DHSC to reduce Transitional Payments to zero in February
The Department of Health and Social Care is to reduce the Transitional Payment within the Community Pharmacy Contract Framework in England to zero from February 2023.
PSNC has refused to accept this on the grounds that any reduction in payments at this point will be impossible for community pharmacy contractors to manage financially.
However, the decision by the DHSC is in line with an announcement last year that the value of the Transitional Payments would be phased down in the second half of 2022/23, and is based on its latest analysis of funding delivery.
The reduction was deemed necessary by the DHSC as the ‘unallocated’ funding that makes up Transitional Payments has reduced because new services have been introduced into the CPCF and their uptake has accelerated, using up the unallocated funds.
A new flat payment will be introduced in 2023/24 to distribute monies from the unallocated CPCF funding.
Between April and September 2022, approximately £16.5m of funding per month was delivered to contractors via the Transitional Payments. In October 2022 payment levels were reduced to approximately £14m, and further reduced in November to £12.5m.
In November 2022 a pharmacy dispensing between 5,001 and 12,500 items a month would have received £1,358 in Transitional Payments.
In the Year 4 and 5 CPCF agreement reached between PSNC and DHSC in September last year it was recognised that there would still be unallocated funding for future clinical services. It was agreed that this would be delivered to contractors through:
- the growing volumes of new and expanded clinical services
- the payment of a flat fee from April 2023 to all pharmacy contractors who dispense at least 101 items a month up to a national total of £70 million on an annual basis (this amount to reduce if clinical service volumes grow beyond DHSC forecasts and all unallocated funding is spent on new services)
- any remaining unallocated funding will continue to be paid out as a transitional payment until the end of year 5, or until the unallocated funding is fully deployed against growing service volumes and/or by the flat fee.
Commenting on the Department’s decision, PSNC chief executive Janet Morrison said: “The Department’s removal of the Transitional Payments could not come at a worse time for community pharmacy businesses who, by the Government’s own admission, have been subjected to years of funding cuts. Pharmacies are on the brink of collapse and removing these payments now may be the final straw for some: we have made that absolutely clear.”