The Payment Schedule Explained

We produce a payment schedule each month for Pharmacy Contractors, Appliance Contractors and Oxygen Concentrator Suppliers. The format of this schedule varies between the three types of contractors however the basic information is the same, in that it details how the payment has been derived and includes
supporting information on the content of the batch which has been processed.

This article considers the Pharmacy Schedule of Payments.

Over 10,000 schedules are produced monthly, with each one containing a minimum of 3 sheets of A4 paper. The diagrams explain where various sections of information are contained on
the schedule:

Page 1
This page deals with high level summary information and information regarding prescription processing.
click here for details.

Page 2
Page 2 contains details of payments by health authorities responsible for holding the contracts with the Pharmacy Contractors and other authorised payments. From 1 October these contracts will be transferred to the relevant PCT.
click here for details.

Page 3
This page gives the number of prescriptions and an explanation why prescriptions may have been transferred between the exempt and chargeable group of the batch.

Included on this page is information regarding the temporary concession with forms which bear a computer printed age or date of birth on the front to show under 16 or 60 years or over, these forms have not been transferred, therefore prescription charges are not affected.

Page 4
Pages 4 and onwards (if required) give the total of all items that have a basic price between £100 and £300. The details of all items that have a greater basic price than £300 are also provided,
with each item being listed separately.

Future Developments
We are keen to provide contractors with as much information as is practical relating to the payment that they receive. As can be seen from the outlines above the schedule already contains a lot of detail. With the advent of ETP and reengineering of our systems in the medium term, we hope to redesign the schedule and to transmit it electronically to those contractors.

Additional copies of payment schedules can be re-produced at a
charge (currently up to £10 each).

Your Monthly Dispensing Payment

We make monthly payments to approximately 10,000
pharmacy contractors. Each monthly payment received by
pharmacists includes the following elements :-

• an estimated 80% advance payment for prescriptions sent
  to the PPD approximately one month earlier
• the full value of the priced prescriptions submitted two
  months earlier
• the recovery of the 80% advance paid the previous month
• in addition appropriate local payments or deductions, such as additional pharmacy access services, pre- registration trainee, essential small pharmacy scheme payments, are included
  
  
  The normal payment timetable for calculating and making
  payments to contractors is :-
  
  
• By mid September the PPD has calculated the value of
  July prescriptions, and also the advance payment for
  August prescriptions
• The authorising Primary Care Trust or Agency
  notifies the PPD before mid September of any local
  payments or deductions, to be made on the 1 October
• The PPD merges all payments together and advises
  the contractor via a 'Schedule of Payments', approximately five days before the end of September, of the total sum due to be paid on 1October
• The amount is paid by the PPD into the contractors
  bank account no later than the first 'working' day of the month
  NB: the current payment dates can be seen on the 'home' page under 'Payments Timetable'
• The 'Schedule of Payments' summarises the totals of drug
  costs, fees, advances, patient charges, local payments and/or deductions, adjustments. There are also details of any prescriptions transferred between paid/unpaid groups and expensive prescriptions

Calculating The 80% Advance

This is an example of the 80% advance calculation for August :-

• Your average prescription cost per item for July
  
• Multiplied by 80%
  
• Multiplied by your declared items for August
  
• Multiplied by an inflation factor of 1%
  Less
  
• Your declared number of paid prescription items
  
• Multiplied by the current prescription charge

For example, assume that 3,500 prescriptions have been
submitted for processing, of which 400 attract a prescription
charge of £6.65, and that the gross average cost per per
prescription for the previous month was 1050p, and the
inflation factor was 1%:-

Calculating The Average Prescription Cost

The average prescription cost used to calculate the 80% advance
is normally based on the last priced account. It is calculated as
follows :-

• total value of drugs plus all fees (total of account)
  
• divided by the total no. of prescription items priced

For new contractors the average prescription cost is based on
the latest national average prescription cost.

Fluctuating Payments

Pharmacists should note that when in a particular month,
say July, an exceptional number of very high cost
prescriptions are submitted, this will result in the 1
October payment being exceptionally high. This is due to
the balance of the July account being above 20% and the
advance for August prescriptions being above 80%,
reflecting the relatively high average cost per item of
the July prescriptions.

If in the subsequent month (i.e. August) the average
cost per item returns to nearer the norm, then there
will be a reduction in the advance payment for September
prescriptions (based on a reduced August average cost
per item) and in the 1 November payment - which
comprises the outstanding balance for the value of the
August prescriptions, and is likely to be considerably
less than 20%.

Pharmacists should not therefore seek to compare their
monthly payment with the number of prescriptions
dispensed in a particular month.

Year End Accounting

A number of contractors ask for assistance in reconciling
their company year-end position with reference to prescription
costs. The following is an example of the information you would
require from your Schedules of Payment in the scenario where
- the year ends on 30 September 2002 - all prescription payments
paid after 30 September are to be accounted for:-

Pictures of 3 months schedules

In this example the total paid after 30 September relating to
prescriptions dispensed up to 30 September is the sum of
the three totals:

The periods related to any locally authorised payments
would need to be separately established.

Revised Schedule of Payments for pharmacy contractors

The pharmacy Schedule of Payments has been enhanced to incorporate the new payments/fees being introduced under the pharmacy contract from April 2005, which will take effect on payments due from 1 July 2005.

Changes to the schedule are highlighted on the example below:

enlarge

enlarge

enlarge

Frequently Asked Questions