Report to the Sutton Clinical Commissioning Group Board

Sutton and Merton Borough Teams Sutton Clinical Commissioning Group Report to the Sutton Clinical Commissioning Group Board Date of Meeting: Wednesday, 3 rd April 2013 Agenda No: 6.1 Attachment: 06 Title of Document: Chair s Action: South West London CCGs risk share agreement Report Author: Geoff Price, CFO Purpose of Report: For ratification Lead Director: Geoff Price Contact details:geoffrey.price@nhs.net Executive Summary: At the last Board it was agreed that Chairs action could be taken in agreeing a SWL CCG risk share arrangement. This took place on 28 March 2013. Attached are papers relating to that agreement The template for the signed agreement ( not signed at time of writing ) The agreement is in accordance with the latest advice and clarification from NCB London. Croydon CCG is unable to sign up to this agreement whilst discussion around their financial position continues. However, there is a clear expectation that they may join the arrangement in the future, should they wish to do so, and would be subject to the same terms and conditions as the 5 CCGs. The risk share in summary is as follows : From the 2% non recurrent fund: Each CCG will contribute a minimum of 0.5% to a collaborative risk pool/transformation fund, plus Contribute their share of the BSBV programme costs. The balance of 1.2% will be held locally by CCGs to provide for local risks and transformation projects, along with the 0.5% contingency reserve. The risk pool is 6 million. The report attached shows the impact for each CCG in the risk share arrangement. Recommendation(s): The Clinical Commissioning Group Board is requested to ratify the agreement. Page 1 of 13

Committees which have previously discussed/agreed the report: The CCG Finance Committee - 28 March 13; The Executive Committee - 20 March 13; the SWL CCGs Accountable Officers Group ( various meetings February / March ) Financial Implications: The SWL CCGs have created an in year risk pool to facilitate the management of in year risk with strong governance arrangements Implications for the Sutton and Merton Board or Joint PCT Boards: As described above Other Implications: None Equality Impact Assessment: Not applicable Information Privacy Issues: None Communication Plan: Not applicable Page 2 of 13

1. Background 1.1 It is important for SW London CCGs to work together to make robust arrangements for the management of financial risk. This is not only to ensure the sustainable financial health of the local health economy and to promote collaborative working, it also supports the delivery of statutory financial obligations of individual CCGs both now and in the longer term. 1.2 The National Commissioning Board s (NCB) guidance for planning Everyone Counts 1, published in December 2012, sets out the requirements for how risks are managed, specifically that: Clinical commissioning groups must demonstrate that appropriate risk management and pooling arrangements are in place internally and between clinical commissioning groups to ensure budgets are achieved - (para 3.26). 1.3 The conditions of authorisation for CCGs also require that a risk sharing arrangement (RSA) be in place. This paper sets out the proposal for such an arrangement and how it would work to benefit its membership. 2. Development of a risk share arrangement 2.1 Chief Finance Officer s (CFOs) and Chief Officer s (COs) have met regularly to develop an appropriate and robust model for the RSA. This has been based on models being developed elsewhere and builds on past experience. It does not limit other forms of risk share but is one of the mechanisms CFOs have identified. 2.2 At the meeting of the Chief Officers (21 March), the updated position for the RSA was discussed following latest advice and clarification from NCB London. 2.3 Latest developments now mean that Croydon CCG is unable to sign up to this agreement, whilst discussion around their financial position continues. However, there is a clear expectation that they may join the arrangement in the future, should they wish to do so, and would be subject to the same terms and conditions as the 5 CCGs. 2.4 The revised proposal, as set out in the sections below, was agreed by the remaining 5 CCGs. 1 http://www.commissioningboard.nhs.uk/everyonecounts/ (Version 7 22 March 2013) 3

3. Principles of the SW London risk share arrangement 3.1 The basis of the RSA is that it will allow the management of variances (surplus and deficit) in year by a common, robust and documented approach to risk management and the use of risk reserves. It provides a means of holding each other to account as well as a support mechanism by the use of peer review. 3.2 The key principles of the RSA are set out as follows: The focus is on the risk pool as being held for risks occurring after agreed plans and control totals are set. It is not to cover known risks or deficits identified at the planning stage. It is subject to the sign off of operating plans, including agreed deficit control totals where appropriate, as well as agreement to release the 2% reserve (required by all CCGs) to be used towards funding the risk share arrangement. The RSA is not a support mechanism for CCGs in underlying deficit; financial balance should be addressed through discussion with London Regional Team and the planning submission process. Provider reconfiguration or support costs are not covered by the RSA - funds are available for transformation scheme costs, such as BSBV, to incentivise service change and QIPP delivery. This will be managed under the proposed RSA governance process CCGs will also have local risk share arrangements in place, as well as collaborative commissioning risk share arrangements. The RSA shall run for 5 years, with an annual review of its working taking place before the start of each financial year. Contributions and draw downs from each CCG must balance out over the life of the agreement. 4. The financial environment for SW London CCGs 4.1 In structuring the RSA, it is recognised that the CCGs start from different positions. Merton and Sutton CCGs are newly formed, having been part of a PCT in turnaround. They inherit underlying deficits and have challenging 2013/14 QIPP targets Wandsworth and Richmond CCGs are significantly above target allocation and inherent strong underlying financial positions Kingston CCG is involved in a number of risk sharing agreements and, although in surplus, is financially finely balanced. Kingston is significantly above its target allocation. 4.2 The financial positions of each CCG as submitted in the latest submitted operating plans for 2013/14 is as shown at Appendix 1. (Version 7 22 March 2013) 4

4.3 During the coming years, CCGs will face considerable risks to meeting their statutory financial requirements, most significantly: Acute performance and growth in demand Providing funding and resources to deliver transformational change and to meet transitional costs of these programmes Challenging QIPP programmes risk of slippage/under-delivery Allocations for example the impact of changes in responsibility for Specialised Commissioning 4.4 The risk share arrangement will provide transitional support, in the year any such risk arises, which is non-recurrent. CCGs will then address the risk in plans for the following year. 5. Proposal for RSA 5.1 The proposal for contributions to the RSA and managing risk locally can be summarised as: Each CCG will contribute a minimum of 0.5% to a collaborative risk pool/transformation fund, plus Contribute their share of the BSBV programme costs. The balance of 1.2% will be held locally by CCGs to provide for local risks and transformation projects, along with the 0.5% contingency reserve. The 2 risk reserves above (local and collaborative) will be funded from the 2% set out below. 5.2 The proposal for the RSA is based on the key requirements set out in Everyone Counts, namely that the approach to risk management provides flexibility whilst providing sufficient mitigations against financial risks. These include risk pooling between clinical commissioning groups; policy for 2 per cent of income to be set aside and spent non-recurrently; and contingencies. 5.3 The arrangement allows that CCGs wishing to contribute more than the minimum 0.5% (reducing the amount held locally in-year) may do so, subject to the agreement of the FRG. (Version 7 22 March 2013) 5

5.4 The financial impact, by CCG, will be as follows: CCG 2% Non Recurrent Fund Source Applications Balance Held BSBV Risk pool locally costs 0.5% '000s '000s '000s '000s % Kingston 3,937 (627) (984) 2,326 1.2% Merton 4,160 (688) (1,040) 2,432 1.2% Richmond 4,186 (642) (1,047) 2,498 1.2% Sutton 4,180 (599) (1,045) 2,536 1.2% Wandsworth 7,821 (1,199) (1,955) 4,667 1.2% Total 24,284 (3,755) (6,071) 14,458 5.5 Boards have already agreed that the programme costs of the Better Services, Better Value (BSBV) reconfiguration should be met from these funds, as it will incentivise service change and QIPP delivery, and supports transformational changes. The scheme is currently hosted by Wandsworth PCT and this will transfer to Wandsworth CCG with effect from 1 April 2013. Although Wandsworth CCG will be hosting the programme, it is expected that all CCG boards to sign up to this arrangement and WCCG will: look to minimise any risk exposure of all participating CCGs ensure arrangements relating to BSBV are transparent for all parties conduct an internal audit of the arrangements to ensure appropriate governance are in place as BSBV host 5.6 WCCG will work with South London Commissioning Support Unit (SLCSU) to deliver the programme and will be holding a number of contracts with external contractors as part of the BSBV programme. Other CCGs will be asked to sign a collaborative arrangement contract as part of the BSBV arrangement. They will also be expected to manage their appropriate risks and liabilities associated with the programme. Other CCG s will need to ensure their Boards are satisfied with the governance arrangements 5.6 The management of the RSA process will be as set out in the Terms of Reference at Appendix 2. (Version 7 22 March 2013) 6

6. Next steps 6.1 The underlying principles of the RSA are based on the assumption that the constituent CCGs start the year with a plan (agreed with NCB) to achieve financial and statutory obligations, or to meet an agreed level of deficit. The risk pool is for unforeseen risks arising in year. The planning process continues and CCGs will ensure that subsequent submissions of plans reflect this. 6.2 The features of the agreement are that net contributions/draw downs are intended as being neither loans nor gifts. The year-end position of the risk pool transactions will not feature on any CCG balance sheet, as it is managed by adjustments to CCG allocations. Confirmation that this proposal meets audit approval should be sought to ensure probity, as with any such scheme. However, it should be noted that the proposal is entirely consistent with arrangements in previous years, so it seems unlikely that this would give rise to concern from an audit perspective. 6.3 All CCGs are taking this paper to Board at the earliest opportunity to ratify this proposal put forward by COs and CFOs, and to confirm their agreement. (Version 7 22 March 2013) 7

Appendix 1 Comparison of financial plans 2013/14 Per latest submission Kingston Merton Richmond Sutton Wandsworth I&E position 1.0% surplus 1% Surplus 3.0% surplus 1% surplus, poss BE if 1.5% surplus QIPP short. QIPP 3.4% ( 6.8m) 3.8% ( 7.5m) 3.1% ( 6.6m) 3.5% ( 7.1 m), 2.5% ( 9.8m) 2.8m unidentif d External finance requirement Not required Not required Not required Not requested Not required Commitments None None None Acute overspend, None against 0.5% QIPP slippage. Commitments 1% for Out of Hospital 1% for out of hospital 1% for Out of Hospital I% local - support for 1% for Out of Hospital against 2% initiative initiative and QIPP initiative QIPP schemes. initiative investment Risk rating of plan Low per NCB Low per NCB High Low per NCB Allocation issues Range of risks Best/Worst case Other comments Disputing 1.1m adjustment Awaiting confirmation of 2.7m premises baseline adjmnt. Sutton & Merton adjt - 5m, s/be 1m (Pharmacy/ GP Computing) None Disputing Richard Jeffery IAT schedule. TBC TBC TBC + 1.3m to - 3.6m after utilising 0.5% contingency. All risks have mitigating actions. All risks have mitigating actions All risks have mitigating actions. Main risks: ESH & StG vs s in plan. Unidentified QIPP. Disputing 4m adjustment should be 1.8m TBC All risks have mitigating actions. (Version 7 22 March 2013) 8

Appendix 2 South West London CCGs Finance Review Group (FRG) Terms of Reference 1. Background The National Commissioning Board s (NCB) guidance for planning Everyone Counts 2, published in December 2012, sets out the requirements for how risks are managed, specifically that: Clinical commissioning groups must demonstrate that appropriate risk management and pooling arrangements are in place internally and between clinical commissioning groups to ensure budgets are achieved - (para 3.26). CCGs in South West London have joined together to create such a Risk Sharing Arrangement (RSA), the basis of which will be to allow the management of variances (surplus and deficit) in year by a common, robust and documented approach to risk management and the use of risk reserves. The RSA provides a means of holding each other to account as well as a support mechanism by the use of peer review. The management of the RSA is by the Finance Review Group (FRG), the terms of reference being as set out in this document. Although, at the current time, Croydon CCG is unable to sign up to this agreement whilst discussion around their financial position continues, there is a clear expectation that they may join the arrangement in the future, should they wish to do so, and would be subject to the same terms and conditions as the 5 CCGs. 2. Purpose & Duties of the FRG The FRG has been jointly established by the SW London CCGs. Its key purpose is to monitor and manage the risk share arrangement in place as of 1 April, running for a period of no less than 5 years. It will provide positive leadership through a collaborative approach to risk management across South West London, delivered through an agreed code of behaviour: Aims SWL CCGs, as well as the wider SW London Economy, are financially sustainable in the longer term Requirements of the NCB authorisation process are met The FRG will have delegated responsibility (from individual CCG Boards) for the governance and implementation of the risk share arrangement Understanding That the CCGs start from different financial positions, including Distance From Target (DFT) and other allocation issues, 2 http://www.commissioningboard.nhs.uk/everyonecounts/ Page 9 of 13

Appendix 2 That Financial Control Totals are to be met for each CCG, not just overall, The focus of the RSA is on the risks that might occur after an agreed plan/ control total is set, not to cover known risks or deficits identified at the planning stage, and The FRG is held to account by CCGs through representation on the group. Measures Recommending financial support for unforeseen risks, when backed by a robust recovery plan Approving the provision of recoverable financial support for transformation programmes Making recommendations for best practices on (for example): - Planning - Management of delivery - QIPP schemes and implementation - Commissioning - Contracting Providing Assurance That access to the funds will be by self-referral or Automatically when a CCG is unable to deliver its monthly financial plan (for 2 consecutive months) or its forecast control total That funds will be distributed based on credible recovery plans, which will monitored for progress Communicating Agenda and papers will be sent to all Chairs, COs/COO and CFOs five working days before the relevant meeting Notes & minutes shall be kept of all proceedings and agreements and will be shared with individual CCG Boards Copies shall be circulated to all CCGs (whether or not present or represented at the relevant meeting) by e-mail within ten working days the end of the meeting to which they relate. Updates and reports will also be provided to CCG Boards as appropriate 3. Membership The membership is comprised of a core group of 5 members, representing each of the current constituent CCG and each with voting rights All CCGs will nominate a representative from its Chair or CO/COO, each of whom will have a vote. The FRG Chair will be nominated from the CCG Audit Chairs (Lay member), plus a nominated deputy, and will be jointly agreed. They will be non-voting. CFOs may attend but will act in an advisory capacity only (non-voting) A senior officer of the Commissioning Support Unit (CSU) will also be in attendance in an advisory (non-voting) capacity. The group has no authority above that of individual CCGs but will act with the delegated authority of the individual representing the CCG. The FRG may establish sub groups with clearly defined terms of reference (which set out the arrangements agreed by the parties for matters such as membership and purpose) as it deems appropriate from time to time. Page 10 of 13

Appendix 2 If any member of the group has a paper on the agenda they should ensure that they are able to attend the meeting or send a representative to present the paper. Other Senior Managers may be invited to present papers as and when required. 4. Quorum and voting rules The quorum will comprise at least 4 members, being: Chair or CO/COO from each CCG Chair, or their nominated deputy With at least 1 CFO or CO being present at any given meeting, with CFO acting in advisory (non-voting) capacity Voting will require 2/3rds majority for a decision to succeed If a majority decision cannot be agreed, this is escalated to a meeting of all Chairs and COO/COs for decision. However, the FRG is part of a collaborative risk sharing process; the expectation is that there would be full attendance at the meetings, apart from in exceptional circumstances. 5. Contributions The contributions to this arrangement are refreshed annually and are as agreed jointly by the Board of the 5 CCGs, in advance of the year may be set differentially at the discretion of individual CCGs but are subject to a minimum contribution of 0.5% of the current year starting allocation. Contributions will balance out over the period of the agreement such that, over time, contributions and withdrawals will even out. 6. Process The process for managing risks and financial support (as set out in Appendix A) will be carried out in 5 stages: Stage 1: Identifying risks and requests for support by CCG self-referral or automatically when a CCG is unable to deliver its monthly financial plan (for 2 consecutive months) or its forecast control total Stage 2: Understanding risks or additional costs CFO & CO present the case for receiving support, giving details of the financial risk/costs, as well as setting out actions already undertaken to manage within existing allocations Stage 3: Proposing actions Page 11 of 13

Appendix 2 CCG compiles a recovery plan or analysis of the benefits of the requested support and submits this to the FRG. The FRG may consider using an independent reviewer at this stage, to verify the plan and/or the stated financial position. Stage 4: Recommendations The FRG assesses the plan provided and makes formal recommendations based on its enquiries and information supplied. CFOS will recommend the specific details of financial transactions and the phasing of support, which will be delivered/supported by CSU. CCG representatives must be in 2/3rds majority agreement for the plan to be accepted. Stage 5: Monitoring Financial support is provided, and the implementation and delivery of the plan is monitored at the monthly meetings of the FRG. 7. Frequency and content of meetings Meetings will take place monthly on a DAY from TIME TIME. The standing agenda items for this meeting will be; a) Individual CCGs financial positions b) Risks to the above, including QIPP progress, acute performance. c) Current performance against bids from the risk pool d) Business cases for future bids e) Value of unallocated risk pool to date The management of the FRG will be hosted by Richmond CCG, who will provide the appropriate administrative support services, with all reasonable costs being a call against the risk fund (agreed by the FRG). 8. Review The arrangements for this group will be reviewed after a period of 3 months to ensure that the membership is appropriate and the desired outcomes are being achieved. These Terms of Reference will be reviewed annually or as required. Page 12 of 13

Appendix 2 Financial Recovery Process Appendix A Referral Self-referral Missing plan/control Total Dialog to establish reasons FRG CCG Actions FRG to consider Recovery/Other Plan FRG agrees proposal by vote Feedback to CCGs FRG supports and monitors CCG progress Page 13 of 13

Collaborative Risk Sharing Arrangement between SW London CCGs (excluding Croydon) 1. Introduction 1.1 SW London CCGs have agreed to collaborate on ensuring robust arrangements for the management of financial risk. This is not only to ensure the sustainable financial health of the local health economy and to promote collaborative working, it also supports the delivery of statutory financial obligations of individual CCGs both now and in the longer term. 1.2 At the current time, Croydon CCG is unable to sign up to this agreement whilst discussion around their financial position continues. However, there is a clear expectation that they may join the arrangement in the future, should they wish to do so, and would be subject to the same terms and conditions as the 5 CCGs. 1.3 This options and underpinning conditions for collaborative arrangements have been discussed by the 5 CCG Boards, and considered within their schemes of delegation; full details of the proposed arrangement are as set out in the paper to Boards dated 22 March 2013. Board approval/ Chair s action is required to ensure a Finance Review Group (FRG) can be established to manage the risk share arrangement. Terms of Reference for the FRG are attached at Appendix 1. 2. Principles of the SW London risk share arrangement 2.1 The basis of the RSA is that it will allow the management of variances (surplus and deficit) in year by a common, robust and documented approach to risk management and the use of risk reserves. It provides a means of holding each other to account as well as a support mechanism by the use of peer review. 2.2 The key principles of the RSA are set out as follows: The focus is on the risk pool as being held for risks occurring after agreed plans and control totals are set. It is not to cover known risks or deficits identified at the planning stage. It is subject to the sign off of operating plans, including agreed deficit control totals where appropriate, as well as agreement to release the 2% reserve (required by all 5 CCGs) to be used towards funding the risk share arrangement. The RSA is not a support mechanism for CCGs in underlying deficit; financial balance should be addressed through discussion with London Regional Team and the planning submission process. Provider support costs are not covered by the RSA - funds are available for transformation scheme costs, such as BSBV, to incentivise service change and QIPP delivery. This will be managed under the proposed RSA governance process CCGs will also have local risk share arrangements in place, as well as collaborative commissioning risk share arrangements. The RSA shall run for 5 years, with an annual review of its working taking place before the start of each financial year. Contributions and draw downs from each CCG must balance out over the life of the agreement. Page 1 of 7

Collaborative Risk Sharing Arrangement between SW London CCGs (excluding Croydon) 3. Proposal for RSA 3.1 The proposal for contributions to the RSA and managing risk locally can be summarised as: Each CCG will contribute a minimum of 0.5% to a collaborative risk pool/transformation fund, plus Contribute their share of the BSBV programme costs. This is to for non-recurrent use as mitigation against in-year risks across the 5 CCGs and to fund programme costs supporting transformational change and QIPP delivery, plus The balance of 1.2% will be held locally by CCGs to provide non-recurrently for local risks and transformation projects, along with the 0.5% contingency reserve. The Parties have signed this Agreement on the date shown below CCG Name - Wandsworth Authorised Officer Graham McKenzie Signature Date CCG Name - Richmond and Twickenham Authorised Officer Dominic Wright Signature Date CCG Name - Kingston Consortium Authorised Officer David Smith Signature Date CCG Name - Merton Authorised Officer Eleanor Brown Signature Date CCG Name - Sutton Commissioning Group Authorised Officer Chris Elliot Signature Date Page 2 of 7

Appendix 1 South West London CCGs Finance Review Group (FRG) Terms of Reference 1. Background The National Commissioning Board s (NCB) guidance for planning Everyone Counts 1, published in December 2012, sets out the requirements for how risks are managed, specifically that: Clinical commissioning groups must demonstrate that appropriate risk management and pooling arrangements are in place internally and between clinical commissioning groups to ensure budgets are achieved - (para 3.26). CCGs in South West London have joined together to create such a Risk Sharing Arrangement (RSA), the basis of which will be to allow the management of variances (surplus and deficit) in year by a common, robust and documented approach to risk management and the use of risk reserves. The RSA provides a means of holding each other to account as well as a support mechanism by the use of peer review. The management of the RSA is by the Finance Review Group (FRG), the terms of reference being as set out in this document. Although, at the current time, Croydon CCG is unable to sign up to this agreement whilst discussion around their financial position continues, there is a clear expectation that they may join the arrangement in the future, should they wish to do so, and would be subject to the same terms and conditions as the 5 CCGs. 2. Purpose & Duties of the FRG The FRG has been jointly established by the SW London CCGs. Its key purpose is to monitor and manage the risk share arrangement in place as of 1 April, running for a period of no less than 5 years. It will provide positive leadership through a collaborative approach to risk management across South West London, delivered through an agreed code of behaviour: Aims SWL CCGs, as well as the wider SW London Economy, are financially sustainable in the longer term Requirements of the NCB authorisation process are met The FRG will have delegated responsibility (from individual CCG Boards) for the governance and implementation of the risk share arrangement Understanding That the CCGs start from different financial positions, including Distance From Target (DFT) and other allocation issues, That Financial Control Totals are to be met for each CCG, not just overall, 1 http://www.commissioningboard.nhs.uk/everyonecounts/ Page 3 of 7

Appendix 1 The focus of the RSA is on the risks that might occur after an agreed plan/ control total is set, not to cover known risks or deficits identified at the planning stage, and The FRG is held to account by CCGs through representation on the group. Measures Recommending financial support for unforeseen risks, when backed by a robust recovery plan Approving the provision of recoverable financial support for transformation programmes Making recommendations for best practices on (for example): - Planning - Management of delivery - QIPP schemes and implementation - Commissioning - Contracting Providing Assurance That access to the funds will be by self-referral or Automatically when a CCG is unable to deliver its monthly financial plan (for 2 consecutive months) or its forecast control total That funds will be distributed based on credible recovery plans, which will monitored for progress Communicating Agenda and papers will be sent to all Chairs, COs/COO and CFOs five working days before the relevant meeting Notes & minutes shall be kept of all proceedings and agreements and will be shared with individual CCG Boards Copies shall be circulated to all CCGs (whether or not present or represented at the relevant meeting) by e-mail within ten working days the end of the meeting to which they relate. Updates and reports will also be provided to CCG Boards as appropriate 3. Membership The membership is comprised of a core group of 5 members, representing each of the current constituent CCG and each with voting rights All CCGs will nominate a representative from its Chair or CO/COO, each of whom will have a vote. The FRG Chair will be nominated from the CCG Audit Chairs (Lay member), plus a nominated deputy, and will be jointly agreed. They will be non-voting. CFOs may attend but will act in an advisory capacity only (non-voting) A senior officer of the Commissioning Support Unit (CSU) will also be in attendance in an advisory (non-voting) capacity. The group has no authority above that of individual CCGs but will act with the delegated authority of the individual representing the CCG. The FRG may establish sub groups with clearly defined terms of reference (which set out the arrangements agreed by the parties for matters such as membership and purpose) as it deems appropriate from time to time. Page 4 of 7

Appendix 1 If any member of the group has a paper on the agenda they should ensure that they are able to attend the meeting or send a representative to present the paper. Other Senior Managers may be invited to present papers as and when required. 4. Quorum and voting rules The quorum will comprise at least 4 members, being: Chair or CO/COO from each CCG Chair, or their nominated deputy With at least 1 CFO or CO from each CCG being present at any given meeting, with CFO acting in advisory (non-voting) capacity Voting will require 2/3rds majority for a decision to succeed If a majority decision cannot be agreed, this is escalated to a meeting of all Chairs and COO/COs for decision. However, the FRG is part of a collaborative risk sharing process; the expectation is that there would be full attendance at the meetings, apart from in exceptional circumstances. 5. Contributions The contributions to this arrangement are refreshed annually and are as agreed jointly by the Board of the 5 CCGs, in advance of the year may be set differentially at the discretion of individual CCGs but are subject to a minimum contribution of 0.5% of the current year starting allocation. Contributions will balance out over the period of the agreement such that, over time, contributions and withdrawals will even out. 6. Process The process for managing risks and financial support (as set out in Appendix A) will be carried out in 5 stages: Stage 1: Identifying risks and requests for support by CCG self-referral or automatically when a CCG is unable to deliver its monthly financial plan (for 2 consecutive months) or its forecast control total Stage 2: Understanding risks or additional costs CFO & CO present the case for receiving support, giving details of the financial risk/costs, as well as setting out actions already undertaken to manage within existing allocations Page 5 of 7

Appendix 1 Stage 3: Proposing actions CCG compiles a recovery plan or analysis of the benefits of the requested support and submits this to the FRG. The FRG may consider using an independent reviewer at this stage, to verify the plan and/or the stated financial position. Stage 4: Recommendations The FRG assesses the plan provided and makes formal recommendations based on its enquiries and information supplied. CFOS will recommend the specific details of financial transactions and the phasing of support, which will be delivered/supported by CSU. CCG representatives must be in 2/3rds majority agreement for the plan to be accepted. Stage 5: Monitoring Financial support is provided, and the implementation and delivery of the plan is monitored at the monthly meetings of the FRG. 7. Frequency and content of meetings Meetings will take place monthly on a DAY from TIME TIME. The standing agenda items for this meeting will be; a) Individual CCGs financial positions b) Risks to the above, including QIPP progress, acute performance. c) Current performance against bids from the risk pool d) Business cases for future bids e) Value of unallocated risk pool to date The management of the FRG will be hosted by Richmond CCG, who will provide the appropriate administrative support services, with all reasonable costs being a call against the risk fund (agreed by the FRG). 8. Review The arrangements for this group will be reviewed after a period of 3 months to ensure that the membership is appropriate and the desired outcomes are being achieved. These Terms of Reference will be reviewed annually or as required. Page 6 of 7

Appendix 1 Financial Recovery Process Appendix A Referral Self-referral Missing plan/control Total Dialog to establish reasons FRG CCG Actions FRG to consider Recovery/Other Plan FRG agrees proposal by vote Feedback to CCGs FRG supports and monitors CCG progress Page 7 of 7