NHS England » Approved Costing Guidance 2024

The Approved Costing Guidance explains how NHS trusts should cost at patient level using the costing standards and then submit cost data for the financial year 2023/24 using the National Cost Collection guidance. It is updated annually.

Collection of patient-level costing data helps the NHS manage costs, improve productivity, eliminate unwarranted variation and, overall, improve services for patients.

This introduction signposts to the key information and support offers and includes legal and governance updates

What you need to know for 2024

The National Cost Collection (NCC) for 2024 will be a year of essential change only for the Approved Costing Guidance. This will allow a settling-in period for the stakeholders involved in the National Cost Collection cycle, reducing the burden on costing practitioners, encouraging best practice and use of the new data validation engine.

The costing standards and collections guidance with key supporting information are published on the NHS England website.

Supporting information and resources are published on our FutureNHS costing engagement workspace. This includes the minimum software requirements for implementing a patient-level costing system.

You can access FutureNHS if you have an NHS email address or email costing@england.nhs.uk to request access if you do not.

The Costing glossary contains essential information on all key costing terms used across the approved costing guidance.

Please read all the guidance relevant to your organisation’s services before proceeding. It is not expected that a trust read all guidance published.

Our support offer

Full details of our support offer are available on our FutureNHS Costing engagement workspace. It includes:

Costing surgeries: Costing standards surgeries and cost collection surgeries are held via MS Teams. They take place once a week before the submission window opens. During the submission window the collections call surgery will operate three times a week.
Costing inbox: If you have a less urgent or particularly complex issue, email us at costing@england.nhs.uk. During the submission window we aim to respond to your emails within three working days; however it may take longer during busy periods.
Regular publication of frequently asked questions (FAQs) once the Approved Costing Guidance is launched.

Costing assurance

It is the responsibility of the trust to ensure that costing data, including the counting, classification and reporting of costed activity, is correct. See Costing condition 3 of the NHS Provider Licence. The new costing assurance process aims to support trusts to put in place checks and balances to ensure data is correct. NHS England will review and identify areas which may need to be reviewed nationally.

Trusts must treat costing as a fundamental financial and activity process subject to an audit. Tools and guidance will be developed by NHS England and be made available to support audit providers. Over the next year, NHS England will work with providers to create a process to feedback on costing data quality to the board to help improve the accuracy of costed activity data. Trusts are encouraged to share their best practice across the costing community.

Compliance and enforcement

Trusts that submit poor quality information or are unable to meet the mandated requirements of the NCC, will have a detrimental impact on NHS England’s ability to carry out its pricing, efficiency, oversight and improvement functions effectively.

Trusts are required to notify NHS England if they are unable to comply with the mandated requirements of the NCC.

Legal matters

Our provider licence and NHS Oversight Framework are the primary tools with which we oversee providers of NHS services: NHS foundation trusts, NHS trusts and many independent providers of NHS services. The licence includes standard conditions, some of which relate to setting prices for NHS care.

The NHS provider licence was originally introduced in 2013 for NHS foundation trusts. It was extended to NHS trusts in April 2023 and has been updated through a statutory consultation to align it with current statutory and policy requirements. In particular, it now includes references to the Approved Costing Guidance and requires internal assurance of costing accuracy and completeness. Trusts must familiarise themselves with the revised provider licence and ensure local finance teams are complying with the new/amended provisions concerning costing.

Three licence conditions relate to costing:

C1: Submission of costing information
C2: Provision of costing and costing related information
C3: Assuring the accuracy of pricing and costing information

Costing condition 1 specifies that providers must:

obtain, record and maintain sufficient information about the costs they expend in the course of providing services for the purposes of the NHS and other relevant information
establish, maintain and apply such systems and methods for the obtaining, recording and maintaining of such information about those costs and other relevant information, as are necessary to enable them to comply with this condition
record the cost and other relevant information required in this condition consistent with NHS England’s Approved Costing Guidance. The form of data collected, costed and submitted should be consistent with the Approved Costing Guidance technical guidance.

Costing condition 2 includes a provision that a provider must give NHS England such information, documents and reports as we may require for the purposes of our functions and in such form and at such times as we may require.

Costing condition 3 includes a provision that providers have processes in place to ensure themselves of the accuracy and completeness of costing and other relevant information collected and submitted to NHS England as per the Approved Costing Guidance.

The Approved Costing Guidance imposes the relevant requirements under those conditions for recording and collecting 2023/24 cost information.

To support NHS England in the exercise of its responsibilities, the costing team at NHS England will be requiring trusts to provide information routinely on their electronic systems as part of their Costing Assessment Tool (CAT) process.

Compliance with the NHS Payment Scheme’s P1 condition may also apply to the costing process and submission of costing data, so trusts should keep this in mind.

These requirements apply to NHS trusts and foundation trusts, which should submit all services at patient-level.

Some clinical events should not be submitted at patient level because the volume of data for little cost is prohibitive, the activity cannot be matched to the core clinical event or the patient should not be identified due to the nature of their procedure or diagnosis (legally restricted sensitive data, LRSD). The services should be submitted at aggregate level. For further information see the Approved Costing Guidance.

If services are mandated at patient-level but you are unable to submit at this level, please complete this MS form.

We do not impose any requirements on independent providers, but we encourage them to comply with the costing principles and costing standards and may require costing and other information to be submitted in future.

Ensuring data quality

The Approved Costing Guidance requires trusts to follow three costing principles when recording and allocating their costs:

materiality
data and information
engagement.

These all depend on reasonable data quality.

Each trust is responsible for producing sound, accurate and timely data, and should work towards data that is right the first time.

The reconciliation and exclusions sections of the collections guidance outlines the process for assuring that the total cost dataset reconciles to the annual accounts and the activity reconciles to the national datasets.

Publication of collected data

We will continue to produce the National Cost Collection publication and release data into analytical dashboards, improving their functionality in partnership with trusts and other stakeholders, so that costs sit alongside other key performance measures to inform management decisions.

We will release data as soon as possible after the collection finishes, with tools to help trusts identify and improve their cost data.

Information governance

For 2023/24, we will collect the following two patient-level (PLICS) datasets:

PLICS Integrated Data Set: unit costs for inpatient admissions, emergency care, outpatient attendances, mental health provider spells and care contacts, Talking Therapies for Anxiety and Depression (previously IAPT) appointments and community care contacts for NHS trusts in England.
PLICS Ambulance Data Set: activity and financial data for all incidents going through 999 call centres or dispatch centres in England.

As of 1 July 2022, Monitor (NHS Improvement) was abolished and all mandatory requests to NHS Digital from Monitor were to be treated as a direction from NHS England to NHS Digital under section 254 Health and Social Care Act 2012 (the 2012 Act). On 1 February 2023, NHS Digital was merged into NHS England. The statutory functions of NHS Digital transferred to NHS England under the Health and Social Care Information Centre (Transfer of Functions, Abolition and Transitional Provisions) Regulations 2023 (Transfer Regulations). Under these Transfer Regulations, all directions from either the Secretary of State for Health and Social Care or NHS England to NHS Digital are now treated as directions from the Secretary of State for Health and Social Care to NHS England.

Therefore, the acceptance of the direction (formerly a mandatory request) is the legal basis to perform the PLICS collection.

PLICS datasets will be created by the PLICS team at NHS England linking the data collected with the national datasets, adding key identifiers (to allow us to subsequently link this data with the national dataset) and pseudonymising the data before providing it to the Costing Team at NHS England. The matching process is specific to the national dataset. For further information refer to the requirements specification.

How we will use the collected data

We need to understand how money is spent in the NHS to achieve the ambitions in the NHS Long Term Plan, recover from the COVID-19 pandemic, support the development of new care models and reduce variation in the use of resources. Costing data supports a variety of functions at national and local levels.

Analytics:
- developing tools, metrics and reports to help trusts improve their data quality, identify operational and clinical efficiencies, and review and challenge their patient-level cost data at provider, population, system and national levels
- supporting efficiency and quality of care improvement programmes and other operational productivity dashboards such as the Model Health System
- producing and distributing patient-level data in our tools for use by NHS trusts, for example the national PLICS portal and PLICS data quality tool
Investment, pricing and pathway design:
- informing existing payment models including the NHS Payment Scheme
- informing and modelling new methods of pricing NHS services
- informing new approaches and other changes to currency design
- reviewing investment decisions, for example for technology and staffing
Effectiveness, efficiency and quality:
- improving efficiency and quality of care
- informing the relationship between provider costs and patient characteristics
- understanding the cost of patient care before, during and after the COVID-19 pandemic
Improving costing:
- informing future cost collection design
- informing costing standards development
- informing developments to the PLICS collection, including the impact assessment on mandating the submission of PLICS.

Even if the intended uses of PLICS data change for future collections, the data collected this year will continue to be covered by the information in the mandatory request, the DPN and this introduction.

NHS England will use the collected PLICS data for the purposes described above. As well as sharing PLICS data within NHS England, we may share it with trusts, commissioners and arm’s length bodies using our tools and reports:

with participating trusts and systems it helps to improve effectiveness, efficiency and quality
with the Department of Health and Social Care, integrated care systems, and with other organisations and individuals it helps to:
- identify operational and clinical efficiencies
- provide comparative costs to support evaluation of new or innovative medical technologies
- respond to Freedom of Information requests and parliamentary questions
- benchmark performance against other NHS and international providers
- inform academic research.

In developing and populating a PLICS benchmarking solution, NHS England may also share suitably aggregated PLICS data (as determined in consultation with participating organisations) with other trusts taking part in this collection.

Any sharing of PLICS data by NHS England (excluding back to the trust that owns the data) will be subject to a data-sharing arrangement approved by the Information Asset Owner of PLICS at NHS England.

Freedom of information requests

All public-sector bodies are bound by the requirements of the Freedom of Information Act 2000 (FOIA 2000). Anyone can submit an FOI request.

NHS England may engage with third-party organisations in relation to a given FOI request in line with our FOIA process and within the statutory timeframes set out under the FOIA.

Contact with relevant third parties around an FOI request will be on a case-by-case basis and will depend on the nature of the request.

As such, in relevant circumstances and depending on the nature of the FOI request, NHS England will contact the trust(s) concerned.

Data retention

The data will be kept securely for as long as it is required. If you have any concerns about how your data will be used, please contact us at costing@england.nhs.uk

National data opt-out

NHS England is requested to collect PLICS data by a Direction, under sections 255 and 256 of the Health and Social Care Act 2012.

On receipt of a Direction under section 254, a Data Provision Notice (DPN) is issued to those that hold the information that is legally required to collect.

The DPN issued to providers for PLICS is a legal obligation with which the providers must comply, and therefore the National Data Opt-out does not apply to the provision of PLICS data by the providers to NHS England.

For more information see the Patient-level costing information on the NHS England website.

Note: We no longer publish an Information Standards Notice for PLICS collections. During 2023 PLICS was moved from an Information Standards approved by the DAPB (Data Alliance Partnership Board) to a Data Collection.

This process is still assured by the DAPB and we still maintain separate data collections for integrated and ambulance PLICS.

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