Publication, Part of Proposed Dispensing Feescales for GMS contractors in England and Wales
Proposed Dispensing Feescales for GMS Contractors, England and Wales - 2022, October release
Calculation of New Feescales
The calculation follows an six-step approach set out in the methodology agreed by the negotiating parties (see Annexes A and B). 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 2022/23 is:
new fee = current fee x (E - Y) / Z
where
E = envelope for 2022/23
Y = anticipated spend for first six months of 2021/22
Z = anticipated spend for second six months of 2022/23 based on current feescales
This calculation is detailed in the 'Calculating the October Feescales' section below and the associated Feecsales for October can be in the October Feescales section.
A similar calculation is carried out to establish what the feescales would have been if implemented from 1 April 2022 for the whole of the financial year.
The formula used was:
new fee = current fee x (E / X)
where
E = envelope for 2022/23
X = anticipated full year spend for 2022/23 based on current feescales.
This calculation is detailed in the 'Calculating the April Feescales' section below and the associated Feecsales for April can be in the April Feescales section.
Please note calculations are performed on unrounded data but figures are rounded for presentational purposes.
Calculating The October Feescales
Step 1
Calculate the envelope [E] for 2022/23 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 2022/23 = -0.7%)
- The profit element (40%) will continue to be uplifted by the agreed net pay uplift [1]
(for 2022/23 = 2.1%)
Calculating the envelope:
Variance between 2021/22 Envelope and 2021/22 Outturn
= 2021/22 Envelope - 2021/22 Actual outturn
= £184.68m - £169.28m
= £15.40m (underspend)
Adjustment to be made in 2022/23 for 2021/22 underspend
= Variance x 60%
= £15.40m x 0.6
= £9.24m
Adjusted 2021/22 Outturn
= 2021/22 Outturn + Adjustment for 2021/22 underspend
= £169.28m + 9.24m
= £178.52m
Cost Element of 2022/23 Envelope
= (Adjusted 2021/22 Outturn x Cost Element Percentage) x Average Volume Increase in Fees 2021/22
= (£178.518 x 0.6) x 0.9930
= £106.36m
Profit Element of 2022/23 Envelope
= (Adjusted 2021/22 Outturn x Profit Element Percentage) x DDRB Uplift
= (£178.518 x 0.4) x (1.021) [1]
= £72.91m
Envelope for Year 2022/23
= Cost Element for 2022/23 + Profit Element for 2022/23 + Adjustment for 2022/23 underspend
= £106.36m + £72.91m + £9.24m
= £188.507m
E = £188.51 million
[1]Until 2019, this was either the figure recommended by the Review Body on Doctors' and Dentists' Remuneration (DDRB), or the figure implemented in England if the recommended figures was not used.
In 2019, a five-year GP contract was agreed in England with fixed practice contract funding and the GPC England and NHS England and NHS Improvement agreed that DDRB will not make recommendations on the uplift figure for GP partner net income for the duration of the deal but that the agreed uplift figure of 2.0% would be used in 2019's calculation of the dispensing envelope.
In 2020, GPC in England and NHS England and NHS Improvement agreed that an uplift figure of 1.8% should be used; in 2021 and 2022, this figure is 2.1%.
Step 2
Calculate anticipated spend for the first six months (April - September) of 2022/23 [Y] based on current feescale
Actual spend for the first six months 2021/22 = £83.45million
Adjustment for price change in October 2020 = 0.760 (i.e. the adjustment factor for 2021/22)[2]
Adjust for forecast volume increase for 2022/23 = -0.7 per cent (i.e. Average annual increase in volume of fees, see Annex A for details)
Therefore
Anticipated spend for the first six months of 2022/23
= Actual spend for first six months of 2021/22 x Adjustment factor for 2021/22
= £83.45m x 0.760
= £63.45m
=Adjusted actual spend for first six months of 2021/22 x average annual increase in fees
= £63.45m x 0.993
= £63.00m
Y = £63.00 million
[2] For more information, see “Proposed Dispensing Feescales for GMS Contractors in England & Wales from 1 October 2021”
Step 3
Calculate anticipated spend for the second six months (October - March) of 2021/22 [Z] based on current feescale
Actual spend for the second six months 2021/22 = £85.83 million
Adjust for forecast volume increase for 2022/23 = -0.70 per cent (i.e. Average annual increase in volume of fees, see Average Annual Volume Change for details)
Therefore
Anticipated spend for the second six months of 2022/23
= Actual spend for second six months of 2021/22 x Average percentage annual increase in fees
= £85.83m x 0.993
= £85.227m
Z = £85.23 million
Step 4
Calculate remaining envelope available for the second six months of 2022/23 [E-Y]
Proposed 2022/23 dispensing envelope (E) = £188.51m
Adjusted spend for the first six months of 2022/23 (Y)= £63.00m
Therefore
Remaining envelope available for the second six months of 2022/23
= Proposed 2022/23 dispensing envelope - Anticipated spend for first six months of 2022/23
= £188.51m - £63.00m
E-Y = £125.50 million
Step 5
Calculate the adjustment factor for October feescales
Given that:
E = £188.51 million
Y = £63.00 million
Z = £85.23 million
Then (E – Y) / Z =
(188.51 - 63.00) / 85.23 = 1.473 i.e. the ‘adjustment factor for October feescales’
The “prices per prescription in pence” for each feescale, taken from the most recently implemented Feescales last April 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 of this paper, 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 dispensed may cause practitioners to move bands 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 = -0.70 per cent
The top and the bottom of each of the bands 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”.
Calculating The April Feescales
Calculate anticipated full year spend for 2022/23 [X] based on current feescale
e.g. uplift the 2021/22 spend by the historic volume increase.
X = Y + Z
Given that:
Y = £63.00 million
Z = £85.23 million
= £63.00m + £85.23m
= £148.23m
X = £148.23 million
The April Adjustment factor = 1.272 which is applied to each pence value at each banding to get new value in proposed feescale.
This is calculated by using the formula E / X
E = £188.51m
X = £148.23m
Then E / X = 1.272 i.e. the ‘adjustment factor for April feescales’
Last edited: 17 October 2022 8:32 am