1. 1 Introduction to remuneration mechanisms for dental contract reform prototypes Version 4.0 Sep 2015

2. 2 1.Overview of remuneration mechanism 2.Expected capitated patient numbers and expected activity levels 3.Calculation of capitated patient numbers and activity allocations 4.Examples of how capitation and activity elements have been established for prototype contracts 5.How the year-end remuneration mechanism will work 6.Examples of how the year-end remuneration mechanism will apply 7.Applying DQOF adjustments 8.Portal reports 9.Appointment transmission and FP17 submissions Agenda

3. 3 Overview of remuneration mechanism In the prototypes a practice’s contract value will be split between: A capitation element for which the practice will be expected to have a number of capitated patients at year end An activity element for which the practice will be expected to deliver a minimum level of activity In Blend A the capitation element covers Band 1 associated care, in Blend B the capitation element covers Band 1 and Band 2 associated care. We are allowing for a fall of up to 20% of Band 2 activity and 30% of Band 3 activity compared to pre-pilot levels If a practice delivers less than the minimum level of activity, they may compensate for this by caring for more patients. All prototype practices will be expected to deliver all necessary care to each capitated patient on their list – if more treatment than the minimum level is required, practices will be expected to deliver this within their overall contract value.

4. 4 Expected capitated patient numbers Expected capitated patient number will be based on pre-pilot level with adjustments for any changes in commissioned levels of UDAs. Where a pilot practice’s capitated patient numbers are currently below their baseline level the practice will be required to recover patient numbers across 2015-16 and 2016-17 with half the recovery expected by the end of 2015-16.

5. 5 Expected activity levels Expected activity levels will be based on pre-pilot activity levels but with an allowance for a fall in treatment volumes. The allowance for the fall in treatment volumes is being made to recognise the additional time being spent on prevention following the pathway combined with the fall in treatment volumes observed in the pilots. Expected activity levels will be adjusted to allow a fall in Band 2 associated UDAs by up to 20% and Band 3 associated UDAs by up to 30%. The allowance for a fall in treatment volumes is greater for Band 3s than Band 2s to reflect that in the pilots there has been a greater fall in Band 3 courses of treatment than Band 2 courses of treatment.

6. 6 Calculation of capitated patient numbers Capitated patient numbers will not be weighted in the prototypes but based on actual patient numbers. Patients attending for a non-referral Band 1 (non-urgent), 2 or 3 course of treatment will trigger capitation – in the prototypes these are the courses of treatment where a patient should have an OHA or OHR. Patients attending for a Band 1a IC course of treatment will also trigger capitation. Unless a patient would have subsequently triggered capitation with another provider, a patient will be on a practice’s capitated patient list for three years from the date of the start of course of treatment that triggered capitation. A practice’s capitated patient list excludes patients last seen by a FT at the practice. The capitation period is re-triggered every time the patient attends for a new course of treatment that triggers capitation.

7. 7 Capitated patient numbers scenarios Year 1Year 2Year 3Year 4Year 5 Capitation period Scenario A – Patient triggers capitation at practice and does not trigger capitation anywhere again in next three years Scenario B – Patient triggers capitation at practice and then triggers capitation at that same practice again and then one year later First capitation period Second capitation period Scenario C – Patient triggers capitation at practice and then trigger capitation at another practice one year later Capitation period (i.e. Capitation period ends once capitation triggered elsewhere) Examples of how capitation works are illustrated below.

8. 8 Activity allocations for courses of treatment Treatment on referral, urgent courses of treatment and charge-exempt courses of treatment do not trigger capitation. Where these courses of treatment are delivered to patients that are capitated patients with the practice, they will not count towards the practice’s activity levels. Where these courses of treatment are delivered to patients that are not capitated patients with the practice, they will count towards the practice’s activity levels (e.g. the practice will be credited 1.2 UDAs for an urgent course of treatment). Activity delivered by FTs does not count towards a practice’s activity level. Practices’ baseline capitated patient numbers and activity allocations will be calculated accordingly.

9. 9 Example of how capitation and activity elements for a prototype contract have been established – Blend A Assume we have a £600,000 contract that would notionally be required to deliver 24,000 UDAs (so has a UDA value of £25) and had 10,000 capitated patients prior to piloting. Let’s assume that in the baseline year the practice delivered: 6,240 Band 1 courses of treatment (6,240 UDAs) 3,520 Band 2 courses of treatment (3,520*3 = 10,560 UDAs) 600 Band 3 courses of treatment (600*12=7,200 UDAs) Assume the practice becomes a Blend A prototype where capitation covers check-ups and preventive care (Band 1 type care). As illustrated on the following slide…. The activity element of the contract value would now be £256,300 (43% of contract value) for which the practice would be expected to deliver a minimum of 10,252 UDAs. The capitation element of the practice’s contract value would be £343,700 (57% of contract value) for which they would be expected to have 10,000 capitated patients.

10. 10 Example of how capitation and activity elements for a prototype contract will be established – Blend A UnadjustedBand 2Band 3Total Minimum activity level = 3520*2 = 7040 UDAs= 600*11 = 6,600 UDAs13,640 UDAs Activity element (£) = 7040*25 = £176,000= 6,600*25 = £165,000£341,000 Capitation element (£) £259,000 Total£600,000 AdjustedBand 2Band 3Total Minimum activity level = 7040*0.80 = 5,632 UDAs= 6,600*0.70 = 4,620 UDAs10,252 UDAs Activity element (£) = £176,000*0.80 = £140,800= £165,000*0.70 = £115,500£256,300 Capitation element (£) £343,700 Total£600,000

11. 11 Example of how capitation and activity elements for a prototype contract will be established – Blend B Assume we have a £600,000 contract that would notionally be required to deliver 24,000 UDAs (so has a UDA value of £25) and had 10,000 capitated patients prior to piloting. Let’s assume that in the baseline year the practice delivered: 6,240 Band 1 courses of treatment (6,240 UDAs) 3,520 Band 2 courses of treatment (3,520*3 = 10,560 UDAs) 600 Band 3 courses of treatment (600*12=7,200 UDAs) Assume the practice becomes a Blend B prototype where capitation covers check-ups, preventive care and routine treatment (Band 1 and Band 2 type care). As illustrated on the following slide…. The activity element of the contract value would now be £94,500 (16% of contract value) for which the practice would be expected to deliver a minimum of 3,780 UDAs. The capitation element of the practice’s contract value would be £505,500 (84% of contract value) for which they would be expected to have 10,000 capitated patients.

12. 12 Example of how capitation and activity elements for a prototype contract will be established – Blend B UnadjustedBand 3Total Minimum activity level = 600*9 = 5,400 UDAs5,400 UDAs Activity element (£) = 5,400*25 = £135,000£135,000 Capitation element (£) £465,000 Total£600,000 AdjustedBand 2 and Band 3Total Minimum activity level = 5,400*0.70 = 3,780 UDAs3,780 UDAs Activity element (£) = £135,000*0.70 = £94,500£94,500 Capitation element (£) £505,500 Total£600,000

13. 13 How the prototype year-end remuneration mechanism will work (1) Unless a commissioner has indicated otherwise, practices may over-deliver on capitated patient numbers to off-set any under-delivery in expected levels of activity A practice’s notional remuneration levels relating to capitation (prior to the additional adjustments subsequently outlined) will be adjusted on a pro-rata basis if capitated patient numbers are above or below the expected levels A practice’s notional remuneration level relating to activity (prior to the additional adjustments subsequently outlined) will be adjusted on a pro-rata basis if activity levels are above or below the expected minimum level subject to the following conditions: – If capitated patient numbers are less than or equal to 100% of expected level, notional remuneration level relating to activity is capped at 100% (e.g. if capitated patient numbers are only 97%, the notional activity remuneration level can be no more than 100%) – If capitated patient numbers are greater than 100% of expected level, notional remuneration level relating to activity is capped at the capitated patient number level (e.g. if capitated patient numbers are 103%, the notional activity remuneration level can be no more than 103%)

14. 14 How the prototype year-end remuneration mechanism will work (2) A tolerance on carry-forward will be applied to the overall remuneration level combined for capitation and activity – this effectively means practices have some tolerance on delivery of both patient numbers and activity from year to year A tolerance will be applied with respect to the remuneration adjustment relating to capitation and activity – a practice will be allowed to carry-forward under-delivery of up to 4% and will be allowed to over-deliver by up to 2% (which may be paid by the commissioner or carried forward). The carry-forward in the prototypes is a monetary value i.e. a percentage of contract value Where the overall remuneration level for capitation and activity falls below 96%, financial recovery may be applied up to 10% of contract value. This adjustment is separate to any subsequent DQOF financial adjustments DQOF financial adjustments will be calculated based on contract value prior to any adjustments relating to capitation and activity

15. 15 Examples of how remuneration mechanism will apply – Year 1 Assume we have a Blend B £600,000 contract with a capitation element of £505,500 for which the practice is expected to have 10,000 capitated patients and an activity element of £94,500 for which the practice is expected to deliver a minimum of 3,780 UDAs. Assume the commissioner is allowing the practice to over-deliver on capitated patient numbers to off- set any under-delivery in expected levels of activity. Assume at year-end the practice has 9,900 capitated patients and had delivered 3,818 UDAs. Also assume the practice has no carry-forward from the previous year. We first calculate the pre-adjusted notional remuneration levels for the capitation and activity elements… The pre-adjusted notional capitation remuneration level would be 9,900/10,000 = 99% of the capitation element. The pre-adjusted notional activity remuneration level would be 3,818/3,780 = 101% of the activity element.

16. 16 Examples of how remuneration mechanism will apply – Year 1 cont. We next calculate the adjusted notional remuneration levels for the capitation and activity elements… In this example, the adjusted notional capitation remuneration level remains at 99% (as the pre-adjusted level is below the pre-adjusted notional activity level and the commissioner is allowing capitation to offset activity anyway) In this example, the adjusted notional activity remuneration level is 100% (adjusted from 101% as the pre- adjusted notional capitation level is less than 100%) We then combine the notional remuneration levels for capitation and activity… In this example the combined notional remuneration level would be (99%*£505,500)+(100%*£94,500) = £594,945 equivalent to 99.16% of contract value We then apply the carry-forward from the previous year In this example the combined notional remuneration level after carry-forward would remain 99.16% as there was no carry-forward from the previous year. We finally calculate the actual remuneration and carry-forward for the following year based on the tolerances… In this example the actual remuneration would be 100% of contract value with a carry-forward of -0.84% (£-5,040) as practices are allowed to carry forward under-delivery of up to 4%.

17. 17 Examples of how remuneration mechanism will apply – Year 2 Assume we have a Blend B £600,000 contract with a capitation element of £505,500 for which the practice is expected to have 10,000 capitated patients and an activity element of £94,500 for which the practice is expected to deliver a minimum of 3,780 UDAs. Assume the commissioner is allowing the practice to over-deliver on capitated patient numbers to off- set any under-delivery in expected levels of activity. Assume at year-end the practice has 10,200 capitated patients and had delivered 3,893 UDAs. The practice also has a carry-forward from the previous year of -0.84% (£-5,040). We first calculate the pre-adjusted notional remuneration levels for the capitation and activity elements… The pre-adjusted notional capitation remuneration level would be 10,200/10,000 = 102% of the capitation element. The pre-adjusted notional activity remuneration level would be 3,893/3,780 = 103% of the activity element.

18. 18 Examples of how remuneration mechanism will apply – Year 2 cont. We next calculate the adjusted notional remuneration levels for the capitation and activity elements… In this example, the adjusted notional capitation remuneration level remains at 102% (as the pre-adjusted level is below the pre-adjusted notional activity level and the commissioner is allowing capitation to offset activity anyway) In this example, the adjusted notional activity remuneration level would be 102% (adjusted from 103% as the pre-adjusted level exceeds the pre-adjusted notional capitation remuneration level of 102%) We then combine the notional remuneration levels for capitation and activity… In this example the combined notional remuneration level would be (102%*£505,500)+(102%*£94,500) = £612,000 equivalent to 102% of contract value We then apply the carry-forward from the previous year In this example the combined notional remuneration level after carry-forward would be 102% - 0.84% = 101.16% We finally calculate the actual remuneration and carry-forward based on the tolerances… In this example the actual remuneration would be 100% of contract value with a carry-forward of +1.16% (£6,960) …or a remuneration level of 101.16% if the commissioner chose to pay for the over-delivery

19. 19 Applying DQOF adjustments DQOF financial adjustments will be calculated based on contract value prior to any adjustments relating to capitation and activity. A practice will have 10% of this remuneration level at risk based on DQOF performance i.e. a practice would lose 10% of that remuneration level if they score 0 points on the DQOF. Where a pilot achieves less than 1000 points, any contract value deducted is entered into a notional national pool to be redistributed amongst pilots based on their relative performance. Pilots can be remunerated up to 102% of their contract value based on this additional payment. The mechanism means that pilots can be remunerated based on their relative DQOF performance whilst the total expenditure for commissioners and total income for providers as a whole remains unchanged. A detailed illustration of the DQOF mechanism is provided in the Annex.

20. 20 Portal reports Portal reports will show year to date position on capitated patient numbers, activity delivery and DQOF indicator performance. The reports will also provide forecast of year-end position based on the year to date position.

21. 21 Appointment transmissions and FP17 submissions Timeliness of appointment transmissions and FP17 submission are data quality indicators in the DQOF. In addition to this it is important for practices that appointment transmissions and FP17 submissions are complete and timely. Timely appointment transmissions will mean portal reports on current capitation and activity levels and forecasts of year-end position are as accurate as possible. Year-end activity and capitated patient numbers will both be based on FP17s only – capitated patient numbers will not be based on appointment transmissions.

22. 22 Annex slides

23. 23 The DQOF remuneration mechanism is applied in 2 steps Step 1 - Application of a weighting to remuneration based on performance against the Dental Quality and Outcomes Framework (DQOF) This adjustment is the weighting that results in the guaranteed remuneration based on DQOF performance. This weighting could in theory be between 90% and 100% (i.e. the 10% of contract value linked to DQOF performance) but we expect in reality the weighting to be only between 96% and 100%. This is because only in exceptional circumstances would we expect a provider to score less than 600 (or 60%) of the 1,000 DQOF points available. Step 2 - Reward of any additional payment based on performance against the DQOF relative to peers Where prototypes do not achieve 1,000 points on the DQOF, the relevant proportion of their contract value will be entered into a notional pool of money to be shared amongst all prototypes in this DQOF pool based on their relative performance against the DQOF. This ensures prototypes are rewarded based on their relative performance against the DQOF whilst ensuring the overall expenditure across all the prototype contracts is maintained at a constant level. The additional payment for which a prototype is eligible is likely to be between 0% and 2% of their contract value - for the prototypes the additional payment will be capped at 2%. Annex - DQOF remuneration mechanism

24. 24 Calculation of the reward of any additional payment based on performance against the DQOF relative to peers There are two steps to the process. The first step is to calculate the value of the pool of money to be shared amongst the prototypes based on their performance against the DQOF in relation to peers. The second step is to calculate how that pool of money should be distributed amongst the prototypes based on their relative performance against the DQOF and their contract value. Annex - DQOF remuneration mechanism

25. 25 Calculating the value of the pool of money to be shared amongst the prototypes based on their relative performance against the DQOF in relation to peers The table below illustrates how prototypes with different contract values and different performance against the DQOF will contribute to the pool of money to be shared amongst pilots based on relative DQOF performance. The value of the contribution is simply the percentage of the contract value that is not guaranteed by their performance against DQOF. PrototypeABCD Contract value£100K£200K£300K£400K Points score on DQOF (out of 1000)9009501000850 DQOF weighting resulting in guaranteed remuneration based on DQOF performance 99%99.5%100%98.5% Guaranteed remuneration based on DQOF weighting£99K£199K£300K£394K Value of contribution to DQOF pool£1K 0£6K Total DQOF pool£8K Annex - DQOF remuneration mechanism

26. 26 Calculating how the DQOF pool should be distributed amongst the prototypes based on their relative performance against the DQOF and their contract value A weighting based on contract value is applied to the points an individual prototype scores above the baseline worst DQOF performance and then the share of the pool the prototype receives is based on the prototype’s proportion of the total weighted points. In this worked example the worst DQOF performance is 850 points, total contract value across all the pilots is £1,000K and the total DQOF pool as calculated previously is £8K. PrototypeABCD Contract value£100K£200K£300K£400K Points score on DQOF (out of 1000)9009501000850 Points scored on DQOF above baseline 850501001500 Percentage of contract value to total contract value across all prototypes 10%20%30%40% Weighted points scored on DQOF above baseline520450 Prototype’s relative proportion of weighted points7.1%28.6%64.3%0 Value of prototype’s reward from the DQOF pool£568£2288£51440 Total reward from the pool£8K Annex - DQOF remuneration mechanism

27. 27 Illustration of total remuneration for pilots when all DQOF related adjustments have been applied PrototypeABCD Contract value£100K£200K£300K£400K Points score on DQOF (out of 1000)9009501000850 DQOF weighting resulting in guaranteed remuneration based on DQOF performance 99%99.5%100%98.5% Guaranteed remuneration based on DQOF weighting£99K£199K£300K£394K Value of prototype’s reward from the DQOF pool£568£2288£51440 Total remuneration£99,568£201,288£305,144£394,00 Percentage of total remuneration after DQOF adjustments compared with contract value 99.6%100.6%101.7%98.5% The table below illustrates how the total remuneration for each of the prototypes when all DQOF related adjustments have been taken into account compares with their contract value. Annex - DQOF remuneration mechanism