REPORT BY THE COMPTROLLER AND AUDITOR
GENERAL: THE MEDICAL ASSESSMENT OF INCAPACITY AND DISABILITY BENEFITS
MEMORANDUM SUBMITTED BY THE DEPARTMENT
OF SOCIAL SECURITY UPDATING NAO's REPORT (PAC 00-01/91)
The NAO Report refers to a number of issues
relating to the medical assessment of incapacity and disability
benefits and the action being taken to address them by the Department
and SEMA, including renegotiation of parts of the contract. The
purpose of this memorandum is to inform you of the progress made.
Much of this progress is the culmination of
work undertaken to implement the recommendations from both the
Social Security Select Committee Report published on 2 April 2000
and the NAO Report. References are to paragraphs in the NAO Report.
We anticipate reaching agreement with SEMA on
a new pricing structure for medical assessments, primarily intended
to meet concerns that SEMA were incentivised to clear cases by
scrutiny rather than by medical examination (paragraph 3.25).
Separate prices will be introduced for scrutiny and examination
work whereby SEMA will receive a similar commercial return for
We also propose to incorporate into the contract
the four targets announced in the government's response dated
27 July 2000 to the Select Committee Report (paragraphs 3.8, 4.29
and Appendix 9). SEMA has been working to achieve these targets
for some months and effective monitoring mechanisms are already
in place. This will put the targets firmly onto a contractual
To ensure there is no misunderstanding on which
cases should be cleared by scrutiny and which should go for examination,
clarified guidelines were introduced in November 2000 (Executive
summary paragraph 14 and paragraph 3.24). The new targets include
one for 95 per cent compliance with the guidelines against which
SEMA's conformance is being closely monitored.
Prior to the clarification of the guidelines,
the rate of examinations had fallen to below 40 per cent of those
scrutinised. The effect of the clarified guidelines has been to
increase this to nearer 70 per cent. This is higher than we believe
to be appropriate and will be studied carefully as part of the
management of the contract. Our research has indicated that around
55 per cent of cases could be expected to go forward for examination,
though there is a possibility that this should be lower. It is
planned to issue further advice to SEMA, aimed at encouraging
doctors to be more proactive in seeking medical evidence, thus
ensuring more accurate targeting of cases for examination.
Although the Select Committee was concerned
about the falling numbers going to examination, as recognised
in paragraph 3.23, it is also important that customers who clearly
satisfy the conditions for incapacity benefit should not be subjected
to examination unnecessarily. This would cause distress to customers
and carry a high administrative cost.
The NAO Report highlights (paragraphs 3.12 to
3.17) the shortage of doctors as a growing problem and sets out
the actions that SEMA had in train. In practice, service levels
began to fall in the summer of 2000. The most significant effect
was concentrated in one or two geographical areas initially, though
all areas showed some signs of difficulty in providing adequate
fee-paid doctor capacity for incapacity benefit.
SEMA has introduced a range of initiatives to
recruit more doctors and to make better use of the doctors they
have, with some positive results. By September it was becoming
clear there was a significant problem. In addition, the introduction
of the clarified scrutiny guidelines in November 2000 increased
the demand for incapacity examinations substantially. Capacity
became over stretched. The Department therefore decided reluctantly
that it had to limit the flow of cases to SEMA by holding back
cases in some District Offices as a temporary measure.
It is recognised that this issue will have an
effect on programme expenditure, however, there is no immediate
alternative, as sending cases to SEMA would simply increase the
Research was carried out by Nestor Disability
Analysis, the subcontractor responsible for employing the fee
paid doctors, to identify the causes of the shortfall in doctors
and to determine how it could be resolved. The level of fees,
which had fallen behind other government departments and external
rates, was undoubtedly a major factor.
SEMA announced on 6 March that a 15 per cent
increase in fees will be awarded from 1 April 2001 in addition
to the 3 per cent awarded in September 2000. This will be coupled
with a vigorous recruitment campaign. The Department has agreed
to fund half of this increase, at a cost of around £2 million
a year, in return for a number of improvements to the contract.
SEMA expect this to resolve the capacity issue
and allow the restoration of full processing by December 2001.
In return for the Department's contribution
to increasing doctor fees, SEMA has agreed to a number of conditions
and improvements, including:
All monies paid by the Department
to go directly into doctor fees;
From 1 April 2001 SEMA will move
onto a fee-per-case basis;
An appropriate form of Open Book
accounting arrangements will be introduced;
New targets have been introduced
for handling complaints and official correspondence; waiting times
for customers; provision of like-gender doctors and interpreters;
and ensuring fewer customers are turned away without examination
(as recommended on Page 7 paragraph (i) of the NAO report).
Department of Social Security
10 March 2001