Commissioning underspend forecast despite CCG financial issues

At month nine, CCGs forecast a year-end overspend of £351m, but this increased to £625m at month 11. In his financial performance paper, to be tabled at today’s board meeting, NHS England chief financial officer Paul Baumann (pictured) says the deterioration is due to the impact of generic drug pricing pressures, which are now estimated at £362m. Excluding this pressure, the underlying CCG position was a deficit of £300m-£400m, before non-recurrent costs and mitigations.

The generic drugs price pressures are due to an increase in the number of category M drugs granted price concessions. The Department of Health and Social Care grants these concessions to allow for short-term price pressures on individual drugs (increasing the cost to the NHS). In April 2017, 27 concessions were in place (the normal level historically), but this increased to 81 by October. In October, the cost of the concessions was £57m – exceeding the total annual cost in 2015/16 and 2016/17. However, the cost has reduced significantly since October as the Department has taken steps to tackle the issue.

Despite the predicted CCG overspend, NHS England forecast a year-end underspend of £172m – due to underspends of £243m in direct commissioning, £515m in NHS England running and central programme costs and almost £32m in technical and ringfenced adjustments.

All the figures exclude the release of reserves – from the £360m held as a wider system risk reserve (0.5% of CCG allocations) and the £200m held centrally by NHS England.

Mr Baumann said a sustainable solution to CCG overspends would be needed in 2018/19 as the bulk of the mitigations in 2017/18 would not be available. The commissioner sustainability fund was designed to achieve this. No national contingency funds will be held in 2018/19, as an extra £650m has been allocated to the provider sustainability fund.

Another board paper notes that a draft accountable care organisation contract will be published for consultation. The paper also includes a number of frequently asked questions.