News / LATEST: Consultation sheds more light on white paper

Chief financial officers may work across several GP commissioning consortia, the government has said as it threw further light on its plans for the structure and roles of the new GP commissioning consortia and the NHS Commissioning Board.

A consultation paper, Liberating the NHS: commissioning for patients, confirmed many of the points set out in the white paper and made by health secretary Andrew Lansley in his appearance before the Commons health committee on 20 July. This included the proposal to cap consortia management spending – there are suggestions costs would be pegged at between £9 and £12 per head.

There was also some more detail on financial management in the new system – the commissioning board will oversee risk pooling arrangements, but there was little on how underspends and overspends will be dealt with in the new system.

Main points

Consortia will be responsible for commissioning ‘the great majority’ of NHS services, including elective hospital, urgent and emergency and rehabilitative care, together with, mental health, disability and most community services. Consortia will be responsible for meeting prescribing and associated costs, and will decide on a case-by-case basis whether to commission services themselves or with another commissioning organisation.

The NHS Commissioning Board will be responsible for commissioning primary medical care and other family health services, national and regional specialised services, maternity services and care for those in prison and custody.

Consortia will determine the healthcare needs of their populations; what services are required to meet those needs; enter into managed contracts with providers; monitor and improve the quality of services provided through these contracts and oversee, with the commissioning board, providers’ training and education plans. They will be able to adapt model contracts to include quality criteria they deem will produce the best outcomes, subject to ensuring patient choice of any willing provider that can provide care to these standards.

They will have a statutory duty to ensure expenditure does not exceed allocated resources. Legislation due later this year will set these out in further detail, along with the requirements in relation to reporting, audit and accounts.

A consortium’s commissioning budget must be used exclusively for patient care, with the exception of the management allowance. The consortium’s budget will be distinct from the income practices receive under their primary medical care contract. However, the government proposes that a proportion of practice income should be linked to the outcomes achieved through their role in the commissioning consortium. This quality premium would be paid in the first instance to the consortium, which would decide how to apportion the funds between practices. It is not clear whether the premium would come out of the management allocation or the commissioning budget. The quality and outcomes framework will be reformed to move away from rewarding processes to better reflect practices’ contribution to health outcomes.

Consortia should work closely with practices to drive up the quality of their care and improve their utilisation of resources. Innovations that improve quality and productivity should be supported, while behaviour that are inefficient and clinically questionable should be challenged.

Over time, the government hopes to develop a single contractual and funding model for GP practices.

The NHS Commissioning Board will be responsible for managing the commissioning revenue limit and reporting the consolidated financial position of consortia.

Each GP consortium will have an accountable officer and chief financial officer (CFO)  - the latter could discharge this role for more than one consortium. Depending on the final number of consortia, this could mean an increase or reduction in the number of CFOs in primary care. However, some primary care trusts already share a finance director, and this trend would have been expected to gain pace under the management costs savings plan.

The size and make up of the team beneath the CFO is not clear – this may be left to local discretion and influenced by the cap on management costs. Liberating the NHS: commissioning for patient’ said a consortium’s commissioning budget will have a maximum allowance to cover management costs. The paper implies some finance support beyond the CFO will be needed – the NHS Commissioning Board will authorise consortia, once it is satisfied they have systems in place to meet requirements of financial accountability and control, for example.

The consultation paper said consortia were likely to perform some commissioning functions in house, though in some cases they may wish to act collectively – for example, adopting a lead commissioner to negotiate and manage contracts with large trusts or urgent care providers. Some support could be bought in from local authorities and the private and voluntary sectors. Some commissioning activities could be undertaken at sub-consortium or practice level. The government believed PCTs will provide many of these services to consortia during the transition phase, but over time a more competitive market will emerge.

During the transition, PCTs should increasingly put management resources at the disposal of shadow consortia. Initially they should be talking to practices and practice-based commissioning groups, which will include identifying the likely future shape of consortia. The Department of Health will work with the profession and the NHS to ensure effective systems that enable consortia to track spending, reconcile activity and expenditure, and minimise transaction costs.

While acknowledging the need for consortia to have freedom to invest their resources to achieve the best and most cost-efficient outcomes for patients, the consultation paper insists they must also manage financial risk to ensure they break even. Commissioners should be helped to manage insurance risk – the risk from unavoidable fluctuations in need – through risk pooling, but they will be responsible for managing service risk – risk arising from controllable activities such as poor prescribing.

The NHS Commissioning Board will play a major role in managing financial risk, for example by overseeing risk pooling within and between consortia. There is little detail on the management of underspends and overspends, including whether any planned and managed underspends may be carried over to future years to invest in services and whether overspends will be deducted from the following year’s allocation. The document said this would be agreed between the NHS Commissioning Board, the Department of Health and HM Treasury.

However, it did outline a number of key criteria that will be considered when setting rules on underspends and overspends. These are: minimising exposure to insurance risk; allowing the maximum proportion of funds to be allocated to patient care; ensuring robust arrangements for managing the impact of under- or over-spending without holding back a disproportionate amount of money as a contingency; and ensuring there are sufficient incentives and disciplines to manage financial risk, particularly service risk, at consortium level.

The paper said these arrangements must complement the incentives for consortia to manage risk, which will include benefits for good financial management.

The commissioning board and the economic regulator (Monitor) must develop a framework to ensure transparency, fairness and patient choice in consortia’s investment decisions. This would be particularly important where consortia are buying services from one or more of their GP practices.

The government intends to give the commissioning board some powers to intervene where there is financial or systemic failure, or a significant risk of this happening. The board could make continued authorisation dependent on remedial action and, as a last resort, to take over the consortium’s responsibilities or assign them to a third party, such as a neighbouring consortium.

Reaction

British Medical Association council chair Hamish Meldrum said the paper proved more detail of the government’s plans, but questions remained. ‘The proposals contain both opportunities and threats and we will be actively engaging with the consultation process to explore this in great detail and to ensure our members’ views are taken on board. We will also be publishing our own proposals for how GP commissioning could be made to work,’ he added.

Jo Webber, NHS Confederation deputy policy director, said the plans would recast relationships across the whole system. She added: ‘It will be a real challenge for GPs to take on the role of commissioning so many of the services provided by the health service at a time when there is already a need for the NHS to find around £20bn of efficiency savings. As the document on commissioning makes clear, they will need the support of skilled managers both during the period of transition and afterwards as well, if this new vision for health is to be made to work.’

The consultation document: [PDF]