Health Insurance Fund: Transfer to the Consolidated Fund

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A decision made on 27 April 2011:

Decision Reference: MD-TR-2011-0038
Decision Summary Title:	Transfer from the Health Insurance Fund to the Consolidated Fund		Date of Decision Summary:	8th April 2011
Decision Summary Author:	Treasurer of the States		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Approval of the process for the transfer of £6.131m from the Health Insurance Fund to the Consolidated Fund for Health and Social Services income for Primary Care Services, the ability for H&SS to spend the additional funds and the delegation of payment approval to the Treasurer of the States		Date of Written Report:	8th April 2011
Written Report Author:	Head of Financial Planning		Written Report : Public or Exempt?	Public
Subject: Health Insurance Fund (HIF): transfer of funds to the Consolidated Fund to fund primary care by the Health and Social Services Department.
Decision(s): The Minister approved the control and monitoring process to transfer £6,131,000 from the Health Insurance Fund to the Consolidated Fund for use in funding primary care service delivery by the Health and Social Services Department. The Minister also approved the delegation of the payment approval of quarterly Health and Social Services Department invoices to the Treasurer of the States. The Minister also gave approval for the Health and Social Services Department to spend the additional income received through the process on primary care service delivery.
Reason(s) for Decision: The proposal for a £6.131m transfer was included within the 2011 Business Plan. Further, during the debate of P125/2010, the Minister for Social Security clarified that the actual transfer of funds would be for primary care services, currently provided by Health and Social Services, which would free up funds within the department’s cash limit to fund the growth and balance of savings and user pays which were required. The report to P125/2010 included a schedule of the likely primary care services to be claimed. The Minister for Treasury and Resources committed to manage the transfer from the HIF to the Consolidated Fund and to only release funds on receipt of evidence from Health and Social Services confirming expenditure in respect of primary care services. The Minister for Social Security and the Minister for Health and Social Services have both agreed the process.
Resource Implications: The process itself will reduce the Health Insurance Fund by £6,131,000 and increase Health and Social Services income by an identical amount. Health and Social Services will have the permission and ability to spend the additional income transferred.
Action required: The Treasurer of the States to approve the transfer of funds from the Health Insurance Fund to the Consolidated Fund upon receipt of invoices from Health and Social Services.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Health Insurance Fund: Transfer to the Consolidated Fund

Treasury and Resources

Ministerial Decision Report

TRANSFER OF £6.131M FROM THE HEALTH INSURANCE FUND TO THE CONSOLIDATED FUND FOR HEALTH AND SOCIAL SERVICES INCOME TO FUND PRIMARY CARE SERVICES

Background

The savings and growth proposals from Health and Social Services were considered by CoM as part of the 2011 Business Plan process and early phase of the CSR. The levels of growth required exceeded the funding available within target cash limits. It was suggested that as the longer term pressures on healthcare are likely to require an expansion of the use of the Health Insurance Fund (HIF) then an early transfer from the available surplus may provide a solution.

The proposals in the 2011 Business Plan were to fund £4.9 million of necessary growth in Health and £0.93 million of the department’s required savings from the HIF. This increased to £6.131 million as an alternative to introducing a £0.3 million user pays proposal in 2011 in respect of diabetic supplies and dietary, oxygen and continence products.

2. Business Plan 2011 and P125/2010

The proposal for a £6.131 million transfer was included within the 2011 Business Plan and an amendment from Senator Ferguson resulted in a debate on whether it was appropriate for such a transfer to take place ahead of a full review of primary healthcare services. The amendment was defeated with reference being made to the debate of P36/2010, and more importantly P125/2010 from the Minister for Social Security which proposed an interim arrangement for two years until such time as a full review of primary healthcare services and use of the Health Insurance Fund could be completed. This is now being progressed as part of the Strategic Review of Health and Social Services from which proposals for 2013 and beyond are anticipated. A further proposition to agree the level of funding for 2012 will need to be brought, probably alongside the 2012 Business Plan.

During the debate of P125/2010, the Minister for Social Security clarified that the actual transfer of funds would be for primary care services, currently provided by Health and Social Services, which would free up funds within the department’s cash limit to fund the necessary growth and balance of savings and user pays which were required. The report to P125/2010 included a schedule of the likely primary care services to be claimed.

The Minister for Treasury and Resources committed to manage the transfer from the HIF to the Consolidated Fund and to only release funds on receipt of evidence from Health and Social Services confirming expenditure in respect of primary care services.

P125/2010 was approved on 3 November 2010, subject to review by the Scrutiny Panel. However, the Scrutiny Panel decided on 16 November 2010 not to undertake a detailed review and the amendments to the Health Insurance Fund Law are currently with Privy Council. No funds are able to transfer until Privy Council approval and an appointed day is determined which should be in the first half of 2011.

3. Proposed Process

The intention is to follow a similar process for close monitoring and control of other centrally allocated funds as has been operated with both Pandemic Flu and Fiscal Stimulus. Both have involved a review by Internal Audit to check the evidence of expenditure claims.

The process would operate on a quarterly basis and Health and Social Services have identified a schedule of primary care services and estimated spend during 2011. This schedule will become the template for a quarterly invoice for the provision of services and is attached as Appendix A.

A transfer could then be made to the income of Health and Social Services department to the value of the claim but not exceeding a quarter of £6.131 million.

Internal Audit would be passed the quarterly claims to review. Before the final quarter’s claim is paid, Internal Audit would report on the accuracy of the evidence to support the expenditure. Any adjustment required as a result of the Audit Review would then be made in the final quarter.

Payment approval of the quarterly invoice from Health and Social Services could be delegated to the Treasurer and this report proposes a Ministerial Decision be prepared to agree the proposed process and appropriate delegation.

The Minister for Health and Social Services has confirmed her agreement of the proposed process and the Minister and Chief Officer for Social Security had the opportunity to comment on the process.

Recommendation

The Minister for Treasury and Resources is recommended to agree:

the proposed process for control and monitoring of the HIF transfer via the Consolidated Fund to the income of the Health and Social Services department
the delegation of the payment approval of quarterly Health and Social Services Invoices to the Treasurer of the States
Health and Social Services have the permission and ability to spend the additional income transferred.

Reason for Decision

The proposal for a £6.131m transfer was included within the 2011 Business Plan. Further, during the debate of P125/2010, the Minister for Social Security clarified that the actual transfer of funds would be for primary care services, currently provided by Health and Social Services, which would free up funds within the department’s cash limit to fund the necessary growth and balance of savings and user pays which were required. The report to P125/2010 included a schedule of the likely primary care services to be claimed.

The Minister for Social Security and the Minister for Health and Social Services have both agreed the process.

Resource Implications

The process itself will reduce the Health Insurance Fund by £6,131,000 and increase Health and Social Services income by an identical amount

Health and Social Services will have the permission and ability to spend the additional income transferred.

Report author : Head of Financial Planning	Document date : 8th April 2011
Quality Assurance / Review : Head of Decision Support	File name and path: l:\treasury\sections\corporate finance\ministerial decisions\dss, wrs and sds\2011-0038 - hif transfer - ch\wr - hif transfer - ch.doc
MD sponsor : Treasurer of the States

Appendix A

Areas of Primary Care Services currently funded by Health and Social Services Department