19.02.15
New interim tariff deal offers providers a £500m win
NHS providers have been offered a new enhanced tariff option (ETO) for 2015-16, worth up to £500m more than the original package consulted on last November.
Under the new proposals, NHS England and Monitor have offered reduced savings targets and the cost of reimbursement for specialised services has been raised.
In a letter sent to all NHS providers today, it has been outlined that trusts can opt for the voluntary ETO for 2015-16. But a decision needs to be made within the next two weeks.
The letter adds that if all providers choose the ETO option then revenues can be approved by approximately £500m, compared to the original tariff proposal, through three ways:
- The gross tariff deflator (excluding uplifts for pay & price inflation) is reduced by approximately £200m in providers’ favour, from 3.8% to 3.5%;
- The marginal cost reimbursement for specialised services is raised from the originally proposed 50% to 70%. In addition, all contract variations agreed as at the end of January 2015 are incorporated into the baseline. The combined effect is to provide a benefit versus the original proposal of approximately £170m to providers of specialised services; and
- The marginal cost reimbursement for emergency hospital admissions is increased from its current 30% to 70%, compared to the originally proposed increase to 50%. This 70%payment covers all volumes above the agreed local baseline, not just increases over the 2014/15 outturn. (A&E attendance growth is already paid at 100%.) This adjustment provides an additional approximately £130m to providers.
Responding to the proposals, the Royal College of Emergency Medicine (RECM) welcomed the revision of the marginal tariff, which it believes will result in a substantial improvement in the finances of acute trusts, particularly those for whom acute admissions are a substantial and increasing proportion of their work.
Dr Clifford Mann, president of the College, said: “Having been vociferous, informed critics of the current marginal tariff it is of course welcome news to hear it has been revised. The RCEM will continue to demand that this money is spent on front line services relevant to the admission of acutely ill and injured patients and not diverted for other purposes.”
The letter noted that the majority of the extra costs in the ETO will ultimately be borne by NHS England, who will offer targeted additional funding support to CCGs to help offset some of the pressures arising with their element of this package.
But to give both providers and commissioners certainty, and to reduce administrative complexity, providers who opt for the ETO will do so for the full year 2015-16, with no ability to move from the ETO back to the Default Tariff Rollover (DTR) option and on the basis that it would be continued under any subsequent national tariff for 2015-16.
Simon Stevens said “The NHS is looking for certainty about next year, and a constructive and shared approach to helping hospitals with the genuine pressures they’re facing.
“This new funding option offers that, without sacrificing critical new investments in primary and mental health services. In the round, it gives the NHS collectively our best chance of sustaining high quality services today, while also getting going on major efficiency improvements and the more fundamental changes in care set out in the Five Year Forward View.”
Chief executive of the NHS Confederation Rob Webster added that this is a “critical period” of the year for planning and contracting for services in the NHS.
“We need to ensure we have clarity on the arrangements for 2015-16 as soon as possible,” he said. “This was always going to be a tough year and continuing uncertainty would make it an impossible one. These interim proposals need to be considered carefully by the service in the coming two weeks and may offer a way forward for many.”
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