Memorandum submitted by the Department
of Social Security (BAMS 28)|
1. OUTSOURCING OF MEDICAL SERVICES
Overview of Medical Services
The decision to contract out and the procurement
Award of business to Sema Group
2. CONTRACT MANAGEMENT
Transition and Cutover
Role of IMPACT Contract Management Team
Role of the Chief Medical Adviser
3. SERVICE LEVELS AND STANDARDS
Service delivery improvements
Service performance management and achievements
Medical quality standards and the role of the
Standards of service to the public
4. BA MEDICAL SERVICES PERFORMANCE
5. PLANS FOR THE FUTURE
Supporting delivery of Government objectives
Service improvement and quality initiatives
Gathering medical evidence
Revalidation of doctors
1. Service level targets specified in the
2. Medical Services' examination performance:
3. Medical Services' examination performance:
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
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
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
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
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
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
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.
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
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
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
2. CONTRACT MANAGEMENT
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
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
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
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.
3. SERVICE LEVELS
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
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 areasIncapacity
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
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
Medical Quality and the role of the Medical Quality
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
The percentage of IB All Work Test
scrutiny cases where Medical Services decide a medical examination
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
3.21 These standards are monitored in a
variety of ways, including:
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.
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
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
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. BAMS PERFORMANCE
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. PLANS FOR
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'
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
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.