Paper Title: Financial Plan 2013/14

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Wendy Anabel Scott
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1 Agenda Item No: 4.2 Date of Meeting: 25 th April 2013 Paper Title: Financial Plan 2013/14 Decision Discussion Information Follow up from last meeting Report author: Report signed off by: Noreen Coles, Deputy Chief Finance Officer Alan Pond, Chief Finance Officer Purpose of the paper: To propose draft CCG budgets and locality allocations for 2013/14 Conflicts of Interest involved: n/a Recommendations to the Governing Body To agree draft budgets and Locality allocations for 2013/14 as proposed. 1

2 Financial Plan 2013/14 Governing Body 25 th April Purpose of the Paper To seek the Governing Body s agreement to the draft CCG budgets and locality allocations. 2 Appendices Appendix 1 : QIPP savings in acute commissioning Appendix 2: Planning assumptions 2013/14 3 Terms / Acronyms Used in the Report this section is mandatory as papers are made available to the general public Initials In full A&E Accident & Emergency CCG Clinical Commissioning Group EOESCG East of England Specialised Commissioning Group HCT Herts Community Trust HVCCG Herts Valleys Clinical Commissioning Group LA Local Authority NHSCB NHS Commissioning Board PBC Practice Based Commissioning PbR Payment by Results PropCo NHS Property Services (responsible for estates from 2013/14) QIPP Quality, Innovation, Productivity and Prevention 4 Introduction Draft CCG budgets for 2013/14 were discussed and agreed at the CCG Business meeting held on 28th March. Two options for calculating locality allocations were also considered, with one being favoured by the majority of localities. This paper presents the figures again and seeks the approval of the Governing Body to the CCG budgets and locality allocations proposed. 5 Financial Plan 2013/ CCG Allocation An analysis of the CCG allocation is shown in the table below. This includes an anticipated correction to the allocation of 6m related to specialised services. This is an estimate of the cost of services previously commissioned by the EOESCG, which will become the responsibility of the CCG on 1 st April at: Royal Brompton & Harefield, Royal Marsden, King s, Great Ormond Street, St. George s and Chelsea and Westminster. It also includes a share ( 2m) of the 6.2m of funding returned from previous years (which is the control total underspend the PCT is required to deliver in 2012/13). 2

3 Table 1: CCG Expected Allocation 2013/14 '000 Opening baseline 574,883 Growth 2.3% 13,222 Running Costs 14,000 Expected re specialised comm 6,000 Suplus brought forward 2,000 Total 610, Budgets The paper presented to the Business meeting on February 14 th compared the CCG s allocation with projected spend, if demand increases in line with previous years, and this showed a gap of 18.6m. A summary of the savings by broad budget heading is shown in the table below. Table 2: Summary of QIPP savings k Acute services 12,309 Mental health 1,166 Ambulance services 577 Primary care productivity 311 Community services 1,526 Prescribing 2,693 Total 18,583 Since the last Business meeting further work has been undertaken to build savings and projected growth into individual budget lines. Further details of the acute services figure, by individual Trust and scheme are shown in Appendix 1. These are the amounts built into the planning assumptions currently being negotiated with Trusts. This work will be finalised once contracts have been agreed but in the meantime the Governing Body is asked to agree budgets based on the work undertaken to date. In summary the basis is described below. Acute Services For acute PbR services, the trend of total growth in activity over the last 20 months has been examined for the CCG and extrapolated assuming the trend continues into 2013/14. This includes population growth and shows the following increases: Outpatient referrals +7.8%; Elective +4.6% Non elective + 3.2% A&E + 3.2% The projected activity has been costed using the tariff for 2013/14. Savings have been identified by scheme and Trust, largely aligned to investment in schemes such as HomeFirst as shown in Appendix 1. 3

4 For non PbR services outturn has been estimated based on Month 8 figures, split between the CCGs calculated on an actual basis (where available) rather than the historic basis currently used to report expenditure. A tariff reduction of 1.3% has been applied as per the national guidance. Growth has been added at 3.4%. An adjustment has been made for services transferring to the NHS Commissioning Board for specialised services (based on the national algorithm for PbR and estimated for non PbR) and for dental services; and to the Local Authority for GUM and screening services. Community Services The current HCT contract has been split between CCGs, largely based on the cost of staff working in each CCG area. This shows a shift of cost compared with 2012/13 from this CCG to HVCCG of approximately 1.6m. The rebased figure has also been adjusted for transfers to the NHSCB and Local Authority for health visiting, school nursing, GUM and screening services. The figures have been increased for population growth and non demographic growth, offset by QIPP savings, and the tariff reduction of 1.3%. Other non acute services The budgets are based on projected outturn adjusted for growth, tariff changes where appropriate, or inflation, and less QIPP savings. Prescribing The budgets are based on projected outturn as at month 6, plus growth of 5.67% less savings of 3.7%. A reduction of 2,435k has also been actioned by the DH related to drugs which will become the responsibility of the Local Authority. It is unclear how the cost of these drugs will be charged to the LA. Running Costs The allocation for the CCG is 14m. The budget has been set 186k lower related to QIPP savings. The total budget will be reviewed to assess potential for further savings. Reserves In line with national requirements, a transformation reserve has been established at 2% of the baseline and a contingency reserve at 0.5% of the baseline. Planned Surplus The CCG is required to deliver a surplus of 1% and this has been planned for accordingly. Summary A summary of the budgets is shown in the table below with more detail in Appendix 2. The Board is asked to approve these budgets for the CCG in total. These will be reviewed once contract sums are agreed, at which time further work will be done to disaggregate the total costs to locality level. 4

5 Table 3: Summary of CCG Budgets 2013/14 Budget Heading TOTAL '000 Acute commissioning 349,094 Community commissioning 36,683 Non acute commissioning 107,231 Prescribing 72,778 Other primary care 8,734 Running & corporate costs 13,814 PropCo commissioned services 844 Contingency reserve 3,011 Non recurrent transformation reserve 11,896 Surplus 1% 6,020 Total 610,105 6 Locality Allocations The allocation to be distributed to Localities is the CCG allocation after top slicing a number of budget headings, which are held at CCG level or are unrelated to list size. These are as shown in the table below. Table 4: Calculation of allocation to be distributed to Localities '000 Total allocation 610,105 Excluded from capitation Running Costs (13,814) Transformation Fund (11,896) Unattributable (5,098) Sawbridgeworth (1,278) PropCo commissioned (844) Contingency reserve 0.5% (3,011) 1% surplus (6,020) To be distributed to Localities 568,145 The amount top sliced for Sawbridgeworth relates to a specialised care home which is a PMS practice, where funding is totally unrelated to the size of population. The PropCo commissioned sum is funding allocated to the CCG to pay NHS Property Services Ltd for the cost of vacant space in property sited within the CCG. Locality allocations in 2012/13 were calculated using the PBC toolkit giving each locality a fair share of the total allocation to the CCG. Two options were considered for 2013/14. The first option was to give each Locality the same uplift (2.22%) on their 2012/13 allocation, after adjustment for the items transferring into and out of the CCG allocation. A standard uplift is consistent with NHS England s decision to give each CCG the same uplift, without recognising relative opening funding positions compared to fair shares or changes 5

6 in population size. The second option was to update the fair shares calculation used in 2012/13 to reflect list sizes at 1 st January This resulted in differential growth across localities, ranging from 1.86% to 3.2%, because of changes in population size and structure since last year. The options were discussed at the meeting held on 28 th March and option 1 was agreed. This results in the following allocations at locality level. The impact of some of the changes made to allocations (e.g. specialised services) is not yet known at Locality level and assumptions may need to be reviewed during the year. The Governing Body is recommended to approve these allocations and to agree that they should be reviewed during the year. Table 5: Locality Allocations if standard uplift applied to all Baseline 12/13 Total Growth Total allocation Growth Welhat 107,871 2, , % Stevenage 91,040 2,025 93, % N Herts 114,294 2, , % Upper Lea Valley 111,745 2, , % Lower Lea Valley 76,926 1,711 78, % Stort Valley & Villages 53,904 1,199 55, % Sawbridgeworth 1,278 Contingency 3,011 Running costs 13,814 PropCo Commissioned 844 Unattributable 5,098 Transformation Fund 11,896 1% surplus 6,020 Total CCG 555,781 12, ,105 7 Practice Allocations Each locality will decide the methodology it wishes to use to allocate funds to its practices. Figures will be circulated to locality leads shortly showing the allocations calculated using a number of options. 8 Risks The biggest single risk relates to the transfers in and out related to specialised services, i.e. the uncertainty about the definition of what is included in non PbR specialised services and their on going monitoring, whether the net effect will match the CCG allocation reduction, and the expectation that the CCG allocation will be increased by c 6m to correct errors we currently know about. A paper giving more detail of the risks and mitigations has been discussed at a recent Audit Committee meeting. Alan Pond Chief Finance Officer April

CCG FINANCE MONTHLY REPORT GUIDE January 2014

CCG FINANCE MONTHLY REPORT GUIDE January 2014 Contents Page INTRODUCTION 3 Example CCG Finance report 4 1. ACUTE COMMISSIONING 6 Payment by Results (PBR) 6 Market Forces Factor (MFF) 7 Contract Adjustments