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Dalton urges NHS to adopt two-year tariff as consultation opens

New proposals from NHS Improvement (NHSI) for a two-year tariff system could help stabilise the health service’s finances, the chief executive of the NHS Confederation has said.

NHSI opened a consultation today into proposals, developed in collaboration with NHS England, to set national tariffs two years in advance, for 2017-18 and 2018-19.

It argued that this will provide greater stability for providers, making it easier for them to fund changes for the Five Year Forward View.

Stephen Dalton, interim CEO of the NHS Confederation, said: “We are pleased national bodies have recognised the case for a multi-year tariff which, if implemented well, could contribute to stabilising planning during this difficult period of NHS transformation.

“This is an opportunity to move away from the fraught annual tariff process and instead consider bolder reforms to the NHS payment system.

“As always, we are keen to work with partners and the national bodies to achieve this.”

NHSI also proposed changing from HRG4 currency design to phase 3 of HRG4+, which it said better accounts for different levels of complexity and reflects current clinical practice.

The regulator proposes to model prices for 2017/18 (based on HRG4+) by using the same method adopted by the Department of Health for the 2013/14 Payment by Results (PbR) tariff, with updated inputs and further adjustments. For the second year of the proposed two year tariff (2018/19) we propose to roll these prices over with some adjustments.

These include an update to top-up payments for specialised services, removing the interventional radiology best practice tariff (BPT), and adding four new national prices.

NHSI is also considering options to limit financial volatility for providers and commissioners that may arise from a change of currency, or from inadequacies in costing data, particularly for orthopaedic services.

Paul Baumann, chief financial officer for NHS England, said at last year’s Healthcare Financial Management Association annual conference that NHS England had “every intention” of delivering multi-year settlements.

NHE reported last year that Monitor, NHSI’s predecessor, was considering three potential options for multi-year tariffs.

Andrew Pepper, chair of the NHS Clinical Commissioners Finance Forum and chief financial officer of NHS Wakefield CCG, welcomed the proposals but said that the final prices must be right for providers and commissioners.

“CCGs must be given sufficient opportunity to assess the impact that the proposed changes will have on a number of areas, including published future indicative CCG allocations, and consider whether any unintended consequences arise as a result,” he said.

“This analysis must be taken into account before any decisions are made and we will be engaging closely in the process over the coming months on behalf of our members to make sure their views are fully reflected, both in respect of the pricing proposals set out today and in relation to proposals on areas including the efficiency factor yet to come.”

For locally determined prices, NHSI has proposed that commissioners and providers should link a proportion of payment for mental health services to locally agreed quality and outcome measures or agree an alternative payment approach consistent with the rules for local pricing.

A spokesperson for NHSI and NHS England added that the introduction of a multi-year tariff will provide NHS organisations with greater certainty and stability on the amount they will be paid for the care they provide over a longer period.

“This stability will help the NHS provide patients with high quality, sustainable care, whilst also encouraging innovation and transformation in how health services are provided,” they said.

“This consultation is a key opportunity for the NHS to have its say on next year’s tariff. So, we urge providers and commissioners to feedback on the proposed changes as early as possible.”

The consultation is open until 26 August. To take part, click here.

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