Most of us were pretty stunned at the recent news that NHS England (and now Wales) will make generous payments towards the cost of GP locum cover, not least the providers of locum insurance! How much are GP practices now entitled to and what, if anything, do you need to do?
Back in February this year, the BMA announced a number of changes that aim to improve the practice finances and workload of GP practices in England (and now Wales). These changes came into effect on the 1st April 2017.
The most notable, from a financial planning perspective, is the introduction of a non-discretionary reimbursement of locum costs, to be paid by the Clinical Commissioning Group (CCG).
How much do you now get reimbursed for your GP locum costs?
Sickness cover reimbursement for GP practices in England and Wales is no longer a discretionary payment based on list size, but a practice entitlement.
After 2 weeks’ absence, the practice is paid up to £1,734 per week for 26 weeks, at which point it reduces to £867 per week (50%) for a further 26 weeks.
This is a significant increase from the previous locum cover provision. Many practices would not have received the old payment; those that did qualify often complained that the reimbursement process was lengthy, during which time they had to bear the locum costs.
The new scheme will cover all doctors – partners and salaried doctors – regardless of their health and any pre-existing medical conditions. It is simply a reimbursement of the expense for locum costs when a doctor is off sick.
How will this reimbursement be paid?
The indication from the BMA is that reimbursement will be paid based on invoices received by the practice. Further explanation will doubtless be forthcoming as there is also:
- Specific mention that part-time doctors within the practice may bill for providing cover for their colleagues;
- A question mark over whether the geographic variation in locum costs needs to be reflected, or if the simple provision of invoices will be sufficient.
Is this new funding sustainable?
If a business were to operate on the same basis as this new sickness cover funding, it would be committing financial suicide. Locum insurance providers have small armies of underwriters who assess the risks and potential liabilities in order to price their cover accordingly.
It seems that the NHS is walking into this blindly, at a point where it is already under massive financial pressure. The potential costs to the State are significant!
What should GP practice owners do?
If you have any locum insurance policies in place, you need to review the details of your cover – at least that’s the intention of these reforms.
The reality though is more complex:
- Many GP contracts offer additional features that need to be considered.
- You will be reliant on the efficiency of the CCG in handling claims – the often lengthy delays suffered under the previous reimbursement scheme may still be an issue.
- The amount you get reimbursed may not be enough to cover a locum in your area – you need to do the maths thoroughly to work out if it will be adequate.
You may also want to consider whether or not the funding is likely to be permanent. For example, if you were to take the changes at face value and decided that £1,734 reducing to £867 per week was sufficient for your needs, you might go ahead and cancel your individual locum insurance contract.
If you do cancel your cover and this new funding dries up in a few years’ time, you will have to obtain new cover which could be much more expensive or even impossible to get if your health has deteriorated.
The devil is in the detail when it comes to locum insurance cover
Some locum insurance providers will pay out the benefits irrespective of the NHS England / NHS Wales payment, others may choose not to – you need to check with your particular provider.
If your provider does pay out, this could inject a surplus income into your practice, or result in your practice being in a better financial position when someone is off sick. Not only does this go against the ethos of insurance, it could also lead to other questions being asked…your tax liabilities for one.
Your level of cover
- Do you know how much your practice would need if each doctor in the practice went off sick?
- How does the NHS’s sickness cover reimbursement compare to your current level of locum insurance cover?
You need to review your figures. Once you have, you may find that you need to change your level of locum insurance cover. Before you do anything though, get advice to double check your logic – particularly if you plan on lowering your cover.
Your other benefits
It is important that you check what benefits are covered under your locum insurance arrangement – they may be far wider than mere sickness cover.
If you have group practice cover for example, your policy may also provide benefits for revalidation, jury service, suspension and compassionate leave. None of these will be covered by this new funding.
You also need to consider how comfortable you are with these recent changes and how permanent you think they are. Old insurance policies often have competitive premiums which you may want to keep, especially until the dust has settled and any issues have been resolved.
As always, the answer is to think very carefully before taking any action and speak to your financial adviser who will be very happy to help you review your options.
Does the new sickness cover funding change your practice’s locum insurance plans? Let us know by adding a comment below