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Pharmaceutical Services Negotiating Committee

Transitional Arrangements for Eligible Methadone Dispensing Contractors

Please note these transitional arrangements are due to end 31st March 2013.

The new arrangements for liquid methadone payments agreed by the Department of Health and PSNC will come into effect on 1st July 2012. Restructuring of payments for methadone dispensing is part of the DT Simplification programme, and was carefully considered by PSNC.  Agreement on the changes was part of the 2011-12 funding settlement, but final details of the changes were not agreed until April 2012.  

Why have these transitional payments been agreed?

The changes have given rise to concerns expressed by pharmacies that provide services to large numbers of methadone patients. 

Many of the concerns expressed related to the benefit of supply in daily dose bottles.  The changes affect payment only; there is no intention to change prescribing practice.

Other concerns relate to the level of the new fees.  The analysis undertaken evaluated the time and workload involved in methadone dispensing.  The financial implications were calculated at national level, but it was impossible to assess the financial impact on individual contractors as this is dependent on the practice of individual prescribers.  PSNC is concerned about the level of potential impact for particular pharmacies and has taken note of feedback received from some whose fee income will be substantially reduced following the changes.  In negotiations with the Department of Health, PSNC had pressed the need to give pharmacies at least six months’ notice of the changes, but  this was not possible. 

We have therefore agreed three transitional payments to protect those contractors who are most at risk of negative impact as a direct result of these changes.

Details of the transitional arrangements

Payment 1

From July 2012 – March 2013, where professional fees from dispensing oral liquid methadone have fallen such that the contractor is no longer eligible for the Establishment Payment, under Part VIA of the Drug Tariff, the contractor is able to claim the minimum Establishment Payment for an affected month.

Contractors can claim this payment using a claim form available on the NHS Prescription Services website - click here. (just added)

The declaration will need to include that there is no reason apart from the change in payment for dispensing of liquid methadone that has led to a decrease in fees (e.g. it would not be appropriate to claim if the reduction in professional fees is due to a new pharmacy having opened nearby or the pharmacy is dispensing fewer prescriptions for liquid methadone). Where the claim is made, the contractor will be paid the Establishment Payment if appropriate based on the volume of prescription items for the same month of the previous year but at the current value.  This safeguarding payment will be in place until March 2013.

Payment 2

Where a contractor’s professional fees and Schedule 2 CD fees for dispensing oral liquid methadone are 25% or more of their total professional fees and Schedule 2&3 CD fees, they may be eligible for one or both payments outlined below.

The criteria for contractors to be eligible for either of these payments are:

  • The contractors must have supplied oral liquid methadone in the claiming month; and
  • The average Schedule 2 CD fees and professional fees for dispensing oral liquid methadone across the baseline period, January – March 2012, is 25% or more of their total professional fees total and Schedule 2&3 CD fees for the same period.

NHS Business Services Authority (NHSBSA) will contact those contractors who are eligible for these payments directly to let them know that they fulfil the eligibility criteria.

Contractors will not need to claim for these payments, adjustments will be made automatically by the NHSBSA, where appropriate, and will appear as an adjustment (with the appropriate narrative) on the contractor’s Schedule of Payment document (FP34).

2a Advance payment

When calculating a contractor’s advance payment for any given month, the number of items claimed for the month (on the FP34C) is multiplied by the average Net Ingredient Cost (NIC) for the previous month. This advance payment is taken into account the following month when the final accurate payment for the month is paid.

For July 2012’s dispensed prescriptions only, where the contractor meets the eligibility criteria outlined above and the calculated advance payment for July 2012 is 70% or less than that paid in June 2012, the contractor will be paid the value of the advance payment they received in June 2012. The advance payment will be taken into account in the usual way the following month when the final accurate payment for the month is paid. This adjustment is available for July 2012 dispensed prescriptions only.

2b Professional and CD fees

For July to September 2012, where a contractor meets the criteria outlined above, they will be paid the higher of following payments

  • 90% of the monthly average for January - March 2012 Schedule 2 CD fees and professional fees for dispensing oral liquid methadone only; or
  • the payment for the month due under the new system.

From October 2012, a contractor will be paid according to the system outlined above, but the percentage paid will drop by 10% each month (80% in October) until March 2013 (30%).

Why is the advance payment only for one month?

PSNC recognises that there will be a reduction in items for some contractors due to the changes in liquid methadone payments.  The current advance payment system may result in some contractors experiencing low levels of the 80% advance payment for the month of July 2012. Payment 2A is to help support these contractors until the advance payment is aligned with the new item and AIV levels as a result of these changes.

Why set the eligibility threshold at 25%?

Practice payments have not been included in these transitional arrangements as the thresholds for practice payments can depend on staffing hours as well as item levels.  Therefore, 25% of Schedule 2 CD fees and professional fees taken as a percentage from total schedule 2&3 CD fees and professional fees broadly equates to 20% of total fee payments overall (including practice payments).

As contractors will still be dispensing same quantity of methadone, they will also still continue to earn the same level of contribution to purchase margin as they did before these changes.