Compensation Arrangements: January - May 2008

The Department of Health and PSNC have agreed compensation arrangements for any error due to NHSBSA PPD system failure and as a concession for contractors who may not have been aware of flaws in their own business processes for checking declarations of exemption on prescription forms, for the period from January – May 2008.

The concession is based on a contractor’s first three months of processing through the new system, but only those months between January – May 2008 will be eligible for a compensation payment. This is because compensation payments for months up to December 2007 have already been arranged as part of the agreement between the Department of Health and the PSNC in July.

The NHSBSA PPD will take the month that contractors were first processed through the new system as month one. Therefore contractors who were first processed before January 2008 will only receive compensation for any month from January to May which is included in their first three months.

For example:

• Pharmacy accounts first priced under the new system in November 2007 will be eligible for compensation under this agreement for January 2008. Compensation payments have already been arranged for November and December 2007.
• Pharmacy accounts first priced under the new system from January 2008 will be eligible for compensation for January, February and March bundles.

The payment

Each contractor will receive a payment of 90% of the difference in the NHS charge values deducted due to the difference in average switching rates between legacy and new system processes for a maximum of three qualifying months that a pharmacy's prescriptions were processed through the new system between January and May 2008. This calculation will be specific to each pharmacy, based on the number of prescriptions switched by the new system in each month.

The NHSBSA PPD will shortly send a letter to affected contractors to tell them the compensation payment they have calculated for them. The payment will reach contractors in early October 2008. Contractors do not need to take any action – this will be processed automatically by the NHSBSA PPD.

The compensation payments will exclude from the calculation any months for an account where the NHSBSA PPD has already checked the switching and made adjustments to payments. The level of compensation recognises the delays in payment reaching contractors.

How the payment will be calculated

To make payment the NHSBSA PPD has to calculate a value for both the numbers switched under the new system and the numbers switched under the legacy processing system. The NHSBSA PPD will take the number of items switched from exempt to chargeable in each qualifying month between January and May 2008 that a pharmacy account was processed through the new system as the basis for the calculation (No.of CIP switched).

Payment = 90% difference between CIP switched value and legacy switched value.

CIP switched value = No. of CIP switched x prescription charge.
Legacy switched value = (No. of CIP switched x 0.13 / 0.99) x prescription charge.

The 0.13 and the 0.99 comes from NHSBA PPD figures that there has been an increase in the percentage of forms being switched from the exempt to charge bundles from an average of 0.13% under legacy processes to 0.99% under the new system.

As was announced in the July agreement, there will be no further concessions from June 2008 onwards. It is essential that contractors review their processes for monitoring the completion of patient declarations of their charge status. PSNC will continue to work with NHSBSA PPD to audit the system on a regular basis.

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