News / Providers to have more input on use of marginal rate funds

By Steve Brown

The Department of Health has strengthened guidance on the operation of the marginal rate emergency tariff as part of its final payment by results package for 2013/14. The changes should give providers more involvement in how savings are used and enable a broader range of schemes to be funded.

This is the last year in which the Department will publish tariff details. Responsibility for price setting is passing to Monitor and the NHS Commissioning Board from the 2014/15 tariff. The final guidance takes account of feedback from a road test of the tariff over the past two months.

The marginal rate for emergency admissions was introduced in 2010/11. Instead of receiving full tariff for all emergency activity, providers are paid just 30% of tariff for activity above a 2008/09 baseline. The original aim was to encourage health economies to work together to reduce avoidable admissions with the 70% balancing payment invested in projects to avoid emergency admissions.

Providers have objected to the scheme, claiming they face an unfair balance of financial risk from rising admissions without the full means to control demand. Although the overarching marginal rate policy remains largely unchanged, the final guidance does attempt to address some of providers’ broader concerns – particularly relating to how the 70% balancing payments are used locally.

The final PBR guidance requires commissioners to work with providers to develop proposals for using marginal rate savings. And it enables savings to be spent on a broader range of schemes. December’s draft guidance allowed for ‘investment in relevant demand management schemes’. But the final guidance broadens this to schemes that ‘reduce the incidence of and/or the consequences arising from emergency admissions’.

For example, this could enable schemes to be funded that focus on appropriate earlier discharge, as well as admission avoidance. The guidance also calls for early engagement between commissioners and providers on how funds will be distributed.

The Foundation Trust Network worked with the Department to revise the guidance. ‘We needed to fully involve providers in how decisions get made,’ said FTN chief executive Chris Hopson.

Greater transparency and getting resources spent earlier in the year were also key goals. ‘The guidance, we feel, will ensure that around £200m-£300m more will be spent this year on emergency admissions avoidance and related issues,’ said Mr Hopson.

Mr Hopson also welcomed a more pragmatic approach to setting the baseline. But he added that the tariff incentives in this area remain ‘fundamentally flawed’. And he committed the FTN to continue arguing for change.

The final PBR guidance also confirms an expansion of the best practice tariffs policy and the introduction of a mandatory maternity pathway payment system, with separate pathway tariffs for antenatal, delivery and postnatal phases.

Ahead of the switch in responsibility for tariff arrangements, Monitor and the Commissioning Board have outlined proposed governance arrangements.

The two bodies are planning to set up a joint pricing executive, made up of Commissioning Board and Monitor executive directors, to make most decisions on pricing, with a small number of decisions (such as longer term strategy and public release of annual tariff information) retained by the individual boards.

In addition, a joint pricing development and tariff delivery group would act as a project board for delivery of the national tariff.