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DHBs increase funding for community pharmacy and commission new reviews

Carolyn Gullery Oct 2019

District Health Boards are forecasting a funding increase for the community pharmacy sector of more than $27.2 million in 2020/21, says DHB lead Pharmacy General Manager Planning and Funding Carolyn Gullery.

“DHBs are absolutely committed to supporting a sustainable community pharmacy sector to achieve equitable health outcomes, and support the needs of all New Zealanders,’’ she says.  “The importance of the community pharmacy sector has been brought into sharp focus this year during the COVID-19 response, and DHBs are very grateful for the fantastic commitment to service shown by community pharmacies as the pandemic response continues.’’

In total, DHBs are forecasting a spend of around $525 million in 2020/21 on community pharmacies.

Breakdown of new funding

The National Annual Agreement Review of the Integrated Community Pharmacy Services Agreement (ICPSA) has resulted in a  cost pressure recognition of 2.84 per cent, forecast to be around $14.5 million which will be paid through the Additional Professional Advisory Services (APAS) payment.  Additional APAS funding of around $300,000 will bring the total APAS forecast increase to $14.8 million. This is on top of $12.4 million expected underlying growth in 2020/21.

 “The APAS payment recognises the clinical services pharmacists provide to their patients that are not specifically linked to the dispensing of a medicine,” Carolyn says. “The equity adjustor applied to the APAS funding  recognises the needs of Māori and Pacific people, and Community Service Card and High Use Health Card holders.’’

Total APAS funding has been consolidated into a single pool of $32.8 million and will be calculated by market share.  “We have simplified the calculation of the APAS payment to give pharmacies greater certainty about how much they will be paid each month.”

National funding of $4.1 million will continue to be made available in 2020/21 for DHBs to commission pharmacy services to meet specific local needs. DHBs have increased fees paid for influenza and MMR immunisations by 3.51 per cent, both backdated to 1 July.

The ICPSA is an evergreen contract - it has no end-date and all current ICPSA contract-holders will continue to be funded whether they choose to sign the new Variation 2 (effective 1 October) or not.  However, providers who wish to access their share of the new $14.8 million APAS funding and increases in influenza and MMR rates, will need to sign Variation 2. Providers who remain on their current Variation cannot access the new funding.   

Details of the ICPSA Variation 2 offer can be found on the ICPSA Variation 2 page.

DHBs commission reviews

DHBs are commissioning an independent review of wage cost pressures, and a separate service and funding model review.

“We are commissioning the wage cost pressure review to address sector concerns and better understand what pressures may be experienced by community pharmacy owners in employing their workforce of pharmacists and pharmacy technicians,’’ says Ms Gullery.

The wage cost pressure review will be completed by December.  Findings will be presented to participants in the ICPSA National Annual Agreement Review who will discuss the findings and make recommendations to DHB Chief Executives about next steps.

A separate services and funding model review is also about to get under way to inform decisions about future requirements for community pharmacy services.  DHBs want to create a framework for services and funding that will support effective delivery of people-centred community pharmacy services that better address inequity - fairly and sustainably.

The Services and Funding Model Review will take part in three stages – an independent review of current community pharmacy services (August 2020-October 2020), service redesign (November 2020 – April 2021), and a funding and Pricing Model Review (May 2021 – September 2021).

DHBs and providers will consider the outcomes of the three stages of the Service and Funding Model Review, and work together to develop proposals for the redesign of integrated community pharmacy services.

More information about all the reviews, including Terms of Reference are available on our Reviews page.