NHS England to monitor emergency demand impact on recovery funding

The new aligned payment and incentive scheme was introduced from April. Under the new approach systems agree contracts with providers to deliver activity in line with system plans. While a fixed payment covers the bulk of the arrangement, a variable payment or deduction is also triggered if the provider delivers more or less elective activity than required – with the threshold set at 104% of the 2019/20 level by value.

NHS England officials told a webinar this week that a variable element to cover fluctuations in non-elective activity had not been deemed appropriate. A variable element related to elective activity provided a transparent mechanism to demonstrate to the Treasury that additional funds for elective recovery were in fact paying for additional activity.

But automatically flowing funds to acute providers in response to increased pressures in urgent and emergency care might not always be the right response. Instead targeting resources on community services or the ambulance pathway could be a better response to ease pressures. Instead, the new payment mechanism was designed to get system partners together to discuss and address service and financial pressures as they arose through the year.

However, Rob Unsworth (pictured), head of payment policy in the NHS England pricing and costing team, acknowledged that the current situation with rising Covid-19 cases provided a degree of uncertainty. ‘There is an unknown aspect to Covid and new variants and what impact they might have on both the staffing side and how many beds are taken up with Covid positive patients,’ he said. ‘If that picture looks like it is significantly worse from what we were assuming at the start of the year then I don’t think we would be ignoring the impact that might have on elective recovery.’

There have been reports that trusts are falling short of the 104% target due to Covid pressures, discharge problems and capacity problems. However, with just one month’s worth of official data via the national Secondary Uses Service system, Mr Unsworth said it was too soon to say what the overall impact might be. ‘But we will keep monitoring and take a view if we think it is having a significant effect on the ability to recover elective services,’ he added.

Addressing a concern that the elective recovery fund was overly complicated, Mr Unsworth stressed the requirement to demonstrate that additional funding was being targeted at elective recovery. But he also highlighted proposals to simplify the approach from next year. These proposals, yet to be finalised, include looking at the merits of changing the variable rate for under/over-performance to 100% of national unit prices and changing some of the mechanisms and defaults for out-of-system contracting. (Feedback on the potential proposals can be submitted until 27 July via NHS England’s online survey.)

Mr Unsworth also confirmed the plans for the first adjustments to be made under the ERF in the current year. ERF baselines are in the final stages of being calculated and will be issued shortly. It was made clear that there were no plans to undertake any ERF transactions in the first quarter of the year, with clinical commissioning groups being abolished and new integrated care boards starting in July. Instead, the first adjustments will be made in the autumn once quarter 1 and quarter 2 activity data is confirmed.