Management of Fair Share Expenditure Areas
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- Beatrice Watts
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1 1. Introduction Management of Fair Share Expenditure Areas CCG budgets in Kent and Medway were set by the Department of Health on the basis of analyses of expenditure carried out by PCTs in Wherever possible this PCT analysis used actual spend by CCG to set historic budgets for For some budgets spending was not available by CCG and estimated figures based on total PCT spending were used. In the current year actual spend by CCG has now become available for some of the spending areas affected. In other areas CCG spend is still not available. This paper sets out the options available to CCGs on managing this area of their budgets for The paper also suggests possible ways forward for and beyond. 2. How were Fair Share Budgets Calculated? Fair Share budgets were in most cases calculated by taking the total spend for a PCT for the budget area affected and dividing that spend figure by the percentage each CCG represented of the total PCT budget. The percentages used were as set out in Table 1 below. TABLE 1 Old PCT CCG Pan K&M Fairshare Fair Share Medway 15.84% 100% DGS 14.03% 37% WK 23.89% 63% Ashford 6.42% 14% C4G 11.70% 25% SKC 12.45% 27% Swale 6.17% 13% Thanet 9.51% 21% The percentages themselves were provided by the DH as part their Practice based Commissioning information given to PCTs. These percentages were widely discussed and agreed across the old PCT Cluster as the Baseline exercise returns were completed through 2011 and Which Budget Areas were based on Fair Shares? When the CCG budgets were calculated in the main areas that were estimated and set on fair shares basis were, i. Kent Community Healthcare Trust (Community Services)
2 ii. Kent and Medway Partnership Trust (Mental Health Services) iii. Independent Sector Spending iv. Placements v. Continuing Care Services vi. Small pan Kent and Medway Contracts (Various) vii. West Brook and West View Care Homes viii. Tertiary Acute activity ix. Independent sector including treatment centres x. Hospice and other community based contracts In calculating the fair shares on which CCG Budgets were based for the process involved taking the total CCG expenditure and/ or budget for each of the areas above and dividing it between the CCG in that PCT using the percentage in Table 1. The pan Kent and Medway percentage was only used for relatively small budgets received by the Cluster in and has little material effect on the budgets each CCG received. 4. Progress on Obtaining CCG Expenditure Figures The areas where fair shares budgets were used were those where individual CCG data was more difficult to obtain. This difficulty has continued in both because of the original reasons but also because of the NHS restrictions over patient identifiable data introduced in the current year. A. Areas of Significant Progress Kent Community Healthcare Trust (Community Services) which should and will have a domino effect on other community provision such as West Brook and West View. Independent Sector Spending Tertiary (although the SCG baseline issues has somewhat clouded the issues) B. Areas of Limited Progress Kent and Medway Partnership Trust (Mental Health Services) Placements Continuing Care Small pan Kent and Medway Contracts Current arrangements in The east Kent CCGs have signed an MOU for risk sharing for this financial year, attached as appendix 1. This was based on the principle that areas should be risk shared which; Were Unpredictable, High Cost/Low Volume - 100,000 per patient Had Poor or Incomplete Data Had Geographical Issues such as patients of no fixed abode Have Contracts that are less that 50,000 per year if not locality based.
3 Of these the poor or incomplete data is viewed as an interim position with any risk share proactively removed when data is available on a CCG/GP practice basis. Discussions within CCGs about different elements of this agreement has recognised that the original aim of the risk share is not fully being met, in particular the rational that; Unplanned and rapid departure from these agreements will create, as yet unquantified, financial risk for one or more CCGs, and whilst the intention is to move from risk share this will be undertaken when the ramifications are understood. It has become increasingly clear that in areas such as the independent sector, tertiaries and placements that the move to cost per case represents a significantly greater risk than expected and if unplanned (fully implemented in 2013/14) will financially destabilise one or more CCGs. Some or all of these individual CCG pressures are mitigated partially or fully as other contracts move to a cost per case / usage basis. A simple example of this is that KCHT unblocking will benefit Ashford CCG. However this benefit is mitigated substantially by the CCG taking all costs for West Brook House in Tenterden. Similarly for South Kent Coast placements pressure is mitigated by the two same areas of unblocking in community services. To move to actual expenditure in one area where future mitigations exist may result in inappropriate decommissioning or investments being made on a short term basis by CCGs in apparent surplus or deficit positions. These short term surpluses or deficits are in many cases timing issues rather than financial positions supported by underlying true financial baselines. Given the current level of analysis the CCGs in east Kent need to review the current principles for risk share and agree any changes to these arrangements for to, Allow closure of Year End Accounts Assist CCGs in setting out Commissioning Intentions with their major providers. The Principles set out in the this paper are that, i. Data should be robust before detailed charging to CCGs takes place ii. Charging to CCGs should be as fair as possible to avoid cross subsidy of one CCG by another iii. Financial stability of CCGs should be maintained iv. The course of action taken should support short and medium term planning by CCGs where possible v. There should be no Cherry Picking of advantageous charging by individual CCGs in coming to a solution vi. The move to actual expenditure should encompass the vast majority of budgetary and contract areas to limit inappropriate commissioning behaviour vii. All CCGs are over target and movements of resource baselines would at this point appear inappropriate. viii. Any agreement has a clear and defined exit strategy and a timetable to implement this.
4 A further complexity relates to which organisations should be involved in the the risk share. Options include the Federation, the Federation inclusive of Swale or the whole of Kent and Medway. 5. Options Available to the CCGs In applying these principles the CCGs have a number of options summarised below:- i. Do Nothing ii. Charge Expenditure on a Fair Shares Basis within east Kent (with or without Swale) or across Kent and Medway In addition to these basic options the CCGs could work on a geographical basis. For example, a. All Kent and Medway could be managed as a whole for Budget Areas i to viii in Section 3 above b. West Kent Could be managed separately from East Kent for budget areas iii to viii c. Within east Kent, Swale could be managed with the other 4 CCG or separately. There may be benefits in separating issues between West Kent from East due to the physical distance across the county and because policy issues are slightly different across the county. The scope to work on this basis depends entirely on the speed at which the KMPT contract can be reliably disaggregated. Within east Kent, Swale was a key part of the old eastern and Coastal Kent CCG. The east Kent solution should involve Swale CCG on an equal basis to the other 4 CCGs, but it is clear that Swale sees itself within the North Kent alliance and as such may be reticent to continue risk sharing with the other east CCGs 6. Timescale It is important that action is taken now to agree the way forward. This is because most CCGs have not brought to account any benefits from unilateral disaggregation of Fair Scheme budgets at this stage and therefore an agreement now should not detrimentally impact on CCGs financial positions in 2013/14 and the further analysis will provide more time to plan for the impact in 2014/15 7. Conclusion There is a clear justification for modifying the current risk share MOU within the Federation to include more contract and budget areas and adjusting the de minimus levels. Taking this approach there is a benefit in expanding the agreement to include Swale CCG. By agreeing to continue the risk share for one or more CCGs will be forgoing the in year benefit of potential underspends that would accrue through continuing with the current agreement. However, these benefits would most likely be short term and could be
5 fully negated in resulting in investment and disinvestment decisions that would be reversed the following year. Additionally, particularly within east Kent, NHS England will expect CCGs to manage resources to secure achievement of finance targets. It is incumbent on Governing Bodies to do this through a staged and managed process that will allow individual CCGs to manage the longer term implications. Lastly CCGs will need to consider the implications of the allocation changes recently announced which are likely to reduce funding to all 4 Federation CCGs. Moving funding to a CCG that will have an allocation reduction will need careful consideration. 8. Recommendation The Governing Body is asked to:- Agree the modification of the Risk Share MoU to cover the full costs of services for only in relation to, Independent Sector Spending Placements Continuing Care Services Small pan Kent and Medway Contracts (Various) West Brook and West View Care Homes Tertiary Acute activity Independent sector Hospice and other community based contracts. Agree the inclusion of Swale CCG in the risk share for 2013/14 Ivor Duffy Chief Finance Officer Canterbury & Coastal CCG and Ashford CCG
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