Initial planning guidance published

21 December 2018 Steve Brown

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Although publication of the long-term plan has been delayed until January, the two bodies had promised planning guidance would be out in December.  Preparing for 2019/20 operational planning and contracting represents the first part of this planning guidance. Full guidance will be published alongside five-year indicative clinical commissioning group allocations and the trust financial regime in early January.

The guidance reflects the continued push towards system working. For 2019/20, sustainability and transformation partnerships and integrated care systems will have to produce a system operating plan for the year comprising a system overview and system data aggregation. Systems will be expected to agree realistic, shared capacity and activity assumptions to provide a single framework for organisational activity plans.

Activity data in CCG plans will have to match the volumes in STP/ICS provider plans and vice versa. And activity volumes for CCGs with significant out-of-area flows will also need to be aligned.

Control totals for each system will be based on the sum of individual organisation control totals with systems able to propose net-neutral changes to organisation control totals ahead of the draft and final planning submissions.  ICSs in particular will be expected to link a proportion of sustainability funds to the delivery of the system control total. STPs will also be allowed to do this if all parties agree to manage their finances in this way – seen as a marker of system maturity and readiness to develop as an ICS.

The guidance also sets out the financial architecture for the new financial year. Subject to consultation, the uplift in the national tariff will be set at 3.8%. This includes the costs of Agenda for Change pay awards – in 2018/19 £800m funding was paid directly to providers by the Department of Health and Social Care, but this cost will now be reflected in tariff prices.

However, the 3.8% uplift excludes the transfer into national prices of a proportion of the Provider Sustainability Fund and the transfer into national and local prices of 1.25% from CQUIN and the pensions impact. The tariff efficiency factor will be 1.1% and national and local prices will also be reduced to cover the costs of the new centralised procurement arrangements.

As trailed in the tariff engagement document in October, a new default blended payment system for emergency care will be introduced. Covering non-elective admissions, A&E attendances and ambulatory/same day emergency care, the new model will include a fixed element based on locally agreed planned activity levels and a variable element set at 20% of tariff prices.

A ‘break glass’ clause will apply if actual activity is significantly different from the planned level. And the new approach will also see the current marginal rate emergency tariff abolished along with the 30-day readmission rule. This will need to be on a financially neutral basis between commissioners and providers, but the initial planning document does not provide further details on how this will operate.

Also, as trailed, a new market forces factor will be adopted for 2019/20 after 10 years of no change. To avoid major swings in financial flows, the updated MFF will be phased in over five years. These changes will be factored into provider control totals and commissioner target allocations.

CCG target allocations will be based on an improved formula that changes the way population data is used and includes new need indices for community and mental health and learning disability services. It also changes the approach to health inequalities.

The Commissioner Sustainability Fund (CSF) – established this year to support CCGs that would otherwise be unable to achieve in-year financial balance – will again be in operation. However, the long-term goal is to phase this out as all CCGs are expected to return to financial balance. As a first step towards this, in 2019/20 the fund will reduce from £400m to £300m.

CCGs will be expected to deliver a collective breakeven position after deployment of the CSF and control totals will be set on this basis. Any CCG overspending in 2018/19 will be expected to improve its in-year performance and those with long-standing deficits will be set a more accelerated recovery trajectory. However, CCGs will not be required to contribute to a national risk reserve nor to spend any element of their recurrent allocation non-recurrently.

CCG administration costs will need to reduce by 20% in real terms by 2020/21 compared with their 2017/18 running cost allocations – although this will allow an adjustment for the recent pay award. CCG admin allowances will be maintained in cash terms in 2019/20, with savings achieved during the year available to fund any necessary restructuring costs.

In line with the pledge to increase mental health investment, CCGs will be expected to increase spend by at least their overall programme growth plus an additional percentage increment to reflect the additional mental health funding included in CCG allocations for 2019/20. The minimum percentage uplift in mental health spending for each CCG will be shown in the financial planning template. CCGs will also be required to increase the percentage of their total mental health spend spent with frontline mental health provision.

The guidance says that ‘the level of investment required by CCGs in mental health will be significant’ and that contracts will need to include clear deliverables supported by realistic workforce planning.

The minimum efficiency ask for the next five years will be 1.1% a year and the guidance says this will require a renewed and intensified focus on enabling greater staff productivity including investment in digital technology. All systems will work with the NHS RightCare programme to implement national priority initiatives for cardiovascular and respiratory conditions and any CCG that hasn’t implemented a high intensity user support offer for demand management in urgent and emergency care will have to do so.

The guidance also sets out the detailed timetable for the publication of further details and the submission of draft and final plans.