Select Committee on Social Security Minutes of Evidence

Memorandum submitted by the Department of Social Security (BAMS 28)




  Overview of Medical Services

  The decision to contract out and the procurement process

  Award of business to Sema Group


  Transition and Cutover

  Role of IMPACT Contract Management Team

  Role of the Chief Medical Adviser


  Service delivery improvements

  Service performance management and achievements

  Medical quality standards and the role of the Medical Quality

  Surveillance Group

  Standards of service to the public

  Complaint handling



  Supporting delivery of Government objectives

  Service improvement and quality initiatives

  Gathering medical evidence

  Revalidation of doctors


  1.  Service level targets specified in the contract

  2.  Medical Services' examination performance: Incapacity Benefit

  3.  Medical Services' examination performance: DLA/AA

  4.  BAMS performance data September 1997 to August 1998


  1.  This memorandum provides an outline of the role of Medical Services, delivered by Sema Group on behalf of the Benefits Agency, and an overview of the process which led to Benefits Agency Medical Services (BAMS) being contracted out to Sema Group in 1998.

  2.  It describes the way in which all aspects of the service provided by Sema Group are monitored by IMPACT Contract Management Team on behalf of the Benefits Agency, including performance levels, medical quality standards, quality of service to the public, and costs. In relation to medical quality standards, the role of the Chief Medical Adviser to the DSS, and of the Medical Quality Surveillance Group which he chairs, are described.

  3.  Quantitative data relating to service levels and performance are provided as annexes to the memorandum. Data relating to the performance of BAMS in its final year are also provided.

  4.  The final section describes plans for continuing support in delivery of Government objectives, and for ongoing improvements to the service. It refers to initiatives which aim to continue enhancing medical quality.



  1.1  Medical Services, now part of Sema Group, formerly Benefits Agency Medical Services (BAMS), provides a national medical service in support of a number of benefits for sick and disabled people. Their main function is to carry out examinations, provide reports and give advice to Benefits Agency (BA) Decision Makers, who are responsible for determining entitlement to benefit. When necessary, they obtain further medical evidence to help Decision Makers reach fair and proper decisions on entitlement. Medical Services do not themselves make decisions on entitlement to benefit (they did in Industrial Injury Scheme Benefit and Severe Disablement Allowance cases until the law changed in July and September 1999 respectively).

  1.2  Medical Services' areas of specialist expertise, built on many years' experience, is in the assessment of the functional effects of disabling conditions on overall disablement; on capacity for work; on care needs and on mobility. They also determine the relevance of a disability to an accident or disease process, and the likely prognosis. Medical Services' main customer is BA but services are also provided to other organisations, including:

    —  War Pensions Agency (WPA)

    —  The Appeals Service (AS).

  1.3  There are a number of services, which can be requested by post, telephone or face to face contact. However the majority of work arrives by post and enters the organisation via one of the 12 Medical Services Centres (MSC).

  1.4  The services are organised on a geographic basis to meet the needs of customers across Great Britain. They are delivered through the MSCs, which carry out the administrative work, initial scrutiny of cases and medical quality co-ordination, and a network of approximately 180 Medical Examination Centres. These consist only of reception facilities and examination rooms.

  1.5  The workforce comprises over 200 full time doctors and approximately 1,000 administrative support staff. In addition, over 3,000 fee-paid, contracted doctors nationwide play a key role in the delivery of approximately 1 million examinations annually, either at examination centres or in the claimant's own home. The full time doctors, directly employed by Medical Services, are multiskilled to carry out the full range of benefit work. They are also responsible for training and carrying out medical quality audit, both of their peer group and of the fee paid doctors.

The Decision to Contract Out

  1.6  The existence of a medical advisory service within DSS dates back many years. Originally part of DSS Headquarters, full time doctors became part of the Benefits Agency, as BAMS, when the Agency was formed in 1991. The medical advisory service had always been largely composed of part time doctors, with a small core of full time medical civil servants.

  1.7  In the early 1990s BAMS was considered as part of the Government's "Competing for Quality" agenda for the introduction of private sector participation in the delivery of its services.

  1.8  The main aims of private sector participation included:

    —  Provision of an improved service to the public

    —  Provision of value for money

    —  Provision of greater management expertise

    —  Improvement in medical quality standards

    —  Provision of private sector investment in the service.

  1.9  BA carried out a collaborative study with a number of private sector companies to identify how the services could most effectively be delivered. The results were analysed and other internal options (such as a management/employee buyout) were considered. It was finally concluded that contracting out Medical Services to the private sector was the most likely to deliver the improvements sought and ministerial approval was obtained to this course of action.

The Procurement Exercise

  1.10  A project team (IMPACT) was set up to undertake a procurement exercise in accordance with EU Regulations and guidelines for procuring such services. BAMS was divided into three contract packages (North, South East, South West) in order to encourage competition from a range of private sector companies who would be able to bid for one or more packages.

  1.11  Following a short-listing process, five companies (Andersen Consulting, BMI Healthcare, CAPITA, EDS and Sema Group) were invited to enter negotiations with a view to awarding contracts for delivery of the services in the three contract package areas.

Evaluation of the Bids

  1.12  A full evaluation of the qualitative and financial elements of each bid was undertaken and specialists were brought in to advise in the areas of finance, security and IT. The qualitative evaluation measured the operational and business aspects of contractor proposals against a set of pre-determined criteria, including service and medical quality.

  1.13  In addition, a full financial evaluation took place, which assessed the bids against the estimated future cost of delivering the services in house (the Public Sector Comparator) using Treasury investment appraisal guidelines.

Change of Government

  1.14  At the time of announcement of the General Election, work on the procurement ceased in order to allow the incoming Government to consider whether work should continue. The current Government set the following criteria against which they reviewed this and other initiatives involving the use of the private sector:

    —  Their objectives for modernising the Social Security System

    —  Their commitment to work within the announced spending totals for the first two years of government

    —  Their aim of getting the best value for public money and of reducing the burden on taxpayers

    —  The scope to apply private sector expertise, discipline and economies of scale in procuring public services and the ability to secure increased investment from the private sector

    —  The need for continuing flexibility for government to make future changes to services

    —  The opportunities for improving the quality of service for customers, and

    —  The implications for staff.

  1.15  On 31 July 1997 Ministers announced that the outsourcing of BAMS should go ahead.

  1.16  The Invitation to Tender was then issued and the bids subsequently evaluated. Following the evaluation Ministers were asked to agree to the award of contracts. In February 1998 Ministers endorsed the recommendation to award all three medical services contracts to Sema Group for a period of five years with the potential to extend the contract by another two years.

  1.17  The decision took into account the opportunities for modernising the delivery of Social Security to make it better, simpler and more efficient. The contract set targets designed to achieve improved service levels and enhanced medical quality. It also provided the private sector with the opportunity to invest in the business and put forward different innovative and more cost effective methods of carrying out the business.

Award Of Business

  1.18  The decision to award the business to a single supplier, Sema Group, was based on Best Value for Money principles over the whole life of the contract. "Best Value" addresses not just the financial aspects but takes into account a range of quality and service aspects.

  1.19  Sema Group achieved the highest scores under both the qualitative and financial evaluations and for each of the proposed contract terms. In the qualitative analysis they clearly demonstrated greater strengths than their competitors. Evaluation of their bid demonstrated that, despite their lack of experience in managing a medical service, they had extensive experience of managing contracted services and an acknowledged reputation in the delivery of IT systems and of handling large Civil Service (TUPE) transfers successfully.

  1.20  Sema Group's proposal had a number of innovative elements and represented potential for delivering the service whilst maintaining standards and achieving service and medical quality improvements. Features of their bid included a proposal to support service delivery through improved IT systems and to move to a potentially more effective, decentralised method of operation. They also brought enhanced management skills and proposed improvements to customer service. Their proposals for improved medical quality involved development of evidence-based medical techniques.

  1.21  As part of the evaluation process, proposed sub-contractors were also evaluated against set criteria. Sema Group engaged two companies as sub-contractors, one of which was Nestor Healthcare Group plc and its subsidiary, Nestor Disability Analysts (NDA), who have extensive experience of supplying nurses and doctors to fill posts across the country. NDA's role includes provision of the required number of fee-paid doctors to Sema Group to allow them to deliver their medical services. The fee paid doctors who had worked for BAMS were invited to apply for new contracts with NDA, and most of them agreed to do so.

  1.22  Sema Group also entered into a sub contracting arrangement with Definitech Ltd to arrange for provision of reports from hospital consultants and specialists when required.

Single Supplier

  1.23  As the evaluation pointed to a single supplier for all three contracts, a risk analysis was carried out to determine whether this was a safe decision. All risks were given due consideration and it was decided that the contracts provided sufficient safeguards against these risks. In addition, selecting more than one supplier would have resulted in additional cost to the Department in excess of £13 million over a seven year period.

  1.24  There are stringent performance targets in the contract together with financial remedies, which may be imposed, should the contractor fail to deliver the service levels. Other clauses protect the Authority by providing for "Most Favoured Customer" status, the right to market test the service and to benefit from any advantages gained by the contractor should they expand the business.

  1.25  A single supplier brought advantages in terms of consistency of service and dealing with a single point of contact across the country. Business processes and IT systems would be standard, thus avoiding difficulties when contracts were re-tendered.

Contract Value

  1.26  The value of the three contracts is £305 million and represented savings of £62 million (14 per cent) against the Public Sector Comparator over the lifetime of the contract.

  1.27  The cost of delivering medical services was not maintained as a separate item within BA's accounts and was cash-based. In order to provide comparison with bids, the true cost of BAMS in its final full year of operation (9 April 1997 to March 1998) was estimated. This was done by collecting the actual cost of the various cash elements to date and adding "notional" costs such as its share of corporate costs, depreciation, etc. The total was estimated to be £85.5 million. The cost of Sema Group delivering its services in its first year (September 1998 to August 1999) was £83.8 million, but the two figures are not directly comparable because of changes in the number of cases handled and new processes introduced. Sema Group charges also reduce significantly year on year through the life of the contract.

  1.28  Payment for medical services provided by Sema Group is based on output pricing: BA pays for medical reports delivered by Medical Services which Decision Makers can use to decide entitlement to benefits. If reports are not of an acceptable quality, determined by an agreed set of criteria, then the Decision maker is entitled to return the report for it to be redone at no additional cost.

  1.29  Prices have been fixed for the duration of the contract subject to a formula applied annually which allows an index-linked price increase less a 4 per cent efficiency factor. Prices can also be changed by negotiation to reflect any changes required to the medical processes as a result of policy or other changes.


Transition and Cutover

  2.1  Following the award of the contract, there was a 5 month period of transition during which BA retained control of service delivery while Sema Group prepared their processes and systems. To ensure that all was in place for Cutover over 100 criteria were established to assess Sema Group's readiness to take over the services. These were designed to ensure that any problems were capable of resolution before the service was finally transferred, for example:

    —  Processes for smooth transfer of civil service staff, including satisfactory payroll and pension arrangements, and

    —  A sufficient number of doctors to deliver the service.

The role of the Contract Management Team

  2.2  The IMPACT Contract Management Team within BA manages the Medical Services contracts. Its role is to monitor Medical Services' activities to ensure that they meet their contractual obligations. This includes not just the quality of the services but also delivering the proposed improvements to the outputs. IMPACT are responsible for all commercial aspects of the contract. In particular, they monitor performance against Service Levels and Service Standards and ensure that invoices accurately reflect services delivered.

  2.3  The contract specifies service requirements in detail. However, it provides for changes to be introduced under a formal, controlled procedure. IMPACT manages and negotiates changes to the contract and the award of any new business. A number of minor changes and some major changes, such as those required in connection with the new Decision Making and Appeals (DMA) legislation, have been successfully negotiated.

  2.4  Regular meetings are held with Medical Services to discuss all aspects of performance, including medical quality.

The Role of the Chief Medical Adviser

  2.5  The Chief Medical Adviser is the Senior Accountable Officer to the DSS on all medical issues, and has overall accountability for the provision of medical advice in the development and maintenance of policy on Social Security benefits and War Pensions.

  2.6  The Chief Medical Adviser and doctors in DSS Medical Policy Group are at the forefront of development in the UK of disability assessment medicine, and are fully involved in national and international initiatives designed to bring a more objective and evidence based approach to the assessment of disability.

  2.7  The Chief Medical Adviser has overall accountability for medical quality standards of doctors who work for or on behalf of the DSS and its Executive Agencies. He was fully involved in drawing up and agreeing the medical quality standards specified in the contract.

  2.8  All doctors must be approved by the Chief Medical Adviser before they can undertake medical assessments for Medical Services. All medical training and guidance documents used by Medical Services must also be approved.


Service Delivery Improvements

  3.1  In the first year a number of service improvements have been introduced. A sophisticated and extensive management information system has been implemented and other IT improvements introduced. For instance, files are in the process of being bar-coded to streamline registration and tracking processes. A number of local delivery centres have been implemented at Medical Examination Centres (including Truro, Sheffield, Seven Sisters) at which all administrative functions are co-located with the medical examination function, instead of being handled remotely by a Medical Services Centre.

Service Performance Management

  3.2  Prior to transfer some aspects of service performance were not fully measured and those that were did not use a process rigorous enough for contracting. New measures had to be devised and this made subsequent comparison of performance difficult. To resolve this, information from BAMS for the 5 months prior to cutover to Sema was collected and processed in the new format. This provides the main baseline for performance comparison.

  3.3  The contract provides for a number of Service Level targets (Annex 1) which measure the time taken from a case arriving in Medical Services to the date of return to the BA.

  3.4  The contract contains a Financial Remedies regime which imposes financial charges on Medical Services for failure to meet Service Levels. This is standard practice with a commercial contract of this type.

  3.5  As the Service Levels specified in the contract were new and more stringent than had applied to BAMS, Sema were allowed a 12 month "holiday period" from the application of Financial Remedies to allow them time to bring about the improvements and deliver the efficiencies which would enable them to achieve the new Service Levels.

Service Performance achieved

  3.6  The graphs at Annexes 2 and 3 show what service levels have been achieved in the most important areas—Incapacity Benefit (IB) and Disability Living Allowance (DLA), which together represent over 80 per cent of Medical Services' workload.

  3.7  Overall, Medical Services have made very significant improvements in delivering the services. In November 1999 they met the service levels in 99 out of 124 available targets measured across the 3 contract packages. (BA had no referrals to submit to Medical Services in the remaining 31 Service Level areas).

  3.8  For Incapacity Benefit, which forms the largest part of the workload, Medical Services inherited arrears of work from BAMS and these have been progressively reduced. Since June 1999 they have been achieving the IB examination target in two of the contract areas and, after progressive improvement throughout the year, they are now meeting the target in the third area.

  3.9  Disability Living Allowance and Attendance Allowance represent the second largest part of the work, with most examinations being carried out by home visit. Problems arose initially from the new process introduced by Medical Services for scheduling home visits and, as a result, performance initially deteriorated. Following considerable effort, Medical Services recovered the position and performance has continually improved to the point where the DLA target is being met in two areas with the third missing by just 2.8 per cent.

  3.10  Performance in other areas such as Industrial Injuries Scheme Benefits (IISB) has generally followed a similar pattern, with improvements being seen in all benefit areas, and most Service Levels being achieved and maintained.

  3.11  In addition to the successful delivery of existing services, Medical Services have also demonstrated flexibility by successfully handling major changes to service requirements, such as those required to implement DMA legislation, and those for piloting introduction of the Personal Capability Assessment.

Medical Quality and the role of the Medical Quality Surveillance Group

  3.12  Medical Services have responsibility for ensuring that medical quality performance meets the requirements specified in the contract, which address the end to end quality process, covering recruitment of doctors, training, regular and accurate provision of key performance information, and Medical Services' plans for quality improvement. The Medical Quality Surveillance Group, chaired by the Chief Medical Adviser, monitors and validates compliance on medical quality issues. Its membership is drawn from DSS Medical Policy Group, IMPACT and Medical Services. The principle of the validation programme is to establish and examine the tasks and events that contribute to a quality medical report, rather than just examining the report itself.

  3.13  The contract requires Medical Services to provide regular and accurate management information data to IMPACT. In relation to medical quality, management information is provided for 33 performance indicators. These were derived prior to and during the Transition period by a working group of key stakeholders from the DSS and BA, and include such activities as:

    —  The percentage of IB All Work Test scrutiny cases where Medical Services decide a medical examination is required

    —  The percentage of IB referrals where Medical Services advise that the claimant has an exempt condition.

  3.14  Medical Services' management information reports are comprehensively analysed by IMPACT and the Medical Quality Surveillance Group, and any issues are raised with Medical Services. The Medical Quality Surveillance Group determines what further action is required. This includes:

    —  Undertaking further investigation of the management information data to clarify any apparent anomalies

    —  Requiring Sema to identify and implement appropriate remedial action

    —  Undertaking further, targeted, audit.

  3.15  Reports are provided at the level of individual Medical Services Centres, allowing the Medical Quality Surveillance Group to compare performance and arrange for further investigation of any centre whose performance is out of keeping with that of the peer group.

  3.16  Medical Services also provide monthly outcome reports of their rolling programme of medical quality audit of the work of individual doctors. The programme is based on a statistically valid sample of reports covering medical advice on all the major benefit areas.

  3.17  Disability assessment can never be a wholly objective process, depending as it does on the evaluation of a claimant's subjective symptoms such as pain or fatigue. It depends on the exercise of clinical judgement by specially trained doctors who are fully aware of the consensus of informed medical opinion, and who use their knowledge of the expected effects of a medical condition to form an opinion of its functional effects on a claimant.

  3.18  Medical Services' audit focuses on the key requirements, defined in terms of customer and legislative requirements and adherence to the consensus of medical opinion, which are essential for a report to be compliant with the quality standards specified in the contract.

  3.19  The Medical Quality Surveillance Group receives Medical Services' monthly outcome reports, together with an exception report and Medical Services' proposals for further investigation or remedial action where appropriate.

Standards of service to the public

  3.20  The contract for medical services covers a wide range of standards relating to customer service. Many of these were not in place before the contract and were introduced to place special emphasis on the needs of customers. These standards cover such aspects as travelling and waiting times, special needs for disadvantaged claimants and provision of information on Sema Group premises.

  3.21  These standards are monitored in a variety of ways, including:

    —  Mystery shopping—members of the BA undertake unannounced visits to Medical Services sites to ensure compliance with required standards. Issues raised are addressed directly with Medical Services at a local level and escalated to IMPACT if necessary.

    —  Surveys—The contract requires Medical Services to undertake surveys of claimants and BA customers. An approach was agreed, and is now being refined. The present claimant survey obtains claimants' perceptions of a variety of issues including Medical Services' appointment system, the examination process, the courtesy of staff, travelling and waiting times. Claimants are asked how they rate the service provided by Medical Services from "Excellent" through to "Very Poor."

  3.22  The findings from Mystery Shopping broadly confirm the results reported by Medical Services. Emerging trends from surveys indicate that in general claimants are satisfied with arrangements for making appointments, and with communication with administrative staff. Some dissatisfaction is expressed over delays in being examined, the length of the examination, and payment of expenses, but overall satisfaction scores exceed 88 per cent.

  3.23  IMPACT raises any issues arising from Mystery Shopping or surveys with Medical Services' Operations Manager, and Medical Services are asked to propose and implement remedial action.


  3.24  Medical Services deal with complaints relating to matters concerning their delivery of medical services, including doctors' manner, standard of service, travelling times, waiting times etc. Of these, the largest single category is complaints about doctors' manner. Medical Services are not in a position to deal with complaints or disputes in relation to decisions made by the Decision Makers to award or disallow benefit following consideration of the medical report. For complaints appropriate to Medical Services, specific targets are laid down in the contract relating to response times. Once again, these targets are more challenging than the original targets required of BAMS.

  3.25  Medical Services have adopted a pro-active approach to handling complaints. Literature issued to customers explains how and to whom they should address any complaint. In addition within each examination waiting area a wall display gives additional information about accountable officers and the complaints handling process. Local Complaints Managers have been appointed and are located at Medical Services' main centres.

  3.26  Medical Services have instituted a mechanism for investigation of complaints of a serious nature about a doctor's conduct or behaviour.

  3.27  The BA has also ensured that Medical Services have provision for reference of complaints to an independent body which examines complaints referred to them to decide if a complaint has been fully investigated and correct guidance followed. To date, 26 complaints have been referred to the independent body.


  4.1  Before cutover, BAMS had 220 employed doctors and approximately 3000 fee-paid doctors, of whom approximately 1200 carried out examination sessions, the rest carrying out medical assessments for DLA/AA in the claimant's home.

  4.2  Information is not available about the average number of sessions carried out per doctor per month in this period. Individual commitment of fee-paid doctors ranged from a minimum of two to a maximum of ten sessions per week.

  4.3  BAMS' training budget was not identified as a separate item of expenditure, but financial planning included a figure of £2 million for formal training. With the exception of IB, for which standardised training was delivered nationally, training activities were largely the responsibility of individual Medical Quality Managers at each MSC.

  4.4  Information about the number of medical examinations carried out and the average number of clients seen per session is shown at Annex 3.


  5.1  The continuing successful management of the contract and the drive to enhance medical quality will focus on the following areas:

    —  Supporting delivery of Government policy initiatives and objectives

    —  Continuing improvement in services and medical quality

    —  Identifying more effective processes for the gathering of evidence in support of benefit claims

    —  Revalidation of Medical Services' doctors.

Policy initiatives and objectives

  5.2  The Personal Capability Assessment, which will replace the All Work Test from April 2000, will introduce a new "capability" element to the medical assessment of IB claims. This will require Medical Services' doctors to develop new skills by extending their knowledge and expertise of key occupational health and disability awareness principles. Early trials of the new medical assessment have shown that Medical Services doctors can perform very well in the enhanced role.

Service improvement and quality initiatives

  5.3  Medical Services have firm plans to continue the implementation of localised service delivery which incorporates administrative and medical functions in medical examination centres. In addition they are researching a number of options to improve services in the London area which will bring benefits to claimants and reduce costs.

  5.4  Medical Services have also produced plans documenting their proposals for an enhanced IT infrastructure supporting service delivery. Some progress has already been achieved, for example in the delivery of a sophisticated and flexible management information and reporting system, and future plans build on the work already done. The computer system for processing the work has already been enhanced to provide greater emphasis on supporting and driving the business, rather than being limited to file registration and tracking functions. Medical Services are reviewing future options for further enhancement.

  5.5  Medical Services' commitment to the practice of evidence-based medicine will greatly strengthen the quality and robustness of advice to Decision Makers, and should also contribute to the undertaking of more sensitive and objective medical examinations. IMPACT and the Chief Medical Adviser are committed to encouraging more effective service delivery by this means.

  5.6  The introduction this year of the Diploma in Disability Assessment Medicine (DDAM) is already viewed by the medical and allied professions as a cardinal development which will bring acknowledged expert status to those who possess it. Medical Services' full participation in this venture is welcomed, and the DSS will collaborate with Medical Services to actively encourage the adoption of the DDAM as a mark of excellence for doctors in the field of disability assessment.

Gathering medical evidence

  5.7  As part of its modernisation of disability benefits, the DSS is currently reviewing the evidence gathering process in support of claims. The objective is to gather in the most efficient and effective way, the most meaningful evidence from the most appropriate sources. The DSS has recently commissioned a study to look at the use of health care professionals such as occupational therapists, physiotherapists, nurses, etc. in the evidence gathering process, where Medical Services may play a pivotal role in the future.


  5.8  The General Medical Council expects all registered doctors in the UK to be revalidated within the next two years. This poses a significant challenge to the medical profession in general. Together with DSS doctors, Medical Services have embarked upon an intensive programme of work to ensure that the stringent criteria for revalidation are met by all doctors working for, or on behalf of, the DSS.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2000
Prepared 20 April 2000