News / Tariff raises prospect of marginal rate changes

The threshold at which the marginal rate for emergency admissions is applied could be adjusted locally to take account of significant increases in activity, Monitor and NHS England said in their first national tariff proposals.

The 2014/15 national tariff payment system: a consultation notice said the marginal rate will be retained in 2014/15. Currently, this pays providers 30% of the tariff for emergency admissions over a baseline set at 2008/09 activity levels. The remaining 70% should be spent by commissioners on improving services that prevent the need for patients to go to hospital or to invest in community services to allow hospitals to discharge patients earlier. However, with emergency activity increasing over the last few years, many trusts have complained the baseline was too low.

There was evidence the marginal rate had, to some extent, slowed the rate of emergency admissions, it said. However, it acknowledged that in some areas change was needed to ensure the policy worked – for example where there had been significant shifts in the pattern of emergency care in a local health economy or where there had been insufficient progress in developing demand and discharge management schemes.

The national bodies said that where there have been significant local increases in emergency admissions outside the control of providers, commissioners will be required to agree a revised baseline. Also, NHS England will ensure that the money retained by commissioners through the application of the marginal rate rule will be spent transparently and effectively to enable more patients to be treated in community settings.

Foundation Trust Network (FTN) chief executive Chris Hopson said the move was ‘better than nothing’, but was disappointed the rate remained in place. ‘Monitor and NHS England are still trying to have their cake and eat it – insisting that A&E targets are met but requiring hospitals to treat increasing numbers of emergency admissions for just 30% of the cost of doing so.’

He added: ‘We remain very concerned about the coming winter and the sums of money currently being lost by some trusts as a result of the 30% marginal tariff – over £5 million a year in some cases – are huge. If local rebasing fails to deliver more funding where it is desperately needed, quality of care in a significant number of A&E departments will be even more at risk – precisely what we are all trying to avoid.’

The FTN would continue to campaign for the abolition of the marginal rate, he said.

The tariff document said that there would be price stability in 2014/15 with only minor currency changes. Also, prices will be based on 2013/14 prices, rather than updated reference costs, and these would be adjusted for increases to provider costs (2.1%) and the efficiency requirement, which will be set at 4%. This meant that on average the prices providers are paid next year should go down by 1.9%.

Monitor conducted an impact assessment of the 4% efficiency target and a scenario where providers achieved 3% efficiency. It concluded most providers would remain financially viable under both circumstances, though some would move from a small surplus to a small deficit in the event of achieving 3% efficiency savings.

The tariff document also said providers and commissioners would be encouraged to develop local payment mechanisms that supported new models of care, including better integrated care. The current rules allow local prices to be agreed where there are no national prices and where commissioners and providers agree new payment approaches for new services or bundles of services.

In 2014/15, a principles-based system will apply to all local prices, variations and modifications. There will be separate rules for agreeing local prices where there is no national price and where local variations are proposed.

Commissioners and providers will generally continue to use national currencies with local prices for adult mental health, ambulance and some specialist services. However, Monitor and NHS England propose a requirement to submit local price data against these currencies to improve transparency and build an evidence base.

NHS England chief financial officer Paul Baumann said: ‘Providers and commissioners face a major task in constructing robust plans for 2014/15 onward that secure clinical and financial sustainability in increasingly challenging circumstances. To help them succeed in this task, we are proposing tariff arrangements for 2014/15 that provide the maximum possible continuity. Meanwhile we will be taking forward our work on longer-term pricing strategies to support our emerging strategic priorities and incentivise improved outcomes for patients.’

The consultation on the proposals runs until 31 October and Monitor and NHS England hope to publish the final tariff in December.