For those providing NHS Dental services a key consideration is how they are paid. One aspect of this is the payments received for providing compliant premises. This is a highly technical but nonetheless important topic and this briefing note will attempt to outline in simple terms the issues arising.
In Scotland General Dental Services are provided by the NHS through the National Health Service (General Dental Services) (Scotland) Regulations 2010 as amended from time to time. Remuneration for provision of such services is made in accordance with the Statement of Dental Remuneration ("SDR").
As well as remuneration for providing General Dental Services contractors are entitled to be reimbursed certain premises costs. This briefing note provides an overview of the relevant provisions of the SDR relating to reimbursement of premises costs.
Who is eligible for rent reimbursement?
In order to be eligible for rent reimbursement (be that rent under a lease or notional rent for owned premises) a practice must have been:-
- Used for providing General Dental Services; and
- Passed a Health Board inspection.
There are slightly different provisions depending on whether or not the premises were in use prior to 1st April 2006. These are likely to have little practical effect other than for recently opened practices.
Who qualifies for reimbursement of premises costs?
There are various tests which must be met in order for premises costs to be reimbursed:-
- The contractor's name must appear in sub-part A of the first part of the dental list for that Health Board area.
- Dentists working (technically "assisting") the contractor must appear in the second part of the dental list for that Health Board area.
- The practice must be a fully or partially committed practice.
- The patient lists must be either stable or increasing.
- The contractor must be in compliance with her/his NHS terms of service.
- The practice has passed a Health Board inspection within the last 3 years.
- An accountant's certificate (technically a "declaration") setting out the proportion of NHS earnings bore to total earnings for the most recent complete practice financial year. This should be sent to the Central Services Agency by 28th February in each year.
- The contractor must either be the rent payer, the practice owner or a partner/director of the rent payer or practice owner.
Additionally, where the designated contractor is a specialised orthodontic or other specialised practice then a declaration requires to be submitted confirming the contractors in the practice accept referrals for treatment under General Dental Services for all categories of patients. This should be sent to the Central Services Agency by 30th June in each year.
If, and only if, these requirements are met does a contractor qualify for reimbursement of premises costs.
If the requisite information is submitted late then applications for reimbursement will only take effect from the late submission date. It follows that it is essential that contractors comply strictly with these requirements and maintain an audit trail of compliance.
If a practice which complied with these requirements ceases to meet any of them then the entitlement to reimbursement ceases. However, the Health Board does have the power to waive this where the failure arose due to exceptional circumstances.
What is the difference between a fully NHS committed practice and a partially NHS committed practice?
For an explanation of what is a fully NHS committed practice follow this link.
A partially NHS committed practice is one which is not a fully NHS committed practice provided that it has an average of at least 500 patients per dentist accepted for care and treatment under a capitation and continuing care arrangement with the contractors within the practice.
What costs are reimbursed?
- Where the practice premises are leased the reimbursed costs are the lower of:-
1.1 the then current market rent; or
1.2 the actual lease rent for the premises.
Most commercial leases are on terms which do not allow the rent to reduce. It follows that, if the market rent for the premises were to fall, the practice could end up with a shortfall in rent which is not reimbursable.
If the practice is not VAT registered then VAT paid on rent is also reimbursable.
- Where the practice premises are owned notional rent is payable. The notional rent is calculated as the then current market value. The notional rent is reviewed every three years. This review can be accelerated in certain circumstances (i.e. further capital investment in the practice and that investment had Health Board prior approval; or the practice relocates to new premises consistent with Health Board dental premises strategy).
Where, after 1st January 2007, practice premises have benefited from NHS capital contribution (whether with purchasing costs, building works or refurbishment) the notional rent is abated for a 7 year period. There is a complex formula contained in the SDR for calculating this abatement.
- In the case of both rented premises and owned premises reimbursement applies only to those parts which are used for providing General Dental Services. Other areas (whether used for other purposes or unused) are excluded. Where parts are communal then the reimbursement is "adjusted".
- Where practice earnings do not derive wholly from General Dental Services a pro rata abatement of reimbursement is applied. So, for example, where 20% of practice earnings do not derive from GDS the reimbursement is abated by 20%.
- There are transitional provisions which affect reimbursement when dentists change within a practice or reduce/increase their hours.
- Non-domestic rates are also reimbursable. Similar principles apply to the calculation of the precise amount reimbursable as apply to rent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.