Individual Service Funds Vs Direct Payments – Which one is best?

What is a personal budget? 

 

Personal budgets are designed to give people more choice and control over their care and support plans. Individuals are given a choice as to how they would like their care and support to be managed.  

A personal health budget however, uses NHS funding to create an individually agreed personalised care and support plan to offer people of all ages better choice and flexibility over how their needs are met.  Typically this is offered to individuals who suffer from long-term health conditions or disabilities to offer them the opportunity to mange their own health and support more efficiently.  

Both budgets are based on an assessment of every individual’s healthcare or social care needs and is used to purchase a variety of services and support such as personal care, equipment, therapies, and respite care.  

An integrated personal budget is for your healthcare, support needs, and social care needs and works in a similar way to personal budgets.  

Implementing the different types budgets can differ depending on the model used. Some individuals may receive it as a direct payment others may have a third party organisation or a specific care team manage it for them. Clause 11.30 in the Care Act explains how there are three main ways in which personal budgets can be deployed and these are: 

1. Managed Budgets – Here is where care and support is arranged on the behalf of the individual  
2. Direct Payments – Here is where the individual is paid the funds directly  
3. Individual Service Funds – Here is where the budget is paid to a provider who manages it on the behalf of the individual 

Regardless of the model used, the main goal of personal health budgets and personal budgets is to encourage co-production and collaborations between individuals and healthcare professionals to ensure the individual receives the best care and support possible.  

Individual Service Funds (ISFs) VS Direct Payments – What’s the difference? 

Whether a local authority, an individual, or a family choose to use an Individual Service Fund (ISF) or a Direct Payment  knowing what each type of budget offers and how it works is crucial in deciding which is best for your situation.  

Individual Service Funds (ISFs) in social care allow individuals to choose a provider to manage their personal budget. That provider then works collaboratively with the individual to find, arrange, and pay for the appropriate care and support which they need. They were formally introduced in the Care Act 2014 as an option for commissioning self-directed support.  

Often through using an ISF individuals get a far greater choice of care and support than they would if the Council operated a managed budget. ISFs also remove the administrative burden and responsibility of looking after the funds and instead encourage a co -production approach to arranging care.  

Direct Payments, alternatively, are personal budgets which get paid directly to the individual to manage and purchase their own care and support. They were designed to promote choice and independence over people’s care and support. The idea was that services bought and chosen by an individual would be more personalised and would improve people’s health and wellbeing better. By having control over the funds recipients can customise their care arrangements according to their preferences and needs.  

When Direct Payments are done well it can promote a person-centred approach to care, as well as help empower individuals and enable improved wellbeing. However, not everyone uses this budget in the way it was intended so in many cases Direct Payments are not always appropriate.  

What can Individual Service Funds (ISFs) and Direct Payments be used for? 

 

What is good about both ISFs and Direct Payments is that you can be very flexible and creative in how they are used to improve someone’s health and wellbeing. It is important however the funding is used correctly and paid for the right services so you are challenged with the risk of fraud. Some examples of how to use the funding correctly include: 

• Employing personal assistants to help manage budgets better  
• Purchasing services from agencies or community micro enterprises  
• Support to get out and about e.g. to doctors appointments or food shopping  
• Short breaks/replacement/respite care  
• Community activities/joining local groups 
• Day to day activities e.g. dressing, cooking, cleaning  
• Assisting access to training and employment  
• Buy equipment for home adaptations e.g. assistive technology or technology enabled care  

ISFs and Direct Payments guidance – Who controls the funds? 

The Care Act states that everyone should get the social care support they deserve if you can’t do certain things and have ‘eligible needs.’ These eligible needs are assessed and do not take into account health needs. If however, the assessor thinks health needs also need to be addressed a joint assessment with the NHS is then conducted.  

It is important to remember that Direct Payments, ISFs and NHS Continuing Healthcare may work in similar ways but Direct payments and ISFs are personal budgets not personal health budgets and therefore they do work differently. 

Both ISFs and Direct Payments are controlled by local authorities as once tested social services pay the funds, but ISFs have an extra step. This is where either social care services or health commissioning authorities write up an ISF agreement once an individual has decided who their ISF holder will be.  

The Care Act 2014 does encourage local authorities and health commissioners however, to maximise the use of ISFs as a way of commissioning flexible support. For this to happen health and social care organisations need to adjust their procurement and financial arrangements, such as what local authorities should or shouldn’t do if ISFs are available locally, as well as how best to adapt the commissioning cycle to develop an effective ISF offering such as with procurement.  

For example, as previously discussed ISFs are commissioned on behalf of an individual and this works well from a procurement perspective when its commissioning is organised through either a framework or a Dynamic Purchasing System. This is because it is essential for ISFs to be open to new providers joining over time to accommodate to change as both the market builds and as care needs change.  

It’s worth noting that regardless of the personal budget used, it is always useful to see what additional guidance is available, especially as legislation changes. This could be from looking at The Care Act itself as well as other resources including Think Local Act Personal’s Paper ‘Individual Service Funds (ISFs) and Contracting for Flexible Support.’  

So before any process of personal budgets are used it’s always worth seeing what additional guidance is out there to ensure all legislation is being followed and that no individual will be put at risk for not receiving the care they need.  

Individual Service Funds (ISFs) VS Direct Payments – Who are they best for? 

ISFs are best suited for individuals who require support and assistance with their care needs but prefer a more person-centred and flexible approach to service provision. Direct Payments on the other hand, are best suited to individuals who desire more control over their care and support arrangements and want to play a pivotal role in making their own care decisions.  

The table below summarises who else would benefit from each type of personal budget. 

Individual Service Funds (ISFs)

Direct Payments

Individuals with complex needs   ISFs are well-suited for individuals with multiple or complex care needs. It allows them to coordinate and integrate various services from different providers to ensure their support is tailored to their specific needs.   Individuals who want to remain independent  ISFs allow individuals to be empowered and take charge and responsibility of their own care so they have more flexibility in deciding how their support is delivered.   Individuals who need sustainable and long-term continuity of care   ISFs work well for individuals living with long-term conditions as it can offer a consistent level of support to be delivered. ISFs allow individuals to have control over their funding so they can build and maintain trusted long-term relationships with their chosen care providers.

Individuals with specific cultural or language needs   Direct payments offer individuals the opportunity to select care providers who understand their cultural and language preferences. This helps to promote a more culturally sensitive and responsive approach to care   Individuals who need more flexible care  Direct Payments provide the flexibility to adapt care arrangements as needs change quicker. Through the individual managing their care arrangements themselves, they can easily adjust the type, how often and the duration of services they use when they want, to ensure their care remains responsive to their changing needs.   Individuals who want more involvement and control   Direct payments encourages more independence, active participation, and decision-making from the individual and their support network. It values individuals having a greater say in their care and enables individuals to live life on their terms to help delay further future care needs.

 

It is clear from the table above both types of personal budgets can work well for a variety of individuals. Whilst both encourage independence it is clear ISFs may work best for individuals who need more guidance in deciding which care and support is best for them. Whereas Direct Payments allows individuals to have more control and work collaboratively with other stakeholders to make the decisions which are right for them and can avoid longer waiting times for changes to take place.  

ISFs VS Direct payments – What are the advantages and disadvantages of both? 

 

Like already discussed  both of these personal budgets can be beneficial for different people, however there are some more generalised advantages and disadvantages for both. The table below summarises these.  

	ISFs	Direct Payments
Advantages	More choice and control with what providers they want to work with and how their personal budget is spent   Improved outcomes   Make better use of the individual’s and the communities assets to meet care needs   More flexibility in deciding how the budget can be used to creatively meet needs and achieve decided outcomes   Sustainable continuity of care   Care plans can be easily adjusted without having to involve local authorities  Provides a middle option for choice and control between managed services and direct payments	Offers more flexibility over how your care and support is arranged and provided to make it even easier to adjust as care needs change  Promotes a more advanced person-centered approach through allowing individuals to select caregivers that understand their potential language barriers, cultural backgrounds, and more unique circumstances   Better continuity of care   Improved quality of life – individuals have the opportunity to enhance their quality of life the way that they want to   Enhanced independence   Improve confidence and self-esteem   Improved outcomes – individuals who have more control over their support are more likely to experience positive results
Disadvantages	Long processing times   Risk of overspending or making incorrect financial decisions   Risk of working with incompliant providers   Limited support   Complex decision – making   Limited provider choices   Complex financial management skills are needed	Increased responsibility and workload   Risk of being overwhelmed by the workload   Risk of overspending   Risk of inadequate budgeting   Risk of financial abuse or fraud   Limited provider choices   Limited support and guidance   Complex legal and administrative procedures can be overwhelming

 

The table above clearly demonstrates a variety of advantages and disadvantages across both types of personal budgets. It also shows how some are very similar for each. For example both offer more flexibility when arranging the care and support needed. Direct Payments do however seem to offer even more flexibility as with the individual being in charge of their own funding as they can change their support plans straight away without needing to inform 3rd parties or local organsiations.  

However, where time might be saved in Direct Payments when care needs change it may take longer to complete the administration tasks and processing tasks. This is because in order for an individual to feel confident in the processes they will need to understand all the legal and administrative procedures fully, and these can be quite complex and time-consuming.  

ISFs can be good as they offer a good middle ground between managed budgets and direct payments. Here with an ISF, individuals can still have the control and choice they want in shared decision making on their care and support but there is some support and guidance there to help.  

Both types of personal budgets however do run the risks of overspending, inadequate budgeting, and issues with providers whether that’s a limited choice or that providers are incompliant to their needs.  

ISFs make the best use of the resources they already have available whereas direct payments relies on the individual doing a lot of the work and research themselves which can run the risk of individuals being left overwhelmed with the workload. Of course loved ones can help arrange care, but they cannot have the funding paid to them unless it has been agreed by the local authority.  

What direct payments do offer, however, is more enhanced independence, an increase in self-esteem and confidence, as well as the likelihood of better outcomes. This is because it is suggested that the more involved individuals are in the decision making of their care the more likely they will have a positive experience.  

Both demonstrate great alternatives to managed budgets to give individuals more choice and control in the decision-making of their care. Whilst ISFs may have longer processing times it does offer a good middle option where support and advice about local resources can be shared quite easily. Whereas direct payments offer more flexibility and more independence but at the risk of the individual becoming overworked due to the admin and legal responsibilities all being down to them.  

How to overcome the barriers of ISFs and direct payments? 

 

After reviewing both the advantages and disadvantages of direct payments and ISFs, in order for either of them to be successful collaborative working must happen.  

Whether a local authority decides to use one type of personal budget or both your first step is to always pilot a method with a small targeted group in your community, that way you can see the successes and potential barriers that you could face before scaling and rolling it out more widely. There are also a variety of other things you can do to ensure all personal budgets are arranged successfully including: 

1. Setting up regular forums between commissioners, providers, individuals, and caregivers to problem solve and share experiences together  
2. Consider joint training on how the processing and administrative tasks work for all participants involved to ensure everyone is working and using methods the same way 
3. Produce easy and accessible resources for people, families, providers, and caregivers of what is expected and how best to manage budget regardless of the personal budget used  
4. Make sure all providers involved follow the same goals and approach as your local authority e.g. are they creative, collaborative, and person-centred  
5. Have open and transparent conversations with providers about financial management what is expected, what the budget is, and how you plan to stick to it  
6. Allow for time – being able to creatively support planning happens best when it happens naturally and it isn’t rushed. Allowing time for changes to be made is crucial  
7. Ensure that individuals using direct payments are still offered the same levels of support as those who use an ISF  
8. Decide what metrics you will use to monitor personal budgets from the start  
9. Celebrate and share successes with neighbouring local authorities to make the best use of your resources and providers around you  

What is clear from these 9 tips in overcoming barriers when implementing either an ISF, direct payment, or both in your local area is that communication, collaborating ideas, and sharing experiences with other stakeholders, commissioners, and providers is crucial to ensure individuals have the access to the services they really need.  

By being more transparent about the processes involved with personal budgets your local authority can also reduce the risk of overspending and the risk of fraud as clear communications can show what the funding can and cannot be spent on without any confusion.  

What is great about both ISFs and direct payments is that it offers local authorities and individuals the chance to be more creative and flexible with their budgets so the best person-centred care possible can be delivered without going over budget. 

Summarising which personal budget is best for you? 

In this article we have reviewed the difference between personal budgets and personal health budgets as well as the different  types of personal budgets an individual can use.  

Direct payments offer more choice and control for the individual as the funding gets paid directly to them to purchase the care and support they need. However, Direct Payments are not being used how they were initially intended. The uptake of them has been relatively low for a few reasons including: 

• There are too many challenges faced by an individual finding and choosing appropriate types of care that are most suited to them  
• The administration processes required for an individual to receive the payments are complicated and can be time-consuming to understand the processes 

Councils sometimes have appointed Direct Payment Support Providers to assist people in managing their Direct Payments. This can be a valuable service as it can help people access the care they need and improve their choice of support options. However, often individuals are pushed towards a small group of organisations who charge a fee either to local authorities or to the individuals themselves for basic administrative functions. Whilst this can be effective, when there are alternatives like ISFs it’s always important to consider how each could and could not benefit you before you make a decision.  

Individual Service Funds are a step in the right direction because with an ISF an individual chooses a provider to manage their personal budget. That provider will work collaboratively with the individual to find, arrange, and pay for the care and support needed.  This often leaves individuals with a greater choice of providers and the admin burden being taken away from the individual to allow them to have one less thing to worry about.  

Here a good ISF provider can help an individual find a range of providers who can meet their needs. As the ISF provider remains involved throughout the process, (instead of being simply an administrative process advisor). Here the individual can have a completely flexible and dynamic care and support plan. 

It is clear however the success of a using a personal budget depends on what an individual wants. If an individual wants complete control and doesn’t mind both the legal and administrative procedures they must follow to have more independence, Direct Payments is probably the best option. If however, an individual wants to be more involved and collaborate more with other stakeholders but does not want the responsibility of the admin an ISF might be the best approach.  

Regardless of whichever approach is used having support throughout the process is crucial to help you communicate experiences and share resources with other organisations and stakeholders across local authorities.  

Adam Directs offers a way to help individuals find and manage their own care including payments by using our platform. Here our platform allows organisations to register as an approved supplier so individuals can find the appropriate care that matches their specific needs quicker.  

Our Access Adam Care Commissioning platform also helps onboard fully compliant providers regardless of the care need to ensure there are at least 3 care providers per request so no individual is limited on their choices.  

Another way to find out how to best to organise and manage care is through discovering our local government software where we have suite of solutions to help individuals maintain their independence, delay future care needs, whilst keeping individuals safe. Our technology helps manage, arrange, and gain better market insights across the whole care continuum from digital telecare to demand modelling to help ensure your local authority can cater to all care needs appropriately regardless of the personal budget used.  

For more information contact us today and we can show you first hand how our commissioning solution can help make onboarding the care providers you need even easier.