review of the GMS global sum formula

Review of the General Medical Services global sum formula

9 February 2007

Contents Foreword

1

Executive summary Summary of recommendations

3 7

Chapter 1

Introduction – the global sum and the Carr-Hill formula

9

SECTION A: THE PROCESS OF THE REVIEW Chapter 2 Chapter 3 Chapter 4

Scope and timeline of the review Structure of the review The formula review and resource allocation

10 11 12

SECTION B: THE FINDINGS OF THE REVIEW Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9

Review of workload factors Review of cost factors – variations in labour costs Review of cost factors – isolation and rurality costs Combining the formula adjustments The recommended formula

13 22 27 34 35

SECTION C: TAKING THE RECOMMENDATIONS OF THE REVIEW FORWARD Chapter 10 Chapter 11 Chapter 12

Implementation issues Data recommendations Impact of the formula review on the devolved administrations

41 44 45

GLOSSARY

47

APPENDICES Carr-Hill resource allocation formula Formula Review Group membership Components of QRESEARCH models Guide to normalisation in the global sum formula Calculation of consultation length and home visit adjustment weights Projected distributional impact of the recommended formula without the rurality index compared to the current global sum formula Appendix G Projected distributional impact of the recommended formula with the rurality index compared to the current global sum formula Appendix H Projected distributional impact of the recommended formula with the rurality index compared to the recommended formula without the rurality index Guide to the projected distributional impact of the recommended Appendix I formula Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F

49 55 56 57 60 61 62 63

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Foreword To support the new GMS contract introduced in 2003, Professor Roy Carr-Hill and colleagues were asked to develop an allocation methodology which became known as the “the Carr-Hill formula” or the Global Sum formula. When the new GMS contract was introduced the Department of Health, the General Practitioners Committee and the NHS Confederation gave a commitment to review the formula and this report and its recommendations are the result of that review. The review was carried out by a Formula Review Group led by NHS Employers and comprised senior colleagues from the General Practitioners Committee of the British Medical Association and the four UK Health Departments. The review was supported by independent academic research. I would like to thank each of the contributing organisations for their commitment and involvement in this important review which may directly affect the income and livelihood of many of the country’s 35,000 general practitioners. We were fortunate in having a considerable amount of time in which to carry out this comprehensive review – a luxury not afforded to Professor Carr-Hill and colleagues who were originally tasked with developing a formula to a much shorter timescale. The review allowed us to collate data not previously available and to obtain considerably more up-to-date data than had previously been to hand – particularly that becoming available from the evolution of the new GMS contract. I would particularly like to thank the Department of Health for their investment in the review and the commissioned research. I know senior Department of Health officials share the profession’s desire to secure a robust and credible methodology underpinning the equitable and transparent distribution of some £1.6 billion of public funds and informing allocations of a further £2 billion. The Formula Review Group considered the many comments about the current allocation formula which fell into two broad areas: those that related to the technical content and operation of the formula; and those that related to the perceived political or negotiating decisions which were outwith the original remit of Professor Carr-Hill and colleagues. We have covered the former through this review and our associated recommendations and we have included and commented upon the latter where we felt that such ‘non-formula’ issues had a material impact upon the equitable distribution of GMS resources. It was not the remit of the review to identify the resource envelope which would be required to appropriately fund global sum budgets across all of general practice. The purpose of the formula is to forecast the ‘relative’ costs of one general practice compared to another – that does not tell us how much funding each practice should recieve. Not surprisingly the issue of the Minimum Practice Income Guarantee was a recurring component of discussions during the course of the review and we have commented on this in Chapter 10. However, it was important that work relating to the technical components of the formula were considered as objectively as possible and therefore for individual components of the formula we explicitly excluded any potential skewing of results through the separate or subsequent application of any Minimum Practice Income Guarantee. The Government’s White Paper Our health, our care, our say: a new direction for community services gave a commitment for a separate review of the Minimum Practice Income Guarantee as well as equity across Primary Medical Services. The findings of that review may further supplement and overlap with the recommendations within this report. I believe and hope that this will increase our ability to distribute available resources in as equitable a way as possible Review of the General Medical Services global sum formula

1

so that all patients receive the same high quality level of care and enjoy the same quality of access to services regardless of where they may live or their social background. This report rightly focuses on the components of the allocation formula and I hope we have explained the more technical and analytical elements as transparently and clearly as possible. I believe much of the criticism of the original formula was due to a lack of information and clear explanation of the decisions taken at the time of its implementation. I have therefore encouraged the wider publication and sharing of this review to raise awareness of these issues as well as the reasons for the recommendations now being made. However, we should remember that it is not scientifically possible to forecast exact future workload and the associated resources required. I am pleased that the Department of Health, the Welsh Assembly, the General Practitioners Committee and NHS Employers have agreed to the publication of this report. In my view this is the right way forward and hopefully offers readers the level of detail and explanation which would have been helpful at the time of the original formula. I hope that you will take this opportunity to feedback your comments on the results of the review and particularly provide us with your views on the individual consultation questions.

Philip Grant Chair of the Formula Review Group

2

Review of the General Medical Services global sum formula

Executive summary Introduction 1.

This report presents the results of the review of the GMS global sum formula which has been undertaken by the Formula Review Group (FRG) established by NHS Employers and the General Practitioners Committee (GPC) of the British Medical Association (BMA).

2.

The FRG included representatives of the GPC, NHS Employers and the four UK Health Departments as well as independent academic support. We were required to report our findings and recommendations to the GMS Plenary which is the main development and negotiating forum between NHS Employers and the GPC for all matters relating to the GMS contract and funding.

3.

The GMS global sum formula distributes global sum payments to practices in line with the weighted needs of patients to reflect practice workload and the relative costs of service delivery. A commitment to review the formula was made by Plenary following the formula’s introduction in 2003 and concerns being raised at the time by some GPs regarding the fairness, robustness and reliability of data supporting the allocation of resources.

4.

In undertaking our review of the formula we have based our findings and recommendations wherever possible on evidence-based research, much of which we directly commissioned ourselves.

The recommended formula 5.

Following examination of the factors in the current global sum formula and the investigation of additional factors for possible inclusion in a revised formula, we recommend that the revised global sum formula should adjust for the following: •

workload

•

consultation length and home visits

•

staff Market Forces Factor (MFF)

•

Cost of Recruitment and Retention (CORR)

•

Cost of Unavoidable Smallness (CUS)

•

(possibly) rurality.

Workload adjustment 6. The single workload adjustment reflects the effect of patient, local area and practice characteristics upon practice workload. This adjustment is based on analysis by QRESEARCH (see Chapter 5) and would replace the four separate workload adjustments used in the current global sum formula. The new adjustment would be based on the following variables: •

age-sex bandings

•

newly registered or temporary patients (patients which have joined the practice in the past twelve months)

Review of the General Medical Services global sum formula

3

•

7.

the Index of Multiple Deprivation (IMD) health domain score for the patient’s electoral ward of residence.

There are a number of benefits to this approach which estimated all workload factors in single model. This suggests that its outputs are an improvement on those produced by the original global sum formula research.

Consultation length and home visits adjustment 8. We developed a consultation length and home visit adjustment to supplement the workload adjustment. This adjustment is based on consultation length and home visits data from the General Practice Research Database (GPRD) and the age-sex band from QRESEARCH. Staff Market Forces Factor adjustment 9. The current global sum formula makes adjustment for a staff MFF to reflect the geographical variation in staff costs that practices will incur. This current adjustment is based on data periodically updated by the Advisory Committee for Resource Allocation (ACRA) which reviews the unified PCT resource allocation formula. ACRA is currently reviewing the MFF element of that formula, and we recommend that, until ACRA’s recommendations about the MFF become available, the existing methodology for the adjustment should be maintained. This adjustment should be periodically adjusted to use the latest available data on staff MFF weights as they become available. Cost of Recruitment and Retention adjustment 10. The CORR adjustment allows for the extra costs of recruitment and retention that may be necessary to attract GPs to practices in relatively deprived areas. This adjustment is based on research by the Health Economics Research Unit at the University of Aberdeen which quantified the relationship between indicators of GP recruitment and retention difficulties and possible explanatory variables. 11.

The CORR adjustment formula (used to calculate each practice’s CORR adjustment index) includes the narrow comparator Standardised Spatial Wage Differential (SSWD) which is a measure of the wage premium earned by private sector employees in a given geographical area. The CORR adjustment formula also includes the average Limiting Long Term Illness (LLTI) ratio for the practice which is widely used to indicate the chronic health needs associated with deprivation.

Cost of Unavoidable Smallness (CUS) adjustment 12. The CUS adjustment allows the formula to take account of the lost economies of scale effects for isolated rural practices which unavoidably have a small list size. This adjustment, which is based on research by Deloitte (see Chapter 7), consists of an economies of scale adjustment and an isolation criteria. 13.

4

The economies of scale adjustment reflects the relationship between list size and expenses per patient that exist for practices with small list sizes. As it would be inappropriate to reward small practices without recognising the cause, an isolation criteria is then applied that qualifies the extent to which a small practice should benefit from the economies of scale adjustment based on the degree to which its smallness is unavoidable.

Review of the General Medical Services global sum formula

Rurality adjustment 14. The current rurality adjustment is intended to reflect the uncontrollable additional costs associated with the degree to which the area served is rural. While the new CUS adjustment compensates for the unavoidable costs of practices that are necessarily small because of their isolated location, it could be argued that the rurality adjustment should be applicable to practices irrespective of list size. 15.

We were unable to recommend whether or not a rurality adjustment should be included in the revised formula due to a lack of evidence and rationale to support its inclusion. However, we were able to recommend that if a rurality adjustment was adopted it should be a specifically updated version of the current rurality adjustment.

16.

It could be justified that a rurality adjustment be included in the revised formula because the original analysis showed that rurality was associated with increased expenses per capita after allowing for list size, so it is arguable that a rurality adjustment should be applicable to practices irrespective of size.

17.

However, there are also reasons why a rurality adjustment should not be included in the revised formula. These are:

18.

•

there is an issue around the validity of the original analysis, which was based on data that preceded the introduction of the nGMS contract. It is possible that the higher expenses of rural practices are a reflection of previous payment mechanisms

•

we are aware of a perception that the current adjustment is not particularly well targeted and that it benefits leafy suburbs as well as the most rural practices because it is a continuous function of density and distance

•

we appreciate that whilst it is objectively valid, it may appear unnecessarily complicated to include two adjustments that address seemingly similar issues.

Additionally, the Carr-Hill rurality adjustment includes patients’ average distance to practice. Our health, our care, our say: a new direction for community services states that patients should have more choice to register with the practice most convenient for their particular needs and circumstances. Patients may choose to register with practices some distance from their home, and therefore average distance to practice would no longer be a good measure of rurality.

Factors considered but not recommended for inclusion in the new formula 19.

We considered a number of factors that we do not recommend for inclusion in the new formula. These include: •

QOF prevalence

•

patients living in nursing and residential homes

•

ethnicity

•

patients who speak a different language from their GP

•

GP Market Forces Factor (MFF). Review of the General Medical Services global sum formula

5

QOF prevalence 20. QRESEARCH suggested that we could include QOF prevalence in the workload adjustment, and recommended that patient-level QOF data should be used. However, we found that an adjustment using patient-level QOF data would be difficult to implement. Instead, we recommend that there should be a review of the technical changes required to provide patient-level QOF data in future years, to allow the option of using these data in the future. Patients living in nursing and residential homes 21. While the current global sum formula includes an adjustment for nursing and residential homes, QRESEARCH were unable to adequately define which patients were living in nursing and residential homes using their database. In addition, work by us showed that there was a negligible effect on the distribution of weighted patients from the removal of this adjustment. Ethnicity 22. The QRESEARCH analysis suggested that consultation rates decreased as the percentage of the white population increased. We interpreted the negative effect of ethnicity on workload as evidence of unmet need on non-white groups and we agreed that it would therefore be inappropriate to reduce practice payments on the basis of ethnicity. Patients who speak a different language to their primary health professional 23. We noted that direct information on the number of patients speaking a different language to their primary health professional was not currently recorded on any database. We agreed that it would therefore be impossible to implement a new factor, other than at local level. GP Market Forces Factor (MFF) 24. While we noted some arguments in favour of the inclusion of a GP MFF adjustment, this adjustment would be inconsistent with the CORR research, which found that GP recruitment and retention problems bear little relationship to private sector pay comparisons.

Modelling the recommended formula 25.

We considered the projected distributional impact of the recommended formula both with and without the rurality index compared to the current global sum formula.

26.

The modelling showed that adopting the formula without the additional rurality adjustment would result in:

6

•

a change in weighted patients for GMS practices ranging from -30% to +65%. Excluding the 1% most extreme practices (0.5% at each extreme), the range would be -19% to +29%

•

a general increase in the weighted capitation share of urban practices, practices with high additional needs, practices with high proportions of new registrations, practices with low proportions of patients in nursing and residential homes, practices with low proportions of elderly patients, London practices and practices in spearhead PCTs.

Review of the General Medical Services global sum formula

27.

28.

When using the additional rurality adjustment the modelling showed that: •

the change in weighted patients for GMS practices would range from -19% to +83%. Excluding the 1% most extreme practices, the range would be -11% to +28%

•

there would be a general increase in the weighted capitation share of urban practices, practices with high proportions of new registrations, practices with low proportions of nursing and residential home patients, practices with low proportions of elderly patients and London practices.

Having compared each recommended formula with the current formula, we considered the projected distributional impact of the recommended formula with the rurality index compared to the recommended formula without the rurality index. It showed that: •

compared to the recommended formula without the rurality index, including the rurality index would on average tend to increase the weighted capitation share of rural practices, practices with low additional needs, practices with higher proportions of elderly patients and practices outside of London.

Implementation issues The London adjustment 29. On the basis of improvements to the formula, we recommend that, should the new formula be implemented, the London adjustment should be discontinued. The Minimum Practice Income Guarantee (MPIG) 30. We agreed that the historic constitution of MPIG and correction factor payments protected practices from the negative impact of any redistribution of resource envelope based on the agreed formula. However, the financial stability of individual practices was recognised as vital. 31.

We have based our conclusions and financial modelling on the principle that a revised formula would be applied to the same resource envelope.

Recommendations 32.

Our report makes the following recommendations: We recommend a revised formula that includes the following components: •

workload adjustment

•

consultation length and home visit adjustment

•

staff Market Forces Factor (MFF) adjustment

•

Cost of Recruitment and Retention (CORR) adjustment

•

Cost of Unavoidable Smallness (CUS) adjustment

•

(possibly the) rurality adjustment.

Review of the General Medical Services global sum formula

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The separate adjustments should be multiplied together to generate the aggregate formula adjustment. We recommend that Connecting for Health should review the technical changes required to provide patient-level data, in particular QOF data, in future years. We recommend that the London adjustment should be discontinued if the revised global sum formula is adopted. We recommend that the collection of the following could be beneficial to future developments of the formula:

8

•

the ability to link patient-level QOF data to the National Health Application and Infrastructure System used to apply the global sum formula (also known as the Exeter system)

•

workload data for patients living in nursing and residential homes

•

direct information on the number of patients speaking a different language to their primary health care professional

•

actual patient-level socioeconomic data.

Review of the General Medical Services global sum formula

1

Introduction – the global sum and the Carr-Hill formula

1.1

In February 2003, the NHS Confederation and the General Practitioners Committee (GPC) of the British Medical Association (BMA) jointly published Investing in General Practice: The New General Medical Services Contract which set out the details of the new GMS contract following the outcome of their negotiations over the previous 16 months.

1.2

The new contract agreement included movement from the old Red Book remuneration arrangements to a practice-based contract with core investment via a global sum, distributed in line with the weighted needs of patients to reflect practice workload and complexity and the relative costs of service delivery.

1.3

The current GMS global sum formula, developed with the support of a number of academic teams including Professor Roy Carr-Hill of York University, provided the basis for the distribution of global sum payments by calculating each practice’s fair share of the total global sum resource. The formula did not determine the total global sum resources available nationally.

1.4

The current formula takes account of six key determinants of practice workload and circumstances: (i) patient sex and age for frequency and length of surgery and home visit contacts (ii) nursing and residential home status (iii) morbidity and mortality (iv) newly registered patients (v) unavoidable costs of rurality (vi) unavoidable higher costs of living through a MFF applied to the costs associated with employing practice staff. In particular, this compensates for those additional costs involved in delivering services in high cost-ofliving areas such as the south east of England.

1.5

Applying the indices together to a practice’s population creates a practice weighting. This determines a practice’s global sum entitlement.

1.6

Appendix A presents the core findings from the analysis used to derive the current formula.

1.7

The global sum also includes two off-formula adjustments: (i) an adjustment for the treatment of temporary residents and the provision of immediately necessary and emergency treatment (ii) an adjustment to recognise the particular circumstances of practices in London.

1.8

Some GPs raised concerns about the accuracy and robustness of the current formula after details of the formula were published in 2003. In response to these concerns the negotiators moved to reassure the profession and the NHS by promising that the formula would be reviewed in light of the developing contract and the availability of additional data.

1.9

This report has been prepared as a result of that review and presents the findings of the Formula Review Group. Review of the General Medical Services global sum formula

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SECTION A: THE PROCESS OF THE REVIEW 2

Scope and timeline of the review

2.1

Our review group was established in December 2004 to:

2.2

•

undertake a thorough review of the payments for GMS essential and additional services

•

examine the current global sum formula, including all factors currently included, and investigate additional factors for possible inclusion or exclusion in a revised formula, subject to evidence

•

propose to Plenary any necessary revisions to the current allocation formula, taking account of evidence and resources.

Our objectives were to: •

evaluate whether the current formula delivers a fair distribution of resources, based on those factors currently included in the formula and the introduction of additional factors where this is supported by evidence, and make recommendations about whether fair distribution could be achieved

•

consider redistribution of resources to areas of high health inequalities and of significant primary care workforce shortfalls

•

consider practices’ relative workload and the relative costs of service delivery

•

distribute effectively the resources available within the global sum.

2.3

Our membership consisted of experts in the relevant technical, policy and clinical areas and included representatives from the British Medical Association’s General Practitioners Committee (GPC), NHS Employers and the four UK Health Departments as well as independent academic support. The Chairman of the group was appointed by all parties. A list of FRG members is included at Appendix B.

2.4

We were established by and therefore required to report to GMS Plenary. The Plenary, which consists of negotiators from the GPC and NHS Employers, negotiates all matters relating to the GMS contract and funding. As such, while we would make recommendations, any decisions regarding implementation would ultimately be the responsibility of Plenary.

2.5

While it was originally intended that we would report to GMS Plenary so that a new formula could be implemented in April 2006 together with other changes to the GMS contract, the GPC and NHS Employers subsequently agreed that the wider review of the contract should take place in two stages – 2006/07 and 2007/08. Following discussion about the implications of this decision the negotiators agreed that a significant formula review, in time for April 2006 implementation, was unlikely to be achievable or desirable. Instead, it was agreed that we should produce a report for consultation in 2006.

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Review of the General Medical Services global sum formula

3

Structure of the review

3.1

The factors in the current formula are divided into two types: workload factors and cost factors. Similarly, all proposed new factors are categorised into one of these types.

3.2

Workload factors are those that impact upon the workload of a practice, or the time required to provide care to patients. These are often related to the types of patients seen by the GPs in a practice and account for the fact that some types of patients impose a higher workload. The workload factors we considered in this review are described in Chapter 5.

3.3

Cost factors are those that impact upon the expenditure needing to be incurred by a practice to deliver services to its patients. These are related to the costs incurred by practices in delivering services. The cost factors we considered in this review are described in Chapters 6 and 7.

3.4

We also considered how the various components of the formula should be combined. This included estimating the workload aspects of the formula in a single model, assessing how the separate numerical components of the model should mathematically be combined and, reviewing the weight given to the various components of the formula.

3.5

We undertook a number of pieces of work to assess the potential impact of the revised formula. This included practice-level modelling of the projected distributional impact on weighted patients of any changes to existing factors compared with the current formula. We used a further analysis of this modelling to project the distributional impact of formula changes on particular cohorts of practices (for example on practices grouped by indicators of rurality or deprivation). We also prepared case studies to demonstrate how the formula would affect specific individual practices.

3.6

We also considered a number of issues that would impact upon implementation of its recommendations including the London adjustment and the MPIG. These are discussed in Chapter 10.

Review of the General Medical Services global sum formula

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4

The formula review and resource allocation

4.1

Primary care trusts receive their main funding through the Department of Health in the form of a Unified Resource Allocation. The formula which underpins the distribution of the Unified Resource Allocation is developed and maintained by the Advisory Committee on Resource Allocation (ACRA) which is an independent multi-professional body.

4.2

The Unified Resource Allocation formula allocates funding to PCTs for: •

Hospital and community health services (HCHS)

•

prescribing

•

primary medical services

•

HIV/AIDS.

4.3

We obviously needed to take account of ACRA’s work to avoid potential significant mismatches between allocations and GMS funding as well as to take advantage of methodological improvements which might be mutually beneficial.

4.4

There were a number of areas where the work of ACRA and the FRG coincide and where there was scope for comparing methodologies. These were:

4.5

•

relevant populations

•

additional needs

•

Market Forces Factors.

Issues regarding additional needs and Market Forces Factors will be discussed in Chapter 5 and Chapter 6 of this report.

Relevant populations 4.6

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The population base for the current resource allocation formula in England is the registered population. This is determined using GP registrations in the Attribution Data Set (ADS) constrained to Office for National Statistics (ONS) population estimates for the year in question. The ONS constrained registered population is used for the entire allocation, although, under the GMS global sum formula PCTs pay practices on the basis of their unconstrained registered list. ACRA is engaged in a major piece of work at present on appropriate population bases for revenue allocations after 2007/08. This work forms part of ACRA’s work programme which is due to be completed in the Autumn of 2007. ACRA will then make recommendations to Ministers on possible changes to the overall formula.

Review of the General Medical Services global sum formula

SECTION B: THE FINDINGS OF THE REVIEW 5

Review of workload factors

Current formula 5.1

5.2

Factors The current global sum formula makes adjustments for four practice workload factors: •

the age-sex mix of the practice population

•

the nursing and residential home population of the practice

•

the number of new registrations in the practice population

•

the additional needs of the practice population.

An outline of the research underlying these adjustments is available at Appendix A.

Age-sex adjustment The age-sex adjustment reflects the effect of patient age and gender on workload. This adjustment used the General Practice Research Database (GPRD) which measures instances of a patient’s computer file being accessed. In this research, the numbers and length of patient file openings were used to measure workload. This was compared to the age and sex of patients to develop the age-sex adjustment. The current adjustment consists of seven age bandings for each sex.

5.3

Nursing and residential homes adjustment This adjustment reflects the additional workload associated with patients in nursing and residential homes based on a survey of home managers (used to measure age and sex specific consultation rates) and GPs (used to estimate consultation length and travel time).

5.4

Number of new registrations in the practice population Using a similar methodology to the age-sex adjustment, Professor Roy Carr-Hill developed an adjustment which reflects the extra practice workload associated with newly registered patients and list turnover.

5.5

Additional needs adjustment This adjustment reflects the other patient characteristics which influence workload. It was developed by Dr Stephen Morris, Professor Matthew Sutton and Professor Hugh Gravelle. Using Health Survey for England data on GP consultations from 1998/2000 and other area-level data, they found that, of the variables tested, Standardised Limited Long-Standing Illness (SLLI) and the Standardised Mortality Ratio for those aged under 65 (SMR