Feature / Border crossing

In the 12 years since the devolution of powers to politicians in Scotland and Wales, the local health services have diverged from the model in England. Northern Ireland already had a different system and has retained integrated health and social care through devolution. Wales and Scotland have followed single system models where health boards plan healthcare according to need and deliver it in hospital or community settings. The four systems have a lot to learn from each other – and indeed they do – but they do not operate in isolation and, where they do overlap, confusion and dispute can occur.

This is seen nowhere more so than on the Welsh north-east border with England – and the main cause of dispute is funding flows.

More than 200,000 outpatients from Welsh addresses visit English hospitals each year and in 2008/09 about 54,000 Welsh residents travelled to English hospitals for emergency and elective treatment. About 20,000 people resident in England are registered with a Welsh GP, while 15,000 Welsh residents have a GP in England. There is some suggestion that the slight flow of patients into Welsh GP practices is due to the availability of free prescriptions in Wales, but there appears to be no evidence for this.

Fund allocation

GPs receive funds for their own services based on registered practice lists. But the allocation

of funds for secondary care is different in England and Wales. While Welsh NHS funding is allocated on the basis of residency – where the population lives – in England it is linked largely to the GP registered population. This means some patients are not funded at all (English residents with a GP in Wales), while some are funded twice (if they live in Wales but have registered with a practice in England). English and Welsh commissioners are responsible for commissioning services for patients registered with their GPs, even if they live on the other side of the border.

The Department of Health pays the Welsh Assembly government about £6m a year to cover the net difference in the cost of secondary care of English residents who are registered with a GP in Wales.

It is also worth noting other, non-financial differences between the two systems. Wales does not have patient choice and has to adhere to the Assembly government’s One Wales commitment of treating patients in Wales where it is safe and sustainable. This does not mean a patient being seen in an English provider is automatically recalled if an appropriate service is available in Wales, but could lead to a gradual reduction in the flow of patients over the border.

That flow has built up over the years. It may be that an English provider is a patient’s nearest hospital or their family may live close by. Their GP could have professional ties to a specialist there or the treatment they need is not provided in their local Welsh hospital. Powys has no district general hospital and its residents travel to England and other parts of Wales for many common operations.

So how is this activity paid for? Wales does not have payment by results (PBR) and although Welsh commissioners in specified areas (see box) are mandated to pay the PBR tariff where applicable, disputes remain. For example, English providers must approach Welsh commissioners for approval prior to performing elective work on a patient resident in Wales. Without this approval, the commissioner may refuse to pay.

The mandate is included in the Interim protocol on cross-border commissioning between England and Wales, which was due to expire at the end of March. The Department of Health and the Welsh Assembly government are in talks to renew the protocol.

Welsh local health board finance managers contacted by Healthcare Finance felt they could not comment on cross-border flows in the run-up to the Welsh Assembly elections in May. However, there are a number of significant differences that make cross-border care a difficult and sensitive issue for Welsh planners (commissioners). They argue that English providers’ prices went up after the introduction of payment by results, some putting the total additional cost at £20m a year. They say they have nothing to show for this additional cost.

Before PBR, English providers had block contracts with Welsh commissioners. Many were relatively low-cost organisations and under cost-equals-price, this translated to relatively low charges to the commissioner. However, PBR introduced a tariff based on a national average price, which often benefited the cross-border provider by raising the price they charged.

Over-performance issues

Another complication is on over-performance on contracts. Under PBR Welsh bodies (like their English counterparts) will pay full cost – under the old block contract arrangements they would have negotiated marginal rates for additional activity. And although they may benefit from being able to strip out 100% of the cost if there is under-performance, they acknowledge the destabilising effect this can have on English providers.

The interim protocol is an attempt to fix the outstanding PBR issues. It was agreed following a Commons Welsh affairs committee report in 2009. As part of the deal, the English Department of Health paid £12m to Welsh commissioners in 2009/10 to cover the difference between tariff and prices under the old block contracts.

While it eased some of the problems, Welsh planners believe the additional cost is closer to £20m than £12m. The protocol was seen as a temporary solution. Then health minister Mike O’Brien told the Welsh affairs committee’s follow-up inquiry in 2010: ‘It would be perhaps over-optimistic for me to say [the interim protocol] solved all the problems indefinitely, but what we have is a two-year period to ensure that we have dealt with most of the issues around the funding.’

English commissioners and providers are not convinced the issues have been dealt with. With an acute hospital two miles from the border, Chester is at the centre of the issue.

Jane Tomkinson, Countess of Chester Hospital NHS Foundation Trust deputy chief executive and director of finance and compliance, acknowledges funding of cross-border flows causes difficulties. Her trust is the single largest cross-border provider to Wales with contracts worth £27m a year (PBR and non-PBR activity). Non-PBR work is not as significant as activity covered by the tariff, with contracts standing at roughly £4m a year and so far this work does not cause much conflict.

 As Healthcare Finance went to press arrangements beyond 31 March had not been confirmed, though it is believed the interim protocol will be renewed. But in the absence of an agreement between governments, cross-border care represents a risk for the Countess of Chester in 2011/12, Ms Tomkinson says.

Tariff gap

The gap between the historic cost and tariff for cross-border care is around £6.5m.  ‘Since last summer we’ve been trying to move forward with the Department to get an agreement to consolidate the vote transfer with Wales, which funds the difference between the historic contract value and the tariff. We have to try to resolve the underlying issue so Welsh health boards are clear where the funding flows, and are happy to pay at tariff.’

She continues: ‘We would like a recurrent transfer of this element of the vote so an adequate level of resource is available to Welsh health boards to support payment at the tariff level. We cannot offer a differential price to the Welsh health boards – that would be anti-competitive, it would be in conflict with PBR rules and GP consortia would rightly be concerned as they would effectively subsidise services across the border.’

Iain Crossley. NHS Western Cheshire director of finance, economic and market development, says that in Deeside, part of the Betsi Cadwaladr Local Health Board area, there are 100,000 people who look to Chester for their healthcare.

‘In the past there have been quite a few issues between England and Wales about perceived subsidy. If English commissioners are paying the tariff and the Welsh are on historic block contracts there might be the perception that the cost is being borne more and more by the English commissioners.’

Mr Crossley and others interviewed by Healthcare Finance insist relations are cordial. All sides want the issues resolved. ‘The protocol says the financial consequences will be resolved between Department of Health and the Welsh Assembly government and will not disadvantage either commissioner, but that’s the bit that never really gets resolved,’ he says.

The main areas in dispute include A&E and sexual health services. Western Cheshire pays for these services provided in England for Welsh residents registered with Welsh GPs at a cost of £1.7m a year.

In 2009/10, the PCT received £1.2m to cover part of the A&E costs on a non-recurrent basis. It is hoping to receive funds to cover some of the 2010/11 costs. Non-recurrent revenue banked with NHS North West is currently being used to cover the costs.

Ms Tomkinson adds the Countess of Chester has good working relationships with Betsi Cadwaladr Local Health Board, its main Welsh commissioner. ‘Welsh patients are happy with the services we provide. We have three Flintshire governors and a representative of the Flintshire Community Health Council on our board of governors. We have agreed how we manage, over time, differentials on targets and protocols on the level of service. It works well but the financing mechanism is the primary cause of discussion and dispute.’

Efficiency pressures

She says the issue is not confined to PBR. In 2011/12 the local Welsh health board is seeking an 8.5% efficiency requirement and this is a worry for the Chester trust. ‘It could mean there are areas of service we can no longer provide under the contract to reflect the loss of £2.2m of funding, but it is dependent on joint working with the primary care element of the health board to manage demand. We are aware of plans to repatriate some aspects of work, but would urge health boards to review the financial impacts alongside potential inconvenience to patients in travelling further for clinical care.’

 Other policies create further issues. For example, schedules of procedures of limited clinical value are different. ‘We can’t have two patients sitting next to each other in outpatients where one has a procedure undertaken and the other not. We are looking to align the two policies so patients get the same level of access to services,’ she adds.

Policy forged in London and Cardiff has a major role to play in the interaction between the health services. One major change on the horizon – plans to replace PCTs with GP commissioning consortia – could complicate matters further.

The issue must be resolved before the hand-over, Mr Crossley says. ‘Once we move to consortia, which allocation will it come from? Will it fall to the National Commissioning Board or the consortium? The GPs in our emerging consortium are afraid this legacy issue will come back to them.’

In its PBR guidance for 2011/12, the Department said it would take account of the reforms when negotiating the renewal of the interim protocol. But managers on both sides of the border would be happier if a permanent solution could be found.

Interim protocol

The current protocol applies only to patients in named primary care trusts and health boards – Gloucestershire, Herefordshire, Shropshire County and West Cheshire PCTs, as well as Betsi Cadwaladr University Health Board, Powys Teaching Health Board and Aneurin Bevan Health Board.

It states that Welsh commissioners will commission work from English providers in line with the PBR rules – payments will be made at tariff plus the relevant market forces factor. Where there is no applicable tariff, Welsh commissioners are encouraged to follow, as near as reasonably practicable, the provider’s pricing arrangements agreed by their English commissioners.

The Department of Health and officials from the Welsh Assembly government are in discussions over the renewal of the Interim protocol on cross border commissioning between England and Wales.

This process will take into consideration the changes to the NHS in England set out in the recent Health and social care bill 2011.