News / Cluster contracts to stay in shadow form

No mental health provider is using nationally specified currencies with local prices as the primary basis for contracts in 2014/15, according to the findings of an HFMA survey.

The survey of 43 mental health providers – more than three quarters of the mental health providers in England – was undertaken by the association’s Mental Health Finance faculty.

National tariff guidance for 2014/15 from Monitor and NHS England requires organisations to use national cluster currencies when setting local prices for adult mental health services ‘unless alternative currency designs or service delivery models are agreed’.

The survey confirms that the sector is still not able to draw up contracts solely on the basis of clusters. Some 68% said they would have block contracts in place for 2014/15, but would shadow the impact of using local price tariffs. A further 7% said they would have hybrid contracts, with some services covered by block arrangements and others under cost and volume.

One provider said that block contracts would cover the value of 2013/14 contracts, with new developments at tariff prices. Another said they would be running half the year on block followed by cost and volume with ‘caps and collars to manage risks’.

Nearly a quarter of the sample said they would have ‘other’ arrangements in place, including block contracts with no tariff shadowing arrangements.

However, Gus Heafield, chief financial officer of South London and Maudsley NHS Foundation Trust, said the success of the move to a cluster-based currency could not be measured by the speed with which local or national pricing mechanisms are being introduced. 

‘The real progress has been the unprecedented level of engagement with clinicians, commissioners and other stakeholders,’ he said.

‘This has enabled honest discussions on the links between activity, interventions, costs, income and, to an extent, outcomes. This open dialogue is providing a really strong foundation for the improvement of service delivery, and maintaining momentum is essential.’

Support for the use of clusters was underlined in the survey by a clear trend of growing confidence of being able to use the cluster currency in a meaningful way over the next two years.

Paul Stefanoski, chairman of the HFMA Mental Health Finance faculty, said the lack of fully cluster-based contracts was not surprising. 

‘Linking the clusters to payment – even with local prices – is a major step, but we are seeing signs of providers making progress towards this with shadowing arrangements in place,’ he said.

‘This will help local health economies to understand the likely impact of switching away from block contracts.

‘But we are also seeing an increasing confidence that using the currency will deliver value over the coming years, whether we move to national prices or not,’ Mr Stefanoski added.