Comment / Getting pragmatic with payment

There has broadly been a positive reaction to Monitor and NHS England’s proposals to speed up the demise of crude block contracts for mental health services in 2016/17.

But the proposals should not be seen as a major change of direction on mental health payment or a move away from the current push to use mental health clusters to understand and organise service provision.

Monitor and NHS England are consulting on requiring commissioners and providers of adult and older people’s mental healthcare to choose one of two approaches for payment in 2016/17.

Either they could pay on the basis of a year of care or episodes. Or they could adopt a capitation approach. In both scenarios, a proportion of payment would need to be linked to the achievement of quality and outcome standards.

Although it is not completely clear from the main body of the letter setting out the proposals, clusters would have a major role in underpinning both approaches.

The only thing that the two bodies have set their faces against is payment on the basis of cluster days, an approach that is seen to be unnecessarily granular and to ‘not best incentivise early intervention and recovery-focused care’.

Instead the two bodies think the sector is capable of using year of care or episodic payment. As the annex to the letter sets out: ‘This would mean payment was linked to the mental health clusters and would cover care provided to someone in any given cluster for the duration of the payment period’.

The proposed capitated payment approach would also involve the use of cluster data in establishing the unit price (per person per year).

Finance practitioners have suggested that the continued role for clusters should be better emphasised. Clusters are not perfect and do not yet have complete support across clinical and managerial communities. But they have brought significant benefits for those who have made most progress in adopting them.

Often this has been through establishing the packages of care that are delivered for service users in each cluster. Trusts say that this process has, more than any other initiative, helped them to understand the services they are delivering and the variation even within the same organisation. This has informed discussions with commissioners and helped to establish more standardisation and best practice across all points of delivery.

The potential for comparison across different bodies is also significant if people are talking the same language and using the same definitions.

Some organisations have moved beyond clusters. For example, Oxfordshire has developed an outcome-based capitation approach – highlighted in a Monitor local payment example earlier this year – that segments its population slightly differently. However, two of its segments map to the overarching super clusters.

The point is that clusters still have an important role, and the Monitor/NHS England letter could probably make this clearer.

The two bodies’ clearly stated ambition is to fast-track the demise of block contracts. In practice, this is a big ask.

Block contracts are still widespread in mental health, with only lip service often paid to the ‘required’ use of the new currency through some form of cluster shadowing.

Payment that takes little account of demand, activity and desired service developments seems to offer few benefits and is an obstacle to real discussions about the services that commissioners want and the financial implications of delivering them. But moving beyond this, particularly in such a difficult financial environment, will require complete buy-in from providers and, crucially, commissioners.

More sophisticated – and more transparent – contracting, with good risk sharing, makes sense.

The mental health community has been looking to put block contracts behind it for years. The Monitor and NHS England proposals – backed by promised further support and guidance – may offer a pragmatic step towards actually realising this.