Financial Planning Templates 2014/15 to 2018/19 - Guidance for Direct Commissioning

Financial Planning Templates 2014/15 to 2018/19 - Guidance for Direct Commissioning Contents 1. Introduction... 2 2. Cover... 2 3. Area Team Summary... 3 4. Financial Plan Summary... 3 5. Allocations... 4 6. Financial Plan Detail... 4 7. Assumptions... 7 8. QIPP... 7 9. Investments... 9 10. Non-recurrent headroom proposals... 10 11. Risk... 11 12. Contracts... 12 13. Cash and Depreciation... 13 Appendix A: Suggested Approach... 14 Appendix B: Financial Planning Business Rules... 16 Appendix C: Additional Guidance on Areas of Direct Commissioning... 18 1

1. Introduction Planning templates have been constructed to provide sufficient granularity for NHS England to assess Area Team Direct Commissioning (DC) plans for the five year period from 2014/15 to 2018/19. Due to the need to develop comprehensive plans for a full five year period, templates have been adjusted since the 2013/14 planning round. For each area of DC, each financial year has its own expenditure plan. Rather than having to enter values for all five years; years are open to a degree of pre-population by adjusting assumptions on key factors such as levels of activity growth. The financial planning template combines all DC areas into one workbook. The financial information included in the templates should reflect the assumptions set out in the wider Area Team plans for DC. All financial values should be entered in 000. Cells have been colour coded depending on requirement for input. Yellow coloured cells require user input to populate data. Green coloured cells are pre-populated or are automatically generated depending on information entered elsewhere. The sections below give more detailed guidance on each sheet within the workbook. Due to recognition of the complexity and scale of the workbooks covering a five year period, you will find a demonstrative walkthrough on how to approach completing the template in Appendix A. Please submit completed plans to the Financial Performance mailbox at NHSCB.financialperformance@nhs.net in line with the submission date on the email instruction. Please also direct any queries on template completion to this mailbox. 2. Cover Input is required on this tab. Please complete all boxes shaded red in order to demonstrate sufficient ownership and sign off of the financial plan. The workbook will pre-populate the relevant sheets depending on which Area Team is selected, bringing in the relevant areas of DC for completion. 2

Please ensure that the box for quality checks is showing as cleared before submitting the plan. Further detail on the checks can be found in the quality checks tab further on in the template. 3. Area Team Summary This worksheet pulls in summary information from the other worksheets in the template. It should only be reviewed once all the other elements of the Area Team workbook have been completed. It shows the overall Area Team position as a whole, summarising each area of DC. A commentary box is included where an Area Team should add any further summary comments about Area Team DC performance. Please note, definitions of how the financial planning requirements drive the RAG criteria in this and the Financial Plan Summary worksheet are included in Appendix B. 4. Financial Plan Summary Most figures on this tab will be pre-populated on completion of other input sheets on the template and therefore it is recommended that this is completed at the end. The commentary boxes in column J require a narrative commentary on the Area Team s financial position for the relevant areas of DC. It is recommended that Area Teams use this space to link financial performance over the five year period to wider strategic and operational plans. This sheet reflects the overall Area Team position for the relevant area of DC, excluding running costs. It brings in resource allocations and expenditure from the expenditure tabs to populate a series of key metrics driven by the financial planning guidance and requirements for DC. There is a requirement to enter information for the current year (2013/14) in the yellow boxes for QIPP, usage of non-recurrent headroom fund, net risk/(headroom) and risk adjusted surplus/(deficit). The Area Team should take the latest information where available from non-isfe returns of the same month as FOT figures which are used as a starting point for the 2014/15 expenditure plan tab (see paragraph 6). The rest of the tab works automatically and there is no scope to edit the information on it; any changes or adjustments to planned expenditure can be made to the other worksheets in the workbook. Please consult Appendix B for definitions of the RAG criteria. 3

5. Allocations Financial allocations for the five year period are recorded in the Allocations worksheet. Years 2014/15 and 2015/16 will be pre-populated with the opening notified allocations and will not be open to editing in the templates. Area Teams should populate years 2016/17 to 2018/19 themselves. The allocation amounts flow through to the summary positions, calculating the planned financial performance of the Area Team for the relevant areas of DC once the expenditure information has been completed. If Area Teams have a query on an aspect of their allocation they ought to contact the Regional and/or National Team immediately. 6. Financial Plan Detail These are the main sheets of the workbook where annual spend is captured. The figures in these worksheets are a combination of manual entry and pre-populated cells based on entries in the Assumptions, QIPP, Investments and NR Fund proposals worksheets. Resource allocations are automatically populated at the top of the worksheet in row 4. This is for information while completing the template and supporting the calculation of surplus or deficit while the plan is being completed. This workbook is designed to capture all of the Area Team s application of programme resources, separating recurrent and non-recurrent items. The cost categories below are standard across DC; where a category is not relevant to an area of DC no costs should be entered against it. For additional guidance which is specific to each area of DC, please see Appendix C. The following notes give guidance on what the cost categories mean, using worksheet columns as references: Column B: 2013/14 Forecast Outturn. Area Teams are required to enter their FOT positions for the year 2013-14 across the defined categories of spend. For future years, this starting point will be automatically populated with the outcome of the previous year s expenditure plan. Column C: Non-recurrent adjustment to expenditure baseline (-). This column is designed to account for any adjustment in order for the AT to get back to a recurrent opening budget position. ATs should include here actual non-recurrent payments, income, or non-recurrent QIPP, in the expenditure baseline. This should be entered as a negative amount in this column in order 4

to come back to the recurrent opening baseline budget for 14/15 in column D. For years 2015-16 onwards this is an automatic calculation which subtracts all prior year non-recurrent spend from the baseline. Column D: Full Year Effect of QIPP and Investment (+/-). For 2014/15 include here the full year effect of any QIPP schemes from 2013/14 which started part year. The full year effect amount ought to subtracted to reach the underlying position. Similarly the full year effect of any investment schemes which started part year are to be added in here to reach the underlying position. Please treat the full year effect amount as the difference between the full annual value of the recurrent scheme or investment and the in-year amount. This column is automatically populated from years 2015-16 onwards according to information entered in the QIPP and Investment sheets. Column E: Other Full Year Effects (+/-). This is not expected to be widely used but this column allows for any other adjusting items not covered in column D. Values entered here ought to be explained in the commentary box on the Finance Plan Summary. Column F: 2014/15 Forecast Exit Run Rate (underlying Position) (+). An automatic calculation of the recurrent opening net baseline budget, taking into account the removal of non-recurrent items and the impact of full year effects as listed above. Columns G to H: Gross provider efficiency and inflation (-) and (+). Both of these costs can be entered as percentage increases in the assumptions tab where relevant for each cost category. The expenditure plan then automatically calculates the spend based on these percentage assumptions. Net tariff inflation is then calculated in column G. Any other recurrent cost pressures or adjustments ought to be built into the categories for other cost pressures in the template (column L). Column J: Activity Growth (Demog) (+). Demographic growth uplift reflecting population change (this must be derived from a published source e.g. ONS). The user must enter the relevant growth percentages as assumptions in the assumptions tab to automatically populate this area, for those areas of spend where demographic activity growth is expected. Column K: Activity Growth (Non-Demog) (+). Non-demographic Growth pressures arising from technological developments, increased prevalence etc. Again values here will be pre-populated depending on percentage assumptions added to the assumptions tab. Column L: Other cost pressures (+). This is a free cell to enter costs as financial values directly onto the expenditure template (i.e. it is not driven by the assumptions sheet). This would include any recurrent cost pressures not adequately captured by the headings in columns E to I, including CQUIN if relevant. Column M: Net QIPP recurrent (-). This is net recurrent QIPP position which is pre-populated once the AT has completed the QIPP worksheet within the 5

template. All costs entered into the QIPP worksheet will need to be allocated a cost category in order for the workbook to reconcile. Column N: Investment non-qipp recurrent (+). Investment which is not QIPP related, but relating to other service quality/developments. As above, this is pre-populated once the AT has completed the investments worksheet within the template. All costs entered on the investments worksheet need to be allocated to a cost category on the drop down menu for the workbook to reconcile. Column P: Application of NR allocation/ pass through (+). Area Teams need to enter any non-recurrent pass through costs here that the Area Team has received and has been assumed in the allocation. Column Q: Other NR Cost Pressures (net of income) (+/-). Non-recurrent pressures, investments which are not covered in other template columns. Non-recurrent items all at 2014/15 prices. Column R: Investment excluding non-recurrent headroom fund (NR) (+). Non-recurrent investments here will be pulled through automatically from the investments worksheet. This will exclude costs relating to the non-recurrent headroom fund which follow in the subsequent column. This also excludes any investment relating to QIPP which is covered in the QIPP worksheet. Column S: Non-recurrent headroom fund investment (+). This pulls through the Area Teams planned use of the non-recurrent headroom fund as entered in the NR fund proposals worksheet. Column T: Net QIPP (NR) (+). Non-recurrent QIPP will be pulled through automatically from the QIPP sheet. Please note years 2014/15 and 2015/16 require a monthly breakdown of planned spend. The total of this should reconcile back to the overall annual spend. The Primary Care worksheet contains a separate memo at row 204 on Public Health elements in Primary Care to aid section 7 a reporting. Area Teams will be required to complete this: Memo Note - Public Health s7a Reporting 000 2013/14 000 2014/15 000 2015/16 000 2016/17 000 2017/18 000 2018/19 000 Public Health QOF - - - - - - Public Health element of GP global sum Public Health in Primary Care - other Total Public Health in Primary Care - - - - - - These costs should already have been entered and included as part of the expenditure plan across the Primary Care categories. This is memorandum box to identify the Public Health element of Primary Care costs which relate to the 394m funding referred to in the 2014/15 Section 7a agreement. More information is provided in the Primary Care section of Appendix C. 6

Similarly the Specialised worksheet contains a memo at row 154. Overall costs of convergence for the Area Team should be entered against the relevant row in the financial plan detail. This memo box requires the Area Team to split out total planned convergence costs for each year across each Programme of Care. Please ensure the totals for each year come back to the total cost of convergence entered above; there is a validation check to help ensure this. Costs of Convergence Memorandum 000 2013/14 000 2014/15 000 There is also a memo box for CQUIN in Specialised. Any CQUIN costs should be treated recurrently and added in with any other cost pressures in column L. This memo box required the AT to pull out only the CQUIN element and enter against the relevant cost category for the five years. 7. Assumptions 2015/16 000 2016/17 000 2017/18 000 2018/19 000 Internal Medicine Cancer and Blood Trauma Women and Children Mental Health Other Costs Total Cost of Convergence - - - - - - From financial plan detail - - - - - - Difference - - - - - - Validation error? NO NO NO NO NO NO In order to populate future years, an Assumptions tab has been added in order to better link assumptions and costs. Percentage growth assumptions should be added where relevant for each financial year for recurrent costs. The growth percentages ought to be year on year growth, for example the percentage increase in cost against a service compared to the previous year. Years will be pre-populated with recurrent costs based on the % assumptions added in this tab. Assumptions should be added for demographic and non-demographic activity growth, gross provider efficiency and inflation. Demographic growth must be derived from a published source (e.g. ONS). Non-demographic growth includes pressures arising from technological developments, increased prevalence etc. This assumptions sheet allows an Area Team to link financial planning with other operational and activity plans, and use this information to drive future year financial plans. 8. QIPP All financial values for QIPP ought to be entered only on the QIPP tab. 7

The table in the worksheet splits QIPP into two headings: Transactional and Contractual Efficiencies: these relate to savings and investments made from providers from purchasing activity more efficiently i.e. re-procurement of diagnostics, contract conditions. Transformational and Pathway Changes: these relate to savings and investments made from de-commissioning, more effective service provision, new models of care. On this tab, Area Teams must enter the scheme name in the first column and use the drop down menu to choose which area of spend the QIPP scheme relates to (all QIPP schemes must be assigned an area of spend for the workbook to reconcile). Each QIPP scheme name might require more than one line if it is spread over different areas of spend (see example below for a fictional example in Primary Care). All Yrs 2014-15 2015-16 2016-17 2017-18 2018-19 TOTAL ANNUAL VALUE of RECURRENT SCHEMES ( 000) IN YEAR RECURRENT ( 000) NON-RECURRENT ( 000) TOTAL QIPP QIPP Scheme Name (over 0.5m) Area of Spend (select from drop down menu) Gross Saving (-) AT Investment Required (+) Net Total Scheme Saving AT Investment Net Recurrent QIPP Gross Saving (- AT Investment Gross Saving (-) (-) Required (+) Saving 14/15 (-) ) Required (+) Net Nonrecurrent QIPP Saving 14/15 (-) Total Net QIPP 14/15 Transactional Productivity and Contractual Efficiency Savings Re-procurement of existing services General Practice - GMS (1,000) 200 (800) (500) 100 (400) 100 100 (300) Re-procurement of existing services General Practice - PMS (500) 100 (400) (500) 100 (400) (50) (50) (450) Re-procurement of existing services Other List-Based Services (APMS incl.) (700) 100 (600) (550) 75 (475) - (475) Improvement of patient list maintenance Other - GP Services (500) (500) (500) (500) - (500) Scheme 5 - - - - Scheme 6 - - - - Only schemes with an annual value of over 0.5m need be listed, although there is a section which asks for the balance of schemes which fall under the 0.5m limit. In order to calculate an Area Team s underlying financial position, the form asks for the following information for each QIPP scheme entered: The total annual value of recurrent QIPP schemes this should be the full annual value of any recurrent scheme entered in the year in which it begins; In-year recurrent enter here the value of a recurrent QIPP scheme in the year in which it begins. This may be less than the full annual value above if a scheme is started part way through a year; Non-recurrent enter here non-recurrent QIPP against schemes in every year where it is applicable. The total annual value of recurrent QIPP is asked for in order to calculate the full year effect of QIPP which is not planned to be full year. The full year effect carried forward is shown in columns BQ to CC and this flows through to the Financial Plan Detail worksheet in coming to the Area Team s underlying position. It is important to note that any recurrent QIPP values must only be entered once in the year in which the scheme begins. Once a scheme is entered as recurrent in this way it automatically feeds into the following year s baseline spend; do not enter the 8

same recurrent saving each year on the QIPP sheet as this will distort and multiply the effect of the saving in the baseline position. If different projects or work streams are contained within the same QIPP scheme and there are differences in timing of initiation and associated savings or investment, please enter the individual projects or work streams on different lines. Non- recurrent savings or investment should be entered each year in the year in which they occur. For the first two years of the plan, Area Teams are required to split QIPP out between savings and investments, and the table also separates recurrent and nonrecurrent QIPP. Also, for 2014-15 and 2015-16, Area Teams are also asked to complete a monthly QIPP profile. This profile is total net QIPP, the total of both recurrent and non-recurrent savings and investments. For years, 2016-17 to 2018-19 less information is requested. There is no monthly profile and QIPP is not split between savings and investments but shown net. There is also a separate section to enter unidentified QIPP, in rows 122 to 128. Unidentified QIPP still needs to be attributed to a spend category in the drop down boxes, in order for it to feed through to the overall financial plans for the Area Team. The level of unidentified QIPP will be assessed as part of the DC assurance process. At the bottom of the tab (rows 141 downwards) there is also a box to separately identify any QIPP schemes that may require investment from other parties (other organisations or areas of Commissioning). The investment here also needs to be split between recurrent and non-recurrent. Financial information on QIPP entered on this tab will automatically populate the expenditure tabs. This sheet should be the only place where QIPP financial information is entered (with the exception of any additional risks on QIPP delivery not included in the planned figures which can be entered on the risk assessment tab, and current year outturn figures on the Financial Plan Summary). 9. Investments This sheet has been designed to capture any annual recurrent and non-recurrent investments across areas such as service quality and developments. It is important to note that these investments should not be QIPP related; any QIPP related investments ought to be entered in the QIPP sheets. Investment from the nonrecurrent headroom fund ought to be captured separately on the NR fund proposals tab and not entered on this tab. Area Teams are required to enter a free text description of the investment (in columns A, D and H) and the area of spend that the investment relates to alongside 9

the value. This value then feeds into the expenditure plans automatically. Every investment needs to be coded against an area of spend for these to reconcile. Recurrent investments should be added in rows 6-14 and non-recurrent from row 18 downwards. To simplify the last three years, only one narrative description and area of spend should be added for the three years. In a similar fashion to the QIPP example above, an investment that is across more than one area of spend might require more than one line. There is also a box in columns N to R where Area Teams need to enter the full annual value of any investments if a recurrent investment is not full year in the year it begins. The full year effect difference flows through to the Financial Plan detail worksheet. In this way, similarly to QIPP, a value against a recurrent investment need only be entered once in the year in which it is initiated. 10. Non-recurrent headroom proposals The sheet on usage of non-recurrent headroom provides a high level analysis of where Area Teams plan to apply their non-recurrent headroom for the relevant areas of DC. This sheet should be completed for all Commissioning areas, with the exception of Public Health. The amount that is annually available to invest is pulled in from the allocation sheet (as a percentage of recurrent notified allocation in line with planning rules for the relevant financial year). Area Teams are then required to add values across the investment categories for their planned usage of their non-recurrent headroom fund. This will leave a balance of funds available with no plans for usage. Commentaries should also be added for each financial value to give a brief description of what the scheme or usage is, and the benefits of using non-recurrent headroom funds in this fashion. The Financial Plan Summary worksheet will flag where an Area Team have either proposed more than the available headroom percentage or have proposed less than the amount available. It is important to note that this tab is the only area in the workbook where information on expenditure from the non-recurrent headroom can be entered (with the exception of any possible usage as risk mitigation which can be entered in the risk assessment tab and current year outturn figures on the Financial Plan Summary). Expenditure on the non-recurrent headroom should not be included in the annual expenditure tabs, as information from this tab will automatically flow into the non-recurrent investment costs in the expenditure plans. It is important to note the relationship between usage of non-recurrent headroom captured here and any values or plans to use the non-recurrent headroom fund to mitigate against risks on the Risk tab. The values used as mitigations from the non- 10

recurrent headroom must not exceed the remaining headroom funds left after proposals have been entered for any given year (row 63 on NR Fund proposals tab). This is to ward against any funds that have already been committed being double counted as extra possible mitigations should risks arise. 11. Risk The format for risk assessment follows the format used for non-isfe reporting throughout 2013-14. For the first two years, Area Teams are required to enter their full risk value and percentage probability of risk being realised which automatically populates a potential risk value amount. All risks and mitigations should be entered as a positive value. Please note that risks entered here ought to only encompass anything in addition to what has been incorporated in the planned position. As a general rule of thumb, if there is a high chance that a risk will materialise it would be expected to be shown in the expenditure tabs as part of the planned surplus or deficit position. Only include additional risks in this tab which put the achievement of the planned position at risk. Area Teams are also asked to provide meaningful commentaries against each risk figure entered, providing specific detail as to what is driving the risk and avoiding general terminology as much as possible. Area Teams are then asked to enter any mitigations that can be used to offset this risk. This is split between Uncommitted Funds and Actions to Implement. Uncommitted funds ought to include any funds available that have not been committed in the plans. Figures entered as actions to implement ought to include actions on top of funds uncommitted in order to mitigate against risks (non-recurrent measures in here includes use of non-recurrent headroom, although it needs to be ensured that usage of non-recurrent headroom already committed in plans is not double counted as a potential mitigation). Again Area Teams should enter the full mitigation value and the probability of success of the mitigation working as a percentage and the expected mitigation value will automatically populate. A commentary box is provided to show detail of what these mitigating actions are. Further down the tab there is a box for an Area Team to enter mitigations that rely on potential funding, from either other Area Teams, CCGs or the national team. Mitigations relying on potential funding From National - - From Area Team - - From CCGs - - Potential Allocations - - - - 11

These mitigations should be entered in this table and will automatically feed through to the overall risk calculation. These boxes should only be used where this a risk to the financial position which is likely to mitigated by an increase in funding available. The commentary box ought to be used to specifically call out the source of funding mentioned. For the final three years of the five year plan, Area Teams are only required to enter the potential risk value and expected mitigation value as net figures already, and provide a commentary to add detail where possible. The key figure produced by these assessments is the net risk/headroom position which is used to drive a risk adjusted planned surplus/ (deficit) position in the summary sheets. 12. Contracts There is a worksheet to enter information on contracts for each year of the financial plan, together with a restatement of 2013/14 contract performance (based on the latest forecast outturn position consistent with the position used in other areas of the template). The contracts worksheets combine all areas of DC in one, and each shows the view of contracts at an overall Area Team level. It is expected that Area Team will align its plans with those of the wider local health economy. In order to test the alignment of key assumptions Monitor, NHSE, and NTDA will reconcile provider and commissioner plans both for the two and five year submission review phases. The outputs of the reconciliation will be shared between the regional teams of Monitor, NHSE and NTDA. Every step will be taken not to prejudice the position of any trust or commissioner and no information will be shared at individual organisation level without first contacting the appropriate party. Area Teams are required to select their contracted provider in column B in the drop down menu in the yellow boxes. This will automatically populate the name of the provider across all the areas of DC. Area Teams are then required to populate the planned contract spend across the headings in each area to come to the total planned contract spend in column R. For 2013/14 this should be latest forecast outturn planned spend (including views of over performance or underperformance) and not initial contract value. These figures will be inclusive of QIPP plans for each provider, although there is a memorandum line in column S for Area Teams to enter the amount of QIPP which is planned for each provider in each area of DC. 12

The contracts data tab requires information to be split by point of delivery. If you are in doubt as to what category activity falls into please refer to the NHS Data Model and Dictionary (http://www.datadictionary.nhs.uk ). Entries on this sheet will be compared with provider submissions via Monitor or the TDA. The first section of the worksheet and the drop down menu options only cover NHS contracts. There is a section further down the worksheet in rows 211 to 217 where non-nhs provider contracts should be summed for each area of DC. In order to reconcile back to the main expenditure worksheets there is a table from row 226 where Area Teams can add a value for non-contract spend to get back to their total annual spend. This is built in as a sense check to help the accuracy of planned contract costs within overall planned spend. 13. Cash and Depreciation A cash requirement profile for the Area Team is required for the first two years of the model. Please also ensure that the memo note for depreciation is completed at an Area Team level on rows 92 and 93. Depreciation costs should be included in the overall expenditure plans. 13

Appendix A: Suggested Approach This section offers a suggested approach to completing the DC templates. As the worksheets are linked, it is recommended that the workbook is completed in the suggested order below to ensure information is meaningful during completion. Area Teams should adhere to the guidance for the relevant worksheets as above. 1. At the Cover sheet, selecting the relevant Area Team will show the worksheets that require completion. It is recommended that each area of DC is completed in stages (i..e finish the full five years for each Commissioning area before moving onto the next one); 2. Start at the Financial Plan Detail worksheet and populate the 13/14 FOT position against the cost categories provided in column B, further stripping out non-recurrent costs and FYE impacts in columns C, D and E in order to reach the recurrent underlying starting position. It is important that expenditure is entered correctly to generate a surplus in column B that corresponds with the latest forecast outturn position for 2013/14; it must reflect the latest forecast outturn position for each area of DC; 3. Use the Assumptions sheet where required to drive population of the recurrent cost categories on growth and tariff inflation in the Financial Plan Detail worksheet; 4. Enter any other recurrent non-activity related cost pressures as required on the template that are not driven by assumptions (column L); 5. Complete the 2014/15 sections on QIPP (including the monthly profile), investments and NR fund proposals worksheets, in line with the guidance for these worksheets above. This will automatically update these areas of the expenditure plan; 6. Ensure all extra non-recurrent costs are entered on the expenditure plan for application of pass through and any other cost pressures (in columns P and Q); 7. On the same tab, complete the monthly profile of spend for 2014/15, ensuring that in total this balances back to the overall 2014/15 plan; 8. Remaining on Financial Plan Detail, move down to start the 2015/16 expenditure plan worksheet and populate it in same way. Please note that the only difference is that columns B, C and D (the steps covered in 1) 14

above) will be completed automatically for years after 2014/15 as it automatically links into the output of the previous year s plan; 9. Once all expenditure plans are complete, do not forget to add detail to any memorandum boxes which can be found at the bottom of the expenditure plans in the Finance Plan Detail tab. All costs should already have been entered above; these boxes merely separately identify the relevant costs needed. 10. Following this, the Risk worksheet needs to be completed to assess any additional risk on top of the planned surplus or deficit positions; 11. Run through the Quality Checks worksheet to ensure that all information entered in monthly profiles and against contracts, QIPP, investments and non-recurrent headroom, ties back to the expenditure plans. Ensure that any validation errors are fixed before proceeding; 12. Review the Financial Plan Summary worksheet to ensure the five year plans accurately reflect the Area Team view of planned financial performance. Non-ISFE information from the same month as latest FOT position for 2013/14 needs to be entered to populate the information on risk, QIPP and use of non-recurrent headroom fund in column B. Complete the narrative commentary boxes as required; 13. Repeat the above steps for the other areas of DC as required by your Area Team; 14. When all the detailed sheets are complete for each Commissioning area, move onto the Contracts 2013/14 sheet to complete the overall view on contracts at an Area Team level; 15. Work through the later years Contracts worksheets; 16. Add any further comments on the Area Team Summary worksheet as required; 17. Complete all boxes on the Cover sheet in order to demonstrate ownership and sign off. 15

Appendix B: Financial Planning Business Rules The Financial Plan Summary and Area Team Summary worksheets are formula driven, pulling in information from the detailed sheets in order to RAG financial performance in line with business rules for each area of DC. This section defines how the criteria have been calculated. For all areas of DC apart from Public Health, the following planning rules are being used to drive the RAG ratings: 1% Surplus Target. At Area Team level, each area of DC (apart from Public Health) is required to make a cumulative 1% surplus. This is calculated on the planning templates as below: Surplus (includes non-recurrent allocation and non-recurrent expenditure) Total allocation (recurrent and non-recurrent including b/f surplus) RAG criteria: Green = 1% or greater; Amber = Between 0% and 1%; Red = Less than 0% Risk Adjusted 1% Surplus Target. Net (risk)/headroom is brought into the surplus calculation to show a risk adjusted surplus or deficit position before recalculating the surplus target percentage: Surplus+ Net (Risk)/Headroom Total allocation (recurrent and non-recurrent including b/f surplus) RAG criteria: Green = 1% or greater; Amber = Between 0% and 1%; Red = Less than 0% Underlying Surplus. At Area Team level, each area of DC (apart from Public Health) should also be planning to be in 2.5% underlying (recurrent) surplus at the end of 2014/15 and 2% underlying surplus from 2015/16 to 2018/19, calculated as follows: Surplus Non Recurrent Expenditure Non Recurrent Allocation Recurrent Notified Allocation RAG criteria (2014/15): Green = 2.5% or greater; Amber = Between 0% and 2.5%; Red = Less than 0% RAG criteria (2015/16 onwards): Green = 2% or greater; Amber = Between 0% and 2%; Red = Less than 0% 0.5% Contingency. Each Area of DC should be setting aside at least 0.5% contingency for each year in their financial plans. This is calculated as below: Contingency Total allocation (recurrent and non-recurrent including b/f surplus) 16

RAG criteria: Green = 0.5% or greater; Red = Less than 0.5% Non-recurrent headroom. The requirement % for non-recurrent headroom is calculated as a % of recurrent notified allocation. For 2014/15 the target is 2.5% of recurrent notified allocation and 1% from 2015/16 to 2018/19, for each area of DC (apart from Public Health). The plans show the difference between what has been committed and the full % that is available to be used as part of the recurrent notified allocation: Agreed plans in place for non-recurrent fund Recurrent notified allocation QIPP. There are no specific targets for QIPP plans at this stage built into the planning templates. These figures will be used to draw up comparative data during consolidation of the submitted financial plans. The formula works as follows: Net QIPP (including recurrent and non-recurrent) Recurrent notified allocation For Public Health, the planning templates will be applying the 0.5% contingency usage and the QIPP calculation. Instead of targets on surplus, Area Teams are required to break even on Public Health so the RAG status has been built to flag any Area Team projecting a deficit for this area of Commissioning. There are also no plans for non-recurrent headroom usage in Public Health. 17

Appendix C: Additional Guidance on Areas of Direct Commissioning Primary Care: From row 204 there is a memorandum box to show three categories for the Primary Care element of the Public Health Section 7a agreement. This relates to the 394m quoted in the 2014/15 Section 7a agreement. These costs should already be included within the annual financial plan detail; the following box has been added in order to specifically identify the Public Health element: Public Health QOF Public Health element of GP global sum Public Health in Primary Care - other These classifications are consistent with detailed reporting guidance that we expect to be issued for implementation from Month 9 of 2013/14. The Public Health QOF relates to the Public Health domain and should be calculated in accordance with the Statement of Financial Entitlement. (We recognise that this may change when the 2014/15 agreement is finalised.) Based on the 2013/14 Statement of Financial Entitlement we would expect the Public Health element of the GP global sum to cover the following percentages of the GMS contract value: % Cervical Screening Services 1.1 Child Health Surveillance 0.7 Contraceptive Services 2.4 Childhood vaccines and immunisations 1.0 Vaccines and immunisations 2.0 Total 7.2 We will advise Area Teams if these assumptions need to be amended when the 2014/15 agreement is finalised. Costs for Public Health in Primary Care other are likewise expected to be included within the Other Primary Care Services section of the financial plan detail, but needs to be identified separately in this memo box. This would include any Prescribing and other non-pay costs relating to Public Health in Primary Care that relate to NHS England s responsibilities under the Section 7a agreement, i.e. it should exclude costs that should be recharged to local authorities, and which cannot be allocated to individual section 7a programmes. 18

No costs for the Public Health element would be expected in the Primary Care Enhanced Services cost line as we expect these to be allocated to individual Public Health programmes. There is a line in Other for Primary Care NHS Property Services Costs. This should just include the cost of invoices relating to property recharges from NHS Property Services and Community Health Partnerships (CHP). Primary Care IT costs are expected to pass to CCGs and no costs relating to this should be entered on the Primary Care financial templates. Please note dental patient charges and prescription charges revenue has been split out separately from cost. Public Health: Cost categories have been made consistent with section 7a reporting requirements. Even though there is a category for Health Promotion, we expect the value to be nil because we consider Health Promotion to be a local authority responsibility. However we are aware that some Area Teams have been incurring Health Promotion costs and so we would like any expenditure of this nature to be separately identified in your plans in case there is a need to clarify funding responsibility. Prison Public Health and Sexual Assault Referral Services (SARC) have been included against the Health and Justice allocation and these categories can therefore be found in the Health and Justice worksheet. Enhanced Services and prescribing costs (where possible) should be coded against the relevant programme. Immunisations and vaccinations have been split into two categories: Flu vaccination Immunisation and vaccination - other Flu vaccination would include any cost against incurred by seasonal influenza vaccination programmes, for both adults and children. Any other immunisations or vaccinations should be coded to the other line. 19

Specialised: In the Other Full Year Effects column (E), please include the FYE of costs of convergence. This should only be for those bids confirmed and funded in the exercise in Autumn/Winter 2013. This should not include values for rejected bids. CQUIN is treated as an absolute figure rather than 2.5%, CQUIN should be entered in other recurrent cost pressures (column L). Please remember to identify separately Costs of Convergence and CQUIN for each year using the memorandum boxes in rows 154 to 179. 20