Comment / Time to speak out about tariff detail

30 May 2014 Lee Outhwaite

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Image removed.Last month the King’s Fund called for changes to the NHS payment system with different incentives to support integrated models of care. In particular, the think tank believes development work on capitated budgets needs to be accelerated. This was one of the subjects for debate at the recent national HFMA payment system conference.

There is an increasingly noisy consensus of opinion that the payment system is flawed and needs changing, but the pace of change can seem glacial. Monitor and NHS England, the guardians of the NHS payment system, have made it clear they too see the need for change. But they are also keen to avoid unnecessary instability in the current financial environment. And when they do introduce change, they insist it will be evidence-based.

This pace of change is understandable. There will be risk and instability for some organisations as a result of any payment system. The question is whether a new model will move the financial risk around between organisations more appropriately, while at the same time creating the right incentive structures to deliver services in the best setting, promote outreach and develop more clinically effective and cost-effective care. There will be concern to avoid unintended consequences as a result of change made too swiftly.

Monitor and NHS England are discussing plans for 2015/16. Again some will point at the decision not to implement the revised HRG4+ currency – seen as ‘too risky’ – as a missed opportunity. Once introduced, the greater granularity and reflection of complexity and comorbidities should in theory provide a better matching of costs and prices for some activities. 

But perhaps there is a much larger ‘game in play’ around where activity should be undertaken, as opposed to better describing it once it has happened in a non-community-based setting.

The approach taken by the two bodies in terms of consultation and looking for an evidence base for all changes should be applauded. Our job – as the HFMA, as individuals and as representatives of our different organisations – is to make the consultation meaningful. Not everything can be fixed nationally and the chance to develop local solutions to support new models of working is likely to remain a feature going forwards. But we all have an interest in ensuring the national payment mechanisms underpin the right behaviours and lead to the right outcomes for patients. So now is very definitely the time to talk about what could work better.

There are lots of areas where we can contribute. But two areas jump out in the (recently closed) consultation on pricing methodology for 2015/16. Monitor and NHS England have declared an interest in setting differential efficiency factors in the future. These could be specific to each provider, for different service types or for groups of providers. There are no immediate plans to take this forward for 2015/16 as current data is ‘insufficient’. But this is an area where the finance function needs to be fully involved.

The two bodies also point out that computed headline efficiencies delivered to commissioners through the contracting round have typically been lower than the tariff deflator – a gap referred to as ‘tariff leakage. Again, it makes sense for finance to be at the table discussing this complex issue.

It is often the finance professional who sees how a beautifully designed piece of payment system theory translates into practice, recognising that nothing ever happens in isolation. Given the size of the financial challenge ahead, and the need for transforming our models of health and social care delivery, the notion of leaving the payment system as it is, is inconceivable. So let’s give Monitor and NHS England the benefit of our experience and find our voice.

Keywords
Payment systems