APPENDIX B OUTLINE DUE DILIGENCE INFORMATION DATE: 14 th October 2016 TITLE: Primary Care Co-Commissioning Due Diligence LEAD COMMITTEE MEMBER: Ahmet Koray, Chief Finance Officer (Islington ) AUTHOR: Daniel Morgan, Primary Care Lead SUMMARY: This report provides due diligence information on Primary Care Commissioning. The objective of this due diligence exercise has been to gain greater clarity on the contractual and financial risks associated with primary care contracts. It is important to note that NHS England and the s have for 2016/17, and will continue to, work collaboratively together. Whilst it is acknowledged there are challenges associated with the current Primary Care Commissioning model, both parties are committed to working through any new challenges or unexpected situations together. NHS England also commissioned an Organisation Development review in early 2016 to look at how the Primary Care Commissioning function operates in London, and to provide options for how this can be improved for staff and other stakeholders, as well as what the model might look like in the future. The s in North Central London (NCL) are working with NHS England to align staff to NCL, with an expectation that staff will align from the start of 2017/18. Should the 4 s decide to become delegated commissioners for Primary Care, the s will have delegated budgets and decision making powers for Primary Medical Services commissioning, therefore NHS England will act to support, rather than participate in, matters of day to day Primary Care Commissioning.
1. Summary 2016/17 financial position 1.1. An annual plan has been set across NCL across the four categories of expenditure as follows: 2016/17 Plan 000 Personal Medical Services (PMS) 90,670 General Medical Services (GMS) 88,340 Alternative Provider Medical Services (APMS 7,806 Other Medical Services 104 Total Primary Care Medical Services 186,921 1.2. The 186,921k plan includes a QIPP target of 939k. Separately set aside is also the 1% non-recurrent reserve ( 1,909k) and 0.5% contingency ( 955k). The reserve and contingency have been funded through the allocation balance that is available to NCL. In summary, the allocation across NCL has been applied as follows: 2016/17 000 NCL allocation (as notified) 190,918 Expenditure Plans: Primary medical services plan (as above and including QIPP) 186,921 1% Non-recurrent reserve 1,909 0.5% Contingency 955 Total expenditure plan 189,784 Surplus against allocation 1,134 1.3. At month 5, the period to 31 August 2016, the overall financial position for North Central London Primary Medical services is reporting an underspend of 96k against plan. The full-year forecast is consistent and is expected to be 256k underspend by 31 March 2017. 1.4. The most significant variance within the position is the difference between the QIPP values and the beneficial impact from the reversal of 2015/16 accruals that are no longer considered necessary. This difference between QIPP and accrual reversals is the reason why both the year-to-date and forecast positions are underspent. 1.5. A risk to note is that the 2016/17 plan has been set with a QIPP target that is being achieved through non-recurrent measures. This may have implications on future planning if the QIPP requirement cannot be identified recurrently and potentially grows. Mitigation is currently available with the allocation surplus ( 1,134k Page 2 of 7
as above) and the 1% non-recurrent reserve and 0.5% contingency, which would cover any gap in the short-term, but could not be considered a longer term solution. 2. 2016/17 NCL budget plans and performance 2.1. The average growth in London medical allocations for 2016/17 was 4.78%. However this has not fallen evenly across s due to their differing distance from target allocation assessments. Furthermore, the requirement to deliver a QIPP target as well as set aside the 1% non-recurrent reserve and 0.5% contingency, has meant that financial plans across NCL s is very different with a range that includes Islington with a significant surplus, two s with deficits and the remaining two with break-even plans. '000 NCL Barnet Camden Enfield Haringey Islington 2016/17 allocations 190,918 46,640 35,897 39,126 37,568 31,687 Expenditure plans: Primary medical service plans 186,921 45,846 35,955 38,760 36,983 29,377 1% Non-recurrent reserve 1,909 466 359 391 376 317 0.5% Contingency 955 233 179 196 188 158 Total expenditure plan 189,784 46,546 36,493 39,347 37,546 29,852 Surplus / (Deficit) 1,134 94 (596) (221) 22 1,835 2.2. For the purposes of monthly reporting, NHSE uses budget plans that reflect contractual commitments along with an assessment of costs that are likely to materialise over and above these. Therefore allocation values, reserves and contingencies are excluded for monthly reporting purposes. 2.3. Future NCL co-commissioning arrangements will require budgetary information to reflect all items and as a result, the NCL position will immediately improve (depending on the value of QIPP) by the value of the net surplus, which for 2016/17 is 1,134k. 2.4. Expenditure summaries for the first 5 months of 2016/17 (to 31 August 2016) are set out in tables 1 to 6 below. After each, a brief narrative is provided of performance issues: Table 1 - NCL Total PMS 90,670 37,778 37,739 (39) 90,571 (99) (0.1)% 87,314 GMS 88,340 36,806 36,739 (67) 88,169 (170) (0.2)% 86,612 APMS 7,806 3,252 3,221 (31) 7,729 (77) (1.0)% 5,760 Other 104 43 84 41 195 91 87% 168 NCL Total 186,921 77,879 77,783 (96) 186,665 (256) (0.1)% 179,854 (Brackets denote underspend)
Table 2 - Barnet PMS 21,857 9,107 9,078 (29) 21,787 (69) (0.3)% 21,222 GMS 23,660 9,858 9,823 (34) 23,528 (132) (0.6)% 22,904 APMS 297 124 132 8 303 6 2% 505 Other 32 13 19 6 48 16 49% 82 Total Barnet 45,846 19,101 19,052 (50) 45,666 (180) (0.4)% 44,713 2.5. Barnet - five months results to 31 August are showing an underspend of 50k (-0.3%), which comprises the net benefit of unidentified QIPP ( 96k) offset by the nonrecurrent benefit from 2015/16 accruals ( 157k). Refunds in relation to prior year business rates are expected to contribute towards the QIPP savings target later in the year. 2.6. The 180k forecast year end underspend includes the non-recurrent benefit of prior year accruals ( 376k). 2.7. Barnet s weighted population has increased by 2% from April 2015 to April 2016. In absolute terms, this equates to an increase of 7,306 in its normalised weighted population. For the 2016/17, growth rates are currently 1% (3,743 weighted population). Table 3 - Camden PMS 19,490 8,120 8,147 27 19,544 55 0% 19,069 GMS 13,492 5,621 5,650 28 13,617 125 1% 13,245 APMS 2,958 1,233 1,222 (11) 2,940 (19) (0.6)% 2,392 Other 15 6 33 27 52 37 247% 9 Total Camden 35,955 14,981 15,052 71 36,153 198 1% 34,716 2.8. Camden is overspent by 71k (0.5%) for the first five months of 2016/17. This is almost entirely a result of premises related cost pressures and whilst some saving is expected from a revaluation exercise, this is unlikely to be cover the underlying cost pressure. 2.9. Camden s weighted population has grown by 3.1% from April 2015 to April 2016. However, there has been a year to date reduction of -0.5% (1,268 weighted population) for the period to 1 July 2016. Table 4 - Enfield PMS 25,315 10,548 10,508 (39) 25,223 (93) (0.4)% 24,522 GMS 11,523 4,801 4,757 (44) 11,411 (112) (1.0)% 11,529 APMS 1,900 792 795 4 1,898 (2) (0.1)% 1,026 Other 22 9 13 4 36 14 64% 10 Total Enfield 38,760 16,149 16,074 (75) 38,568 (192) (0.5)% 37,087 2.10. Five months results show an underspend of 75k (-0.5%), due in part to a GMS practice closure and the costs no longer being incurred. The remaining benefit is the Page 4 of 7
net effect of QIPP ( 81k) and 2015/16 accrual reversals ( 140k). The forecast includes the extrapolated values for these items, i.e. practice closure budget released ( 65k) and prior year accruals ( 336k). 2.11. Enfield s weighted population has increased by 1.9% (5,528) from April 2015 to April 2016. 2016/17 year-to-date growth currently stands at 0.4% (1,185 weighted population). Table 5 - Haringey PMS 22,649 9,437 9,432 (5) 22,638 (11) 0% 21,150 GMS 13,236 5,515 5,496 (18) 13,179 (56) (0.4)% 13,114 APMS 1,078 449 418 (32) 1,018 (61) (5.6)% 689 Other 20 8 11 3 33 13 65% 44 Total Haringey 36,983 15,409 15,357 (51) 36,868 (115) (0.3)% 34,997 2.12. The delayed start of an APMS practice and the closure of another (GMS) are the main contributory factors in reported 51k underspend. The QIPP and 2015/16 accrual release virtually balance themselves although the net benefit increases to 17k in the forecast. The balance of the full year forecast underspend ( 115k) relates to the APMS and GMS practice changes. 2.13. Haringey s weighted population has seen the largest increase across NCL, with growth of 3.2% (7,254) from April 2015 to April 2016. This is expected to continue into 2016/17, where figures to date are already at 1.5% (4,295). Table 6 - Islington PMS 1,360 567 573 7 1,379 19 1% 1,351 GMS 26,429 11,012 11,013 1 26,434 5 0% 25,820 APMS 1,572 655 655 0 1,571 (1) (0.1)% 1,148 Other 15 6 7 1 26 11 73% 22 Total Islington 29,377 12,240 12,248 9 29,410 34 0% 28,341 2.14. Five months results are showing a breakeven position, managed through 2015/16 accrual reversals ( 55k) offsetting QIPP ( 62k). Unplanned PMS seniority payments ( 7k to date and 19k for the year) is the only significant cost pressure. 2.15. Islington s weighted population increased by 3% (7,254) from April 2015 to April 2016, but has not shown the same level of growth in 2016/17. Current figures indicate an increase of 0.9% (2,250) for the period to 1 July 2016.
3. Summary capitation position Normalised weighted list as at 01/04/2015 Normalised weighted list as at 01/04/2016 Year on Year % Movement Normalised weighted list as at 01/07/2016 YTD Movement (to 01/07/16) % YTD Movement Barnet 362,566 369,872 2.00% 371,857 3,743 1.00% Camden 259,074 266,994 3.10% 266,701 (1,268) (0.50)% Enfield 295,562 301,090 1.90% 300,661 1,185 0.40% Haringey 284,076 293,292 3.20% 294,768 4,295 1.50% Islington 244,719 251,973 3.00% 253,046 2,250 0.90% Total NCL 1,445,997 1,483,221 2.60% 1,487,032 10,206 0.70% 3.1. The capitation table above captures the growth in list sizes from April 2015 to April 2016. There is variation across s ranging from a 1.9% increase to 3.2%. On average, NCL as a whole has seen a 2.6% increase between April 2015 and April 2016. This however is not the case in 2016/17, where the increases are much forecast to be much lower at 0.7%, with Camden retracting by 0.5%. 3.2. The implications of this are on funding formulas and allocation of growth in future years and the impact this will have on any future QIPP requirements. A savings programme will need to be developed to ensure that a robust recurrent position can be maintaining going forward. 4. Feedback from NHS England on known risks and issues to consider 4.1. NHS England has provided information as part of the NCL s due diligence exercise for Primary Care Commissioning. There is a very limited financial and contractual risk identified by NHS England for North Central London. The current position on specific areas is set out below. 4.2. Contracts under caretaking arrangements - Haringey have two contracts under caretaking arrangements. Both contracts end in spring 2017. Camden have a caretaking arrangements for one practice which also ends in spring 2017 4.3. Zero list contracts - There is one identified zero list contract for NCL in Barnet. The are aware of the population profile estimates for the practice which have been reported by NHS England and shared with the 4.4. Locum payments disputes - There are no known legal disputes to report in regard to locum payments. 4.5. Contract disputes - There are no legal claims to report in regard to contract disputes 4.6. ETTF - ETTF information will follow post December 2016. ETTF schemes will require agreement of the revenue consequences before being approved for the Page 6 of 7
pipeline. s are expected to have undertaken their own due diligence exercise on ETTF schemes. ETTF costs will be a call on the primary care medical allocations in future years, so this needs to be considered carefully. 4.7. Rent reviews - rent review liabilities relate to over-due reviews that may result in historic premises payment adjustments and costs. NHS England will confirm in writing that they will meet these historic costs up to the point of full delegation. NHS England will review this arrangement at the end of 2016/17 following any updated information from the District Valuer. 5. General assurances on financial liabilities NHS England and the s have for 2016/17, and will continue to, work collaboratively together. Whilst it is acknowledged there are challenges associated with the current Primary Care Commissioning model, both parties are committed to working through any new challenges or unexpected situations together. Where appropriate NHS England will ensure sufficient provisions are made in 2016/17 to cover the financial risks of liabilities that the s may incur that have not been planned or provided for I previous periods. NHS England will accrue all known and expected pre April 2017 costs relating to rent reviews and aim to identify as accurately as possible through District Valuer reviews. Such pre-april 2017 rent costs will be charged back to NHS England by the QOF and extended access payments will be provided for by NHS England as part of year end payments.