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Eich cyf by abstraks

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									To:                                                         Mr Paul Williams OBE OStJ DL
Chief Executives - Health Boards                   Director General, Health & Social Services
Chief Executive - NHS Trusts                                     Chief Executive, NHS Wales
                                                           Cyfarwyddwr Cyffredinol, Iechyd a
                                                               Gwasanaethau Cymdeithasol,
                                                                 Prif Weithredwr, GIG Cymru

Eich cyf/ Your ref:                                                                 5th March 2010
Ein cyf / Our ref:    SF/EH/0076/10 and
EH/ML/004/10


Dear Colleague,

HEALTH BOARD 2010-11 REVENUE ALLOCATIONS

Please find attached the Minister’s letter ML/EH/004/10 to NHS Chairs formally issuing
the 2010-11 Revenue Allocations.

This letter should be considered in conjunction with the Annual Operating Framework for
2010-11, issued as Minister’s letter ML/EH/042/09. The requirements set out in the AOF
are the Minister’s priorities for the year ahead, and as such I expect your organisation to
deliver these within the funding set out in this allocation without exception.


Yours sincerely




Mr Paul Williams
Director General, Health & Social Services
Chief Executive, NHS Wales
Cyfarwyddwr Cyffredinol, Iechyd a Gwasanaethau Cymdeithasol
Prif Weithredwr, GIG Cymru



                                                                                 Parc Cathays  Cathays Park
                                                                                          Caerdydd  Cardiff
                                                                                                   CF10 3NQ


                                                                                    Ffôn  Tel: 029 2080 1182
                                                                                              GTN: 1208 1182
                                                                                   Ffacs  Fax: 029 2080 1160
                                                             E-bost  E-mail: paul.williams4@wales.gsi.gov.uk
Health Board Revenue Allocation
2010-11

INTRODUCTION

1. This document details the Health Boards revenue allocations for 2010-11.

2. The allocation reflects the Minister for Health and Social Service’s decisions about the
   distribution of resources to Health Boards.

3. This document is complimentary to the NHS Annual Operating Framework, which sets
   out the priorities for 2010-11.

4. This allocation is made under:

      Section 174 of the National Health Service Act 2006 and the amounts payable to
       the Assembly in respect of capital charges under section 174(10). The powers are
       conferred directly on Welsh Ministers.

      Section 70 of the Government of Wales Act 2006

ACTION

5. Health Boards and NHS Trusts are expected to achieve and deliver the annual
   priorities for 2010-11, as outlined in the Annual Operating Framework, from within this
   allocation. The exceptions to this are:

      As in previous years, the Assembly will meet the costs of the Welsh Risk Pool in
       2010-11.

      Funding for the following issues is being held centrally until the amounts required
       for 2010-11 are confirmed:

          The staff grade and associate specialist doctor’s contract.

          Approved continuing care bids

          The costs of first eye treatment for Wet AMD will be allocated again in 2010-11
           as set out in Derek Fishwick’s letter of 9th December 2008.

          GMS and GDS contractor allocations are issued at this stage at 2009-10 levels
           with adjustments for completed primary care premises for GMS and a
           redistribution of PCR target shares for GDS.

2010-11 Cash increases

6. Health Board allocations have been increased overall by 0.4% in 2010-11 from the
   2009-10 published allocation tables, taking account of transfer of funding out of the
   allocation for services provided by the Public Health Wales NHS Trust.
      Health Boards receive a cash increase of £21 million on revenue allocations.

GENERAL POLICY FRAMEWORK

Unified budgets

7. Health Boards are responsible for managing the totality of their budget, and making
   the best use of all available resources. The only restrictions to virement between
   different allocations relate to ring-fenced HCHS services (see Table B) and the totality
   of both the GMS contract and the Dental Contract (see Table C and F and the
   explanatory notes enclosed).

8. Whilst all funding is now allocated to the seven Health Boards, for 2010-11 the
   detailed tables show allocations, where appropriate, at the level of the former 22 local
   health boards. This is to allow reconciliation with previous allocations. From 2011-12
   onwards, the amounts will only be shown at Health Board level.

9. Following work undertaken through the Health Reform Programme, the HCHS and
   Primary Care Prescribing Allocations will be combined in 2010-11. 2010-11 will be the
   last year in which these allocations are shown separately.

10. The 2010-11 allocation comprises:

          Summary

          Hospital and community Health Service (HCHS) revenue discretionary
           allocation (tables A1 and A2)

          HCHS protected and ring-fenced Services (table B1)

          HCHS Directed Expenditure Allocations (table B2)

          New General Medical Services Contract Allocation (table C)

          Revenue Allocation for Drug Prescribing (table D)

          Revenue Allocation for Community Pharmacy Contract (table E)

          Revenue Allocation for Dental Contract (table F)

          Memorandum Tables (tables 1 to 3)

11. For Hospital and Community Health Services (HCHS) costs, Health Boards are
    responsible for commissioning services for their resident population, with the
    exception of some cross border flows, referred to in paragraph 37. The GMS and
    prescribing allocations are issued on the basis of registered populations, and the
    Community Pharmacy allocation is issued primarily on the basis of numbers of scripts
    dispensed within Health Board areas.
HOSPITAL AND COMMUNITY HEALTH SERVICES (HCHS) REVENUE

Recurrent discretionary allocation (Table A)


12. This provides the total discretionary funding available to Health Boards to commission
    hospital and community healthcare services. The distribution of the allocation is
    derived from the 2009-10 baseline, adjusted for new funding issued and funding top-
    sliced.

12. Discretionary allocations have received a 0.75% funding uplift overall to 2009-10
    baselines.

Ring-Fenced Services (Table B)

13. The second component of the HCHS allocation is the funding allocated for ring-fenced
    allocations. Following work undertaken as part of the Healthcare Reform Programme,
    the number of ring-fenced services has been significantly reduced. With the remaining
    ring-fenced services, Health Boards must ensure that this funding is directed for the
    purpose intended. There is no flexibility about the use of this funding, although Health
    Boards are free to invest additional funding in these services to meet national
    priorities. Health Boards are reminded that ring-fenced funding can not be deferred
    into future financial years.

14. Ring-fenced funding has been uplifted by 0.75% on the 2009-10 baseline.

National Finance Agreement

15. The 2010-11 revenue allocation will not include a National Finance Agreement, as has
    been the custom in previous years. The Agreement was primarily designed to ensure
    that there was a reasonable allocation of financial risk between commissioners and
    providers under the previous financial regime. It set out estimates for unavoidable cost
    increases for pay, non-pay, NICE and new drugs and statutory and policy compliance
    that would primarily be incurred by the former NHS Trusts as providers. The new
    financial regime is such that Health Boards must meet these costs as providers of
    services from within their revenue allocations, and thus there is no benefit in the Welsh
    Assembly Government issuing any formal guidance.

16. The exception to this situation is where Health Boards continue to fund services
    provided by the remaining NHS Trusts, and for services provided by one board for the
    residents of another, including services funded through the Welsh Health Specialised
    Services Committee (WHSSC). Finance Directors have established a task and finish
    group to agree collectively the principles and operation of Healthcare Agreements
    between NHS organisations for 2010-11.

PRIMARY CARE REVENUE

GMS Contract and Dental Contract (Tables C and F)
17. Contract negotiations have not been finalised for 2010-11 in time for this document.
    These allocations have therefore been issued based on 2009-10 final allocations for
    general medical and dental services, with adjustments for known 2010-11 changes.

18. These allocations will be re-issued for 2010-11 when contract negotiations have been
    concluded (allocations to be contained within the available funding envelope).

19. An adjustment has been made to the 2009-10 net dental contract allocation for the
    redistribution of the patient charge revenue target shares, as per the correspondence
    from Andrew Powell-Chandler (Dental Policy lead).

Contact points for this area are Julie Broughton (029 2082 5747) Finance, Derek
Fishwick (029 2082 6761) for GMS Policy and Andrew Powell-Chandler for Dental
Contract Policy (029 2082 1689).

Revenue Allocations for Drugs Prescribing (Table D)

20. The Assembly Government will continue to hold a budget for the difference between
    the cost of prescribing and the cost of dispensing (and any risk on that budget will be
    borne centrally). There is no income budget relating to prescription charges.

21. The Health Board Drugs prescribing has received no uplift for 2010-11. Outturn for
    the past few years has been static, therefore the uplifts applied by the Welsh
    Assembly Government have not been used for costs and volume increases on the
    budget, as any volume increases have balanced out with savings made to drug prices

22. There will be no reduction made to the 2010-11 allocations for:

         Further 1.9% PPRS price reductions for branded drugs that will take plac e from
          January 2010;
         Any further in year Category M price reductions;
         Savings as a result of loss of exclusivity ((LOE) – drugs coming off patent).
          The Association of British Pharmaceutical Industry (ABPI) has indicated
          significant savings in the region of £165m of primary care drugs over the next 5
          years for this area

23. In October 2009, Paul Williams wrote to Health Boards informing of the Pharmacy
    Services Task and Finish Group’s recommendations and the need for support the
    implementation of these. In 2010-11 the recommendations will be implemented,
    including:

      4 Community Pharmacy Directed Enhanced Services (Smoking Cessation, Sexual
       Health (Emergency Contraception), Supervised Consumption and Syringe and
       Needle Exchange) will be rolled out by Health Boards using national specifications
       and agreed remuneration rates. These will be open to any pharmacy that reaches
       the necessary accreditation requirements and maintains preset quality assurance
       commitments;

      Increasing the levels of Repeat Dispensing, 28 day prescribing and MURs;
      Developing Medicines Waste Reduction schemes including running a nationally
       coordinated awareness campaign.

      Developing Medicines Reconciliation services across Primary and Secondary Care

      Training and support for each of the above.



24. Health Boards must ensure that they make adequate provision within the funding set
    out in this allocation to support these initiatives.

Revenue allocation for Community Pharmacy Contract (Table E)

25. The Community Pharmacy contract allocation has been recalculated based on the
    most recent 2008-09 HSW dispensing and Health Board LFR accounts data, to reflect
    current dispensing volumes and actual Health Board expenditure for some areas of
    the contract, across the localities.

26. In addition an uplift of 5% for volume related items has been applied, and a further
    0.45% for any in year changes. This represents an increase of 7% to the overall
    2009-10 total envelope of funding.

27. This is the final allocation for Pharmacy contract for 2010-11. No further funding will
    be made available.

Contact points for this area are Russell Pope (029 2082 3014) - Policy lead for
Community Pharmacy Contract or Julie Broughton (029 2082 5747) - Finance.


OTHER ISSUES

Health Commission Wales

29. The current allocation for Health Commission Wales (HCW) has been disaggregated
    to the Health Boards following the resource mapping exercise undertaken during
    2009. The exercise was based on a distribution of recurrent contract values with
    Welsh and other providers. This approach has not been able to take account of in-
    year pressures on provider contracts that HCW managed through the use of slippage
    on other sources of funding and developments.
30. The development of an outline service and financial plan for specialised services for
    2010-11 recognises that some of these in-year pressures will be unavoidable
    recurrent commitments to be met by the Health Boards through the Welsh Health
    Specialised Services Committee (WHSSC). As this plan is further developed and
    finalised, it is likely that the basis of the original distribution of funding through the
    resource mapping exercise will require review and redistribution. Health Boards
    should therefore avoid assuming fortuitous gains as a consequence of this current
    distribution in their 2010-11 financial plans.
Mental Health


31. You are reminded that “One Wales” commits the Government to placing a new priority
    on providing for mental health, including child and adolescent mental health. In line
    with this commitment, the Minister has determined that she wishes to protect
    expenditure on mental health services. In 2010-11, the ring-fencing has been
    extended from core services to all mental health expenditure, as identified through the
    2008-09 programme budget expenditure returns. Table 3 details the total amount of
    the mental health ring-fence, shown by relevant allocation stream. This funding forms
    a floor, below which expenditure on core mental health services must not fall. This
    does not exclude mental health services from making efficiencies, but these savings
    must be re-invested in these services to meet cost increases and new developments.


Renal Services


32. The first phase of protecting investment in renal services, including the additional
    funding for since 2008/09, will apply from 2010-11 onwards. Funding for the following
    services is ring-fenced.
          a. Vascular access for renal patients
          b. Adult dialysis, including Patient Transport Services
          c. Adult transplantation
          d. Erythropoietin Stimulating Agents (ESAs) for renal patients


33. The funding will be managed collaboratively by the Renal Networks and health boards
    through the Welsh Health Specialised Services Committee (WHSCC). In particular,
    savings from the All-Wales contract for Erythropoietins (ESAs) will be reinvested into
    renal services under the direction of the Renal Networks. Further work will be
    undertaken during 2010-11 to extend the ring-fencing to cover other nephrology
    expenditure on renal services and to check the accuracy of the work in the first phase.


Substance Misuse


32. In line with Jo Jordan’s letter of 21st August 2009 to the former Local Health Board
    Chief Executives and Chairs, decisions on the use of NHS funding for substance
    misuse services will now be taken by the Substance Misuse Area Planning Boards.
    The ring-fenced total has been increased to the 2008-09 expenditure levels as
    confirmed during the data collection exercise undertaken during 2009. The revised
    2009-10 ring-fenced baseline is detailed in Table 2 and is uplifted by 0.75% in 2010-
    11 in line with other NHS allocations.


Public Health
33. Funding for services provided by the Public Health Wales NHS Trust, including All-
    Wales Screening Services, has been removed from Health Board allocations, and will
    be retained as a central budget by the Health and Social Services Directorate
    General.

Capital Charge Funding

34. As a result of HM Treasury's Clear Line of Sight (Alignment) project, there will be
    significant changes to capital charges funding from 2010-11 onwards. This is due to
    the removal of the cost of capital from budgets and accounts. Depreciation is to
    remain, but will be ring-fenced in 2010-11 in line with Treasury guidance. Further
    information about the impact of Alignment will issue in due course.

35. Until this work is completed, capital charge funding has been allocated at this point as
    in previous years. There are two exceptions:

          a. Ring-fenced residual estate capital charge funding has been reallocated
             from Powys Health Board to other Health Boards based on revised asset
             ownership and on 2009-10 capital charge commitments provided by Powys
             Health Board

          b. Discretionary capital charge funding previously included within the HCW
             allocation has been apportioned to Health Boards pro-rata to their resource
             map totals for the relevant Welsh providers.

36. An adjustment will be made to allocations as early as possible in the new financial
    year to reflect the outcome of the capital charges changes.

Cross Border Financial Flows

37. As in previous years, an in-year adjustment to allocations will be made to reflect cross
    border commissioning responsibility, where Health Boards in Wales have English
    residents registered with their GPs and vice versa.

38. As in 2009-10, an in-year adjustment to allocations will be made to reflect the
    increased costs to Health Boards incurred by paying for activity in English hospitals at
    Payment by Results mandatory tariff rates. The allocation will be based on agreed
    baseline activity, and is dependent on the outcome of discussions with the
    Department of Health, reflecting changes in the tariff structure in 2010-11.

Wanless Reform Funding

39. Following the review of Primary and Community Care Services undertaken by Dr CV
    Jones there is still evidence of disparate and disjointed services across the system,
    as well as gaps in service provision, particularly by those with increasing vulnerability
    and frailty. The ring fenced Wanless resources will need to be clearly focussed to
    ensure that primary and community services are strengthened, ensuring better
    integration and coordination of services meeting the needs of individuals. They will
    need to demonstrate more effective use of resources to achieve proactively managed,
    streamlined and efficient services for people in the community. This should build on
    developments to date addressing better chronic conditions management and support
    the key actions identified in 'Setting the Direction'.

The Direct Needs Allocation Formula

40. The Welsh Assembly Government remains committed to the implementation of the
    (Townsend) Direct Needs Formula when a differential distribution of growth funding
    allows.

QUERIES


41. If you have any queries about this Circular please contact Steve Elliot (029 2082 3245)
    or Julie Broughton (029 2080 5747).

42. Further information surrounding specific policy issues and contact details are provided
    in the explanatory notes.

								
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