Pricing authorities launch national tariff consultation

Coins

Monitor and NHS England have today (26 November) launched a statutory consultation on the 2015/16 national tariff, inviting NHS commissioners and providers to have their say on proposals for the payment system for the coming year.
  

Following a seven-month long engagement exercise, the pricing authorities have set out a raft of proposals, ushering in potential changes to the marginal rate emergency tariff, efficiency factor, and specialist services, among others.

Objections

Relevant providers and commissioners now have the opportunity to object to the methodology that underpins the proposals in the tariff document. 

If objections meet a set threshold, proposals will either need to be changed by Monitor or will be referred to the Competition and Markets Authority. Objections can only be based on the method for determining the national price, which includes data and calculations.

Proposals and changes

The main proposals and changes NHS providers and commissioners will need to be aware of are:

Efficiency factor

  • A single efficiency factor of 3.8 per cent is being applied for 2015/16, which is within the 3 to 5 per cent range proposed in the tariff engagement document.
  • The document recognises that this sets a demanding challenge for the NHS but that Monitor and NHS England believe it is achievable.
  • An impact assessment of the proposed efficiency factor suggests that almost half of providers are forecasted to end 2015/16 with a deficit (like in 2014/15) if the efficiencies were delivered in full. If 3 per cent efficiencies are delivered, almost three-quarters of providers are forecasted to be in deficit. 

Acute prescribed specialised services

  • A new local variation will see 50 per cent of prices for acute prescribed specialised services being paid above a certain baseline; this is in response to the growth in activity in this area. This baseline will be set according to 2014/15 planned activity, but will not apply to specialist mental health services.
  • This rule applies to the local prices payable by NHS England for acute prescribed specialised services, where those services are provided under a commissioning contract or proposed commissioning contract with NHS England.
  • It is not proposed that the 50 per cent retained by NHS England be spent on any defined areas.
  • An impact assessment of the proposed local variation suggests that the proposals would see NHS England spending on prescribed specialised services reduce by £170 million.

Our reaction

On the introduction of a marginal rate for acute prescribed specialised services, we said: “We're concerned that an approach described as 'risk sharing' could turn into a risk transfer of £170million from NHS England to providers and their local commissioners.

"In certain parts of the country, this could have a significant impact, as next year some providers will effectively have three price cuts hit them in one year. Monitor and NHS England should ensure that the impact of this approach is monitored and will need to focus on how local systems can manage demand for specialised services, with effective contingencies in place.”

Marginal rate emergency tariff

  • The marginal rate for emergency admissions will be revised so that 50 per cent of the price will be retained by commissioners, above a 2008/09 activity baseline.
  • There will continue to be an emphasis on retained funds being spent on reducing efforts that aim to reduce activity.
  • An impact assessment of the proposed changes to the marginal rate for emergency admissions suggests that the proposals would see NHS England spending on prescribed specialised services reduce by £170 million.

Our reaction

On the changes to the marginal rate for emergency admissions, we said: "We were clear in our response to the tariff engagement that we could support a marginal tariff as a transitional step toward a better arrangement, especially if this is on the basis of the full tariff being invested across the system for the cohort of patients who are admitted as emergencies.

"These changes in the balance of risk will be welcomed by our acute provider members. They do not though address the ultimate need for local discussions about solutions to rising emergency admissions and determining how the "remaining" tariff is spent.”

Mental health

  • Service development uplifts for mental health cannot be reflected in full, as the NHS Mandate and planning guidance has not yet been published, but the tariff includes some indications based on information currently available.
  • This includes an additional uplift of £40 million for mental health, which accounts for a 0.35 per cent uplift.
  • It is made explicit that this should be the base for local discussions about prices for mental health, effectively establishing a 3.45 per cent efficiency factor for mental health services.

Our reaction

On prices for mental health services, we said: "Following on from an unfair differential tariff this year, these proposals indicate a tough challenge for mental health providers next year. Mental health has seen a year-on-year real terms cuts in funding and a real step change in investment will be needed to make good on the commitment to see parity of esteem.”

Need for better balance

Commenting on the tariff document on Wednesday, NHS Confederation chief executive, Rob Webster, said: “We reiterate the view of the whole system, along with the Foundation Trust Network and NHS Clinical Commissioners, when we highlight that our members are concerned there is a limit to how much of the same can be done for less and are keen to stress a better balance between this and transforming care by doing things differently.

"We stress the need for a better balance between applying price cuts and achieving savings through transforming care and doing things differently. In the NHS Five Year Forward View, this was described as enabling a 'frontier shift' to establish new and better ways of working. If pushed too far, the efficiency factor in the tariff could serve to undermine collaborative local relationships at a time when they have never been more important."

View the full media statement.

Have your say

The consultation closes on 24 December 2014. For further information, please email paul.healy@nhsconfed.org

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