The disputes resolution arm of the NHS is considering an appeal brought by LloydsPharmacy relating to its attempt to have a one off ‘thank you’ £150 payment to staff during the pandemic reimbursed as a Covid-related expense.

A document published by NHS Resolution in June details how the multiple is disputing the NHS Business Service Authority’s directive that £1.2m used for the staff payment must be recovered from the total Covid costs that were originally reimbursed to it after PSNC (now Community Pharmacy England) reached a deal with the Government.

These total costs amounted to £15.3m, or £14,854 for each of the 1,030 stores that were claimed for, which the company claimed was “significantly below contractor claim averages and below initial market amounts independently estimated”.

The company is arguing that the £150 bonus payments, which were made in July 2021, are eligible for Covid-19 cost reimbursement as it claims they were designed to “recognise the period of additional work and overtime efforts” from pharmacy teams in the early stages of the pandemic.

LloydsPharmacy said that in March 2020 its management team decided “that rather than spend additional time focusing on overtime claims dispensary colleagues should focus on supporting patients for which their additional efforts would be recognised at a later stage”.

The company said that at the time it believed that “all incremental costs would be captured” due to public statements from CPE on its negotiations with Treasury.

‘Business decision’

However, the NHS BSA did not accept this argument and found that the bonus payments were “not in scope of the reimbursement of Covid-10 costs service”. It said the payments were made after the relevant claim period of March 2020-March 2021 and that they were a “business decision”. 

The NHS BSA said: “The wording and calculation of these payments can only be construed in one way and that is that these were bonus payments made to their staff.

“Contractual payment, or salary, are genuine costs that are reimbursable under this scheme, however, payments of this type would never be deemed as ‘thank you’ or ‘bonus’.  

“As these payments are a bonus, they should not therefore be reimbursed using public funds.”

It noted an email from then-CEO Kevin Birch to staff in June 2021 in which he implicitly described the payment as a “discretionary bonus scheme” and explained that it would be awarded pro-rata based on contractual hours – not the hours of overtime that an individual worked.

Lloyds ‘working closely’ with NHS on claim

The NHS BSA’s initial finding was backed up by an ‘independent internal review’ in late 2022. On June 21 this year, NHS Resolution’s head of appeals Jonathan Haley gave his preliminary finding that LloydsPharmacy’s explanation “is not enough to reasonably satisfy me that certain amounts were incurred by the pharmacy in relation to acceptable Covid-19 costs”. 

However, Mr Haley said the NHS BSA had “clearly failed” to give a “reasonable explanation” of its original decision, and so gave both parties 21 days to provide additional evidence before making his final decision.

A spokesperson for LloydsPharmacy told P3pharmacy: “In July 2021 LloydsPharmacy paid all its branch-based colleagues a one-off payment. This was to recognise the additional effort its colleagues undertook during April 2020 to March 2021. This is the period when, due to the Covid-19 pandemic, there was an increased demand for pharmacy services.”

“LloydsPharmacy is still working closely with the NHS BSA and NHS Resolution teams regarding its Covid-19 costs claim and is unable to comment any further on the details.” 

P3pharmacy asked NHS BSA whether it had received similar claims from other contractors, and what its response had been. A spokesperson commented: “The NHSBSA can confirm that other submissions by community pharmacy contractors for the reimbursement of COVID-19 costs included similar claims. 

“Where the NHSBSA identified these claims, it did not approve them for payment.”