Legal costs could see CCGs allowances 'wiped out'

Last week HSJ revealed a typical CCG could have as little as £1.6m to pay for the ringfenced “running costs” of commissioning, after fixed costs had been taken into account. The figure is based on a Department of Health “ready reckoner” which assumed CCGs would get £20 per head to commission services.

Hempsons partner Nadya Wolferstan told HSJ that, with only a small amount for running costs, commissioners would have little left for the “contingencies” that would have to be funded from the allowance. For example, there would be legal challenges to defend at judicial reviews arising from exceptional treatment, and individual funding requests from patients.

There were also “larger costs associated with reconfiguration and shutting down hospitals” which CCGs will have to meet but may share with other commissioning bodies, she said.

HSJ understands that primary care trusts regularly have legal bills of more than £50,000 for legal challenges relating to moving or decommissioning services. Larger, more complex reconfigurations involving hospital closures can result in bills totalling more than £200,000.

Ms Wolferstan said that CCGs could also expect to face legal challenges against decisions to award contracts to provide services.

As a result, she said, CCGs may become “risk averse” or be forced to come together to pool risk, otherwise legal costs could “wipe them out”.

PCT Network director David Stout said: “PCTs have not had a ringfence [for running costs] so would have dealt with [legal costs] out of wider budgets.

“If you’ve got a fixed running cost amount it would not be wise to commit it all because there will always be things you don’t know about. The tighter the budget the more difficult that gets”.

NHS national director for commissioning development Dame Barbara Hakin told HSJ the administration cost “ceiling” was still being calculated by the DH but it was expected to be between £25 and £35 per head of population.

She suggested CCGs make use of the ready reckoner to make plans based on a range of possible figures.

Dame Barbara said the figure was being calculated from previous commissioning administration costs – reduced by 30 per cent as required by the government – and divided into “fair shares” for those taking on commissioning – mainly CCGs, the NHS Commissioning Board, Public Health England and local authorities.

Therefore, she said, CCGs were not being given an unjustly small amount.