Technical / New risk framework to be applicable immediately
The framework is applicable immediately and the month 5 monitoring returns will reflect its requirements. Some amendments made to the framework are simply updates for changes in the sector since April 2014. For instance, the new framework refers to the fit and proper persons requirements and duty of candour.
The key changes are those consulted on in June, reflecting the difficult financial position for
the NHS at the moment. Monitor concedes that the framework is likely to result in lower ratings for some foundation trusts.
A financial sustainability risk rating has been introduced to replace the continuity of service
rating. The new rating adds two metrics to the existing liquidity and capital service capacity metrics. The new metrics are:
The individual metric scores would be combined using the weightings as indicated in the table below to give an overall weighting of 1 to 4. Rounding will be to the nearest number. This is a change to the previous framework, which rounded up (so, in the new framework 1.5 would be rounded up to 2, but 1.4 down to 1).
Scoring a 1 on any metric will cap the weighted rating to a 2 overall. The existing 2* rating will be retained where there is little likelihood of deterioration in an FT’s position.
This revised framework will be applied on a monthly basis, although the indicators will continue to be published quarterly. This monthly assessment is only possible due to Monitor’s insistence that all foundation trusts submit financial information monthly from August 2015 – previously only foundation trusts rated 1 or 2 were subject to monthly reporting.
Monitor has also made it clear that it expects to take action earlier, although the wording of the framework has been amended since the consultation draft. Trusts rated as 1 are ‘likely’ to be investigated; 2-rated trusts will ‘potentially’ be investigated; trusts rated 3 or 2* will potentially be subject to enhanced monitoring – under the previous regime they would have not been subject to any regulatory activity.
As proposed in the consultation, Monitor has also introduced an additional assessment of value for money in FTs’ governance rating. This measure will consider whether there is evidence to suggest inefficient or uneconomical spending. Monitor expects this evidence to include looking at how a trust performs against published benchmarks. At the moment, those national benchmarks do not exist – Monitor will notify the sector once they become available.
In August, Monitor and the NHS Trust Development Authority issued their ‘nursing agency rules’ for a short period for comments. These will be finalised and applied from this month. Any foundation trust that exceeds their published maximum hourly rate for agency staff, fails to use an approved framework for procuring agency staff or exceeds the annual ceiling of 3% of nursing staff costs on agency nurses could be deemed to be failing in its value for money duty.
In brief
The Department of Health group manual for accounts for 2015/16 is available. A key addition is guidance on accounting for the better care fund (BCF). This is of interest to clinical commissioning groups and NHS providers, as BCF impacts on agreement of balances and NHS provider accounts need to be consistent with CCG accounts.
Monitor has expanded its local payment examples with a potential capitated approach for mental health services. The new outcomes-based approach has three components: a fixed core payment; an incentive outcomes-based payment; and a mechanism for sharing risk related to gains/losses between commissioners and providers.
A form to help trusts comply with the very senior manager pay process is available from Monitor. Trusts have been asked to seek ministers’ views before board appointments where the salary is higher than the prime minister’s.
The Scottish government health directorate has released a paper applying programme budgeting methodology used in England and Wales to disaggregate NHS Scotland activity and costs by 23 diagnostic categories.
NICE update: Diabetic eye disease drug guideline
NICE guidance TA346 covers the use of aflibercept for treating diabetic macular oedema (DMO) – a common complication linked to diabetic retinopathy and the most common cause of visual impairment in diabetes mellitus. It occurs as a result of changes in retinal blood vessels in people with diabetes. Disruption of the blood-retinal barrier allows fluid to leak from blood vessels in the central part of the retina (the macula), leading to fluid accumulation and thickening of the macula. This can lead to severe visual impairment in the affected eye. In England, 6,205 people may be eligible for treatment with aflibercept solution by intravitreous injection each year.
NICE guidance recommends aflibercept solution for injection as an option for treating visual impairment in this way only if: The eye has a central retinal thickness of 400 micrometres or more at start of treatment The pharmaceutical company provides aflibercept with the discount agreed in the patient access scheme.
The list price of aflibercept is £816 per vial ex VAT (British National Formulary edition January 2015). The total cost for treating a patient in the first year is £6,936 based on 8.5 aflibercept injections. The pharma company has agreed a patient access scheme with the Department of Health. This provides a simple discount to the list price of aflibercept, with the discount applied at the point of purchase or invoice.
Prepared by Stephen Brookfield (senior business analyst) at NICE
The key changes are those consulted on in June, reflecting the difficult financial position for
the NHS at the moment. Monitor concedes that the framework is likely to result in lower ratings for some foundation trusts.
A financial sustainability risk rating has been introduced to replace the continuity of service
rating. The new rating adds two metrics to the existing liquidity and capital service capacity metrics. The new metrics are:
- Income and expenditure (I&E) margin
- Variance from planned I&E margin.
The individual metric scores would be combined using the weightings as indicated in the table below to give an overall weighting of 1 to 4. Rounding will be to the nearest number. This is a change to the previous framework, which rounded up (so, in the new framework 1.5 would be rounded up to 2, but 1.4 down to 1).
Scoring a 1 on any metric will cap the weighted rating to a 2 overall. The existing 2* rating will be retained where there is little likelihood of deterioration in an FT’s position.
This revised framework will be applied on a monthly basis, although the indicators will continue to be published quarterly. This monthly assessment is only possible due to Monitor’s insistence that all foundation trusts submit financial information monthly from August 2015 – previously only foundation trusts rated 1 or 2 were subject to monthly reporting.
Monitor has also made it clear that it expects to take action earlier, although the wording of the framework has been amended since the consultation draft. Trusts rated as 1 are ‘likely’ to be investigated; 2-rated trusts will ‘potentially’ be investigated; trusts rated 3 or 2* will potentially be subject to enhanced monitoring – under the previous regime they would have not been subject to any regulatory activity.
As proposed in the consultation, Monitor has also introduced an additional assessment of value for money in FTs’ governance rating. This measure will consider whether there is evidence to suggest inefficient or uneconomical spending. Monitor expects this evidence to include looking at how a trust performs against published benchmarks. At the moment, those national benchmarks do not exist – Monitor will notify the sector once they become available.
In August, Monitor and the NHS Trust Development Authority issued their ‘nursing agency rules’ for a short period for comments. These will be finalised and applied from this month. Any foundation trust that exceeds their published maximum hourly rate for agency staff, fails to use an approved framework for procuring agency staff or exceeds the annual ceiling of 3% of nursing staff costs on agency nurses could be deemed to be failing in its value for money duty.
Debbie Paterson is an HFMA technical editor
New sustainability and financial performance risk rating
|
|
Financial criteria |
Weight % |
Metric |
Rating categories |
||||
|
1 |
2 |
3 |
4 |
|||||
|
Continuity of service |
Balance sheet sustainability |
25 |
Capital service capacity (times) |
<1.25x |
1.25x- 1.75x |
1.75x- 2.5x |
> 2.5x |
|
|
Liquidity |
25 |
Liquidity (days) |
Worse than (14) |
(14)- (7) |
(7)-0 |
>0 |
||
|
Financial efficiency |
Underlying performance |
25 |
I&E margin (%) |
Worse than (1)% |
(1)%- 0% |
0%- 1% |
>1% |
|
|
Variance from plan |
25
|
Variance in I&E margin as % of income |
Worse than (2)% |
(2)%- (1)% |
(1)%- 0% |
>0% |
||
In brief
The Department of Health group manual for accounts for 2015/16 is available. A key addition is guidance on accounting for the better care fund (BCF). This is of interest to clinical commissioning groups and NHS providers, as BCF impacts on agreement of balances and NHS provider accounts need to be consistent with CCG accounts.
Monitor has expanded its local payment examples with a potential capitated approach for mental health services. The new outcomes-based approach has three components: a fixed core payment; an incentive outcomes-based payment; and a mechanism for sharing risk related to gains/losses between commissioners and providers.
A form to help trusts comply with the very senior manager pay process is available from Monitor. Trusts have been asked to seek ministers’ views before board appointments where the salary is higher than the prime minister’s.
The Scottish government health directorate has released a paper applying programme budgeting methodology used in England and Wales to disaggregate NHS Scotland activity and costs by 23 diagnostic categories.
NICE update: Diabetic eye disease drug guideline
NICE guidance TA346 covers the use of aflibercept for treating diabetic macular oedema (DMO) – a common complication linked to diabetic retinopathy and the most common cause of visual impairment in diabetes mellitus. It occurs as a result of changes in retinal blood vessels in people with diabetes. Disruption of the blood-retinal barrier allows fluid to leak from blood vessels in the central part of the retina (the macula), leading to fluid accumulation and thickening of the macula. This can lead to severe visual impairment in the affected eye. In England, 6,205 people may be eligible for treatment with aflibercept solution by intravitreous injection each year.
NICE guidance recommends aflibercept solution for injection as an option for treating visual impairment in this way only if: The eye has a central retinal thickness of 400 micrometres or more at start of treatment The pharmaceutical company provides aflibercept with the discount agreed in the patient access scheme.
The list price of aflibercept is £816 per vial ex VAT (British National Formulary edition January 2015). The total cost for treating a patient in the first year is £6,936 based on 8.5 aflibercept injections. The pharma company has agreed a patient access scheme with the Department of Health. This provides a simple discount to the list price of aflibercept, with the discount applied at the point of purchase or invoice.
Prepared by Stephen Brookfield (senior business analyst) at NICE
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