Feature / Introduction to payment by results (3)

The tariff accounted for about £25bn of NHS spending in 2008/09, although the current figure is thought to be nearer £29bn. This accounts for just over a third of primary care trust budgets. The figures do not remain static from year to year as the Department of Health refines the scope and structure of the tariff.

The Department is using 2011/12 to prepare for substantial expansions in the tariff’s scope in future years – for example, by mandating the allocation of patients to mental healthcare clusters in advance of its plan to mandate the use of these clusters in 2012/13 (with local prices). There may also be small changes in the scope of the mandatory tariff. In 2011/12, some additional admitted patient care healthcare resource groups (HRGs) and outpatient attendance treatment function codes (TFCs) will be included, having been previously excluded because of low volume of activity.

Some activity is excluded from PBR and payment for this work is agreed locally – services outside the scope of reference costs and those that do not have currencies, or where currencies exist but the costs associated with them are not believed to be sufficiently robust.

Each year the Department publishes a list of non-mandatory currencies and prices, such as for fitting/maintaining hearing aids. These can be used as a guide or starting point for local negotiation.

The tariff can be used as a lever to incentivise behaviour by altering its structure. For instance, the Department has encouraged efficiency through more elective day cases, and incentivised better management of the rise in non- elective admissions through the 30% marginal rate for activity over the 2008/09 baseline.

Before the final tariff is published, it is tested in two stages in NHS organisations. The sense check allows advisory groups, single specialty hospitals and a small cohort of NHS providers and commissioners to examine the draft prices for perverse incentives and the impact of the tariff.

The second stage, the road test, usually takes place in December or January and allows all organisations to become familiar with the planned tariff and associated guidance.

Though the Department expects no change between road test and final tariff, it updates the guidance to reflect feedback from the service.