News / Provider revenue up 0.5% in tariff plans

In an impact assessment that accompanied the opening of the statutory consultation on the 2017/19 two-year tariff, the national oversight bodies said that in 2017/18 proposed prices would change operating revenue in 93% of NHS providers (186 trusts) by ±2%. In 70% (140 NHS providers) the change in operating revenue would be ±1%.

It acknowledged that shifts in revenue could be higher or lower, depending on activity and levels of compliance with the national tariff.

Commissioners would spend more – in 2017/18 they estimatedthat clinical commissioning groups would increase spending by around 0.3% of their overall funding allocation. CCG spending increases would vary from -0.9% to +1.4%, while for NHS England there would be a 2.9% increase on its nationally priced direct commissioning spend. The latter is largely due to increased specialist top-up payments.

The assessment added that the benefits of having a two-year tariff outweighed the lack of flexibility inherent in a longer-term tariff.

It added that benefits of proposed changes to national prices - making them more reflective of costs incurred, for example - specialised top-ups and best practice tariffs outweighed the costs and risks. The new national prices would help commissioners and providers decide the most cost-effective mix of services (allocative efficiency) and incentivise providers to be more efficient (productive efficiency).

Spending would rise for most maternity care (+£332m or +13%) and decrease for most outpatient attendances (-£199m or -4%). While changes in specialised top-ups would mean an overall increase in spending – from £303m in 2016/17 to £414m in 2017/18 and £417m in 2018/19 – orthopaedic and paediatric spending would be reduced.

The statutory consultation was launched with a national prices and tariff workbook and guidance to support the implementation of local payment rules on mental health in the two-year tariff period.

NHS England and NHS Improvement said commissioners and providers must adopt transparent and robust payment approaches that are linked to outcomes. Under the payment options, which are included in the consultation, providers and commissioners must choose either a capitation model or an episode of treatment (year-of-care) approach.

The consultation will close at midnight on 6 December.