The ADPF succeeds in the first of its aims by reducing variation in total practice income. This is achieved at the cost of up to 44-fold variation in payment for practices treating the same number of patients to the same level of quality. Even excluding the outlying 10% of practices, variation is approximately twofold, and we judge that the second aim of the ADPF of fair pay for workload is therefore not achieved. Finally, the ADPF will not help tackle health inequalities in Scotland since it institutionalises the inverse care law where resource distribution favours the affluent despite systematic chronic disease care being harder to implement for more deprived populations.9,10
The implementation of the ADPF therefore does not deliver two of its three stated objectives. It effectively prioritises equality of total practice income, over ensuring that resources are proportional to chronic care work actually done.
The potential financial impact of the inconsistent link between workload and reward can be illustrated by two practices, both of which have 30 patients on their coronary heart disease (CHD) register. One has a list size of 560, a higher than average prevalence (5.4%), and achieves 101 points in the CHD domain. The other has a list size of 23 324 with a very low prevalence (0.13%, which is plausible since it almost exclusively serves university students), and achieves 100.5 points. Both practices therefore have similar fixed costs in running a register, have the same number of patients to care for, and deliver CHD care of very similar overall quality. Under TDPF they would earn the same. Under ADPF, the smaller practice is (modestly) penalised by square root transformation and is paid £850. The larger practice benefits from truncation, square root transformation and inflation by relative list-size and is paid £25 063. This 29-fold variation is not the most extreme in the CHD domain, and similar examples can be found in other disease areas and for other practices.
This also highlights the inconsistencies of truncating prevalence, where the rationale is that there are fixed costs to running register and recall systems that fall as equally on practices with few patients as those with many. However, truncating prevalence fails to deliver benefits to most practices with small registers. The largest CHD register in a practice benefiting from truncation was 243 (prevalence 2.65%, list size 9154). Fixed costs will be a greater proportion of total costs in practices with <243 patients with CHD. Four hundred and sixty-three (51.3%) practices had <243 patients on their CHD register, but because their prevalence was above the truncation level, did not receive any recognition of their relatively greater fixed costs. To our knowledge there are no estimates of how large the fixed costs of running a register are, but we believe that they are likely to be small compared to non-fixed costs directly related to register size (regularly checking diagnoses and data completeness, writing letters, seeing patients in clinic). If fixed costs can be shown to be important, they would be better addressed by paying a fixed amount for registration and recall in each disease area independent of register size, or applying a truncation to register size rather than prevalence.
A further rationale for using the ADPF was to avoid financially destabilising practices. However, the initial risk of this was minimal, since existing practice income was largely guaranteed under the Minimum Practice Income Guarantee and QOF money represented new resources. Amending the payment system now would carry a risk of financial destabilisation of some practices, and any changes might therefore require transitional arrangements for practices with very large potential losses.
Our conclusion is that the ADPF makes the relationship between workload and reward in Scotland significantly variable, and in our opinion, inequitable. Additionally, it helps perpetuate the inverse care law. Although the analysis has used Scottish data, the results on variation in payment and the relationship between workload and reward are generalisable to the rest of the UK because ADPF and payment calculations are the same. However, whether resources will be systematically redistributed away from practices serving more deprived populations will depend on the relationships between prevalence, list size, and deprivation elsewhere in the UK. We believe that a system such as TDPF, where payment varies only with register size and points achieved, would be both more transparent and fairer.
More generally, the study highlights the importance of carefully modelling the effects of complex payment systems before implementation. The distributions of true prevalence and the ADPF were compared before implementation.6
However, since ADPF implementation fails to deliver on two of its explicit aims, the overall effects of adding a prevalence adjustment to a payment system that already included a list size adjustment do not appear to have been adequately modelled. This probably reflects the fact that prevalence adjustment was rapidly developed as a modification of an already complex contract in the period between the contract being agreed, and its implementation in April 2004.6
Similar problems arose with the implementation of the weighted allocation formula (the ‘global sum’) that determines the majority of practice income.6,11
In both cases, more comprehensive modelling before implementation using existing data would have identified major, soluble problems. Radical change to payment systems will always risk perverse and unintended consequences, but at least some of these can and should be avoided in the future by more rigorous testing before implementation.