General Medical Services (payments) Board -2003 Supplement To Audit Report
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General Medical Services (Payments) Board -2003 Supplement to Audit Report Issues of Governance
During the course of the 2003 audit of the General Medical Services (Payments) Board (the Board) issues arose which gave rise to concerns in relation to the governance of the High Tech Drug Scheme and the Dispensing Doctors Scheme. I raised these matters with the Chief Officer of the Board and his responses have been incorporated in this supplement. 1. High Tech Drug Scheme
In 2003 the Board incurred expenditure of €106.8m on the High Tech Drug Scheme. This expenditure is recorded in Note 6 to the Board's Financial Statements. It consists of payments of €5.5m to 1145 pharmacists in respect of patient care dispensing fees and €101.3m to 13 drug wholesalers for the supply of the drugs to the pharmacists. In previous years I drew attention in my audit reports to the fact that the value of stocks on hand, as recorded in the annual financial statements, was not reliable. This was due to the Board not having proper stock controls and stocktaking procedures for this scheme. As part of this year's audit I examined the payments being made to the wholesalers under this scheme. This report highlights the lack of controls in place in regard to acquisition, stock control and recording of high tech drugs. The Scheme
A wide range of expensive high tech medicines may be prescribed to patients on their discharge from hospital, such as anti rejection drugs for transplant patients, medicines used in conjunction with chemotherapy and growth hormones. Prior to the introduction of the current scheme, such drugs were dispensed to the patients through hospitals or health boards, which often involved patients travelling long distances to collect their medicines. The present scheme was introduced in November 1996 so as to enable patients to obtain their medicinesfrom community pharmacists. The scheme is confined to drugs which are on a list approved by the Department of Health and Children (DOHC). Patients prescribed the high tech drugs are asked to nominate a community pharmacy of their choice. The Health Board Liaison Officer advises the nominated pharmacist of the patient's requirements. The pharmacist then orders and takes delivery of the required drugsfrom his wholesaler and dispenses these drugs to the patient. Each month the pharmacists submit their High Tech dispensing claims together with supplier delivery dockets to the Board. The Board pays them a monthly patient care fee of €49.64 per patient. The Board records on a monthly basis details of the dispensing fee and the quantity and type of drug dispensed by each pharmacist.
The wholesalers send their invoices for the ingredient cost of the drugs to the Board by the 2nd day of each month in respect of deliveries made the previous month. The Board is contractually obliged to pay these invoices by the 6th day of each month. The Board deducts an agreed 5% discount on invoices it receives from wholesalers for the supply of high tech drugs to the pharmacists. The Board pays the wholesaler invoices prior to receiving the corresponding delivery dockets from the pharmacists. The Board then bills the relevant Health Board with the ingredient cost of the drugs dispensed inclusive of VAT, where applicable, less the 5% discount. Cost of the Scheme
The cost of the scheme has increased significantly each year since it was introduced in late 1996. The following table shows the increase in costs each year from 1997 and the value of High Tech Drugs on hand as recorded in the Board's Financial Statements. High Tech Drugs Scheme Expenditure Year
1997 1998 1999 2000 2001 2002 2003
€ 27,212,531 33,715,059 42,303,174 50,505,842 63,791,527 83,432,337 106,818,906
% Increase Over 1997
24 55 86 134 207 293
Estimated Value of Closing Stock
€ 1,473,390 2,177,068 2,177,068 3,570,154 4,127,751 5,696,664 8,014,825
The expenditure in 2003 of €107m represents 7% of the Board's total expenditure for the year. The projected expenditure on the scheme for 2004 is set to increase to €140m. Also, commensurate with the increase in the annual expenditure there has been an increase in the value of the stocks on hand at the end of each year. The main cost drivers of the scheme are the ingredient cost of the medicines, the number and the type of products authorised for reimbursement under the scheme, the number of patients to whom such products are prescribed and the number of items prescribed. The drugs range in pricefrom €20.79 to €7,951.22 per pack. At year-end 2003 there were 225 items approved for dispensing which included 11 new products (new chemical entities) introduced in 2003.
Audit Findings
•
While delivery dockets in respect of drugs received by pharmacistsfrom their wholesalers are submitted with their monthly dispensing claims for patient care fees there was no cross check, by the Board, of these delivery dockets against the invoices submitted by the wholesalers for payment. The Board had no arrangements in place to enable it to establish that drugs invoiced and paid for are, in fact, being delivered to the relevant pharmacists.
•
The Board records, on a monthly basis, the dispensing fee and the type and quantity of high tech drugs dispensed by each pharmacist. The Board has pointed out that the returnsfrom pharmacists of drugs dispensed may not be complete. This is because once a pharmacist has claimed for a dispensing fee in respect of a patient in any particular month, there is no incentive to return details of any further dispensing to that person in the same month.
•
The Board also has no system in place to record the type and quantity of drugs ordered and taken into stock by each pharmacist. Therefore, there is no monitoring or reconciliation of stocks held and dispensed by the pharmacists during the year or reconciliation to the amount stated in the annual financial statements.
•
It is an inherent feature of the scheme that there will be some unavoidable element of wastage. All of the drugs acquired by a pharmacist may not be used, for instance where a patient's prescription is changed and the pharmacist has no other patient requiring the original drug. Wholesalers are not obliged to take returns of stock and some high tech drugs with a short life may go out of date while in stock. As the Board has not got proper monitoring or stock control procedures in place it is not possible to determine the level, cause and cost of wastage.
•
In response to my enquiries the Board carried out a financial exercise, which compared the cost of drugs purchased with the cost of the drugs dispensed for the years 2000 to 2003 inclusive. It estimated that there is a difference of €23m between the amount purchased and the amount recorded as dispensed, after taking account of end of year stocks. According to the Board this difference is accounted for partly by wastage, partly by late claims from pharmacists and partly by the fact that returnsfrom pharmacists may not be completed correctly or not returned at the year-end.
As I considered that the controls in place over the acquisition, stock control and the recording of high tech drugs dispensed under the High Tech scheme were not adequate and in view of the significant increase in expenditure since the inception of the scheme, I sought the Chief Officer's views and details of any corrective action he intended to take to improve matters.
Chief Officer's Response
With regard to the role of the Board the Chief Officer stated that: •
The Board has a relatively narrow remit i.e. that of a processing and payments board. An independent review of governance and accountability in the General Medical Service Schemes carried out for the Department of Health and Children in 2003 had concluded that there was evidence to suggest that the Board performs this function efficiently.
•
The Review accepted that the Board was not responsible for the GMS system as a whole nor for the cost escalations experienced in the various schemes, particularly over recent years. It concluded that the Board cannot be so accountable, particularly as it has no role in the design and planning of the schemes or in the negotiation of the scheme arrangements with primary care contractors.
•
The review also concluded that the Board had not been in a position to develop an effective validation regime at contractor level to ensure the veracity of payments made.
With regard to the level of control in place the Chief Officer stated that: •
As there are 1,145 community pharmacists dispensing drugs/medicines under the scheme each month and taking account of the timeframe available to the Board to ensure that it meets its contractual payment obligation to wholesalers, it is not possible to guarantee that all invoices are matched to delivery dockets prior to payment. The Board will have issued payment to the wholesaler prior to the receipt of the delivery docket. The Board does not have the facility under the current scheme arrangements in a pre-payment environment to establish that invoices paid to the wholesaler represented supplies delivered to the community pharmacies.
•
The Board is currently developing a functional specification including the interface in relation to the electronic data capture of invoices from wholesalers to allow for reimbursement and also to record the data supplied by wholesalers to community pharmacies. Until the new system to accept claims electronically from wholesalers is in place, which will allow this validation to occur prior to payment, arrangements have been put in place to validate a random sample of invoicesfrom each company to delivery dockets in relation to either a past or current invoice. No irregular claims have been identified as result of the exercise.
•
As the order for high tech stocks is made by the community pharmacists there is no mechanism for the Board to record a purchase order. However, as part of the project to implement an electronic interface between the Board and the wholesalers, it is planned that community pharmacists will be directed to provide details of any stock requests that they made during the year and these will be tested against the delivery dockets and the invoices received from the wholesalers. Despite the Board's best efforts over a period of time it has not been able to engage with the contractors to implement the associated information technology infrastructure. Notwithstanding these difficulties the Board has pressed ahead with piloting and testing software components that would enable the required interfaces to be implemented and has successfully demonstrated this infrastructure in a live environment through a number of pilot pharmacy sites.
•
The implementation of a fully integrated, robust, information technology solution, which includes order processing, delivery notification, invoice payments and stock reconciliation will require a significant investment and commitmentfrom all and will require that the stakeholders revisit the original agreed arrangements.
With regard to wastage, the Chief Officer stated that: •
Under the current scheme arrangements the acquisition of drugs and medicines under the scheme is outside of the Board's control and it is accepted that all stakeholders including community pharmacies have a role to play regarding the levels of stocks carried in the pharmacy to ensure that the level of wastage is kept to a minimum.
•
There are many situations where wastage can occur and the absence of a mechanism for returns, redistribution of broken packs, prior notice for request or discontinuation of particular medicines, and prescribing for shorter periods must be considered but in view of its limited role i.e. that of a reimbursement agency, these matters are largely outside the control of the Board.
2. Payment of Fees under the Dispensing Doctors Scheme
In 2003 the Board incurred €2.3m on fees paid to Doctors who prescribe and directly dispense medicines to their patients who hold medical cards (GMS patients). This amount is recorded under Note 4 in the Board's Financial Statements. As part of my 2003 audit I examined the payments being made under this scheme. This report highlights the deficiencies identified in the scheme, which came to light during the audit, and sets a context for the qualification in my audit report on the Board's Financial Statements for 2003.
The Scheme
The dispensing doctors scheme has its basis in an agreement reached with Registered Medical Practitioners for the provision of services under section 59 of the Health Act 1970. The Department of Health and Children's (DOHC) circular of May 1972 (13/72) which was issued to all health boards sets out the general arrangements for prescribing and dispensing drugs. In particular, paragraph 41 of the circular provides that where a doctor's main practice is three miles or more from the nearest pharmacy then all his GMS patients should be asked by the relevant health board whether they wish to have their prescriptions dispensed by the doctor or by a retail pharmacist. Under the scheme doctors can supply medicines free of charge to their GMS patients who opt to have their medication dispensed by the doctor. The doctor is paid a dispensing fee and he receives all his medicines for his dispensing patients free of chargefrom his local pharmacy by completing an official stock order form, which is cleared by the relevant health board. The doctor records the details of the medicines dispensed on a form, which is signed by the doctor and the patient and returned by the doctor to the Board. Because of other data capture priorities the information on these forms has not been recorded, compiled and analysed by the Board since 1997. In August 1999 following agreement between the DOHC and the Irish Medical Organisation a revised scheme was introduced. Dispensing doctors were required by 1 October 1999 to decide on one of the following options: •
Cease to be a dispensing doctor and receive a once off payment of €1270.
•
Cease to be a dispensing doctor and continue to receive the existing dispensing fee of €9.33 per patient per year in respect of the number of dispensing patients on his/her panel at 1 January 1999. The fee would increase with national increases.
•
Continue to be a dispensing doctor and receive an increased dispensing fee of €24.12 per patient (linked to national increase) based upon meeting a minimum level of 70% of the items required by his/her dispensing patients. A level of dispensing above or below this requirement would give rise to a proportionate increase or decrease in the fee respectively. Failure to meet the 70% threshold in three consecutive years would bring about removalfrom the scheme. This fee became effective from 1 April 2000.
To start off the new arrangements a pilot scheme was introduced in late 1999, which was to be evaluated with a view to extending it nationwide as early as 2000. Twelve doctors were chosen under the pilot scheme and were awarded a dispensing fee of €34.61 per patient with effect from 1 January 2000 based on a dispensing performance level of 85%. Also, a dispensing manual was prepared in collaboration with the IMO for circulation among dispensing doctors to address dispensing practice issues.
In return for the payment of a significantly enhanced dispensing fee, under the agreement dispensing doctors who wished to remain in the scheme would have to have computer systems in place by 1 January 2001 which would enable them to transmit dispensing data electronically to the Board. This data would allow: •
The compilation of accurate dispensing data for management and statistical purposes.
•
The monitoring of the level of dispensing and calculation of the performance related fee.
•
The monitoring and reconciliation of stocks held and dispensed by doctors.
DOHC issued a draft circular to each health board stating that the new arrangements were introduced in recognition of the fact that the existing dispensing arrangements, procedures, criteria and standards of performance relating to and required of dispensing doctors needed to be amended and updated: •
To bring about better and more rigorous accountability.
•
To ensure the highest criteria and standards of performance by dispensing doctors.
•
To reflect changing demographic patterns and needs.
In 2000 the Board set about providing the dispensing doctors with the required software and drew up specifications for the computerisation of the scheme. In July 2000 the DOHC instructed the Board that it could make payment for 2000 on a flat fee basis without performance measurement. It also instructed the Board that •
From 1 January 2001 it was intended that all participating doctors would be paid strictly on a performance related basis as envisaged in the 1999 agreement.
•
In the event of a participating doctor who received such revised payments failing to meet the requirements of the scheme by the relevant date (that is 1 January 2001) the monies paid to him or her (in terms of differential between the standard and the revised fees) should be recouped by the Board from other GMS scheme payments made in 2001.
The dispensing doctors scheme has not been computerised as of October 2004 and, as a result, the improvements envisaged in the DOHC draft circular have not been achieved. Notwithstanding this, the doctors who opted into the scheme continue to be paid the enhanced fee in the intervening period on a flat fee basis and their dispensing performance has not been measured.
Cost of the Scheme
The amount paid in dispensing fees has increased significantly since 1999 as follows: €
1999 2000 2001 2002 2003
745,913 1,660,240 2,161,778 1,631,024 2,393,349
In 2003, 146 doctors who elected to remain in the scheme received €1.88m in dispensing fees. The doctors who were involved in the pilot scheme were paid at the rate of €37.26 per patient and the other opt-ins were paid at the rate of €32.30 per patient. Thirty-four doctors who opted out of the scheme received their continuing payment of €10.61 per patient, which amounted to €155,841. The balance of expenditure for 2003 in the order of €357,000 is accounted for by arrears and miscellaneous payments. In addition to this cost a total of €12m was paid to Pharmacists for supplying the doctors with the required drugs. The stock of dispensing drugs on hand at 31 December 2003 was €2.1m. Audit Findings
While the amounts involved are small when compared to the total annual expenditure of the Board, I considered that there was an issue of regularity involved. I estimated that for 2003 the additional cost associated with paying the enhanced fee is in the order of €lm over and above the cost of the original scheme. As a result of the failure to have the scheme computerised, payments have been made under the scheme notwithstanding the fact that the conditions, which govern the scheme, remain unfulfilled. As a consequence, the benefits expected in regard to better accountability have not materialised. In particular the conditions of the scheme have not been met in that: •
Doctors are being paid the new enhanced fee on a flat fee basis instead of being paid in accordance with their dispensing performance, with the distinct possibility that they are not receiving their correct payment.
•
The DOHC's direction of July 2000 has not been implemented with the result that participating doctors who failed to meet the requirements of the scheme have not had excess payments recoveredfrom them.
•
Doctors are not making returns in electronic form.
The benefits, which were envisaged as flowing from the revised arrangements, have not materialised since: •
The manual of good dispensing practice, which had been prepared in 1999, has not been issued to the dispensing doctors and there are no national guidelines regarding stock ordering and quantities which can be dispensed.
•
At October 2004 computerisation has not been introduced and therefore it has not been possible to compile accurate dispensing data for management and statistical purposes.
•
There is no monitoring of the level of dispensing.
•
There is no monitoring and reconciliation of stocks held and dispensed by doctors during the year or reconciliation to the amounts stated in the annual Financial Statements.
As it appeared to me that the systems of internal control which the Board operates for this scheme are inadequate and deficient and that payments are being made which are contrary to the conditions of the scheme I sought the Chief Officer's view on my findings and the source of his authority to continue paying the enhanced fee. Chief Officer's Response
In his reply the Chief Officer informed me that: •
In 2000 the Board set about preparing a functional specification of the computerised dispensing system.
•
Despite the Board's best efforts to engage with all interested parties including the general practitioners and software vendors it was not possible to reach agreement and secure the transfer of data in electronic form.
•
Due to the fact that the payment element of the scheme was implemented before the system was in place it has proved very difficult to engage and move the issue forward to a resolution. The issue is now being addressed under the auspices of the Health Board Executive.
•
The Board does not measure the performance of dispensing doctors and in the absence of such a monitoring system it would not be possible to cease dispensing payments.
John Purcell Comptroller and Auditor General O.O. November 2004
During the course of the 2003 audit of the General Medical Services (Payments) Board (the Board) issues arose which gave rise to concerns in relation to the governance of the High Tech Drug Scheme and the Dispensing Doctors Scheme. I raised these matters with the Chief Officer of the Board and his responses have been incorporated in this supplement. 1. High Tech Drug Scheme
In 2003 the Board incurred expenditure of €106.8m on the High Tech Drug Scheme. This expenditure is recorded in Note 6 to the Board's Financial Statements. It consists of payments of €5.5m to 1145 pharmacists in respect of patient care dispensing fees and €101.3m to 13 drug wholesalers for the supply of the drugs to the pharmacists. In previous years I drew attention in my audit reports to the fact that the value of stocks on hand, as recorded in the annual financial statements, was not reliable. This was due to the Board not having proper stock controls and stocktaking procedures for this scheme. As part of this year's audit I examined the payments being made to the wholesalers under this scheme. This report highlights the lack of controls in place in regard to acquisition, stock control and recording of high tech drugs. The Scheme
A wide range of expensive high tech medicines may be prescribed to patients on their discharge from hospital, such as anti rejection drugs for transplant patients, medicines used in conjunction with chemotherapy and growth hormones. Prior to the introduction of the current scheme, such drugs were dispensed to the patients through hospitals or health boards, which often involved patients travelling long distances to collect their medicines. The present scheme was introduced in November 1996 so as to enable patients to obtain their medicinesfrom community pharmacists. The scheme is confined to drugs which are on a list approved by the Department of Health and Children (DOHC). Patients prescribed the high tech drugs are asked to nominate a community pharmacy of their choice. The Health Board Liaison Officer advises the nominated pharmacist of the patient's requirements. The pharmacist then orders and takes delivery of the required drugsfrom his wholesaler and dispenses these drugs to the patient. Each month the pharmacists submit their High Tech dispensing claims together with supplier delivery dockets to the Board. The Board pays them a monthly patient care fee of €49.64 per patient. The Board records on a monthly basis details of the dispensing fee and the quantity and type of drug dispensed by each pharmacist.
The wholesalers send their invoices for the ingredient cost of the drugs to the Board by the 2nd day of each month in respect of deliveries made the previous month. The Board is contractually obliged to pay these invoices by the 6th day of each month. The Board deducts an agreed 5% discount on invoices it receives from wholesalers for the supply of high tech drugs to the pharmacists. The Board pays the wholesaler invoices prior to receiving the corresponding delivery dockets from the pharmacists. The Board then bills the relevant Health Board with the ingredient cost of the drugs dispensed inclusive of VAT, where applicable, less the 5% discount. Cost of the Scheme
The cost of the scheme has increased significantly each year since it was introduced in late 1996. The following table shows the increase in costs each year from 1997 and the value of High Tech Drugs on hand as recorded in the Board's Financial Statements. High Tech Drugs Scheme Expenditure Year
1997 1998 1999 2000 2001 2002 2003
€ 27,212,531 33,715,059 42,303,174 50,505,842 63,791,527 83,432,337 106,818,906
% Increase Over 1997
24 55 86 134 207 293
Estimated Value of Closing Stock
€ 1,473,390 2,177,068 2,177,068 3,570,154 4,127,751 5,696,664 8,014,825
The expenditure in 2003 of €107m represents 7% of the Board's total expenditure for the year. The projected expenditure on the scheme for 2004 is set to increase to €140m. Also, commensurate with the increase in the annual expenditure there has been an increase in the value of the stocks on hand at the end of each year. The main cost drivers of the scheme are the ingredient cost of the medicines, the number and the type of products authorised for reimbursement under the scheme, the number of patients to whom such products are prescribed and the number of items prescribed. The drugs range in pricefrom €20.79 to €7,951.22 per pack. At year-end 2003 there were 225 items approved for dispensing which included 11 new products (new chemical entities) introduced in 2003.
Audit Findings
•
While delivery dockets in respect of drugs received by pharmacistsfrom their wholesalers are submitted with their monthly dispensing claims for patient care fees there was no cross check, by the Board, of these delivery dockets against the invoices submitted by the wholesalers for payment. The Board had no arrangements in place to enable it to establish that drugs invoiced and paid for are, in fact, being delivered to the relevant pharmacists.
•
The Board records, on a monthly basis, the dispensing fee and the type and quantity of high tech drugs dispensed by each pharmacist. The Board has pointed out that the returnsfrom pharmacists of drugs dispensed may not be complete. This is because once a pharmacist has claimed for a dispensing fee in respect of a patient in any particular month, there is no incentive to return details of any further dispensing to that person in the same month.
•
The Board also has no system in place to record the type and quantity of drugs ordered and taken into stock by each pharmacist. Therefore, there is no monitoring or reconciliation of stocks held and dispensed by the pharmacists during the year or reconciliation to the amount stated in the annual financial statements.
•
It is an inherent feature of the scheme that there will be some unavoidable element of wastage. All of the drugs acquired by a pharmacist may not be used, for instance where a patient's prescription is changed and the pharmacist has no other patient requiring the original drug. Wholesalers are not obliged to take returns of stock and some high tech drugs with a short life may go out of date while in stock. As the Board has not got proper monitoring or stock control procedures in place it is not possible to determine the level, cause and cost of wastage.
•
In response to my enquiries the Board carried out a financial exercise, which compared the cost of drugs purchased with the cost of the drugs dispensed for the years 2000 to 2003 inclusive. It estimated that there is a difference of €23m between the amount purchased and the amount recorded as dispensed, after taking account of end of year stocks. According to the Board this difference is accounted for partly by wastage, partly by late claims from pharmacists and partly by the fact that returnsfrom pharmacists may not be completed correctly or not returned at the year-end.
As I considered that the controls in place over the acquisition, stock control and the recording of high tech drugs dispensed under the High Tech scheme were not adequate and in view of the significant increase in expenditure since the inception of the scheme, I sought the Chief Officer's views and details of any corrective action he intended to take to improve matters.
Chief Officer's Response
With regard to the role of the Board the Chief Officer stated that: •
The Board has a relatively narrow remit i.e. that of a processing and payments board. An independent review of governance and accountability in the General Medical Service Schemes carried out for the Department of Health and Children in 2003 had concluded that there was evidence to suggest that the Board performs this function efficiently.
•
The Review accepted that the Board was not responsible for the GMS system as a whole nor for the cost escalations experienced in the various schemes, particularly over recent years. It concluded that the Board cannot be so accountable, particularly as it has no role in the design and planning of the schemes or in the negotiation of the scheme arrangements with primary care contractors.
•
The review also concluded that the Board had not been in a position to develop an effective validation regime at contractor level to ensure the veracity of payments made.
With regard to the level of control in place the Chief Officer stated that: •
As there are 1,145 community pharmacists dispensing drugs/medicines under the scheme each month and taking account of the timeframe available to the Board to ensure that it meets its contractual payment obligation to wholesalers, it is not possible to guarantee that all invoices are matched to delivery dockets prior to payment. The Board will have issued payment to the wholesaler prior to the receipt of the delivery docket. The Board does not have the facility under the current scheme arrangements in a pre-payment environment to establish that invoices paid to the wholesaler represented supplies delivered to the community pharmacies.
•
The Board is currently developing a functional specification including the interface in relation to the electronic data capture of invoices from wholesalers to allow for reimbursement and also to record the data supplied by wholesalers to community pharmacies. Until the new system to accept claims electronically from wholesalers is in place, which will allow this validation to occur prior to payment, arrangements have been put in place to validate a random sample of invoicesfrom each company to delivery dockets in relation to either a past or current invoice. No irregular claims have been identified as result of the exercise.
•
As the order for high tech stocks is made by the community pharmacists there is no mechanism for the Board to record a purchase order. However, as part of the project to implement an electronic interface between the Board and the wholesalers, it is planned that community pharmacists will be directed to provide details of any stock requests that they made during the year and these will be tested against the delivery dockets and the invoices received from the wholesalers. Despite the Board's best efforts over a period of time it has not been able to engage with the contractors to implement the associated information technology infrastructure. Notwithstanding these difficulties the Board has pressed ahead with piloting and testing software components that would enable the required interfaces to be implemented and has successfully demonstrated this infrastructure in a live environment through a number of pilot pharmacy sites.
•
The implementation of a fully integrated, robust, information technology solution, which includes order processing, delivery notification, invoice payments and stock reconciliation will require a significant investment and commitmentfrom all and will require that the stakeholders revisit the original agreed arrangements.
With regard to wastage, the Chief Officer stated that: •
Under the current scheme arrangements the acquisition of drugs and medicines under the scheme is outside of the Board's control and it is accepted that all stakeholders including community pharmacies have a role to play regarding the levels of stocks carried in the pharmacy to ensure that the level of wastage is kept to a minimum.
•
There are many situations where wastage can occur and the absence of a mechanism for returns, redistribution of broken packs, prior notice for request or discontinuation of particular medicines, and prescribing for shorter periods must be considered but in view of its limited role i.e. that of a reimbursement agency, these matters are largely outside the control of the Board.
2. Payment of Fees under the Dispensing Doctors Scheme
In 2003 the Board incurred €2.3m on fees paid to Doctors who prescribe and directly dispense medicines to their patients who hold medical cards (GMS patients). This amount is recorded under Note 4 in the Board's Financial Statements. As part of my 2003 audit I examined the payments being made under this scheme. This report highlights the deficiencies identified in the scheme, which came to light during the audit, and sets a context for the qualification in my audit report on the Board's Financial Statements for 2003.
The Scheme
The dispensing doctors scheme has its basis in an agreement reached with Registered Medical Practitioners for the provision of services under section 59 of the Health Act 1970. The Department of Health and Children's (DOHC) circular of May 1972 (13/72) which was issued to all health boards sets out the general arrangements for prescribing and dispensing drugs. In particular, paragraph 41 of the circular provides that where a doctor's main practice is three miles or more from the nearest pharmacy then all his GMS patients should be asked by the relevant health board whether they wish to have their prescriptions dispensed by the doctor or by a retail pharmacist. Under the scheme doctors can supply medicines free of charge to their GMS patients who opt to have their medication dispensed by the doctor. The doctor is paid a dispensing fee and he receives all his medicines for his dispensing patients free of chargefrom his local pharmacy by completing an official stock order form, which is cleared by the relevant health board. The doctor records the details of the medicines dispensed on a form, which is signed by the doctor and the patient and returned by the doctor to the Board. Because of other data capture priorities the information on these forms has not been recorded, compiled and analysed by the Board since 1997. In August 1999 following agreement between the DOHC and the Irish Medical Organisation a revised scheme was introduced. Dispensing doctors were required by 1 October 1999 to decide on one of the following options: •
Cease to be a dispensing doctor and receive a once off payment of €1270.
•
Cease to be a dispensing doctor and continue to receive the existing dispensing fee of €9.33 per patient per year in respect of the number of dispensing patients on his/her panel at 1 January 1999. The fee would increase with national increases.
•
Continue to be a dispensing doctor and receive an increased dispensing fee of €24.12 per patient (linked to national increase) based upon meeting a minimum level of 70% of the items required by his/her dispensing patients. A level of dispensing above or below this requirement would give rise to a proportionate increase or decrease in the fee respectively. Failure to meet the 70% threshold in three consecutive years would bring about removalfrom the scheme. This fee became effective from 1 April 2000.
To start off the new arrangements a pilot scheme was introduced in late 1999, which was to be evaluated with a view to extending it nationwide as early as 2000. Twelve doctors were chosen under the pilot scheme and were awarded a dispensing fee of €34.61 per patient with effect from 1 January 2000 based on a dispensing performance level of 85%. Also, a dispensing manual was prepared in collaboration with the IMO for circulation among dispensing doctors to address dispensing practice issues.
In return for the payment of a significantly enhanced dispensing fee, under the agreement dispensing doctors who wished to remain in the scheme would have to have computer systems in place by 1 January 2001 which would enable them to transmit dispensing data electronically to the Board. This data would allow: •
The compilation of accurate dispensing data for management and statistical purposes.
•
The monitoring of the level of dispensing and calculation of the performance related fee.
•
The monitoring and reconciliation of stocks held and dispensed by doctors.
DOHC issued a draft circular to each health board stating that the new arrangements were introduced in recognition of the fact that the existing dispensing arrangements, procedures, criteria and standards of performance relating to and required of dispensing doctors needed to be amended and updated: •
To bring about better and more rigorous accountability.
•
To ensure the highest criteria and standards of performance by dispensing doctors.
•
To reflect changing demographic patterns and needs.
In 2000 the Board set about providing the dispensing doctors with the required software and drew up specifications for the computerisation of the scheme. In July 2000 the DOHC instructed the Board that it could make payment for 2000 on a flat fee basis without performance measurement. It also instructed the Board that •
From 1 January 2001 it was intended that all participating doctors would be paid strictly on a performance related basis as envisaged in the 1999 agreement.
•
In the event of a participating doctor who received such revised payments failing to meet the requirements of the scheme by the relevant date (that is 1 January 2001) the monies paid to him or her (in terms of differential between the standard and the revised fees) should be recouped by the Board from other GMS scheme payments made in 2001.
The dispensing doctors scheme has not been computerised as of October 2004 and, as a result, the improvements envisaged in the DOHC draft circular have not been achieved. Notwithstanding this, the doctors who opted into the scheme continue to be paid the enhanced fee in the intervening period on a flat fee basis and their dispensing performance has not been measured.
Cost of the Scheme
The amount paid in dispensing fees has increased significantly since 1999 as follows: €
1999 2000 2001 2002 2003
745,913 1,660,240 2,161,778 1,631,024 2,393,349
In 2003, 146 doctors who elected to remain in the scheme received €1.88m in dispensing fees. The doctors who were involved in the pilot scheme were paid at the rate of €37.26 per patient and the other opt-ins were paid at the rate of €32.30 per patient. Thirty-four doctors who opted out of the scheme received their continuing payment of €10.61 per patient, which amounted to €155,841. The balance of expenditure for 2003 in the order of €357,000 is accounted for by arrears and miscellaneous payments. In addition to this cost a total of €12m was paid to Pharmacists for supplying the doctors with the required drugs. The stock of dispensing drugs on hand at 31 December 2003 was €2.1m. Audit Findings
While the amounts involved are small when compared to the total annual expenditure of the Board, I considered that there was an issue of regularity involved. I estimated that for 2003 the additional cost associated with paying the enhanced fee is in the order of €lm over and above the cost of the original scheme. As a result of the failure to have the scheme computerised, payments have been made under the scheme notwithstanding the fact that the conditions, which govern the scheme, remain unfulfilled. As a consequence, the benefits expected in regard to better accountability have not materialised. In particular the conditions of the scheme have not been met in that: •
Doctors are being paid the new enhanced fee on a flat fee basis instead of being paid in accordance with their dispensing performance, with the distinct possibility that they are not receiving their correct payment.
•
The DOHC's direction of July 2000 has not been implemented with the result that participating doctors who failed to meet the requirements of the scheme have not had excess payments recoveredfrom them.
•
Doctors are not making returns in electronic form.
The benefits, which were envisaged as flowing from the revised arrangements, have not materialised since: •
The manual of good dispensing practice, which had been prepared in 1999, has not been issued to the dispensing doctors and there are no national guidelines regarding stock ordering and quantities which can be dispensed.
•
At October 2004 computerisation has not been introduced and therefore it has not been possible to compile accurate dispensing data for management and statistical purposes.
•
There is no monitoring of the level of dispensing.
•
There is no monitoring and reconciliation of stocks held and dispensed by doctors during the year or reconciliation to the amounts stated in the annual Financial Statements.
As it appeared to me that the systems of internal control which the Board operates for this scheme are inadequate and deficient and that payments are being made which are contrary to the conditions of the scheme I sought the Chief Officer's view on my findings and the source of his authority to continue paying the enhanced fee. Chief Officer's Response
In his reply the Chief Officer informed me that: •
In 2000 the Board set about preparing a functional specification of the computerised dispensing system.
•
Despite the Board's best efforts to engage with all interested parties including the general practitioners and software vendors it was not possible to reach agreement and secure the transfer of data in electronic form.
•
Due to the fact that the payment element of the scheme was implemented before the system was in place it has proved very difficult to engage and move the issue forward to a resolution. The issue is now being addressed under the auspices of the Health Board Executive.
•
The Board does not measure the performance of dispensing doctors and in the absence of such a monitoring system it would not be possible to cease dispensing payments.
John Purcell Comptroller and Auditor General O.O. November 2004
