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Payment system changes to encourage better care and financial efficiency

Proposed changes to the NHS payment system for next year are designed to help maintain tight financial discipline while promoting high-quality care for patients in tough economic conditions.

Proposals set out by Monitor and NHS England for the 2015/16 national tariff would also encourage a speedier expansion of innovative patterns of care to meet the needs of patients.

Providers and commissioners are encouraged to respond to these proposals in order to influence the final tariff which will be published later in the year.

The NHS payment system is described as a “springboard to change” that can help develop new ways of delivering service improvements.

Monitor and NHS England propose setting an efficiency factor – the official estimate of the opportunity for providers and commissioners to achieve savings – of between 3 per cent and 5 per cent for the benefit of patients. This year the equivalent figure is 4 per cent, and a single figure for 2015/16 will be set at the end of the year.

The tariff framework covers a mixture of national prices and rules for local price-setting. The new proposals also include:

  • Reforming payment structures for urgent and emergency care. There is a need to understand the costs of providing urgent and emergency care services following the review by Sir Bruce Keogh. We would like to encourage commissioners and providers to explore alternative payment approaches linking capacity, activity and quality.
  • Confirmation of the rules for setting prices based on the mental health currencies, unless there is an agreed local payment variation. Moving away from block contracts would improve transparency and the delivery of quality and outcomes for service users.
  • Examples of local payment design which tackle challenges like enabling the frail, elderly or those with several long term conditions to get person-centred care.
  • A new heart failure best practice tariff to encourage ways of working which provide better outcomes for patients
  • Developing guidance on how to set local prices which better reflect efficient costs, promote quality improvements and  share risk between commissioners and providers
  • Retention of national variations such as the marginal rate rule, 30-day emergency readmission rule, and the market forces factor for 2015/16 while we continue to develop the long-term payment system.

Ric Marshall, Director of Pricing at Monitor, said: “The changes we are proposing will incentivise the NHS to make necessary improvements in quality and efficiency so that it continues to meet patient needs and expectations within available resources.

“Commissioners and providers will be able to make better decisions about what services to commission and provide for their patients. We are now inviting the sector to give us their feedback on these ideas before we go to statutory consultation on the contents of the tariff.”

Sam Higginson, Director of Strategic Finance at NHS England, said: “Pricing and incentives have an important enabling role. For 2015/16 we are making a number of significant changes where we already have the evidence to do so. We are also actively encouraging local innovation in clinical priority areas, which will allow us to gather evidence we can then use to inform pricing in the future.

“We want to move quickly to strengthen the contribution of the payment system to the changes the NHS needs to make. We encourage all commissioners and providers to give their feedback on our proposals so we can work together to achieve this for the benefits of patients.”

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  1. Continuous healthcare screening procees takes too long. Patients who are in need of maximum health care often receive funding too late.