Blended payment model set to expand

Blended payment was set as the default payment approach for emergency care and adult mental health services for the current year. However a tariff engagement document, setting out the key areas of work for the 2020 national tariff, proposes expanding the approach to outpatients and maternity services, while piloting the approach for adult critical care.

The NHS long-term plan has promised to move away from activity-based payment to support moves to deliver more integrated care. In contrast, a blended payment approach involves an intelligent fixed payment, based on forward-looking forecasts of activity and best available cost data, combined with one or more of variable, risk-sharing and outcomes-based elements.

The new approach for outpatients is seen as supporting the long-term plan’s commitment to remove the need for up to 30 million face-to-face outpatient visits a year over the next five years. Changes could be implemented in two stages.

Reimbursement of all outpatient attendances would move to a blended payment system for 2020/21. Then from the following year, activity might start to be grouped and paid for by specialty or some other meaningful grouping – probably starting with ophthalmology, dermatology and rheumatology.

The specific proposals would include a fixed sum as the largest element of payment, set using locally agreed expected activity at nationally published prices – making no distinction between face-to-face and video consultations.

A risk sharing agreement would share the financial impact of actual activity being materially different from assumptions, although the document says this would not be a pure activity-based variable payment. The outcomes element could be used to support the long-term plan outpatient attendance reduction goal.

The fixed payment for maternity services would involve local agreed activity at national pathway prices, adjusted based on the historic net income flows between other providers in the local maternity system (LMS). The risk share element could recognise if there are more or fewer complex cases than anticipated and the outcomes element would help to reinforce the delivery of LMS priorities.

After initial proposals over the summer to also include adult critical care in the blended payment proposals, the tariff engagement document said a more streamlined blended payment approach was now being considered for piloting during 2020/21focused on fixed and outcomes-based payment elements.

No major changes are planned to the existing blended payment approach for emergency care and mental health services, although guidance will be improved on how best practice tariffs should be reimbursed within the blended payment.

More generally the engagement document confirms that next year’s tariff will be set for just one year and the price relativities will be rolled over from the current year – meaning the tariff continues to be set using the 2016/17 reference costs version of the HRG4+ currency design. The plan is still to use patient-level cost data, rather than reference costs, to set tariff prices from the 2021 tariff onwards.

NHS England and NHS Improvement have also indicated that the NHS standard contract will be reformed to include a proposed requirement for providers and commissioners to have a ‘meaningful system collaboration and financial management agreement in their local health economy’.

More details will be included in a separate engagement document on the contract. But the agreement could set principles around open book accounting and transparency and set out a mechanism for overall financial management and risk sharing to support delivery of the system control total.