Wyn Thomas-Assistant Director Community Partnership Development. To: (please tick all that apply)

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1 Board Paper March 10 th 2015 Item 15/52 Title: To improve health and provide excellent care FUNDED NURSING CARE AND CONTINUING HEALTH CARE RATES 2014/15 & 2015/16 Author: Responsible Director: Wyn Thomas-Assistant Director Community Partnership Development Geoff Lang Director of Strategy Summary Issues: of Key Informing board of the impact of applying the methodology, agreed by board in March 2014, to uplift Free Nursing Care (FNC) rates in and Seeking board approval to increase Continuing Health Care rates from in line with changes to Local Authority rates and the changes to the FNC rates. Action Required By Board: To: (please tick all that apply) Note Endorse Ratify Approve Key Impacts: (Please provide a short summary against all that apply) Corporate Objective Finance Quality Impact Assessment Standards for Health Services in Wales Equalities, Diversity & Human Rights Risk & Assurance Financial cost of 204,075 in and 543,728 in Disclosure: Betsi Cadwaladr University Health Board is the operational name of Betsi Cadwaladr University Local Health Board Board Coversheet v5.0 October 2014

2 FUNDED NURSING CARE AND CONTINUING HEALTH CARE RATES 2014/15 & 2015/16 1. Purpose To update the Board on the implementation of the agreed national methodology for inflationary increases to Free Nursing Care (FNC) rates and ask for approval to increase the Continuing Health Care (CHC) rates in line with increases to Local Authority rates from April Background and Context Board members will be aware from previous consideration at the Board meeting held on 27 th March 2014 of the current position in relation to the setting of the Funded Nursing Care Fee (FNC) for 2014/15. Prior to the commissioning of the Laing & Buisson Report in 2013 by the FNC Task Group on behalf of Health Boards - the FNC rate in Wales had for several years remained at a single rate of per client per week. This reflected the flat cash position experienced by Health Boards during this period in relation to their Welsh Government funded Financial Allocations. The fee was made up of two components - a payment for incontinence products and a sum of as a contribution to registered nursing costs. Taking the Laing & Buisson findings into account, in 2013 Health Boards agreed that: A 10% uplift be applied to the continence products component of the FNC rate, raising it from 10 to 11 per person per week. This uplift has been applied as an interim measure whilst work is undertaken to explore the potential for a national procurement model. It is possible that the greater purchasing power of the NHS in Wales would lead to efficiencies in cost without any reduction in quality. A staged uplift to the labour component of the FNC rate, raising the fee by up to as at the first of April At the March 2014 Board meeting, and based upon a recommendation from Chief Executives, Board members agreed that an Inflationary Uplift Mechanism be applied to the FNC rate for five years, following which it may be necessary to undertake a further review. The mechanism linked the labour element of the FNC rate to NHS pay awards, using a mid point Band 5 level as a proxy for care home employed registered nurses. The rationale for adopting the Inflationary Uplift Mechanism (IUM) included two principal factors it avoided the need to repeat the costly and manually intensive exercise undertaken by Laing & Buisson on an annual basis, and it also provided 1

3 care home providers with assurance that the rate will be adjusted in line with inflation for the coming five years. The IUM has therefore been used in considering the labour element of the 2014/15 FNC rate. 3. Current Position When the IUM was originally considered as an appropriate model to use to set the labour component of the FNC fees there was no real indication of what the IUM would produce as uplift for 2014/15. By the time the issue was considered by the Board for approval it was expected, based upon the work of the Pay Review Body, that it would produce a 1% uplift for the labour element of the FNC. However, local negotiations on pay within Wales have resulted in the WG Health Minister announcing a slightly more complicated two year pay deal. This deal is made up of two parts i.e. the first part being a one off payment to A4C Banded staff (equivalent to 0.76%) and the second part being a 1% recurrent pay increase applicable from the 1 st April Whilst the 2015/16 FNC rate can be adjusted easily by the application of the IUM and increasing the rate by the 1% announced by the WG Health Minister for that year, the decision to award a one off lump sum for 2014/15 makes the calculation of the IUM adjustment much more difficult. 4. Implications of the Welsh Pay Settlement on the FNC Rate Applying the IUM means that health boards will raise the labour element nonrecurrently by 0.76% (from to i.e. an uplift of 0.98 per week per client) from the 1 st April 2014 until the 31 st March For this period the new FNC rate would therefore be including the revised incontinence fee of per week per client. Health Boards will then need to apply a recurrent uplift of 1% on the labour element from the 1 st April 2015 (in reality an additional 0.24% on the labour rate paid for 2014/15). The labour element of the rate would therefore be from the 1 st April 2015 for twelve months. Applying the IUM as above will mean an additional non-recurrent increased cost in 2014/15 of 114,116 and a recurrent cost from the 1 st April 2015 of 135,928 per annum. As the Health Board s CHC rates are based on the Local Authority rate plus the current FNC rate, there is an additional financial cost of 85,959 for CHC packages in The impact of the increase to the FNC and CHC rates in the current financial year have already been factored into the Health Board s projected expenditure positions for this year. 2

4 5. Continuing Health Care (CHC) Rates For the past three years the Health Board has based its CHC rates on the prevalent LA nursing home rate plus the FNC rate. Given the judicial review facing the NHS in Wales regarding FNC rates and the so called gap, it is recommended that this policy continues in Having refreshed their fee setting methodology, the 6 North Wales local authorities have now reviewed their fees for 2015/16 and are proposing increased rates from April (Please note that there is a common rate for 5 of the 6 County areas which takes us closer to having a standard Regional rate, Conwy CBC is the authority which has a different rate to the others.) In summary the Local Authority rates for and the proposed BCUHB CHC rates, (reflecting the revised FNC rate) and the financial impact is set out below; Locality Betsi Cadwaladr University Health Board - Continuing Healthcare and FNC Rates FINAL BCU HB General 2014/2015 Local Authority General Nursing Rate FNC Rate in Basic Rate per Week General BCU HB General % 2014/15 Financial Implications of FNC Inflation & Uplift in Incontinence Products Total Impact 2015/16 Financial Implications Total Impact FNC 0.31 LA Nursing Home Fee Anglesey % 4,198 18, ,232 Conwy % 15,858 68,748 2,311 66,437 Denbighshire % 6,578 26, ,623 Flintshire % 8,233 37,150 1,180 35,970 Gwynedd % 11,216 53,436 1,697 51,739 Wrexham % 10,226 46,311 1,471 44,840 TOTAL 56, ,939 8, ,841 Locality Betsi Cadwaladr University Health Board - Continuing Healthcare and FNC Rates FINAL BCU HB EMI 2014/2015 Local Authority EMI FNC Rate BCU HB EMI in Basic Rate per Week EMI % 2014/15 Financial Implications of FNC Inflation & Uplift in Incontinence Products Total Impact 2015/16 Financial Implications Total Impact FNC 0.31 LA Nursing Home Fee Anglesey % 2,844 13, ,248 Conwy % 5,863 31, ,949 Denbighshire % 6,265 32, ,254 Flintshire % 5,173 27, ,003 Gwynedd % 4,504 26, ,945 Wrexham % 5,001 24, ,822 TOTAL 29, ,861 4, ,222 The total additional cost in is calculated as 407, Recommendations The Board has already approved the use of the Inflationary Uplift Mechanism as an appropriate way to calculate the labour element of the FNC rate. No decision is therefore required by the Board at this time. 3

5 The Board is however asked to note the application of the IUM to the FNC rate and the resulting financial implications for the Health Board, noting also that the two year nature of the NHS Wales Pay Award has led to a more complex calculation than had been expected. The Health Board is asked to confirm its continued application of the policy of setting CHC fee rates based on the applicable Local Authority rate plus the current FNC rate, and confirm the CHC rates for as below.. County Area CHC Rates BCUHB Revised General CHC Rate BCUHB Revised EMI Rate Anglesey Conwy Denbighshire Flintshire Gwynedd Wrexham