Temporary finance regime unveiled in coronavirus response

New finance guidance applies for an initial period from 1 April to 31 July this year. Providers will receive a guaranteed minimum income, which will mirror current costs.  It says commissioners and providers should agree block contracts. The payments will be based on the spending implied by the month 9 agreement of balances, plus an uplift for inflation but not activity growth. In block contracts with mental health trusts the uplift should include an additional amount to deliver the mental health investment standard.

A sum equal to the average historical monthly average of non-contracted activity should also be added to the block contract payments.

The suspension of the planned financial regime will mean the financial recovery fund will not operate and providers will receive a national payment to cover the difference between actual costs and guaranteed income. The national bodies said figures for individual commissioners and providers will be available on 23 March.

Each month, together with their regular financial reports, providers should claim for additional costs due to coronavirus, Covid-19, that are not covered by the block payments. The claims should include evidence of: increased staff costs; rises in temporary staffing to cover sickness – agency reporting requirements must be maintained; and the additional costs associated with the Covid-19 response, such as decontamination, transport and testing.

Shortfalls in contractual performance should not lead to a reduction in payments by commissioners and all contract penalties will be suspended.

Commissioner allocations will remain unchanged, but the impact of the new arrangements for paying providers will be considered when financial position is being assessed. Clinical commissioning groups and local authorities will receive separate guidance on enhanced discharge support in the community.

Indicative capital allocations will be issued shortly, but trusts were told to enhance their oxygen supply and distribution arrangements. While public dividend capital (PDC) will be available to modify buildings or to purchase equipment, the spending must be for the purposes of delivering the response to Covid-19. PDC dividend will not be payable on Covid-19 capital spending. The guidance recognised that CCGs may incur capital spending to support general practices.

Spending should be within the delegated capital limits (£15m for providers and £10m for commissioners) and amounts above the thresholds must be approved by NHS England and NHS Improvement. The national bodies may bulk buy equipment, but this may not always be practical.

As well as the flow of funding, the guidance emphasises the importance of maintaining good governance. It said all NHS organisations should undertake an urgent review of their financial governance to ensure decisions on spending relating to Covid-19 are robust. The resilience of finance functions and business continuity plans, especially payroll, supplier payments and core reporting, should be tested as they could face significant staff absences. Fraud prevention arrangements should also be considered.

In a letter to the service, NHS chief executive Simon Stevens (pictured) and chief operating officer Amanda Pritchard said the introduction of block contracts was one of a number of measures to remove routine burdens. Others included additional funding, and the deferral of the publication of the NHS people plan, the clinical review of standards and NHS long-term plan implementation framework until later this year. The letter includes an annex outlining the financial arrangements.

Other measures outlined in the letter include:

• Freeing up the maximum possible inpatient and critical care capacity – 30,000 or more of the 100,000 general acute beds by postponing all non-urgent elective operations from 15 April for at least three months; discharging all inpatients medically fit to leave; buying urgent surgery and Covid-19 care capacity in independent hospitals

• Preparing for, and responding to, large numbers of patients needing respiratory support – including enhancing oxygen supply and distribution and national procurement of ventilators

• Supporting staff and maximising availability – including targeted staff testing for Covid-19 and adjusting working practices for at-risk staff

The HFMA has produced a summary of the guidance. Click here to download