Publication, Part of Proposed Dispensing Feescales for GMS contractors in England and Wales
Proposed Dispensing Feescales for GMS Contractors, England and Wales - 2019, October release
Calculation of New Feescales
The calculation follows the six-step approach set out in the methodology agreed by the negotiating parties (see Annexes A and B of the Proposed Dispensing Feescales for GMS Contractors in England & Wales from 1 October 2019 PDF file, available to download under Resources on the Overview page). All data used are for England, but it is anticipated that the new feescales will also be accepted for use in Wales.
The formula used to calculate the new feescales for the second half of 2019/20 is:
new fee = current fee x (E-Y) / Z
where
E = envelope for 2019/20
Y = anticipated spend for first six months of 2019/20
Z = anticipated spend for second six months of 2019/20 based on current feescales
This calculation and associated feescales can be found in the Calculation of October Feescales section.
A similar calculation is carried out to establish what the feescales would have been if implemented from 1 April 2019 for the whole of the financial year.
The formula used was:
new fee = current fee x (E / X)
where
E = envelope for 2019/20
X = anticipated full year spend for 2019/20 based on current feescales.
This calculation and associated feescales can be found in the Calculation of April Feescales section.
Please note calculations are performed on unrounded data but figures are rounded for presentational purposes.
Step 1
Calculate the envelope [E] for 2019/20 in line with negotiated agreement
For 2012/13 it was agreed that the envelope should be re-based to a starting figure of £170.00m.
Since 2012/13 this new methodology has been used to calculate the envelope. Future envelopes will be split (60:40) into two elements, cost and profit, and each element will be separately uplifted:
- The cost element (60%) will be uplifted each year using a two-year average of the volume increase/decrease of fees
(for 2019/20 = 0.031%)
The profit element (40%) will continue to be uplifted by the agreed net pay uplift
(for 2019/20 = 2.0%)[1].
Calculating the envelope:
Variance between 2018/19 Envelope and 2018/19 Outturn
= 2018/19 Envelope - 2018/19 Actual Outturn
= £180.98m - £188.64m
= -£7.66m (overspend)
Adjustment (increase of Envelope) to be made in 2019/20 for 2018/19 overspend
= Variance x 60%
= -£7.66m x 0.60
= -£4.59m
Adjusted 2018/19 Outturn
= 2018/19 Outturn + Adjustment for 2018/19 overspend
= £188.64m + (-£4.59m)
= £184.05m
Cost Element of 2019/20 Envelope
= (Adjusted 2018/19 Outturn x Cost Element Percentage) x Average annual change in
volume of fees 2018/19 (see Section 5. Average Annual Volume Change)
= (£184.05 x 0.60) x 1.0003
= £110.46m
Profit Element of 2019/20 Envelope
= (Adjusted 2018/19 Outturn x Profit Element Percentage) x Agreed Uplift
= (£184.05 x 0.40) x (1.02)
= £75.09m
Envelope for Year 2019/20
= Cost Element for 2019/20 + Profit Element for 2019/20 + Adjustment for 2018/19 overspend
= £110.46m + £75.09m + (-£4.59m)
= £180.96m
E = £180.96 million
[1] With the implementation of the new five-year GP contract in England, with fixed practice contract funding, GPC England and NHS England and NHS Improvement have agreed that DDRB will not make recommendations on the uplift figure for GP partner net income for the duration of the deal. The agreed uplift figure of 2.0% used in this year’s calculation of the dispensing envelope has been agreed by GPC England and NHS England and NHS Improvement.
Step 2
Calculate anticipated spend for the first six months (April - September) of 2019/20 [Y] based on current feescale
Actual spend for the first six months 2018/19 = £81.06 million
Adjustment for price change in October 2018 = 1.164 (i.e. the adjustment factor for 2018/19)[1]
Adjust for forecast volume change for 2019/20 = 0.031 per cent (i.e. average annual change in volume of fees, see Average Annual Volume Change for details)
Therefore
Anticipated spend for the first six months of 2019/20
= Actual spend for first six months of 2018/19 x Adjustment factor for 2018/19
= £81.06m x 1.164
= £94.32m
= Adjusted actual spend for first six months of 2018/19 x Average annual change in volume of fees
= £94.32m x 1.0003
= £94.35m
Y = £94.35 million
[1] For more information, see “Proposed Dispensing Feescales for GMS Contractors in England & Wales from 1 October 2018”
Step 3
Calculate anticipated spend for the second six months (October - March) of 2019/20 [Z] based on current feescale
Actual spend for the second six months 2018/19 = £107.58 million
Adjust for forecast volume decrease for 2019/20 = 0.031 per cent (i.e. Average annual change in volume of fees, see Average Annual Volume Change for details)
Therefore
Anticipated spend for the second six months of 2019/20
= Actual spend for second six months of 2018/19 x Average annual change in volume of fees
= £107.58m x 1.0003
= £107.62m
Z = £107.62 million
Step 4
Calculate remaining envelope available for the second six months of 2018/19 [E-Y]
Proposed 2019/20 dispensing envelope (E) = £180.96m
Anticipated spend for the first six months of 2019/20 (Y) = £94.35
Therefore
Remaining envelope available for the second six months of 2018/19
= Proposed 2019/20 dispensing envelope - Anticipated spend for first six months of 2019/20
= £180.96m - £94.35m
= £86.61m
E-Y = £86.61 million
Step 5
Calculate the “adjustment factor”
Given that:
E = £180.96 million
Y = £94.35 million
Z = £107.62 million
Then (E – Y) / Z =
(180.96 - 94.35) / 107.62 = 0.805 i.e. the ‘adjustment factor’
The “prices per prescription in pence” for each feescale, taken from the most recent proposed feescales, are then multiplied by the ‘adjustment factor’ [new fee = current fee x (E-Y)/Z]. The resulting figures are shown in the Proposed New Feescales section, in the right-hand column of the Table 1 and 2 entitled “Prices per prescription in pence”.
Step 6
Fees are paid on a sliding scale according to the numbers of items dispensed which are placed into bands each year. Changes in the numbers of items dispenses may cause practitioners to move bandings which are therefore adjusted to take account of volume changes, i.e. each band’s width is increased/decreased by the two-year average volume change.
The average annual change in volume of fees = 0.031 per cent
The top and the bottom of each of the bandings in both of the feescales were changed by this average annual change in volume.
The resulting figures are shown in Tables 1 and 2 in the Proposed New Feescales section in the left-hand columns of the tables entitled “Total prescriptions calculated separately for each individual dispensing practitioner, in bands”.
Last edited: 13 September 2019 11:39 am