The Medical Assessmet of Icapacity ad Disability Beefits REPORT BY THE COMPTROLLER AND AUDITOR GENERAL HC 280 Sessio 2000-2001: 9 March 2001 LONDON: The Statioery Office 0.00 Ordered by the House of Commos to be prited o 1 March 2001
executive summary The Departmet outsourced the medical assessmet of beefits to improve the performace ad value for moey of this vital service 1 Disability ad icapacity beefits costig over 19 billio are paid each year to some of the most vulerable members of society. It is importat that their eligibility is assessed fairly ad efficietly, ad i a way that causes them miimum axiety ad icoveiece. It is also essetial to protectig the public purse that such expediture is icurred oly i paymets to those who are geuiely etitled to them. Medical assessmet is cetral to the Departmet of Social Security's (the Departmet's) decisio-makig o customers' eligibility for these beefits. I 1999/2000 early 3,000 doctors workig o behalf of the Departmet provided advice or reports for the use of lay decisiomakers o some 1.3 millio cases, early half icludig physical assessmets. 2 The Departmet have bee resposible for medical assessmet of all icapacity ad disability beefit claims sice 1993, before which the Departmet of Health had bee resposible for some of the work. The itroductio of Icapacity Beefit i 1995 highlighted iadequacies i the maagemet, flexibility ad performace of the service. Busiess targets for costs ad turaroud times, ad quality stadards, were ot beig achieved. After assessig several optios the Departmet pursued outsourcig as the best way to achieve a rage of objectives: to improve the quality of reports, speed their throughput, maitai service to customers, lever i ivestmet, ad reduce costs. The lauch i February 1996 of the Departmet's wider Chage Programme made it imperative that the outsourcig should cotribute to deliverig improved services at 25 per cet lower cost over three years. 3 Followig competitio the Departmet awarded SEMA Group cotracts totallig 305 millio to deliver the service for at least five years. Though two of the five bidders withdrew there was still competitio for two of the three regioal cotracts, ad for the third the lack of competitio did ot result i higher prices. SEMA Group offered the cheapest bid, below the cost of the existig i-house service, ad the Departmet assessed this bid as the highest quality ad the most iovative. They obtaied further reductios ad cocessios through additioal biddig rouds ad estimate that outsourcig will save betwee 10 ad 14 per cet compared to the i-house operatio (the public sector comparator). 1executive summary
4 The cotract has prove a demadig oe for the Departmet to maage. They prudetly allowed six moths to prepare for trasfer to SEMA Group, but there were still problems i schedulig appoitmets, where the compay's solutio proved to be impracticable ad had to be abadoed. The cotract provides strog icetives to deliver medical assessmets to time, but the Departmet's powers to obtai improvemets i the quality of the service are ot as robust, despite their achievemets i stregtheig quality measures. The Departmet also egotiated a service improvemet pla to help esure that SEMA Group's iovative proposals for developig the service were implemeted. But progress i implemetig it is ot liked to paymets ad has bee patchy ad slower tha expected. A key aspect of SEMA Group's proposals, the comprehesive reorgaisatio of all medical cetres to work more closely with beefit offices, proved uecoomic ad has occurred oly at isolated locatios. Appedix 1 provides a detailed chroology of evets. 5 We examied the medical assessmet service to assess: whether the speed, efficiecy ad quality of medical assessmet have improved, eablig the Departmet to pay "the right beefits to the right people at the right time"; whether the quality of service to beefit customers is adequate; ad the useful lessos that should be leared for other outsourcig iitiatives. I desigig our study we had regard to the work of the Social Security Select Committee, who reported o Medical Services i April 2000. Where possible, we have followed up actio take as a result of their recommedatios but, i additio, we looked at the maagemet of medically assessed beefits more widely ad the likage betwee providig a quality service to customers ad effectively protectig beefit expediture. The approach we used i our examiatio is described i Appedix 2. Sice outsourcig the speed ad efficiecy of medical assessmet have improved but savigs could be made by reducig delays i Beefits Agecy processes 6 Icapacity Beefit ad Disability Livig Allowace with its sister beefit, Attedace Allowace, represet over 90 per cet by value of medically assessed beefits. Disability Livig ad Attedace Allowaces are ot paid util evidece (which may take the form of a medical assessmet) has bee provided to demostrate that the customer meets the criteria, so timely assessmet is especially importat to avoid udue delays i customers receivig their beefits. Coversely, Icapacity Beefit customers who meet basic eligibility criteria are paid beefit immediately, ad those subsequetly foud to be capable of work do ot have their beefit paymets recovered. So for this beefit a timely medical assessmet is essetial to protect the public purse. 2executive summary 7 SEMA Group's efficiecy improvemets have cotributed to speedier medical assessmets. Sice outsourcig, the average time take to provide medical reports ad advice has reduced. But workloads i Icapacity Beefit have actually bee reducig, albeit offset by some icreases i disability beefits. There is also still room for improvemet. 8 Medical assessmet forms oly part of the ed-to-ed processig of beefit claims. For Icapacity Beefit, the total time take to process cases due for review rages from 90 to 170 days across differet parts of the coutry. Most of this variatio is due to the variable speed of processig i the Beefits Agecy rather tha medical assessmet. This is partly due to other beefits takig higher priority i local beefit offices, ad also because resources allocated are ot closely matched to caseloads. Delays also arise because evidece provided by
customers ad their geeral practitioers is ofte iaccurate or icomplete. Disability Livig Allowace/Attedace Allowace cases, the admiistratio of which is more cetralised i oly 12 locatios, are hadled more promptly, despite some delays i obtaiig evidece. 9 If the Agecy could reduce the processig time i Icapacity Beefit to the levels achieved by the three top-performig Area Directorates they could achieve savigs by reducig paymets to customers who are o loger eligible for beefit. We estimate these savigs to be aroud 60 millio a year i paymets of Icapacity Beefit, which could be reduced to the order of 30 millio to 40 millio through customers goig o to claim other beefits istead. Brigig performace up to the level of the middle performer, which the Departmet cosider more achievable i the medium-term, could brig et beefit savigs of aroud 20 millio. Elimiatig backlogs i cases awaitig review could achieve et oe-off savigs of 20 millio to 30 millio, with further savigs if the ogoig level of backlogs could be reduced. 10 The Departmet have begu to focus o improvig performace ad reducig variatios i the time it takes to process claims ad make decisios through the Performace Improvemet Programme, which was lauched i February 2000. The Programme has so far focused o Icome Support ad Jobseeker's Allowace, two large ad complex beefits, but the Departmet ow ited to apply a similar approach to Icapacity Beefit. This will ivolve: idetifyig, sharig ad implemetig good practices from the best performig Areas; Improvig maagemet iformatio to track performace; traiig ad chages i procedure to improve workflow maagemet; ad support from Performace Improvemet Actio Teams for those offices with particular difficulties. Improvemets i the targetig ad quality of assessmets have yet to be fully delivered 11 The Departmet ad SEMA Group have recogised that they eed to focus more o improvig the quality of medical reports, which has bee a cause for cocer sice before outsourcig. Durig procuremet the Departmet decided that it would be too difficult to eforce cotractual clauses relatig to quality. This was because of the iadequate quality moitorig systems the i place ad the difficulty of defiig what actually costituted adequate medical quality - a problem experieced more widely i the medical professio as a whole. Istead, they put i place other remedies, such as the right of decisiomakers to retur reports that were ot usable for rework, at o extra cost. 12 SEMA Group's ow quality assurace systems suggest that the quality of reports has improved sice outsourcig. Ad, prima facie, this is bore out by the Beefits Agecy returig less tha oe per cet of reports as ufit for purpose. Yet our iterviews suggested that staff ofte fail to sed back reports that are techically below stadard because of the delays it causes, ad because they believe the revised report would probably be o better tha the first oe. The Departmet's ow moitorig gives o idicatio that the quality of medical assessmets is ay better tha before outsourcig. 13 Whe outsourcig, the Departmet aimed to make medical assessmet more efficiet ad to avoid the risk of over or uder examiatio by better targetig of physical examiatios ad paper scrutiies of cases. They itroduced ew guidelies for doctors to reduce uecessary examiatios by more clearly 3executive summary
defiig the circumstaces whe a scrutiy of papers would suffice. They also deliberately agreed a sigle price for all Icapacity Beefit reports, whether or ot a examiatio had take place, to provide a better icetive to SEMA Group to reduce uecessary examiatios. 14 Too low a level of examiatios may lead to customers beig passed as ufit for work ad eligible for beefit whe they are ot. Because SEMA Group are paid the same price whether assessmets are based o paper scrutiy or examiatio, they make a sigificatly greater retur o the former, a fact of which the Departmet were aware whe they siged the cotract. We foud o evidece that the compay had sought to maximise their profits through a systematic policy of uderexamiatio, but oetheless there is a geeral icetive o medical services cetres ad doctors to opt for the simpler ad quicker method. A Departmetal review has idicated that betwee 20 ad 30 per cet of scrutiy cases did ot meet the agreed guidelies. As a result, SEMA Group are retraiig all doctors doig this work ad the Departmet have redrafted the guidace issued to doctors to clarify the policy o whe to examie customers. This has already resulted i a icreased rate of examiatio. The Departmet are reegotiatig the cotract so that the compay will make a broadly similar rate of retur from examiatios as from scrutiies. 15 Eve the best medical evidece may result i a poor decisio if ot iterpreted correctly by the decisio-maker. The major medically assessed beefits have a high rate of successful appeals agaist decisio to withdraw or reduce beefit. Aalysis by the Appeals Service idicated that i some 25 per cet of those decisios they chaged, the iterpretatio of the medical evidece, whether from SEMA or the customer's doctor, was a importat factor. The Departmet are ow begiig to look at ways of learig from the results of appeals, but they also eed to esure that decisio-makers have access to good quality advice from SEMA Group doctors o medical issues. 16 Improvig the quality of assessmet depeds crucially o SEMA Group attractig sufficiet umbers of suitably traied doctors. SEMA Group have cotiued to suffer shortages of doctors. This stems partly from a geeral UKwide shortage of doctors, which is expected to worse before it improves, ad also from the fees paid for this work. SEMA Group have itroduced higher pay i remote areas where there are particular shortages ad have recetly give a 3 per cet pay icrease to all fee-paid doctors, but rates are still substatially below those paid by other govermet departmets. SEMA Group have itroduced various measures to improve professioal stadards ad have recetly aouced that i future they will pay doctors to atted traiig. 17 The mai threat to maitaiig a viable workforce is i the loger term. Almost half of the fee-paid doctors are aged 55 or over ad could therefore begi to retire i the ext five years. Although doctors retirig from geeral practice could add to the pool from which SEMA ca draw, there are risks attached to such reliace o a ageig workforce. Proposals i SEMA Group's bid to make greater use of urses ad other health professioals have made little progress i the face of legislative ad other obstacles. 4executive summary The Departmet, workig through SEMA Group, eed to improve service to customers 18 While the Departmet require SEMA Group to meet certai stadards of customer service, they have limited leverage through the cotract to oblige SEMA Group to raise stadards, as paymets are ot liked with achievemet of these stadards. 19 There is ot yet sufficiet iformatio available to give a adequate picture of the stadard of customer care. SEMA Group's surveys of customers idicate that most are cotet with the coduct of examiatios, but the umber of
recorded complaits is icreasig. Most are about doctors' attitudes ad how they coduct examiatios, particularly where customers are examied at home, which raises cocers about the quality of the resultig reports. There is ot yet eough evidece o how well the service treats customers from ethic miorities ad those who request a female doctor or a iterpreter. 20 The schedulig of appoitmets remais a area of particular difficulty. The cotract icetivises SEMA Group to maximise attedace at examiatios. Despite this the average proportio of customers failig to atted appoitmets has rise slightly to 23 per cet i 2000. To compesate for "o-shows" SEMA Group has cotiued to overbook appoitmets as practised by the i-house service. This results i over 1,000 customers (aroud three per cet) beig tured away from examiatios every moth, which ca cause icoveiece ad distress. 21 I respose to the Social Security Select Committee's report of April 2000 the Govermet made a strog commitmet to improvig the stadards of service to customers. The Departmet ad SEMA Group have itroduced improved customer survey methods ad ehaced moitorig of doctors' performace. They are improvig customer iformatio o examiatios, have revised guidace for doctors who carry out home visits, ad begu recordig separately complaits about cultural isesitivity. But these iitiatives are at a early stage ad there is as yet o evidece as to the effect o the service provided to customers. Overall coclusios 22 Before outsourcig, the Beefits Agecy medical service was a uderachievig orgaisatio operatig withi tight resource costraits. Outsourcig has reduced the cost of the operatio to the Departmet ad has see valuable improvemets i the speed with which work is processed. 23 However, the viability of the busiess remais uder acute cost pressure ad this has affected the efforts of the Departmet ad the compay to improve the quality of medical assessmets ad customer service. SEMA Group's prices bega lower tha their competitors' ad were drive lower i rebiddig. Moreover, key elemets of their strategy to improve efficiecy ad reduce the cost base, through automated schedulig of examiatios ad use of urses, have ot yet bee implemeted. Ad chages i the balace of work from more profitable Icapacity Beefit towards less profitable Disability Livig Allowace/ Attedace Allowace have created aother fiacial pressure. 24 The icetives i the cotract that require SEMA Group to make qualitative improvemets are ot as robust as those requirig the fast turaroud of work, despite the Departmet's achievemets i stregtheig quality measures. The busiess is cofroted by a major strategic threat i terms of shortages of doctors, which is forecast to get worse over the ext five years ad requires rapid remedial ad prevetative measures. 25 O a broader frot, the system of assessig ad payig claims for beefit depeds o the effective ad timely cotributio of differet players: Beefits Agecy offices; claimats' geeral practitioers ad cosultats; ad SEMA Group examiatio cetres. Bottleecks curretly exist throughout the system which result i delays i payig some disability beefits to those etitled to them, as well as cotiued paymet to those who are o loger eligible, ad a highly variable quality of service to claimats aroud the coutry. 26 This has bee a iovative project for the Departmet, ivolvig the outsourcig of a service closer to their core busiess tha their earlier procuremets. There are lessos to be leared by all Departmets. The key recommedatios which follow are supplemeted i Appedix 3 by more detailed recommedatios o ways the Departmet could secure improvemets. 5executive summary
Recommedatios to the Departmet of Social Security O the quality of medical assessmet ad preservig their medical assessmet capability a) The Departmet should focus more of their maagemet effort o the quality of medical reports. Stroger oversight of SEMA Group's iteral quality assurace arragemets is required from the Departmet's Corporate Medical Group of specialists, ad this may require a review of resources. b) Uusable reports should always be set back to SEMA Group for rework to secure cotiuous improvemet i stadards. The defiitio of a usable report should iclude the requiremet that that it provides evidece to back up the opiios give. The Departmet also requires legible reports which do ot iclude iappropriate or offesive commets, especially sice customers or a tribual may eed to read them at a later date. c) The Departmet ad SEMA Group should cotiue to work closely with the ew Appeals Agecy to further develop the ew arragemets for feedback from idepedet tribuals o the stadards of medical evidece they expect to see. This should ivolve pilotig ways of esurig that: decisio-makers receive regular feedback o the fidigs of appeals tribuals ad the implicatios for their work; SEMA Group doctors also receive feedback o relevat fidigs; ad the Departmet's case is properly represeted at appeals tribuals where beefit decisios are beig examied. This may ivolve a review of the cost-effectiveess of sedig staff to atted tribuals. d) I view of the worseig shortages of doctors available to carry out medical assessmet work, the Departmet ad SEMA Group should look further at the proposals set out i the cotractor's origial bid, to make use of other healthcare practitioers such as urses to carry out appropriate parts of the work. e) The Departmet should obtai as soo as possible a projectio of the demographic ad skills mix ad locatio of the full-time ad fee-paid workforce at the ed of the cotract i 2003 to esure that a viable service ca be delivered beyod the ed of the existig cotract, ad to idetify ay eed for corrective actio. This may ivolve lookig agai at the mix of full-time ad part-time doctors doig the work. O the efficiet maagemet of medical assessmet 6executive summary f) The Departmet should, as part of their focus o reducig variatios i performace, look to speed up processig times i Icapacity Beefit ad reduce the size of backlogs of cases awaitig medical referral, across all regios. This will ivolve addressig the exact causes of backlogs ad processig delays, buildig o the aalysis i this report ad o the expertise from the Beefits Agecy's ow work o performace variatios i other beefits. g) The Departmet should seek to stadardise approaches i districts to reviewig log-term Icapacity Beefit claims. Their "Keepig i Touch" iitiative, curretly i pilot form, may provide valuable iformatio through cotact with these customers to iform the review process.
h) Workloads at local beefit offices are volatile ad difficult to predict. The Departmet should avoid situatios where high priority cases comig up for review i certai district offices are deferred through lack of fuds. Ways of achievig this might iclude keepig back a proportio of fudig for medical assessmet work cetrally. O customer care i) The Departmet should seek to build performace measures liked to fiacial icetives o customer care ito their cotract for medical services. This should be part of ay egotiatios to exted the cotract duratio to 7 years, ad might iclude measures to: reduce the icidece of customers beig tured away from examiatio appoitmets usee; esure the waitig time targets of 10 ad 30 miutes for customers attedig a appoitmet are met or improved o; provide a doctor of the same geder or a iterpreter for all customers who request it whe arragig the appoitmet, subject to the customer beig willig to travel to a alterative cetre. j) The Departmet should cosider, with SEMA Group, ways of elimiatig the problem of turig away customers who have bee asked to come for examiatio without seeig them by: implemetig atioally the successful pilots where schedulig of appoitmets is doe locally, ad local kowledge of customers ad geography ca help pla sessios more accurately; recosiderig the way fee-paid doctors are remuerated, the scope to let them examie at their ow practice premises, ad the icetives o them to complete all scheduled examiatios; ad better traiig ad retetio of SEMA Group staff doig schedulig so that they ca more effectively judge the legth of differet types of examiatios. k) The Departmet ad SEMA Group should cotiue to look at ways of further improvig the surveys of Beefits Agecy staff ad customers so that they meet geerally accepted market research idustry stadards. The Departmet should periodically exercise their right to validate these surveys ad esure they provide a represetative picture of the views of all customers. l) The Departmet should obtai robust iformatio, from either improved customer surveys, or more directly targeted research methods, to determie the effect of SEMA Group's activities o differet customer groups, by ethicity ad geder, i lie with the ew provisios of the Race Relatios (Amedmet) Act 2000. Where there are differet outcomes for differet groups, they should cosider settig targets for improvemet. m) The Departmet should work with the Commissio for Racial Equality to esure that SEMA Group, as well as their other cotractors, put i place raceequality programmes to esure compliace with the requiremets of the Race Relatios (Amedmet) Act 2000 which itroduces a ew positive duty o public bodies to promote race-equality. These programmes should be i lie with the codes of practice to be issued by the Commissio early i 2001. 7executive summary
) The Departmet require better assurace that complaits received by SEMA Group have bee properly hadled. This might iclude: more detailed categorisatio, by type, of complaits about the coduct of doctors at examiatios; focusig their moitorig effort o serious complaits ad o multiple complaits agaist the same doctor, to esure that SEMA Group have take corrective actio; a firm defiitio of what costitutes a serious complait; (eg. a matter likely to have iflueced the beefit decisio, or which iflicts pai or hardship o the customer or relates to improper coduct by SEMA Group staff); egotiatig with SEMA Group or a subsequet supplier to build fiacial remedies ito the cotract for failures to act i respose to such complaits withi set timescales. Recommedatios to all Departmets o outsourcig o) Objectives should be explicitly prioritised ad miimum stadards set for each so that Miisters ad officials are aware of the likely outcomes. I this case the Departmet pursued several objectives that teded to coflict: to improve the quality of reports, quicke throughput, maitai service to customers, lever i ivestmet, ad reduce costs. Although qualitative criteria were weighted, overall the objectives were ot prioritised, ad the resultig cotract focused o reducig the cost of the service whilst speedig up throughput. p) Where Departmets ited outsourcig to brig sigificat capital ivestmet they should cosider whether the proposed legth of cotract gives the supplier a adequate period to recover worthwhile ivestmet. There is the risk that this cotract will suffer from partial "ivestmet blight" for much of its miimum five-year duratio. q) Where Departmets are uable to defie service quality to cotractually eforceable stadards they should cosider other approaches to icetivisig suppliers. I this case, optios iclude direct paymets for outputs coducive to quality, such as the achievemet of targets for umbers of medical staff attaiig additioal professioal qualificatios. r) Where Departmets embark o iovative outsourcig of specialist services they should cosider loger shortlists, to offset the icreased risk that compaies will withdraw without biddig. I this case the Departmet prudetly shortlisted five compaies, ad therefore maaged to maitai competitio for two of the three cotracts ad the illusio of competitio for the other. 8executive summary