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15.02.16

Providers welcome new tariff proposals, but warn the task ahead is ‘still immense’

NHS Providers have welcomed a “shift in approach” from Monitor and NHS England about what savings are available through the national tariff. 

Last week, the regulator launched a consultation on the proposals for the 2016-17 national tariff, which it says will help hospitals stabilise their finances and includes an average increase in national prices of 1.8%. 

The Monitor and NHS England proposals are based on the 2015-16 Enhanced Tariff Option (ETO), but with adjustments including an inflation uplift of 3.1%, an efficiency deflator of 2% and an adjustment to reflect the anticipated increase of 17% in contributions to the Clinical Negligence Scheme for trusts, equivalent to a 0.7% uplift on average across national prices. 

Some changes will also be delayed until 2017-18, including the move to the HRG4+ currency for payment for admitted patient care, new top-up payments for specialised services and a specialised services marginal rate rule known as the risk share rule. 

Chris Hopson, chief executive of NHS Providers, said: “After five years of an efficiency requirement of around 4% – when the provider sector has only been able to reduce its costs at around 2% a year – these proposals represent a welcome shift in approach from Monitor and NHS England about what savings are sustainable through the tariff.

“Despite this encouraging tariff package, the task for the provider sector in 2016-17 is still immense, and the headline efficiency requirement trusts will need to deliver far exceeds the headline 2% included through the tariff.” 

He added that as providers and commissioners continue their contracting discussions for 2016-17, “we urge organisations to ensure that the tariff net increase is passed on to those trusts providing services without national prices, supporting the necessary investment which is required in mental health, community and the ambulance services”. 

Toby Lambert, Monitor’s pricing director, said: “The changes to payments, including the average increase, recognise the complexities of treating different types of patients and illnesses, underlying costs and wider financial pressures. 

“We want hospitals to be able to break even in 2016-17, and believe that the changes we have proposed will give providers the breathing space they need to prioritise and focus on long-term improvements.” 

The proposed tariff will be supported by a new £1.8bn Sustainability and Transformation Fund, which as part of the Five Year Forward View will help challenged hospitals to achieve financial balance.  However, Helen McKenna, senior policy adviser at The King’s Fund, recently wrote for NHS that the amount available to support transformation will be less than first expected.

Providers rejected last year’s tariff proposals and Lambert described the process of coming up with an agreement for this year’s draft proposals as ‘challenging’. Monitor is also discussing moving to a multi-year tariff from 2017-18. NHS Providers previously stated their opposition to changes to the tariff objection thresholds after saying that they made it harder for their voices to be heard. 

The national tariff proposals consultation is open until 11 March. 

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