News / Monitor in line for tariff role

Foundation trust regulator Monitor looks set to assume responsibility for tariff setting as part of government plans to turn it into a wider economic regulator.

The newly elected coalition government announced its plans for the next five years in the middle of May. It included 30 specific commitments and proposals for the NHS, most of which had been rehearsed in the Conservative and Liberal Democrat election manifestos.

Alongside plans to develop the Care Quality Commission into an ‘effective quality inspectorate’, the government announced that Monitor would become an economic regulator. It will ‘oversee aspects of access, competition and price setting in the NHS’, taking on the provider performance management role currently undertaken by strategic health authorities.

No further details were given on Monitor’s potential role in price setting. Monitor was similarly tight-lipped about what this could involve. ‘Monitor is well equipped to take on this challenging new role, and we look forward to working with the new secretary of state to secure the success of his policies,’ said Steve Bundred, who took over as chair of Monitor at the beginning of May.

In 2007 the former government ruled out a ‘Bank of England Monetary Policy Committee model’ for price setting while the payment by results system was still in its infancy. ‘Until it becomes more mature, it is difficult to see how an external body could be given a simple set of guidelines within which to operate,’ it said.

Despite this steer, the consultation provoked some support for greater independence in tariff setting.

It is easy to see the mechanics of creating a tariff out of previous years’ reference costs being outsourced. But managers contacted by Healthcare Finance recognised that the Department would always need to be able to ensure the required activity was affordable at tariff rates.