News / Fundamental change for urgent care payment plans

29 August 2014

Login to access this content

By Seamus Ward

Monitor has proposed a ‘fundamental change’ in the approach to payment for urgent and emergency care to support implementation of the Keogh review.

The proposed payment approach was outlined in a discussion document on options for reform, Reimbursement of urgent and emergency care. The system would have three elements:

  • Payments for fixed and semi-fixed costs to reflect the ‘always on’ nature of providing emergency services
  • Volume-related payments to help providers manage unpredictable fluctuations in demand and share risk with commissioners
  • Provider-specific and system-wide metrics to maintain the quality and safety of care.

Monitor pricing development lead Jyrki Kolsi said: ‘This document sets out some options for a fundamental change in how we think urgent and emergency care could be paid for. We want to test the concepts with the sector before working out detailed options for the new payment approach.’

The new system will support delivery of the Keogh review on urgent and emergency care, which recommended giving those who need it better access to specialised care and care closer to home for those with less serious conditions.

‘This would require the local urgent and emergency care systems to work as a connected whole,’ he said. ‘We think, and we have heard from the sector, that the way different providers in the system are paid is fragmented and is getting in the way of encouraging the service to work together.’

Mr Kolsi said the fixed payment element was a key part of delivering the Keogh vision for providers to coordinate capacity planning and operations. Most urgent and emergency care costs were fixed or semi-fixed. The document said that at current activity levels unavoidable fixed and semi-fixed capacity costs accounted for 47% (a rural minor injuries clinic) to 100% (NHS 111 call) of total emergency care costs.

While it was too early to say how the relative proportions would be reflected in the fixed element of payment, he said it would be a key factor in the regulator’s thinking. 

The third element of the proposed mechanism – quality metrics – would be used as eligibility criteria for different rates of fixed and volume-based funding. They could also act as the basis for penalty and bonus payments to support service change and quality improvements in providers or across systems. But these metrics are still in the early stages of development.

Mr Kolsi acknowledged the concept was ‘somewhat new’ and ‘untested’ in the NHS. But there would be a transitional period, possibly starting in 2016/17, depending on testing.

‘We are committed to developing and testing this in the NHS with volunteer local areas and generating more evidence before decisions about a potential national roll-out. The urgent and emergency care review is a transformative and fundamental reform. It is not a sticking plaster and because of that we need to get it right.’

Monitor hopes to develop the system so that some local health economies adopt it in 2015/16.

Foundation Trust Network head of analysis Siva Anandaciva said the Monitor paper showed the marginal rate for emergency admissions underfunded providers by failing to take account of their fixed costs. ‘We must set future payments at a level that reflects the true costs of service delivery, otherwise the new payment system will simply cut up the pie differently without addressing the fundamental problem,’ he said.

Monitor has asked for responses to its proposals by 9 September.