HFMA repeats call for overhaul of costing standards

NHS England and NHS Improvement has proposed that NHS trusts delivering community services should compile and submit costs at the patient-level, complying with a nationally prescribed methodology, from the year 2021/22 onwards. This would mean a first mandatory submission in summer 2022.

A consultation paper, issued in December, also proposes to end the submission of reference costs with this year’s collection covering the 2020/21 financial year. Reference costs are submitted at an average level, with providers using different methodologies to apportion costs.

If NHS England and NHS Improvement confirm the proposals for community services, this would complete the whole service’s transition to patient-level cost submissions. Acute trusts were initially required to submit patient level costs for the 2018/19 financial year. They were joined by ambulance trusts and mental health service trusts (where mental health services were the primary service) in the latest submission for 2019/20.

However, the mandatory requirement to submit costs at the patient-level would not guarantee the NHS had a robust set of patient-level cost data. There have been multiple calls for the mandatory standards to be reviewed and made more proportionate to the benefits delivered. The HFMA made this point in a 2019 report to NHS England and NHS Improvement and again in December’s briefing on the future NHS financial regime in England.

In its response to the community services consultation, the association reiterated its support for the move to patient-level costing and that this should be a mandatory requirement for the whole NHS. But it said it ‘strongly disagreed’ with the methodologies and approaches in the healthcare costing standards that would underpin the mandatory submission. It again called for a review of the costing requirements for all sectors.

While there are concerns that the costing requirements are too onerous for all sectors, there are particular challenges in community services. Data enabling costs to be accurately allocated to specific patients is in short supply, with inconsistent coding of activity and a focus on contacts rather than what is delivered in a contact. Many people believe that there needs to be a first step of improving the collection of consistent patient-level activity data, and establishing a meaningful community services currency, before the costing standards could be complied with.

The consultation paper from NHS England and NHS Improvement also asks whether community providers would support a move to quarterly cost collection. The national bodies have asked this question in previous consultations on proposals to mandate collection in other sectors. But the question has taken on greater significance as it has become clear this is now a real ambition.

Speaking to November’s HFMA Healthcare Costing for Value Institute costing conference, NHS England and NHS Improvement’s director of pricing and costing Chris Walters said that the pandemic had helped to create a demand for more timely data, and the costing community would have to respond. ‘Moving to submitting and collecting patient-level costs on a quarterly basis is realistic and something we should aspire to,’ he said.

And Julian Kelly, NHS England and NHS Improvement chief financial officer told the HFMA annual conference in December that there had to be ways to improve the timeliness of costing data. He highlighted the fact that nationally collected cost data can be 18-months out of date by the time it is processed. ‘Can we not do some sort of quarterly cost collection?’ he asked. ‘The data would be useful for local, system, regional, and national organisations, commissioners and providers to see where the productivity opportunities lie. It’s about getting a balance between good costing data and timeliness.’

However, the HFMA said it was strongly opposed to a quarterly cost collection for the community health sector. ‘We understand the need for, and support in principle, the move to timely costing information being made available nationally,’ it said in its consultation response. ‘However, our members have expressed significant concerns about the burden of submitting cost data on a quarterly basis.’

Complying with the existing standards is already time consuming, leaving little time to use the data to work with local teams to support improvement. And the national data is not widely used locally, with costing data delivered in a different way by trusts, with different inclusions and exclusions, to meet the needs of clinical teams.

‘There are already concerns about recruitment and retention within costing teams, with costing practitioners stretched to meet existing costing submission requirements,’ said HFMA head of costing and value Catherine Mitchell (pictured). ‘Quarterly submissions would stretch these resources further, leaving less time to actually use the costing data. And it may also exacerbate recruitment and retention problems.’