Feature / Finance explained

One of the big changes in the new arrangements for commissioning relates to specialised services – or prescribed specialised services, to use the new jargon. Prior to the introduction of clinical commissioning groups, 10 specialised commissioning groups (SCGs) commissioned specialised services variably on behalf of primary care trusts, alongside a set of highly specialised services that were commissioned nationally.

But from April, specialised commissioning has become the responsibility of NHS England.

The structural changes would have required some change anyway, as the strategic health authority and PCT hosts for SCGs were themselves being abolished. But the real motivation was to create a single operating model for all specialised services, which have been ‘prescribed’ in legislation. In practice, 10 of the 27 local areas teams are responsible for contracting with specialist providers, but they will do so in a consistent way.

The aim is to ensure that all services identified as specialised are commissioned to a standard service specification and price, ensuring patients get access to the best possible services, regardless of where they live. There has been a huge amount of work to identify and specify the so-called prescribed services, led by more than 50 clinical reference groups. But getting the funding right has been a major challenge.

The former SCGs were funded by the PCTs on whose behalf they commissioned. But creating the new NHS England budget for specialised commissioning was not simply a case of taking former SCG budgets and transferring these to the central pot. For a start, SCGs across the country commissioned a different range of the nationally identified specialised services, which meant PCTs in some parts of the country were commissioning some specialised services directly.

Provider focus

Adding to the complications has been a major expansion in the services categorised as specialised. Some estimates suggest a 40% increase in the overall specialised commissioning budget compared with the estimated £8.5bn spent by PCTs in 2010/11. And on top of this, there has been a switch from population-based to provider-based commissioning.

This last point means that a specialist provider will receive all its specialised service income from the area team covering the area in which it is located – not from the area team covering the population from which the patient is referred.

NHS England finance director Paul Baumann was quoted recently acknowledging that the disaggregation of former PCT budgets had proved ‘massively complex’ and more difficult than had been anticipated.

This complexity involved trying to unpick existing commissioning arrangements while also understanding exactly which ‘additional’ services were transferring from local responsibility to NHS England. The starting position was SCGs’ baseline expenditure (albeit for a different range of services). This was followed by a requirement in 2012/13 for SCGs to commission a ‘minimum take’ of services to establish a consistent approach to commissioning a subset of specialised services a year ahead of the formal full transfer of responsibilities.

This gave a first estimate on required budget levels, but did not provide the full picture as it did not cover all services and there was still some variability in approach to minimum take services.

Maximum take

Initial central specialised commissioning budgets – needed to adjust CCG allocations before they were announced in November 2012 – were therefore based on more detailed estimates informed by a further process. This looked to identify the wider range of specialised services – also referred to as maximum take – including so-called group 3 services, where there could be difficulties in distinguishing activities from services that should be commissioned locally.

While providers filled in returns to identify these services, the issue was far from straightforward. It was made more complex because half the expenditure related to drugs, funding for which was sometimes in provider budgets and sometimes in GP prescribing budgets. An identification rules algorithm was created to translate the service specifications, drafted by the clinical reference groups, into something that could inform the contracting process. It decides if activity is specialised or not, based on clinical codes and classifications. However, this has added further complications, as in some service areas it has failed to pick up specialised activity, while in others it has identified some non- specialised services as specialised – in part a result of the lack of detail provided in the underpinning coding. The result has provided something of a financial headache. In overall terms, the NHS England pot for specialised commissioning is too small – reportedly to the tune of several hundred million pounds on an overall budget that should be around £12bn.But it is not simply a matter of retrospectively adjusting all CCG budgets to make good this shortfall. Within the overall correction required in NHS England’s favour, there are some CCGs that have contributed too much and those that have not contributed enough.

It is proving difficult to unravel, in particular given the move to provider- based commissioning, as some of the required adjustments are not just within area teams but between teams. This is not an issue about funding sufficiency. Specialised services have not expanded and clearly the funding is in the system.

However, getting the right funds into the right budgets is vital, both for NHS England and for CCGs. NHS England needs to have the resources to match to its new commissioning responsibilities. And new CCGs need a firm understanding of the real resources available to invest in local services.