News / Cap reduces MFF range

There has been a further tightening of the range in the market forces factor (MFF) in 2010/11 as a result of the continued capping mechanism.

The MFF is used in the payment by results process to compensate providers for unavoidable cost differences faced by providers in different parts of the country, which all receive the same national tariff rate for procedures and treatments. A trust with an MFF of 1.1 would receive a 10% top-up on tariff rates.

A major change to the way the MFF is calculated for 2009/10 resulted in a significant tightening in the range of MFF with 42 percentage points (between smallest and highest MFF) in 2008/09 becoming 35 percentage points in 2009/10 (although this did not translate directly into a loss of income for organisations at the top of the range as there were also compensating increases in average tariff prices).

However, a capping mechanism suppressed the full impact of the MFF changes, without which the range would have spanned just 28 percentage points.

This capping mechanism – limiting changes in overall income resulting from the MFF changes to 2% – has continued in 2010/11. The range now stretches from an MFF of 1.0 (Cornwall Partnership NHS Trust) to 1.32 (University College London Hospitals NHS FT).