PSNC has announced changes to funding arrangements, including a rise in practice payments and advance payments, but increased paperwork, from April 1.

But the negotiator could not provide any update on a 2012-13 funding agreement based on the cost of service inquiry (COSI), although it stressed it was working "very hard to secure the best outcome for all contractors".

The changes, due to come into force at the same time as the NHS reforms, will see practice payments rise 8p to a total of 66.2p per item – offering some respite on last October's 15p drop.

"The additional practice payment of 8p per item will help a little, but will not make a significant difference to the abysmal financial situation many contractors find themselves in" Umesh Modi, Silver Levene	More on funding Government grants NMS six-month stay of execution PSNC announces revised methadone payment       structure CPS seeks greater acknowledgement of services       in Scottish funding
	Contractors will also receive their full estimated monthly payments upfront, as advance payments will, from the beginning of June onwards, increase from 80 per cent to 100 per cent. PSNC chief executive Sue Sharpe said the increase in practice and advance payments could help businesses as negotiations continued with the government over the 2012-13 funding agreement.

And PSNC added that it was working to negotiate payment for the additional paperwork requirements that would come into force in April.

As the NHS structure changes, pharmacists will have to ensure prescriber codes are included in their prescriptions or face delays in payment because costs for unidentified prescribers will no longer be shared across PCTs.

Although initial checks had suggested few prescriptions were missing codes, PSNC said it was assessing the burden the requirements would place on contractors – stressing that the Department of Health had recognised that pharmacists should be paid for the work.

Other changes to take effect in April will include an updated methadone payment structure and the launch of the government's supply chain finance scheme.

Umesh Modi, partner at accountancy firm Silver Levene, forecast that the changes would do little to ease the financial woes caused by the 15p drop in practice payments and category M clawbacks that came into force last October.

"The additional practice payment of 8p per item will help a little, but will not make a significant difference to the abysmal financial situation many contractors find themselves in," he told C+D.

"To put it into perspective, for an average contractor this will add up to an extra £600 a month compared to a clawback of some £3,000 a month announced last autumn," Mr Modi explained, "so contractors will never catch up with the shortfall".

And, while Mr Modi said the move towards 100 per cent advance payments would help ease cashflow problems, he said a new funding agreement was needed to give contractors certainty in running their businesses.

North-East London LPC secretary Hemant Patel cautiously welcomed the announcement. Although he expected the drop in practice payments to be well received by contractors, Mr Patel reported that morale was "very low" among pharmacists.

"What I'm hearing from my colleagues is that they're all concerned about investing in the future and many are even worried about continuing, because expenses are going up and income isn't," Mr Patel told C+D.

"On one hand there's continued bleeding due to the supermarkets, and on the other hand the NHS is reducing payments, then thirdly neither the CCGs or local health boards are offering any hope for additional service commissioning."

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