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Enhanced services in England are currently negotiated at a local level
with no indication nationally of what is a reasonable price. The picture
in Wales is different, with indicative rates being published earlier
this year for care home support, minor ailments and pharmaceutical rota
(out of hours) services (see Panel below). In Scotland, the intention
is to work towards both a national service framework and an indicative
national tariff for additional services.
With primary care trusts strapped for cash and recent evidence indicating
that commissioning
of enhanced services is low (PJ, 19 August, p224),
should England follow suit and agree national benchmark prices? An investigation
by The Journal suggests that publication of benchmark prices for core
elements of enhanced services would be helpful but that a negotiated
national tariff would not be appropriate.
Indicative rates for national enhanced services in Wales
Indicative rates were published earlier this
year for services for care home support, minor ailments and additional
hours (formerly
rota out of hours) services
in Wales (PJ, 29 July, p125). According
to Catherine Stanley, business and contracts manager at Community
Pharmacy Wales, service level agreements for these national enhanced
services were agreed by the new contract project implementation board
(facilitated by the Welsh Assembly Government), which included CPW,
and indicative rates have since been established for three of these
national enhanced services. The concept of national enhanced services
within the community pharmacy contract in Wales arose from the work
of the new community pharmacy project implementation board (facilitated
by WAG). They were developed with a view to national best practice
and to save time and resources. “Instead of a service specification
and rate having to be agreed locally 22 times one can be agreed once
at a national level,” she explains.
Both CPW and the local health boards support the process and principle
of nationally agreed rates for these services while recognising that
local circumstances may dictate the level of enhanced services being
commissioned. The principle of national enhanced services was endorsed
by the WAG new community pharmacy project implementation board and
service templates were published on the Health Of Wales Information
Service community pharmacy website.
“Representatives of CPW (the service providers) met representatives
of the LHBs in Wales (the service commissioners) to negotiate indicative
rates for the national enhanced services. This process does not contravene
competition legislation as all information used in the negotiations
was already in the public domain,” says Ms Stanley. She adds: “The
negotiations were conducted in a manner that ensured that both parties
to the negotiations were provided with copies of all relevant financial
information and both parties were happy with the outcome of the negotiations.”
Both contractors and LHBs are free to renegotiate the indicative
rate for each service depending on local circumstances. Where this
is the case the service will be considered a revised national enhanced
service and agreement of the remuneration rate will be reached between
the CPW regional committee and the LHB using the guidance provided
by the Pharmaceutical Services Negotiating Committee.
The first three national enhanced services for which an indicative
rate has been negotiated are the most common services and the ones
it was expected the majority of LHBs would wish to commission. Negotiations
are continuing on national enhanced service indicative rates for
supervised administration and syringe and needle exchange. It is
hoped that other national enhanced services will be developed in
the future, says Ms Stanley. |
Pricing toolkit
When details of
the funding for the new contract were announced (PJ,
30 October 2004, p637) the intention was that national benchmark prices
would be agreed for each of the enhanced services. Exact funding would
then be negotiated locally between the local pharmaceutical committee
or pharmacy contractor and the primary care organisation. The benchmark
price would be central in guiding these discussions. The Pharmaceutical
Services Negotiating Committee later announced that, instead, a pricing
toolkit agreed by the PSNC, the Department of Health and the NHS Confederation
(which represents the interests of primary care trusts) would be published
(PJ, 10 September 2005, p299). The reasons given were: there had been
minimal usage at a local level of prices agreed for national enhanced
services under the new General Medical Services contract; local factors
would be able to be taken into consideration; and local negotiation
allows the value of the service to be enhanced by the environment in
which it operates.
In addition, the PSNC has since warned that primary care organisations
could risk contravening the Competition Act if they discuss pricing among
themselves before entering into agreements with local pharmaceutical
committees. LPCs can, however, share historical data on pricing of enhanced
services. The pricing toolkit does not include actual prices, just an
indication of the factors to be included in negotiating local services,
and therefore does not contravene competition legislation. “The
purpose of the enhanced pricing toolkit is to provide a transparent process
for both the primary care trust and the LPC in negotiating these locally
commissioned enhanced services,” the PSNC states on its website.
Animosity
Gail Thomas, head of medicines management at Central and Eastern Cheshire
PCT, believes that benchmark prices, similar to the indicative rates
agreed in Wales, would be helpful for PCT commissioners. “If,
for example, a national tariff specified that the price range for a
consultation on minor ailments should be between £2.50 and £4,
then it would at least be a starting point for PCT local negotiations.”
Ms Thomas believes that establishing benchmark prices will be particularly
important as practice-based commissioning becomes more widespread. “Under
practice-based commissioning, GPs will be commissioning services and
I think that it might be difficult for them to know what the value of
a service is from a pharmacy perspective.” She adds that if the
commissioner has never dealt with pharmacy before or does not know anything
about pharmacy services, he or she would have to spend a lot of time
investigating what would be a fair tariff. “It would be far easier
to say ‘This is what you should be looking to pay’,”she
said.
Gian Celino, a director at Webstar Health, a company that provides consulting
and project management services in the pharmacy sector, has been commissioned
by the NHS Working in Partnership Programme to develop a resource for
minor illness management. As part of that, he has specifically been looking
at community pharmacy minor ailments schemes. He says that the data he
has collected suggest that there is duplication of work among PCTs and
pharmacy contractors to develop and agree pricing of the service.
Mr Celino believes that this duplication is a waste of time. “There
is a limited capacity in both primary care teams and local contractor
organisations, particularly after the introduction of the new community
pharmacy contract. It seems a shame for effort to be expended in meetings,
discussions, negotiations and even research on what is the appropriate
price to pay, when in reality many of [the schemes] are similar.”
Across 10 schemes that he looked at the method of pricing varied considerably. “Some
PCTs apply a retainer plus a consultation fee. The retainer was around £10
per month. Consultation fees ranged from £3 to £7, with some
schemes applying a different fee where the drug was supplied under a
patient group direction (£10) although other schemes made no such
distinction,” he explains.
There are also different approaches to the drug element. “Most
reported paying the Drug Tariff price plus VAT, however it is not clear
how the PCTs deal with items which have no Drug Tariff price. Others
pay what they described as “cost” price plus VAT. Finally
we found that there are different approaches taken to the application
of VAT to the drug element.”
Ms Thomas also argues that setting benchmark prices would improve relationships
between pharmacy contractors and PCTs. Referring to negotiations that
took place within Central Cheshire PCT when a minor ailments service
was set up, she said: “Having some sort of price range to mark
yourself against would have taken away some of the animosity that can
develop between the contractors and the PCT. [The contractors] were saying
that the fee was too low, but, actually, it was average compared with
other PCTs.” In this respect, she says, benchmark prices would
also benefit contractors. She argues that at the moment PCTs can decide
themselves what they think is a reasonable price for an enhanced service. “Whereas
if there were a benchmark tariff stipulating a price range, then PCTs
would find it difficult to try to pay below this,” she suggests.
Competing
with other providers
But would benchmark prices not lead to pharmacists being undercut by
other health care professionals who can operate with lower overheads?
Mr Celino says that where pharmacy is substitutable, such as in providing
smoking cessation services, there needs to be some flexibility. He believes
that there is a stronger argument for an indicative tariff for schemes
provided solely by pharmacists, such as supervised consumption of methadone,
needle exchange and minor ailments schemes.
Mike Holden, chief executive of Hampshire and Isle of Wight LPC, says
that at the moment the only indication of prices is the secondary care
tariff. “You have got to beat that to save money because otherwise
the service will not get commissioned,” he says.
Mr Holden believes that it would be useful to have benchmark prices,
however, he suggests that rather than an all encompassing figure, it
would be more helpful to have guide prices for the different elements
of a service specified in the PSNC toolkit. “I hate wasting time
and resources reinventing wheels. Therefore, why have LPCs doing that
exercise, and the multiples doing that exercise, when there are some
core elements that could go into there.”
He suggests that an indicative price range for the core elements of a
service is needed — the minimum price that you can run the service
for without losing money and the ideal price.
“You need to be able to negotiate within that band. But unless you know
where those two parameters are, you are putting your finger in the wind and you
may end up delivering services at a loss to get your foot in the door. And once
you have created that precedent, you are stuffed,” says Mr Holden.
Views from the PSNC and the NHS Confederation
Steve Lutener, head of regulation at the Pharmaceutical Services
Negotiating Committee, explains that the PSNC considered carefully
whether it was going to be possible to agree national benchmark
prices for enhanced services. The factors it considered were:
· Any benchmark prices would have to be agreed between the PSNC
and the NHS Confederation, and they would have to be non-binding.
· The enhanced services are based on locally commissioned services,
and there was information available to the NHS Confederation
and to the PSNC on the range of prices already being paid. In
discussions with the Department of Health and the NHS Confederation
in 2005 it became clear that the levels of benchmark prices they
would accept were going to be well below some of the prices currently
paid, and below levels the PSNC considered reasonable.
· If a benchmark price were published, it could apply only to
a standard service specification, so would need to be adjusted
to account for any variation in the service specification.
“We have seen in The Pharmaceutical Journal research which
shows that the majority of commissioned services are not the
standard service, but a locally modified service. Although a
benchmark price for the standard service would give a starting
point for negotiation on locally modified services, there would
still need to be negotiation concerning each individual modification,
and the value to be given to each, to reach a revised price,” Mr
Lutener explains.
He points out that LPCs and PCTs have access to information on
the range of prices already being paid, and these can be used
as starting positions in their negotiations, particularly when
used with the pricing toolkit.
Regarding the situation in Wales, Mr Lutener argues that it is
different from that in England. “Constitutionally, apart
from its role in negotiating with the Welsh Assembly Government,
Community Pharmacy Wales is recognised as representative of all
contractors in Wales, in the same way that an LPC is representative
of contractors in its area. Therefore, publishing rates it has
agreed with the local health boards parallels the situation in
England, where an LPC publishes the details of the service agreed
with some or all of its PCTs,” he says.
Chris Town, who chaired the pharmacy contract negotiations on
behalf of the NHS Confederation, told The Journal that the confederation
was interested initially in a debate about a national tariff
but that both the pharmacists and the managers felt that there
was so much variation in what people were looking for that it
was easier to have a toolkit to work out a price, which could
then be negotiated at a local level.
“From a pharmacist’s point of view, if the added value is
significant then the fee could be higher but, equally, if the
workload and therefore the value of that workload is miniscule
then setting a bottom line price would give the wrong indication
and people would not even bother going to the negotiating table,” he
explains.
Mr Town, who is currently chief executive of Cambridgeshire PCT,
was also a key player in the negotiation of the GMS contract.
He believes that setting national prices for services under that
contract has got in the way of progress. “In many cases
with some of the GMS enhanced services, [the national prices]
were cost prohibitive. Whereas when people sat down at a local
level, they agreed that, first, it was not affordable from the
PCT’s point of view and, secondly, that it was not the
sort of profit that the GPs were looking to make from the service.”
However, Mr Town believes that there would be no harm in publishing
some benchmark prices as part of the toolkit if they were available,
as long as a nationally negotiated tariff is not set. |
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