Feature / Currency exchange

As mental health payment by results enters its introductory year, Steve Brown talks to finance directors about their readiness for the change in contracting currency and the new payment system.

It has been exactly 10 years since the Department of Health unveiled plans to introduce payment by results. The focus of the 'fundamental changes' outlined in the April 2002 announcement, and in the subsequent Reforming NHS financial flows in October the same year, was acute activity. But the clear plan over time was to cover 'all commissioning arrangements within the NHS'.

Fast forward to the present day and we stand on the verge of a major step towards that broader vision. Payment by results guidance for 2012/13 confirms that this is the 'introductory year' for a shift from block contracts to PBR currencies for adult and older people's mental health services. It has taken longer to get here than many would have hoped back in 2002 - and 'here' is a world of a national currency with local prices rather than national tariffs.

But even now, 10 years on, there are concerns about the timescales and the work still needed to be undertaken in local health economies.

Confederation concerns
NHS Confederation chief executive Mike Farrar summed up these concerns when he spoke in March. He said the new payment system for mental health services was not ready yet and was unlikely to be ready by the deadline of the financial year 2013/14 - the date originally identified by the Department as the earliest opportunity to introduce a national tariff. 'The Department and Commissioning Board need to spend time and resources to develop a functioning mental health tariff,' he said, suggesting that further postponement might otherwise be needed.

Few, if any, working in mental health finance expect a national tariff in 2013/14. If anything, there is concern that moving too quickly will cause problems, both in terms of clinical engagement and possible financial destabilisation. Finance directors support the decision to introduce the national currency - too long has been spent in discussion and attempts to design the perfect system on paper. But they want a sensible and measured approach to the continued introduction of PBR so that the risks for commissioners and providers are understood thoroughly prior to going live. 

The new cluster-based PBR currency is seen as having huge potential to drive engagement between clinicians working in commissioning and provision. But it will also provide links between caseload, user need and the amount paid.

Mental health providers believe traditional block contracts have been seen by commissioners as an opportunity to get more for less, while activity-based PBR contracts have sucked increasing levels of resources into the acute sector. Working with clusters - defined in terms of service user needs rather than the different types of intervention - also has the potential to introduce greater links with outcomes.

So there is enthusiasm for the new system and relief that mental health PBR is at last moving beyond theory and debate. But the worries about timescales flagged up by Mr Farrar are real. Finance directors want the challenges facing mental health services to be acknowledged and a measured approach taken to getting a working system in place.

'We do have concerns about the timescales,' says Ros Francké, chair of the HFMA's mental health faculty MH Finance and finance director of Cheshire and Wirral Partnership NHS Foundation Trust. 'We have continued to flag these concerns - for example in an HFMA survey last summer - and the position hasn't changed. While we are working collegiately with commissioners, both sides recognise the huge amount of work we've got to do just to be able to evaluate what is going on.'

Ms Francké says there are lots of good reasons supporting the introduction of the new currency. 'We have a group of clinicians in our trust now who talk very positively about the process that contributes to designing patient care effectively,' she says.

And there are enormous benefits in understanding changes in casemix even within a static caseload. But at the same time, she says the service does 'not want to take the risk with something that will be as untried and untested as it will be by the Department's deadlines, despite the effort that has gone into this agenda over the last 18 months'.

Eyes on the prize
James Duncan, finance director and deputy chief executive at Northumberland Tyne and Wear NHS Foundation Trust, one of the country's biggest mental health providers, says the new system has to be about more than ticking the PBR expansion box. 'We need to keep our eyes on the prize: a payment mechanism that incentivises good services, supports transformation and encourages us to implement the mental health strategy,' he says.

The key, he suggests, is to have a system that forces providers and commissioners to talk about policy objectives and not just about counting and paying for 'widgets'.

Gus Heafield, director of finance and corporate governance at South London and Maudsley NHS Foundation Trust, accepts that deadlines provide a useful impetus. 'Without deadlines, the potential for drift is great,' he says. But there needs to be a balance between pushing the service to deliver and pushing too hard so that mental health finances are destabilised and clinicians disengaged. 'The danger is you set deadlines, which then become the driver for delivery. It can seem that the end is to achieve something by a given date, rather than something that supports the overriding objectives - to keep people well, keep them out of hospital and intervene as early as possible to avoid the deterioration of their condition.

'We need to get that right. And we have to understand where we are starting from - the information base is relatively poor and we need to learn internally the links between interventions, outcomes and costs. So we need to be cautious, not run before we can walk, and ensure we don't destabilise parts of the system.'

The Department's final PBR guidance sets clusters as the contract currency for 2012/13 and calls on providers to agree local cluster prices with commissioners. This follows on from last year's guidance (for 2011/12), which 'encouraged' commissioners and providers to 'shadow the clusters alongside their existing contract arrangements'. In reality, large parts of the service are at least 12 months out of step with the position described in the guidance.

Most providers contacted by Healthcare Finance will at best be shadowing their normal block contracts this coming year. 'We have agreed activity levels within our contracts,' says Ms Francké, 'but not by cluster. In addition, the commissioners have supported this agenda by designing CQUIN targets around PBR development in 2012/13.' In part this will see shadow prices developed during the year.
Paul Stefanoski, director of resources and deputy chief executive at Black Country Partnership NHS Foundation Trust, agrees that 2012/13 will not be a proper shadow year.

'We will report our activity by cluster as an addendum to the contract,' he says. The aim is to bring commissioners up to speed for 2013/14. That could mean 2014/15 is the first year of full PBR (with contracts actually drawn up and paid on the basis of clusters, rather than contacts and bed days) - at least a year out of sync with the suggested timetable.

Testing the data
Berkshire Healthcare NHS FT acknowledges it is behind the curve on PBR implementation - a result of an internal focus on a large service redesign. The caseload clustering deadline of the end of December was met, but director of finance, performance and information Alex Gild says the trust now needs to test the robustness of this clustering data and get the clinical practice embedded. There are no shadow prices as yet and, again, contracts will not be based on clusters in 2012/13. 'We are effectively agreeing a development programme to get us ready to review local pricing in 2013/14,' he says.

However, he says the trust has already seen benefits from the new currency in monitoring the redesigned service. 'Our six local authority areas have all reviewed their caseload based on cluster profiles and this has been really powerful,' he says. 'It is the first time we have had good information that describes the needs of the people coming through our services.'

More time to review and understand the data is a common request. Some organisations had service users clustered well in advance of the December deadline, but for many they will only have had three months' worth of cluster activity. Finance directors say they need time to understand the data - particularly in clusters where interactions with users can be over extended periods.
One director says a full year's data would be needed in some areas before it would be possible to have a credible stab at workable cluster prices. There is a need both to understand the distribution of caseload across clusters and within individual clusters.

Alongside the need to understand the data is the need for improvements in the core activity data itself - with new clinical systems holding the key for many organisations. Finance directors maintain they can produce accurate costs as long as they are counting the right things. In general mental health organisations need much richer data - so not just counting server user contacts but the detail of those contacts, including preparation time, travelling time, time spent with service users, non-face-to-face support, and the number and types of practitioners involved.

Mental health trusts had a first attempt at producing cluster-based costs for the 2010/11 reference costs return - although many did so using only part-year activity. The curve of average costs across all the clusters, from around £10 to £100 per cluster day, looks to be the right shape - for example, with cluster 14 (psychotic crisis) exhibiting the highest costs, as might be expected. But there was significant variation in the individual submissions and within the component costs for each cluster (for example, the cost per attendance or cost per assessment for a specific cluster). Better data is the key to improving submissions.

This improvement is already under way in some areas - partly as organisations have been introducing information systems locally after the demise of the national IT programme. Some organisations report major improvements in data in just the past year - underlining the motivation provided by making the PBR system live.

South Staffordshire and Shropshire Healthcare NHS Foundation Trust is one organisation looking at a new clinical information system that would deliver a true electronic patient record. Finance and performance director Jayne Deaville says the key is to make the data collection almost invisible. 'We need the information we require [for costing and contracting] to come out of the system as a by-product of the normal clinical activity,' she says.

But better understanding of data and better data are just two of many challenges facing mental health trusts as they try to make a success of the new system (see box).

Summing up current views among mental health providers, Steve Shrubb, director of the NHS Confederation's Mental Health Network, believes the service needs more clarity about central expectations. 'We need the Department to come out and say that they want the next 18 months to be on data quality, training CCGs and a real concentration on clusters - making them the spine of conversations - and testing and re-testing the links with quality outcomes,' he says. 'We need to keep up the pressure, but in a way that is realistic.'