‘Disarray’ as providers resoundingly reject 2015-16 tariff proposals

Providers have rejected the controversial 2015-16 tariff proposals, Monitor has announced, leaving financial uncertainty looming over the NHS as it enters a period of change while attempting to cope with unprecedented demand.

The healthcare regulator announced that 75.1% of all NHS providers (by share of supply) lodged formal objections to the proposed tariff, comfortably breaching the 51% threshold for objections that means pricing authorities must either refer their proposals to the Competition and Markets Authority for review, or consult the health service again on revised prices taking into account the objections.

The statutory consultation on the proposed rules and prices in the National Tariff for 2015-16 showed around 13% of CCGs, 37% of relevant providers by number, and 75% of relevant providers by share of supply, objected to the proposed method for determining.

A Monitor spokesperson said: “Under the legislation governing the NHS payment system, the proposals cannot be introduced if the proportion of CCGs, or the proportion of relevant providers (by number or weighted by share of supply), who object to the method equals or exceeds 51%, unless there is a reference to the Competition and Markets Authority.  As the share of total tariff income received by the objecting providers exceeds 51%, the National Tariff cannot be introduced in its current form at this stage and its implementation will be delayed.

“Monitor and NHS England are now considering the feedback received from the consultation and possible next steps, in the context of what the legislation permits in the event that an objection threshold is breached. Amongst the options available are engaging with the sector then re-consulting on revised proposals or referring the method to the Competition and Markets Authority.

“Meanwhile, commissioners and providers will be expected to continue planning for 2015-16 on the basis of the timetable and guidance that has already been issued.”

The King’s Fund has called the rejection of the tariff an “unprecedented development” leaving the NHS facing an uncertain outcome.

Richard Murray, director of policy at The King’s Fund, said: “The rejection of the proposed national tariff for next year is very significant. It signals that the policy of implementing year-on-year reductions in the prices paid to hospitals for their services has reached the end of the line.

“This is an unprecedented development. It is not clear what the outcome will be but, with just three months to go before the start of the financial year, it will throw financial planning in the NHS into disarray.

“With signs that it is becoming increasingly difficult to maintain downward pressure on staff pay, it indicates that the two main ways used to reduce NHS costs over the last few years - limiting staff salary increases and reducing payments to hospitals – have now been largely exhausted.

“With financial problems among hospitals now endemic, waiting times rising and staff morale a significant cause for concern, this once again indicates that the situation facing the NHS is becoming critical.”

Dr Steve Kell, co-chair of NHS Clinical Commissioners called it a “really disappointing situation for CCGs” at a time when the NHS needs effective planning and service improvement.

He said: “This is a crucial year for the NHS and it is essential NHS England and Monitor reach an agreement soon which addresses the concerns of providers and commissioners.  We need a national tariff system that enables and supports local relationships not undermines them.  This delay is likely to lead to significant cost implications for commissioners and it is vital that CCGs do not have additional financial pressures in a year when we need to deliver real change for patients and ensure the Better Care Fund is effective.”

Rob Webster, chief executive of the NHS Confederation, was critical of the timelines set out by Monitor and NHS England which has led to this delay having an “unacceptable impact” on planning for the next financial year.

“The most important conversations in the NHS are the ones that happen locally and these are now hampered because not enough has been done nationally to agree prices,” he said. “Time spent on planning nationally has come at the expense of time needed to plan locally and this puts another barrier in front of those local systems trying to work together to coproduce change in tough times. Once we reach an acceptable resolution to this interruption, we need to consider the valuable lessons from how the whole NHS has been engaged on the last two processes for setting tariffs and develop a process that will work on the third time of trying."

He added: “We remain concerned about some proposals in the tariff, most notably the decision to implement an untested marginal rate for acute-prescribed specialist services. Without the evidence to the contrary, our members can only infer that this seems a risk transfer from NHS England’s budget to local systems. It will have a big impact on a number of health systems and the extent of concern raised over the last few months demonstrates this."

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