Feature / First steps

05 March 2014

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A new pathway tariff for paying for maternity services became mandatory in April 2013. With potential to become a model for other services, Steve Brown tracks its early progress

There are big hopes for the maternity pathway tariff. Unveiled in 2012/13, it aims to incentivise better, more proactive models for meeting the needs of pregnant women, while also ensuring funding is more equitable.

But it carries wider significance. With Monitor and NHS England reviewing the payment system, pathway tariffs are seen as one of the key ways to improve the way in which services are paid for.

According to the National Audit Office, having a baby is the most common reason for admission to hospital. There were nearly 700,000 births in 2012, with maternity care costing about £2.6bn – equivalent to £3,700 per birth.

The old system for payment – paying for each individual interaction during the ante-natal period, then paying for the birth itself and postnatal care separately – was viewed as flawed, both in how it operated and in the overarching incentives it provided.

Describing the old tariff back in 2011, former health secretary Andrew Lansley said: ‘The current system pays for activity, encouraging a reactive approach that increases the chances of last-minute interventions.  Clinical responsibilities will hopefully override this, but why should the tariff and clinical quality not coincide?’

A replacement pathway tariff would mean ‘it is in the interests of the provider to be as proactive as possible for that mother, to manage any other conditions and to prevent the need for any interventions’.

The tariff also aimed to provide a fairer funding system. Under the old item-by-item payment system, different trusts recorded similar non-delivery interventions in different ways. So a woman attending the maternity ward for an unscheduled scan or consultation might be treated as a short-stay inpatient in some trusts or an outpatient attendance in others. There could be significant variation in the prices paid based on the recording convention rather than the substance of the interaction.

The new pathway tariff was introduced in shadow form in 2012/13 but became mandatory as part of the 2013/14 tariff. The pathway tariff in fact breaks down the pathway into three sections:

  • Antenatal care
  • Delivery
  • Postnatal care.

For the ante and postnatal care pathways, mothers are assigned to a standard, intermediate or intensive resource casemix category. This assignment is based on the woman’s health and social care complexities and triggers a corresponding tariff payment.

For antenatal care, this is assessed using information gathered at the booking and assessment appointment. This is again used to assign the postnatal pathway, although supplementary information gathered throughout the pregnancy and delivery can also be used.

The antenatal and postnatal tariffs replace the series of individual payments for individual observations and investigations (NZ04 to NZ10) and outpatient appointments, as well as covering some community activity previously paid for under local contracts.

For deliveries, there are just two prices – one for with and one for without complications or comorbidities (CC). For deliveries, this is a significant reduction in the granularity of the previous delivery payment system, where there were effectively 19 different healthcare resource groups covering everything from normal delivery without CC to a caesarian section with eclampsia, pre-eclampsia or placenta praevia.



Two-price approach

This greater granularity is still captured in coding and classification and providers still submit costs at this level. However, the ‘two price’ approach – which makes no distinction for method of delivery – is intended to ‘complement a culture based around normality’, according to Department of Health guidance published at the outset of the new system.

For 2014/15 – Monitor and NHS England’s first tariff – the 2013/14 rules simply get rolled forward. This includes risk-sharing recommendations – for commissioners and providers to ‘share’ any gains or losses compared with current year income. Finance managers who spoke to Healthcare Finance in the main backed the idea of paying for maternity on a pathway basis. But the first year has not been without teething troubles.

Tim Woodhead, finance director of Birmingham Women’s NHS Foundation Trust, says there is logic to paying for maternity using a pathway tariff. It oversees some 8,000 births a year and typically receives income of £34m. In 2013/14, this will rise by a modest £100,000.

 ‘But there have been difficulties operationally,’ says Mr Woodhead. ‘This has been both in terms of the paperwork we are asking midwives to collect and the commissioning arrangements we have had to put in place to support the process. It is far more complex than before and this is taking some time to resolve.’

Birmingham is not alone in this view. One of the biggest issues that emerged in a survey undertaken by the HFMA Payment System Group was the difficulty in locating the lead provider for antenatal care.

In theory, the system works simply – a lead provider is identified for each part of the pathway. This provider delivers the care and receives the payment for services delivered during the relevant period.

The reality is that other providers outside of the lead provider also deliver some care – either as part of unscheduled activity or because the woman chooses to do so under the choice initiative. This then requires the second trust to bill the lead provider. However, in the absence of a national system that all trusts could upload data to and consult, they are left asking the woman, or checking her GP details and working out the local provider.

Across England, there are also cases of double booking – for example, where a woman registers with one trust (whereupon it assumes it is the lead provider), only to change her mind and register with a different trust. The simple act of finding where to send the invoice can be extremely time-consuming.

Lead provider issues

Richard Price, deputy finance director at Dudley Group of Hospital NHS Foundation Trust, believes the definitions and process around assigning lead provider status need attention.

‘There are different approaches being taken around the country,’ he says. ‘In some parts of the country, they are using the woman’s preferred trust for the delivery episode to assign the antenatal lead provider. But for us locally, it is the organisation employing the midwife who does the booking that is the lead provider. Here, that means that if a Sandwell and West Birmingham Hospitals NHS Trust midwife does the booking but the woman chooses to have her antenatal care at Dudley, then Sandwell gets the payment, but we bill for every episode.

‘At the moment, this policy in general is increasing the administrative burden on acute trusts at a time when we all need to be reducing bureaucracy.’

Even once the correct provider has been identified, there can be issues. Some trusts have not been able to implement the pathway tariff this year because of a lack of data and systems to support it. In these circumstances, the provider who did the booking may still be getting paid per intervention (under the old system) and so not want to pay for activity undertaken by another provider.

This may need an understanding commissioner to ensure the ‘secondary’ provider gets paid. This is the case with Southend Clinical Commissioning Group, whose local Southend University Hospital NHS Foundation Trust will move to the pathway tariff in 2014/15. CCG head of finance Steven Downing says there have not been a lot of cases, but when they occur it requires extra work. ‘We have an arrangement with Southend [to pick up their provider-to-provider maternity charges], but we then have to identify if we’ve already paid someone else as lead provider for this activity,’ he says.

For some organisations, the money owed and owing in these provider-provider payments may more or less cancel each other out. ‘Operationally, the key issue is the inter-provider charging,’ says Kevin Ross, director of contracting at University Hospital Southampton NHS Foundation Trust.

‘We’ve agreed within our local provider network not to undertake this in 2013/14 as the belief was that it was not that material within a £25m service. And with the internal industry required to identify, agree and charge for it, it was just too difficult.’

Complex concerns

But Birmingham Women’s – which, as a specialist provider, undertakes more complex activity and receives more mid-pathway referrals – could not afford to take such an approach. ‘The cost of women booked with us but with activity done elsewhere is about £1m, but for women booked elsewhere but coming to us for care, it amounts to about £3.5m,’ says Mr Woodhead.

‘We need an agreed way of identifying the lead provider. There have been benefits from getting going with the tariff and introducing it early, but my frustration would be if we don’t learn the lessons at pace. It would be helpful to have greater clarity on this issue now.’

Help should arrive in the shape of the promised national maternity data system. Although this system was initially expected to be in place last autumn, its arrival – now expected in autumn 2014 – should simplify the process of identifying the lead provider.

Barbara Fittall, development manager for payment currencies at the Department of Health, says other support is also on its way. ‘We are intending to publish a code of conduct for maternity to address lots of these issues,’ she says. While this will stop short of setting requirements, it will set out standards and practices that commissioners and providers will be expected to follow.

There was a big one-off issue as the new system got under way. Clearly lots of women would have started their antenatal care under the old system in 2012/13. So should providers have received a partial payment for further antenatal care delivered in 2013/14? Or should they bill commissioners on the old per item basis? Some providers say that invoices for this roll forward still remain unpaid.


Work-in-progress issue

But moving beyond the one-off transition, there is a work-in-progress accounting issue that, according to some, still needs to be resolved. As one respondent to the HFMA survey explained. ‘There is a large amount of income paid in 2013/14 that relates to antenatal care that will be given in 2014/15, but rules around deferred income do not allow for this. Many trusts are unsure what to do.’

The 2013/14 payment by results guidance suggested that providers could simply account for the payment in one year even though the care may not all be delivered in that year. The more recent guidance from Monitor and NHS England continues to offer this as a ‘simple solution … in future’, although it also acknowledges that commissioners and providers may wish to agree apportioning the payments between the two financial years.

This latter approach – intuitively right in accounting terms – is how many areas have handled the issue.

And it appears to have been confirmed as the right approach in a frequently asked questions document published by the Department of Health last September.

It states: ‘In order to be consistent with the income recognition requirements of IAS 18, maternity pathway income for the antenatal pathway can be apportioned across financial years using the tariff refund proportions in paragraph 656 (Table 2) of the payment by results guidance for 2013/14.’

The table in question covers arrangements for changing the lead provider.

If this is the categorical guidance, it has not filtered down to all finance managers, who would welcome final confirmation of a prescribed, consistent approach.

The HFMA has raised the issue with Monitor and understands that it was discussed by a Department of Health liaison group recently. Clarification is expected to be issued as soon as possible.

Funding levels in general continue to be an issue. The Public Accounts Committee’s January report Maternity services in England said there was ‘only limited assurance that the new tariff payments would provide sufficient income to providers to deliver the Department’s objectives’. It called for a ‘detailed costing exercise’ to assess the affordability of meeting these objectives.

In reality, this is mostly an issue about the quantum of funding for maternity rather than how that money is delivered to providers. The tariffs were calculated on the basis of delivering the same overall quantum of funding as had been paid out previously under the old item-by-item payment system. So if the tariffs are at the wrong level, it doesn’t necessarily mean there is anything wrong with the tariff mechanism itself.

But there is concern among some providers that the current split between standard, intermediate and intensive pathway prices might disadvantage those with a higher proportion of complex activity. The original prices were set on the basis that 66% of women would map to the standard antenatal pathway, 27% to intermediate and 7% to intensive.

‘Specialised units have a different cost base,’ says Mr Ross at Southampton. ‘While some of the costs incurred by specialist and non-specialist providers will be dealt with in the pathway complexity, I think there is also probably a structural difference and it is unclear if this has been considered.’



Granularity call

Mr Woodhead agrees. ‘There is a widespread belief that maternity generally loses money, but the work that we’ve done here suggests that it is the very highly complex work that is the most under-rewarded.’ He suggests that greater granularity around the pathways would help.

Despite attempts to clarify what is and isn’t included, there is still confusion. So it is clear that all the ultrasound scans and screening that feature within national screening programmes are covered by the antenatal payment, but the analysis element undertaken by specialist diagnostic laboratories under a separate commissioner contract is not. But it is less clear in areas such as care and support delivered very early in the pathway – often before the usual 10-week assessment.

Mr Ross says: ‘The more clarity we can get of what is in and what is out would be welcome.’ More detail on exactly how the costs were calculated would be of particular help, he adds.

The real test for the pathway tariff is not just about getting the money flows right. It will ultimately be tested against its original aims. Has it helped create a pathway that eliminates unnecessary interventions and supports mothers proactively in the right locations?

It is clearly far too early to tell, but understanding whether the pathway payment system has underpinned and influenced the desired changes in practice could have implications well beyond maternity services.

Maternity tariff prices 2014/15

Antenatal

Standard
Intermediate
Intensive
£1,060
£1,696
£2,822
Deliveries With complications or comorbidities
Without complications or comorbidities
£2,188
£1,496

Postnatal

Standard
Intermediate
Intensive
£237
£299
£805