News / Monitor and NHS England lay down plans for stability tariff

By Steve Brown

Monitor and NHS England have confirmed that the approach to their inaugural tariff next year will be based on stability, with 2014/15 prices based largely on this year’s prices.

A discussion paper from the two organisations, which assume responsibility for the payment system from 2014/15, said the list of nationally mandated services and their prices ‘will remain very close to the 2013/14 list’. 

‘During this time of change for the NHS, we recognise that commissioners and providers need the payment system to be predictable,’ the paper said.

Tariffs next year will not be updated in line with the 2011/12 reference costs, but will remain largely based on the prices set for 2013/14 (based on 2010/11 reference costs).

Only ‘essential system-wide adjustments for factors such as efficiency, inflation and clinical negligence scheme for trust’ would be made, alongside ‘very few changes to healthcare resource group (HRG) design’.

Healthcare Finance understands that this latter point is likely to involve a small number of HRG deletions and replacements – although the changes will have an impact on a slightly broader range of HRG prices.

The discussion paper – How can the NHS payment system do more for patients? – gave no specific plans for 2015/16, but said that changing the payment system would take time. ‘Changes to this system will not happen overnight, and it is important we get this right,’ said NHS England chief finance officer Paul Baumann.

Underlining this, Jason Mann, Monitor’s interim director of pricing, told Healthcare Finance that there would be no big-bang change to reimbursement in 2015/16.

‘My suspicion is that we’ll start to see some significant things in 2015/16, but it will take quite a few years before we start to get a lot of changes in a lot of areas.’ 

He added that the collection of patient-level cost data – starting this summer – would provide better understanding of cost drivers. ‘This will allow us to start thinking about different types of reimbursement for different types of service,’ he said.

The two bodies committed to developing a payment system that covers the ‘whole range of NHS care’, while recognising the need for different payment models for different services and flexibility to encourage innovative service delivery.

The existing payment by results (PBR) system had delivered benefits, but there were concerns that it was not sufficiently patient focused, not always based on good-quality information and sometimes acted as a barrier to integrated care.

They said a future payment system should:

• Reimburse for outcomes, not treatments or inputs
• Promote the long-term sustain-able wellbeing of the whole person
• Allow for different approaches to suit patient need, with flexibility within a clear structure of rules
• Provide clear signals to providers and commissioners on their service choices.

Paul Briddock, chairman of the HFMA Payment by Results Special Interest Group, said the discussion paper corresponded largely with issues raised at a recent workshop run by the association with Monitor and the King’s Fund. Changes were needed to support service transformation, he added.

‘Members have told us that they want to see a comprehensive system that is not overly complicated and strikes the right balance on risk sharing between commissioners and providers,’ he said. ‘It is good to see Monitor and NHS England broadly identifying the same goals.’

While they are developing a payment system for the longer term, Monitor and NHS England recognise the need for immediate changes to PBR.

In particular, they want to encourage local experimentation to support service redesign.

Four reviews of existing policies are already under way on:

• Flexibility rules
• The 30% marginal rate rule for emergency admissions (see box)
• Reimbursement of the treatment of very complex and costly patients
• Mental health reimbursement.

Much earlier engagement with the NHS will start in June when they will set out plans for the structure of a revised national tariff document. Prices will be published at 2013/14 levels, taking account of the proposed currency changes. The document will also provide the first indication of how tariff will be uplifted and deflated, although some aspects will be finalised later in the year.