completio of these forms may be too difficult ad stressful for some customers with a metal illess; ad although the writte coset of the customer is always obtaied by the Beefits Agecy before they cotact the customer's geeral practitioer, as part of the forms the customer fills i, some geeral practitioers are uwillig to provide the iformatio requested. This is the case eve where the form is to be retured directly to a SEMA Group doctor. Some geeral practitioers express cocer for their doctor/patiet relatioship as a result of their ivolvemet i the beefit system as they feel patiets perceive them to be part of the decisiomakig process. part three But the Departmet ofte experiece difficulty i obtaiig accurate ad up-to-date medical evidece from customers' geeral practitioers, ad this ca lead to uecessary examiatios by SEMA Group, where a customer ought actually to be exempted from testig. I 2000, aroud eight per cet of customers who atteded for examiatios were foud to be exempt. This amouts to some 25,000-30,000 people who eed ot have bee called for examiatio had sufficiet evidece bee provided by their geeral practitioers. Ad although the Departmet do ot collect data o it, a further group of

38 3.22 The provisio of iformatio to the Beefits Agecy o Icapacity Beefit customers by geeral practitioers forms part of their work ad remueratio uder the stadard Natioal Health Service cotract. A doctor who has issued a statemet of icapacity to a patiet is legally obliged to provide o request a report o the patiet to a medical officer workig o behalf of the Departmet of Social Security - a obligatio uderlied i updated guidace from both the Geeral Medical Coucil ad the Departmet i although there is o separate paymet for completio of these reports. However, some other reports commoly requested by the Departmet do attract a separate fee. Geeral practitioers are also icreasigly asked to provide patiets' isurace compaies with certificates ad writte reports, for a fee, ad the British Medical Associatio told us that the demads o geeral practitioers for writte iformatio o their patiets are placig practices uder cosiderable strai. The Regulatory Impact Uit of the Cabiet Office is curretly studyig ways of better maagig this work, icludig improved targetig of the iformatio required ad the applicatio of iformatio techology. The award of Icapacity Beefit is sometimes based o isufficiet evidece of icapacity 3.23 Whe outsourcig the medical services, the Departmet cosidered that there was scope for better targetig of those Icapacity Beefit cases where examiatios were really ecessary, to avoid the risks of both uder ad over-examiatio. Whilst the Beefits Agecy ca specifically ask for a customer to be examied, the decisio o whether or ot to examie is ofte made by SEMA Group advisers usig their professioal judgemet ad the evidece available. The fee payable by the Departmet is the same i either case. To guard agaist the greater profitability of scrutiy work leadig to a reductio i examiatios, the Departmet stipulated i the cotract that the overall percetage of scrutiy referrals resultig i examiatios should ot fall below 20 per cet. Ad where a acceptable reductio o examiatio rates did results i greater profitability, the Departmet were etitled to recover a proportio through the aual cotract reegotiatio process Durig 1999, cocers arose withi the Beefits Agecy that some claimats were beig passed as "ufit for work" without sufficiet evidece of icapacity. Followig reviews at idividual beefit offices (Figure 21), the Departmet i Jue 2000 carried out a formal audit of 400 radomly selected cases which had bee passed as ufit for work o the basis of scrutiy. The results showed that i 20 per cet of cases the doctor had ot complied with the guidace ad i a further 10 per cet there was doubt over the doctor's iterpretatio. Cosequetly some customers who might well have bee foud ieligible for beefit were ot examied. As a result, SEMA Group will retrai all doctors who udertake this work ad the Departmet have redrafted the guidelies to doctors to clarify the policy o whe to request a examiatio The Departmet deliberately desiged the cotract to try to cut dow uecessary Icapacity Beefit examiatios, but i doig so they created a risk that the drive to icrease efficiecy ad profit margis would cause the cotractor to reduce the rate of examiatio too much, with attedat risks to the accuracy of beefit paymets. We foud o evidece that there has bee a deliberate attempt by SEMA Group to do this. But we cosider that the Departmet's ad SEMA Group's focus o reducig turaroud time for medical referrals, i the first two years of the cotract, may have iadvertetly led to lapses i the stadard of evidece gatherig. The Departmet are ow reegotiatig the cotract so that the compay will make a broadly similar rate of retur from examiatios as from scrutiies. 21 Reviews at idividual beefit offices led to cocers about the umber of Icapacity Beefit cases passed as "ufit for work" Haley District Beefit Office checked a sample of 343 cases retured by SEMA Group over a four-day period A group of 20 Icapacity Beefit cases origially passed as "ufit for work"after scrutiy by SEMA Group doctors were set back after cocers from Beefits Agecy staff at Burley District Beefit Office Forms had bee issued to the geeral practitioer for further iformatio i 135 cases Oe customer was cofirmed as "ufit for work" after further scrutiy 42 of these had ot bee retured at the time of scrutiy by SEMA Group 35 cases passed as ufit for work without additioal evidece 7 customers referred for examiatio 93 forms retured 19 customers were subsequetly set for examiatio after all 10 customers were cofirmed as "ufit for work" after examiatio 7 customers were foud fit for work after all ad disallowed beefit after examiatio 2 customers were disallowed beefit after failig to atted the examiatio without "good cause" part three 33

39 part three 34 Difficulties i obtaiig evidece from cosultats ad specialists also lead to uecessary examiatios for disability allowaces 3.26 I assessig the eligibility of Disability Livig Allowace or Attedace Allowace customers, the Departmet geerally cosider whether other forms of evidece ca support a accurate decisio before requestig a medical examiatio by a SEMA Group doctor. If too may uecessary examiatios are requested this will cause uecessary stress ad icoveiece to customers ad also icrease the costs of medical referrals to the Departmet. But i may cases decisiomakers are uable to obtai evidece from cosultats or specialists treatig the customer, eve after a umber of weeks. A examiatio is the required. Beefits Agecy staff told us that before the outsourcig there was a iformal limit o the umber of requests for examiatio - oly 20 per cet of all cases could be examied ad i other cases writte reports had to be chased up repeatedly. There is o loger such a limit, ad oe Disability Beefit Cetre we visited had icreased its requests for examiatios by a factor of four i oe year. A moitorig exercise at Newcastle Disability Beefit Cetre showed that i 25 per cet of examiatios a more appropriate source of evidece tha examiatio could have bee chose. Better traiig ad feedback for decisio-makig staff could improve the use of medical evidece 3.27 To make accurate decisios o beefit etitlemet, the Beefits Agecy eed also to iterpret accurately the medical evidece they obtai. The results of a sample of 435 appeals cases surveyed by the ew Appeals Service i October 1999 idicated that i some 25 per cet of those decisios they chaged, the iterpretatio of the medical evidece, whether from SEMA Group or the customer's doctor, was a importat factor. Although this sample was ot statistically represetative, it icluded a large proportio of disability-related beefits Our visits to beefit offices highlighted that, to make the right decisios cosistetly, decisio makers eeded: a comprehesive kowledge of the beefit rules ad experiece i their iterpretatio; iitial traiig which covers the admiistrative ad medical aspects of the work; access to advice from medical advisers as ad whe required; ad support ad feedback o the outcome of their decisios ad ay relevat medical advacemets SEMA Group are required to provide a o-demad local medical advice service for decisio-makers, ad performace i dealig with equiries is oe of the service levels agaist which they are measured. A August 2000 survey of decisio-makers coducted by the Disability ad Carer Beefits Directorate cocluded that overall staff were ot satisfied with the service provided locally ad that it was ot beig used to its full potetial. Ad durig our study decisio-makers at six District Beefit Offices ad two Disability Beefit Cetres told us that: decisio-makers at District Beefit Offices rarely used the advice service, preferrig to cosult their ow colleagues; decisio-makers at Disability Beefit Cetres felt discouraged from usig the service because some doctors behaved i a uhelpful ad uapproachable way; at both District Offices ad Disability Beefit Cetres, staff felt reluctat to cosult medical advisers because of the pressure of work ad the additioal time it would add Although Beefits Agecy staff prepare some 150,000 submissios for appeals tribuals every year for disability ad icapacity beefits, at oly two of the six District Beefit Offices we visited did those writig the appeals atted the tribual or receive feedback from tribuals o the results of appeals. Decisio-makers told us they would fid iformatio o the outcome ad causes of appeals useful i doig their work, but they felt that i may cases it would ot have helped them make a better decisio. They believed the mai reasos for successful appeals agaist disallowace of beefit were: ew evidece was produced at the tribual that had ot bee available to the decisio-maker; the customer's attedace at the tribual caused the customer's evidece to be treated more sympathetically; the customer's coditio had chaged by the time the tribual took place; or the tribual "just took a differet view" These fidigs reflect the view of our workshop group, which cocluded that buildig a better relatioship with the Appeals Service was crucial to improvig the delivery of correct decisios i disability beefits. The group oted that at preset a failure of commuicatio ad uderstadig betwee the Beefits Agecy ad appeals tribuals produces a culture where decisiomakers believe there is othig they ca do to avoid decisios beig overtured o appeal. The Departmet have ow begu to look at ways i which the results ad mai messages from appeals tribuals ca be fed back to improve the quality of iitial decisio-makig.

40 Part 4 The Departmet, workig through SEMA Group, eed to improve service to customers 4.1 A key aim of the "Moderisig Govermet" White Paper is to make sure that public service users, ot providers, are the focus, by matchig services more closely to people's lives. The Departmet are expected to provide services that are resposive to customers' eeds ad treat them fairly. A uderlyig level of dissatisfactio ad complait is perhaps ievitable i view of the sesitive ature of medical assessmet, the eed for judgemets to be made ad the likelihood that some customers may have their beefit reduced or take away as a result. The previous i-house service experieced mixed customer satisfactio ratigs. This part of our report shows that the outsourced service has ot yet achieved a sigificat chage. There are cocers that service to customers is ot yet adequate The Departmet have limited leverage to oblige SEMA Group to raise stadards 4.2 The Departmet's cotract requires SEMA Group, as a miimum, to meet the Departmet's curret service stadards, icludig the Beefits Agecy's Customer Charter. The stadards specified i the cotract are broadly similar to those i the Customer Charter. They cover, for example, the time a customer ca expect to wait before beig see, the availability of iformatio, equality of treatmet for all customers, ad the help to be provided for people with special eeds. The cotract also covers dealig with equiries ad complaits withi set timescales, customers' travel arragemets ad travel expeses, ad the cacellatio of examiatios ad alterative appoitmets. The cotract does ot, however, lik paymets to the achievemet of the stadards set. 4.3 The mai ways i which the Departmet gai feedback o the quality of services is from mothly reports by SEMA Group o the results of customer satisfactio surveys, ad regular aalyses of complaits. The Departmet see idividually oly those complaits about SEMA Group which are routed through them, ad these represet a small proportio of the total. They recogise that there is a eed for some form of idepedet validatio to satisfy themselves ad customers that every complait is beig recorded ad is beig take seriously, ad that all ecessary corrective actio is beig take. 4.4 The Departmet ca compare survey results across the cotract packages, ad i July 2000 they sought a more detailed aalysis of complaits for each Medical Examiatio Cetre. Further aalyses of this type could help to show where problems are arisig, the uderlyig causes ad possible areas of good practice. SEMA Group's surveys suggest that most customers are satisfied overall with the service 4.5 While the cotract does ot specify a target customer satisfactio level, SEMA Group surveys suggest that betwee 75 per cet ad 85 per cet of customers are geerally satisfied with the service provided, both at examiatio cetres ad at customers' homes, although the survey methods used limit the reliability of these results (Figure 22). They also idicate that most customers are cotet with the coduct of examiatios. part four 35

41 22 Overall customer satisfactio with services at Medical Examiatio Cetres Per cet Notes: Medical Examiatio Cetres Home visits MAM J J A S O N D J F M A M J J A S O N The surveys were desiged withi the Departmet ad SEMA Group without exteral professioal advice, ad the process by which the results were gathered was ot idepedetly validated. The cotract does ot specify how surveys are to be doe ad to what stadard. The umber of customer resposes varied greatly from moth to moth because differet beefits were sampled each moth. The uusually high satisfactio rate for home visits i Jauary 2000 was based o oly 15 resposes, while the February 2000 survey of examiatio cetres, which had a overall satisfactio rate of 76 per cet, was based o some 1184 resposes. I August 2000, followig advice from the Natioal Audit Office's cosultats from NOP Research Group Ltd, SEMA Group bega to sample across the beefits each moth to provide more cotiuous assessmet. 2. Respose rates for Icapacity Beefit ad Disability Livig Allowace/Attedace Allowace averaged about 70 per cet, with lower respose rates from the smaller beefits. 3. April ad October 1999 ad April 2000 surveys covered Disability Livig Allowace ad Attedace Allowace examiatios oly, both of which are carried out i home visits. Therefore there are o data o examiatio cetres for these moths. Source: Surveys by SEMA Group The umber of recorded complaits about SEMA Group's performace is icreasig 4.6 I the first 2 years of the cotract, SEMA Group received about 4,000 recorded complaits a year about its services. The umber of complaits is icreasig to a aual average of approximately 5,000 (Figure 23). This may be due partly to improved complaits recordig. The problems experieced i schedulig appoitmets ad i recruitig doctors (paragraphs 2.4 ad 3.15), together with more recet publicity associated with the Social Security Select Committee's report i April 2000 may also have prompted more customers to complai. However, disability rights groups advisig beefit customers told us that some customers who are dissatisfied with the treatmet they have received are evertheless dissuaded from makig a complait either because they fear it may affect their beefit, or because they are ot clear about how to complai. 24 Aalysis of complaits received before ad after outsourcig Before outsourcig, most customer complaits were about how doctors coducted examiatios admiistratio 8% waitig time 4% dispute over fidigs 14% legth of examiatio 6% other 10% cotet of examiatio 17% doctor's maer 41% I the period Jue to August 2000 most complaits were still about the coduct of examiatios part four Complaits received about SEMA Group from September 1998 to August 2000 umber of complaits received 1,600 1,400 1,200 1,000 Source: Sep - Dec - Mar - Ju - Sep - Dec - Mar - Nov Feb May Aug Nov Feb May Departmet of Social Security Ju - Aug Sep - Nov travel costs (ew category) other 5% 6% admiistratio 8% waitig time 5% dispute over fidigs 19% legth of examiatio 7% doctor's maer 29% cotet of examiatio 21% Notes: 1. The data used i the upper chart relate to the ie moths immediately prior to outsourcig. The lower chart relates to the quarter eded August Source: 2. The complaits category "travel costs" appears oly i the lower chart as it was itroduced after outsourcig. Departmet of Social Security

42 Most complaits received are about doctors' attitudes ad the coduct of examiatios, but the orgaisatio of examiatios is also sigificat 4.7 Before outsourcig, most customer complaits (64 per cet) were about what wet o i the medical examiatio. Some 41 per cet were about doctors' attitudes; the way doctors coducted examiatios was the subject of fewer complaits (17 per cet), as show i Figure Sice outsourcig some 57 per cet of customer complaits still relate to what goes o i medical examiatios although fewer are about the doctor's maer (Figure 24). Volutary ad disability rights groups suggested to the Social Security Select Committee that some doctors were discourteous, asked iappropriate questios or behaved i a icosiderate maer. 4.9 The level ad ature of complaits differ both across the 12 Medical Service Cetres (Figure 25) ad depedig o whether the customer is examied at home (almost all Disability Livig Allowace ad Attedace Allowace customers), or atteds a examiatio cetre (almost all Icapacity Beefit customers). Figure 26 overleaf shows that for both home visits ad examiatios at a cetre, the coduct of the examiatio itself, icludig the doctor's maer, is importat. But for those customers attedig a examiatio cetre, appoitmet arragemets ad waitig times are also very importat, whereas, perhaps uderstadably, these are less importat for customers who are waitig at home for the doctor The remaider of this part of the report looks at the causes of customer dissatisfactio with the coduct of examiatios; maagemet of appoitmets ad waitig times; how the service hadles the differet eeds of wome ad ethic miorities, a particular area of cocer i the Social Security Select Committee report. It also cosiders the actio beig take by the Departmet ad SEMA Group i respose to the recommedatios of the Social Security Select Committee. The way examiatios are coducted ad the explaatios give to customers ca affect both customer care ad the quality of the medical report 4.11 The cotract requires that at all medical examiatios, SEMA Group doctors shall: allow customers sufficiet time to give their relevat medical history; maitai a o-adversarial maer; explai the purpose of the examiatio ad what it etails; 25 Customer complaits, aalysed by Medical Services Cetre The level ad ature of complaits differ across the 12 Medical Services Cetres 1.8% Complaits as a percetage of examiatios 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Ediburgh Birmigham Cardiff Glasgow Machester Newcastle Sutto Nottigham Wembley Leeds Bootle Bristol Key others waitig time, travel expeses, admiistratio ad accommodatio Note: doctor's maer, cotet ad legth of examiatio ad cliical fidigs The data used relate to the quarter to August 2000, ad show the umber of complaits received as a percetage of examiatios by each cetre. part four Source: Departmet of Social Security 37

43 26 Aalysis of customer complaits categories by the two mai beefit groups 80% 70% 68% 60% 50% 48% 40% 30% 20% 10% 0% 31% 12% 9% Icapacity Beefit (maily examied at a examiatio cetre) 3% 21% 8% Disability Livig Allowace/Attedace Allowace (maily examied at customer's home) Key issues relatig to the examiatio itself issues relatig to the admiistratio ad waitig time Cliical fidigs Others Note: The data used relate to the quarter eded August The total umber of complaits received i the period was 1,353. Source: Departmet of Social Security part four 38 perform the examiatio i a maer that avoids uecessary discomfort to the customer; ad aswer ay appropriate relevat medical questios posed by the customer without givig a opiio o the outcome of the claim or medical coditio The coduct of examiatios ot oly affects customer care but ca also ifluece the quality of the medical report. For istace, if the doctor does ot put the customer at ease, they may ot disclose importat iformatio about their coditio which is relevat to the report. But it is iheretly difficult for ayoe ot preset at the examiatio to verify whether the doctor acted appropriately, so compliace with these requiremets is ot liked to paymets uder the cotract The Departmet cosider that the higher level of complaits arisig o home visits about the coduct of examiatios may be due to customers' expectatios that the examiatio will be like a visit from their geeral practitioer, which may well lead to disappoitmet. The SEMA Group doctor will ot be seekig to alleviate a customer's medical coditio or prescribe medicie, ad the purpose of the examiatio may be oly to cofirm oe aspect of the customer's coditio. If the examiatios are ot explaied ad coducted i a sesitive way, the doctor could appear brusque ad ucarig. Better preparatio of customers i advace, to esure that they kow what doctors are goig to do ad why, could reduce levels of complait, as well as helpig to improve the quality of the resultat reports. Improved traiig of doctors i customer care ow beig provided should icrease awareess of the eed for greater sesitivity i examiig customers at home. The schedulig of examiatios of customers at SEMA Group premises remais a area of particular difficulty 4.14 A cotiuig cause of cocer is that customers are beig tured away usee from scheduled examiatios. I priciple, a fully effective system for schedulig the examiatio of customers would esure that doctors always have customers to see durig their examiatio sessios ad that all customers who atted are see. I practice, this has prove difficult to achieve both before ad after outsourcig because a sigificat miority of customers either do ot accept the appoitmets available, or accept but do ot atted I March 1998, before outsourcig, 20 per cet of Icapacity Beefit customers ivited for examiatio advised that they were uable to atted, ad a further 20 per cet of those with a appoitmet did ot atted. (The actio take if customers do ot atted is determied by decisio-makers, ad is discussed i more detail i Appedix 2). Though the Departmet could i some cases make late substitutios, the et "drop-out" rate was 35 per cet. The Departmet hoped that outsourcig would help to address this waste of resources.

44 27 Compariso of the umbers of Icapacity Beefit customers who had their appoitmets cacelled before ad after outsourcig 1 Reaso for customers ot beig see Customers set home usee Appoitmets cacelled by telephoe Before outsourcig December 1999 Before outsourcig December 1999 November August 2000 November August 2000 March 1998 mothly average March 1998 mothly/average mothly average mothly average TOTAL set home usee 1,612 1, (Percetage of examiatio appoitmets) 3 (2.1%) (2.9%) (0.8%) (0.6%) Broke dow as follows: Doctor uable to see customers due to overbookig 40% 44% 6% 14% Doctor productivity lower tha expected (icludig difficult cases) 14% 12% 5% 7% Doctor cacelled the sessio 10% 10% 83% 69% Customer would ot wait to be see (more tha 30 miutes) 13% 11% Less tha 0.5% Less tha 0.5% Other reasos 2 23% 23% 6% 10% Notes: 1. Figures are for March 1998, the last moth prior to begiig of trasitio of the service to SEMA Group. 2. Other reasos iclude cliets ufit to be see, accommodatio problems, or admiistrative errors. 3. The average umber of appoitmets betwee November 1997 ad March 1998 was 75,399; the average for December 1999 to August 2000 was 49,807. Source: Departmet of Social Security 4.16 Because SEMA Group are paid for each completed report, they have a strog icetive to esure that as may customers as possible atted ad that their staff are fully employed o productive work. However, sice outsourcig the average proportio of customers who fail to atted their appoitmets has ot reduced. Betwee December 1999 ad May 2000 it rose to 23 per cet. I such cases SEMA Group icur costs but receive o icome. There is also a risk that some customers ot examied will cotiue to receive beefits to which they are ot etitled The mai sigle reaso for customers beig tured away usee cotiues to be excess attedace due to overbookig. Other reasos iclude: doctors takig loger tha expected to complete examiatios; customers uwillig to wait loger tha the maximum expected time of 30 miutes; doctors cacellig sessios too late to iform customers To allow for customers ot attedig, the i-house service practised overbookig. This has bee cotiued by SEMA Group. More customers are ivited to atted tha there are appoitmet "slots". However the umbers who do ot atted is volatile ad if overbookig does ot match the rate of o-attedace it ca result i large umbers of customers beig tured away usee. Before outsourcig o average aroud three per cet of customers a moth were tured away or had their appoitmets cacelled by telephoe. Results to date suggest that the situatio has deteriorated slightly sice outsourcig, ad the umber has rise to 3.5 per cet (Figure 27). The level of cacellatios varies sigificatly betwee areas, exceedig 7 per cet i Bootle (Figure 28). The results of simulatio modellig of the overbookig problem are at Appedix 2 ad show that to avoid turig away customers, the rate of overbookig eeds to be matched accurately to the actual rate of o-attedace. Although there may be some exceptioal cases where late cacellatio of appoitmets by SEMA Group is uavoidable, all of the above factors ca to some extet be maaged. Turig away customers causes them icoveiece ad uecessary distress as they will be required to atted agai for a further appoitmet. The Departmet have repeatedly expressed their cocer to SEMA Group about the umber of customers tured away, but there is o direct moetary icetive o the compay to moderate overbookig Ufilled examiatio slots ad travel expeses paid a secod time to customers tured away are costly for SEMA Group. Uecessary travel expeses aloe are likely to cost 75,000 a year. If the umber of customers failig to atted ad the umber of customers tured away usee could be reduced, more examiatios could be completed withi the resources available. Part of the solutio lies i takig active measures to reduce the proportio of customers who do ot atted part four 39

45 28 Icapacity Beefit customers tured away from appoitmets without beig see i each medical examiatio area 1 The diagram shows that the percetage of customers with a appoitmet who are beig tured away without beig see varies from oe medical services cetre to aother Customers tured away usee as a percetage of appoitmets scheduled 0% 1% 2% 3% 4% 5% 6% 7% 8% Glasgow Cardiff Newcastle Leeds Bristol Ediburgh Birmigham Nottigham Machester Sutto Wembley Bootle Notes: 1. The diagram covers the period November 1999 to August The figure to the right of each bar idicates the actual average umber of customers set home usee i the period, while the height of the bar idicates the umber set home as a percetage of the scheduled appoitmets i the same period. Source: Departmet of Social Security data examiatios, ad the eed for overbookig. There is also scope for further aalysis of the reasos why customers fail to atted, ad whether there are differet attedace patters associated with differet groups of customers, ad with differet geographical areas The Departmet ad SEMA Group have piloted improved procedures sice 1998, though these have ot yet bee itroduced atioally, ad there is also scope to lear from good practice i other sectors such as the Health Service ad private medical isurers (Appedix 8). The key lessos are that: part four 40 appoitmets should be booked at times that are mutually coveiet to customers ad staff rather tha beig imposed; ad customers should be give the optio to atted appoitmets i the late afteroo or eveig. The possibility of some examiatios beig carried out at Geeral Practice surgeries rather tha examiatio cetres could be cosidered as a way of helpig to match this work with doctors' other commitmets, although customers should of course ot be examied by their ow geeral practitioer, or aother i the same practice. Explorig the possible use of other health professioals such as urses may provide greater flexibility i appoitmet times.

46 There is so far oly limited evidece o how well the service hadles the differet eeds of wome ad ethic miorities 4.21 Uder the cotract, SEMA Group are required to "comply with ay reasoable requests to accommodate claimats who have special eeds". Provisio for special eeds might iclude, for example, a female examiig doctor where a customer requests it, or iterpretig facilities for customers whose first laguage is ot Eglish. However, there are o performace measures or paymet icetives liked to these requiremets Iterest groups who advise beefit customers have raised with the Departmet cocers about what they see as poor customer service to ethic miority groups; specifically failure to provide iterpreters ad female doctors, ad geeral cultural isesitivity. Ad the Social Security Select Committee were cocered that iformatio provided to customers ad traiig for SEMA Group medical staff were iadequate i these areas. Moreover, the Parekh Report o The Future of Multi- Ethic Britai 1 (published i 2000) stressed that issues of potetial racial discrimiatio ad geder discrimiatio are ofte iter-liked ad ought to be cosidered together. We looked at what evidece the Departmet ad SEMA Group have that they are providig a acceptable stadard of care to all customers, i the light of the Race Relatios (Amedmet) Act , which comes ito force i April This Act places a ew positive duty o public authorities to promote race equality i all their activities The umber of actual complaits about racial or geder discrimiatio or cultural isesitivity i the treatmet of customers by SEMA Group is small, but iterest groups poit out that some customers may be dissuaded from complaiig. Ad prior to December 2000, the Departmet ad SEMA Group did ot record complaits about cultural isesitivity as a separate category. They have ow begu to do so Prior to August 2000, SEMA Group did ot collect as part of their surveys iformatio about customers' geder, age, ethic origi or special eeds to allow them to evaluate how well they respod to those eeds. They are ow begiig to address this ad their surveys ow idetify the views of customers withi these broad groupigs. Although the results are too early to be coclusive, the first three moths' data show a slightly lower rate of satisfactio with home visits amog wome, as compared with me. This is oe area the Departmet ad SEMA Group could moitor with a view to assessig the eed for chages i the traiig they provide to visitig doctors. 1 Report of the Commissio o the Future of Multi-Ethic Britai, established by the Ruymede Trust 2 The Race Relatios (Amedmet) Act received Royal Asset o 30 November Its mai provisios are expected to come ito force i April part four 41

47 4.25 It is difficult to draw ay further coclusios from these ew surveys as the umbers of people from ethic miorities respodig are too small to be statistically valid. However, the low umbers could i themselves be a cause for cocer. It is possible that the method of surveyig used by SEMA Group could be failig to reach sufficiet umbers of people from ethic miorities, so that the umber of resposes received from these groups is disproportioately small. However, the Departmet do ot collect data o the overall profile of customers claimig beefits, i terms of their ethic origi, ad so they caot curretly determie whether or ot the survey results are represetative. The Parekh Report stated that "it is vitally importat that proper moitorig by ethicity should take place throughout the health ad welfare systems". The Race Relatios (Amedmet) Act will also require orgaisatios to idetify through moitorig where there are differet outcomes for differet ethic groups so that they ca take actio to promote greater equality SEMA Group ackowledge that shortages of female doctors amog their workforce, especially i some ier city areas, mea that they caot always provide a female doctor whe a customer requests oe, although uder the cotract they are required to make reasoable edeavours to do so. Of 216 full-time doctors, oe third are female, ad aroud oe sixth of the 3,000 fee-paid doctors who carry out most of the examiatios are female. O the provisio of help to those whose first laguage is ot Eglish, there is o evidece that SEMA Group have failed to respod to direct requests for iterpretatio services, but there is equally o iformatio o the umber of occasios o which they have respoded The Govermet also aouced ew targets for SEMA Group which have bee accepted by them, icludig: withi oe year to trai all doctors i the assessmet of people with metal health problems; behaviours, attitudes ad sesitivities for dealig with people with disabilities; ad distress-avoidig techiques for the examiatio of people with musculo-skeletal coditios; ad withi two years to improve customer satisfactio to at least 90 per cet I additio, the Departmet ad SEMA Group are: chagig all appoitmet ad related letters, to explai more clearly what will happe durig the examiatio, highlight the availability of a iterpreter service, or a same-geder doctor, o request, ad describe the complaits procedure; issuig revised guidace icludig additioal material o customer care ad appropriate behaviour for doctors who carry out assessmets o claims for Disability Livig Allowace or Attedace Allowace; ad idetifyig ways to facilitate meetigs betwee SEMA Group ad iterest groups. I respose to the Social Security Select Committee report, the Departmet ad SEMA Group are takig steps to improve customer satisfactio 4.27 I April 2000 the Social Security Select Committee i their report o Medical Services (HC ) cocluded that outsourcig had ot improved services to the public. They recommeded improvemets i the overall treatmet of customers ad of specific groups, the hadlig of complaits from customers ad the system of customer feedback. part four 4.28 The Govermet's respose to the Select Committee i Jue 2000 gave a strog commitmet to improvig the stadards of service to customers. Key actios icluded updated traiig for doctors i all aspects of customer care, reviews of commuicatios with customers ad complaits procedures ad the developmet by SEMA Group of a database o idividual doctors' medical skills ad performace, icludig their customer care. 42

48 Appedix 1 Chroology of evets Date Evet Early 1990s A surge i Ivalidity Beefit applicatios occurred, compoudig a steady rise i the caseload over the previous decade The Departmet decided to depart from the cetrally agreed fee rate paid to doctors for idepedet medical examiatios ad egotiate their ow rate Disability Livig Allowace was itroduced, with a move from maily medical examiatio to more selfassessmet by disabled customers. July 1992 The Departmet decided to place the medical service withi the market testig programme. April 1995 Icapacity Beefit was itroduced A collaborative study was completed with the commercial sector to look at optios for outsourcig. September 1995 Departmetal officials recommeded to Miisters that outsourcig should take place. November 1995 The recommedatio to outsource was approved by Miisters. February th Jue 1996 July 1996 August 1996 November 1996 Jauary 1997 April 1997 April 1997 May 1997 May to August 1997 July th August st September 1997 The Departmet's wider Chage Programme, to deliver improved services across the board at 25 per cet lower costs over three years, was itroduced. The Departmet advertised i the Official Joural of the Europea Commuities for the supply of medical services. The Departmet issued questioaires to potetial providers, icludig SEMA Group, who respoded with iformatio. The Departmet issued their operatioal requiremets. The Departmet issued their more detailed statemet of service requiremets. Potetial suppliers commeced "due diligece" exercises ad audits of the Departmet's relevat properties ad assets to esure they could meet their obligatios. EDS withdrew from the competitio. The origial Miisterial deadlie for cotract sigig passed. Icomig Miisters were briefed o the outsourcig so far. Miisters cosidered whether to go ahead. Bidders submitted their proposals. The Departmet discussed proposals ad requiremets with the four remaiig shortlisted bidders. New Miisters gave their fial approval to go ahead with outsourcig. The Departmet ivited the bidders to submit their best ad fial offers, with the Ivitatio to Teder. Aderse Cosultig withdrew from the competitio without biddig. Remaiig bidders submitted their offers. The Departmet evaluated the bids received. 18th September 1997 The Departmet issued a revised Ivitatio to Teder documet. 5th November 1997 The Departmet ivited bidders to submit reteders. 13th November 1997 Bidders submitted their reteders. 20th February 1998 The cotract was awarded to SEMA Group. 16th March 1998 Trasitio of the medical services to SEMA Group bega. 1 September 1998 Full "cutover" or trasfer of the service to SEMA Group took place. October 1998 SEMA Group took back the work of schedulig appoitmets which had bee carried out by their subcotractor Nestor, ad had ru ito difficulties. Sprig 1999 Cocers were raised by Beefits Agecy users over the umber of Icapacity Beefit cases passed o scrutiy. October 1999 Deductio of service credits for failure to meet service level targets from SEMA Group by the Beefits Agecy bega. 12 April 2000 The Social Security Select Committee reported o Medical Services. Jue 2000 The Govermet respoded to the Select Committee's report. September 2000 SEMA Group ad Nestor itroduced a 3 per cet pay rise for fee-paid doctors. November 2000 SEMA Group ad Nestor aouced that doctors would i future be paid for attedig traiig courses. appedix oe 43

49 Appedix 2 The Natioal Audit Office s methodology We held a workshop with a group selected from aroud the Departmet. With facilitatio from our cosultats, of the Uiversity of Strathclyde Maagemet Sciece Departmet, the group followed cogitive mappig techiques to focus o the maagemet of Icapacity Beefit, ad suggested possible improvemets. This techique ad the results of the workshop are detailed later i this Appedix. Part 1: The Departmet outsourced the medical assessmet of icapacity ad disability beefits to improve the performace ad value for moey of this vital service. We reviewed the procuremet process ad the cotract betwee the Departmet ad SEMA Group usig Natioal Audit Office expertise i public sector outsourcig cotracts. We focused o the fiacial ad qualitative evaluatio of bids, the operatio of the paymet regime i the cotract ad the Departmet's arragemets for cotract maagemet. We costructed process maps ad simulatio models of the Icapacity Beefit process, with our cosultats from the Uiversity of Strathclyde ad Visual Thikig Iteratioal Ltd. These charts ad models drew o the results of the cogitive mappig workshop ad the visits to beefit offices to idetify potetial improvemets i the Icapacity Beefit process. The detailed results are show later i this Appedix. We visited ie Beefits Agecy offices to examie the processig of icapacity ad disability beefits ad discuss with staff the service they received from SEMA Group. The offices visited icluded six District Beefit Offices, processig Icapacity Beefit ad other locally admiistered beefits, at: Dudee Sutto Truro Cardiff Haley Totteham These represeted six of the 13 Area Directorates of the Beefits Agecy. We also visited three of the Disability ad Carer Beefits Directorate's twelve Disability Beefit Cetres, Part 2: Sice outsourcig, the efficiecy ad speed of medical assessmet have improved but savigs could be made by reducig delays i Beefits Agecy processes. We reviewed maagemet iformatio o performace ad quality from the Departmet ad SEMA Group. We discussed with the Departmet's disability ad icapacity beefits policy braches the resposiveess ad flexibility of the medical assessmet services. Ad we discussed the stadards of decisio-makig ad appeals with the Presidet of Appeals Tribuals, Judge Harris. processig Disability Livig Allowace ad Attedace Allowace at: Bootle Newcastle Blackpool Part 3: Improvemets i the quality of assessmets have yet to be fully delivered. We sought comparative iformatio o medical assessmet from the isurace idustry's Health Isurers' Forum via a questioaire. The iformatio provided icluded rates of pay for medical reports ad service quality issues. appedix two We held discussios with key iterest groups, icludig: Natioal Associatio of Citizes' Advice Bureaux; the Disability Alliace; the Royal Associatio of Disability ad Rehabilitatio; the British Medical Associatio; the Royal College of Geeral Practitioers; ad the Commissio for Racial Equality. Ad we reviewed evidece o Medical Services preseted to the Select Committee o Social Security to avoid duplicatio of coverage. Part 4: The Departmet, workig through SEMA Group, eed to improve service to customers. We visited six medical examiatio cetres ru by SEMA Group. O our visits we looked at the quality of accommodatio provided to customers, ad discussed with maagers the issues surroudig appoitmet maagemet ad customer care. 44

50 Results of cogitive mappig, process mappig ad simulatio modellig Durig our work o the maagemet of Icapacity Beefit, we used three techiques described below: cogitive mappig, process mappig ad simulatio modellig. This allowed us to idetify a issue with oe techique ad check or elaborate o it with aother, or "triagulate". Key fidigs, i terms of areas the Departmet ca address, are described i the fial sectio below. Cogitive mappig Cogitive mappig is a approach used to geerate a shared uderstadig of a complex issue, system or process by buildig a picture or "map" from iformatio geerated through discussio with those ivolved i the issue, system or process. It ca be used to assist orgaisatios i decisio-makig or strategy developmet or, as was the case here, to uderstad how decisios are made ad to explore the factors that help or hider the orgaisatio i achievig its objectives. With cosultats from the Uiversity of Strathclyde School of Maagemet Sciece, we held a workshop for staff from the Departmet ad SEMA Group ivolved i the maagemet of Icapacity Beefit at a rage of levels. With facilitatio from our cosultats, the group produced a set of "maps" which idetified issues affectig the efficiet ad effective maagemet of the beefit, ad the likages betwee them. The highest level map, below, shows the overall aim the group idetified, ad the 16 key issues they saw as importat i achievig it. The workshop, held at the begiig of our study, helped focus our efforts o the key issues, ad all 16 issues are reflected i the report as show below. Overall aim ad key issues idetified by staff at our workshop o Icapacity Beefit Decisio-makers should make a balaced decisio havig obtaied all relevat evidece ( ) Beefits Agecy should focus o protectig programme expediture ( ) Beefits Agecy should focus o reducig uecessary beefit paymets ( ) Beefits Agecy ad SEMA Group staff should work more effectively as parters (3.29) Improve the guidace o whe customers should be set for the persoal capability assessmet ( ) Esure that SEMA Group's performace agaist cotractual requiremets is effectively measured ad visible to users of the service ( ; ) Better quality metal health evidece should be obtaied from GPs ad SEMA Group ( ) Esure that doctors have adequate medical evidece whe completig scrutiy cases ( ) Beefits Agecy should revisit the Disability Livig Allowace Assessmet process (Appedix 7) Look at ways of improvig the quality ad accuracy of the medical examiatio ( ) Make better use of IT to improve the service (1.23; Appedices 3 ad 6) Note: Refereces i brackets idicate where these issues are covered i the mai body of the report. SEMA Group should improve appoitmet schedulig to icrease flexibility ad reduce failures to atted (2.17; ; Appedix 3) Make clear to the public, customers' advisers etc, what medical assessmet is for ad how it works ( ; ; 4.30) Employmet Service persoal advisers should work with decisio-makers to help obtai all relevat evidece (eg where customers atteds a drug rehabilitatio cetre rather tha the geeral practitioer) ( ) Reduce the icidece of failure to atted examiatios without otice by makig it clear to customers that they risk loss of beefit ad by makig it easier for them to atted (2.17; ; Appedix 3) Beefits Agecy should develop a better relatioship ad commuicate with the Appeals Agecy ( ) Esure that customers kow what to expect from the process ( ; 4.30) appedix two 45

51 Process mappig Followig the workshop, we examied the processig of Icapacity Beefit at six district beefit offices i differet Beefits Agecy Area Directorates. This ivolved observatio ad iterviews with staff workig o claims at each stage of the process, ad examiatio of case examples. The followig process map of the system resulted from this work. Employed ad still sick after 28 weeks o Statutory Sick Pay? Self-employed ad ufit to work? Uemployed ad ufit to work? Customer seds claim form ad GP medical certificate to local beefit office. Medical certificate i order? Customer receives beefit. Beefit office staff set a date for the case to be checked agai, accordig to the disease or coditio. Computer system brigs cases forward for actio accordig to the date set, uless o further review is proposed. Cases ca be deferred to a later date if staff resources are ot available. If the customer is potetially exempt from medical testig because of metal illess or termial illess a request for iformatio goes the GP. I most cases, beefit offices staff sed a questioaire to the customer, for further iformatio about the icapacity. Exempt? Not exempt? Beefits office staff allocate poits to the customer accordig to the level of icapacity ad refer cases to SEMA Group for advice, scrutiy or examiatio. Form ot retured? Beefit office stop the customer's beefit if the the form is ot retured after 6 weeks ad oe remider. Score more tha threshold? Customers scorig more tha the threshold are usually referred for scrutiy. SEMA Group decide whether to examie these cases or ot. Scrutiy carried out? Examiatio required? Score less tha threshold? Customers scorig less tha a set threshold are referred for examiatio. SEMA Group arrage examiatio ad otify customers. Results retured to beefit office Decisio-maker decides whether customer will cotiue to receive beefit. Customer fails to atted without otice or uable to atted for a secod time? Customer etitled to beefit? Customer failed to atted with o "good cause"? appedix two Beefit office staff record o the system the SEMA Group doctor's advice o whether, ad how soo, the case should reviewed. Customer ot etitled to beefit? Beefit disallowed. 46