News / DH signals major shift in PBR policy beyond 2010/11

Draft payment by results guidance for next year has introduced a marginal rate for emergencies and dropped plans to move accident and emergency tariffs to the latest version of healthcare resource groups.

Other changes compared with 2009/10 are broadly in line with earlier announcements. But beyond 2010/11 the new operating framework signals a major change, with national tariffs becoming the maximum price payable.

Use of a marginal rate on emergency activity was widely anticipated, but the PBR guidance puts this at 30% and sets the threshold as the 2008/09 outturn activity (at 2010/11 prices). The only exception to this baseline is where PCTs can show emergency activity has reduced sustainably in 2009/10. The marginal rate will not apply to decreases in activity.

Another new business rule will enable strategic health authorities to apply to the Department to ‘suspend contractual arrangements in their area’. But NHS director general of finance, performance and operations David Flory made it clear he ‘did not expect to have to exercise this option’.

The Department has also changed its mind on moving accident and emergency tariffs onto HRG4, as proposed at the end of the summer. Mr Flory said this was a result of the sense check exercise, which had suggested the change would ‘introduce an unacceptable level of volatility’.

A&E tariffs will remain on version 3.2 groupings, although the two higher bands will see price increases to reflect recent costings and there will be a review of the basis of A&E funding.

Other changes compared with 2009/10 were in line with earlier announcements. There will be a combined day case and elective inpatient tariff. Non-mandatory outpatient procedure tariffs will be replaced by 49 mandatory tariffs for high-volume HRGs, with the rest reimbursed as part of outpatient attendance tariffs.

But by far the biggest announcement on PBR was outside the draft PBR guidance. The Operating framework for the NHS in England 2010/11 signals a big change in direction. ‘After 2010/11, we shall move to a position where national tariffs represent the maximum price payable by a commissioner as opposed to the mandated price for particular activity,’ it said.

The Department said it recognised the change had ‘the potential for increasing contracting and transaction costs in the system’. The original aim of PBR was to remove price from annual contract discussions, leaving managers to focus on activity and quality.

The Department also announced its intention to explore the development and implementation of pathway and year-of-care tariffs, starting with long term conditions.

The PBR guidance also provides further details on the 0% uplift to tariff, unveiled by NHS chief executive David Nicholson and Mr Flory at the HFMA annual conference earlier this month.

The overall 0% uplift, which will apply to non tariff prices as well, is built up from a 2% uplift for pay, 0.6% for non-pay inflation, 0.9% for non-pay pressures, offset by a 3.5% efficiency requirement. Clinical negligence scheme for trusts contribution increases have been factored into specific tariff prices.