Contractor reminder: Transitional Payments set to zero from February

The Department of Health and Social Care (DHSC) determined that from February 2023 onwards, Transitional Payments would be set to zero. This is reflected in the February Schedule of Payments received by contractors this month. In discussions with DHSC, PSNC had rejected the change to the Transitional Payments on the grounds that any further reductions in payments would be impossible for community pharmacy contractors to manage financially. The reduction was then ultimately imposed without agreement.

Background

Transitional Payments were the temporary mechanism that was introduced at the start of the five-year Community Pharmacy Contractual Framework (CPCF) settlement in 2019/20, with the intended purpose of supporting contractor’s preparations for a more service-based role. These were funded from the ‘unallocated funding’ that was part of the CPCF funding envelope, i.e. funding that was intended to be delivered to contractors, but was not direct remuneration for any services or dispensing activity.

The amount of funding available within the CPCF envelope to fund the Transitional Payments has reduced over time. This was expected, as new services which have been introduced have had funding allocated from the previously unallocated funding.

The announcement that Transitional Payments would be phased down over the second half of 2022/23 was therefore consistent with the expectations for Transitional Payments to reduce over time.

The latest analysis of funding delivery to contractors indicates that in 2023/24 there is unlikely to be any ‘unallocated’ funding. This is due to multiple factors such as:

• Introduction and growth of new clinical services;
• The creation of a new ‘Flat Payment’ in 2023/24; and
• Significant growth in prescription volumes over the last 2 years.

As part of the Year 4 & 5 funding settlement for community pharmacy, a new Flat Fee payment will be introduced from April 2023. Read more about the Flat Fee here.

Read about CPCF 2023/24 and Regulations: Imposed changes here.