NHS Improvement mandates patient-level costing

02 February 2018 Steve Brown

Login to access this content

NHS Improvement’s decision to mandate patient-level costing and the use of its published costing standards follows a consultation towards the end of 2017. It said that more than three quarters of respondents to the consultation exercise agreed with this proposal. 

The mandatory requirement will start from the 2018/19 financial year with a first collection in 2019. But, despite the standards becoming mandatory in just two months’ time, trusts will in fact be given three years to become fully compliant. The transition period recognises that some trusts will need time to change existing costing processes and establish new data feeds in some areas.

NHS Improvement’s board has also approved a proposal for dual running of reference costs and patient-level costs for 2018/19 and 2019/20, although this was supported by just over half of all respondents to the consultation. 

NHS Improvement said it was ‘aware of the impact that dual running of reference costs will have, and we plan to move to a single collection as soon as possible’. It will assess the 2017/18 submission to see if reference costs can be recreated from the patient-level data. ‘If this is successful, in 2018/19 there will be a single collection of acute cost data,’ it added. ‘If unsuccessful, we will try to align the returns for 2018/19 so that we move to a single cost collection as soon as possible.’

Work is underway with suppliers to reduce the impact for cost accountants by making sure all submissions can be run from a single system. 

An impact assessment published alongside October’s consultation suggested that over 10 years, the annual average cost of complying with the proposed patient-level cost approach would be less than the current costs of submitting mandatory reference costs – despite an initial spike in costs as some trusts upgrade systems and capacity. 

While the assessment did not estimate potential savings for the NHS overall from mandating patient-level costing, it provided examples of where trusts had realised benefits that covered and, in some cases, far exceeded implementation costs.

While the decision to mandate patient-level costing only relates to acute bodies, NHS Improvement said it was working to spread the approach across other sectors in the coming years.

Alongside the mandation decision, NHS Improvement also published its ‘third and final’ version of its Healthcare Costing standards for England and National cost collection guidance 2018, covering cost submissions for the 2017/18 financial year. The revised standards cover the current financial year and 2018/19. Future update will be published in the January ahead of the year to which they apply. 

A second version of ambulance costing standards has also been published and versions will be published in March covering mental health and community services. 

The oversight body also confirmed that an integrated reference costs return, net of education and training costs, will not be required in 2018. A cost method will be piloted to integrate this process with patient-level costing from 2019.

See Up and running, Healthcare Finance December 2017