News / Finance managers welcome ‘no change’ in final tariff

The Department of Health has confirmed there will be no changes to mandatory tariff prices or trim points compared with the road-test tariff published in December.

The final tariff package was published at the end of February. There were only a small number of minor detailed changes to non-mandatory tariffs and trigger codes for specialised top-ups.

NHS finance managers welcomed the consistency.  ‘We should welcome the absence of further tweaking so close to contract deadline date,’ said HFMA president Paul Assinder. While there were no major changes to payment by results rules, the finalised guidance did provide additional clarification in several areas, in particular over the introduction of a 30% marginal rate for emergency admissions.

It stresses that the marginal rate only applies to activity above the preset baseline and should be applied after any other national adjustments have been applied for short stay emergency spells, long stay payments or specialised service top-up.

For example, a spell attracting both the 70% short stay adjustment and the 30% marginal rate would be paid at 21% of the tariff price. It does not apply to activity outside the scope of PBR, best practice tariff activity or A&E attendances.

Further details are also provided on how to set the baseline, which is the value of 2008/09 activity priced at the 2010/11 tariff. A separate baseline will apply for each contractual relationship. So even if a provider reduced activity compared with the baseline in aggregate, the marginal rate would still apply in each contract where activity is above baseline.

Speaking to Healthcare Finance, the Department’s director of NHS finance, Bob Alexander, said the marginal rate was not intended to be a ‘rewarding strategy’. The aim is to bring providers and commissioners together to tackle rising emergency admissions.

HFMA PBR group chairman Andy Hardy said the 30% marginal rate would be challenging for many providers. ‘This will be particularly the case in areas such as trauma, where there is likely to be a significant shortfall compared with costs. This clearly makes demand management – understanding increases in demand and ensuring all patients are referred into the most appropriate pathway and setting – a joint responsibility.’

He added: ‘Clinicians and managers in providers will need to actively engage with primary care colleagues to ensure optimum referrals and the development, where appropriate, of alternatives to hospital-based care. However, it will also be important for strategic health authorities to use their system risk pools – created from the 70% savings  triggered by this new business rule – to support providers in service areas hardest hit by these changes.’

The guidance says SHAs will determine locally how they collect and use these savings, adding:

‘But we would expect some of them to be invested in emergency admission avoidance.’

The guidance covers 2010/11 and provides no more detail on the operating framework’s reference to moving the tariff to a maximum price beyond the coming year.

Mr Alexander said the Department did not want ‘wholesale price negotiation’ but was keen to ensure the tariff was not an obstacle to improving services. ‘I could see a scenario where it is in the interests of a provider to offer a lower price that enables a PCT to invest in something complementary that wasn’t in the tariff,’ he said.

Mr Assinder agreed that the benefits of a standard tariff – keeping the commissioning focus on quality – should not be lost. 

‘Any move towards open price competition should be resisted as it could precipitate a race to the bottom in quality and a crude exploitation of monopolistic market conditions in some health economies,’ he said. He backed the ‘reference cost-based legitimacy of the tariff’, but said the move to best clinical practice and whole system pathway tariffs should be pursued with vigour.  ‘We hope the HFMA’s PBR group will be at the forefront of such developments,’ he said.