News / No change to HRG4 tariff launch plans

Concerns were raised during the Department of Health’s consultation on future options for payment by results about the quality of the 2006/07 reference costs (the first to be collected using new healthcare resource groups HRG4). However, Sarah Butler, the Department’s deputy director of finance responsible for payment by results operations, told the HFMA payment by results summit that plans for a revised tariff currency had not changed.

She said that the original consultation had made it clear HRG4 would be launched as the basis for the tariff in 2009 and this remained the case.

The Department has acknowledged difficulties with the service’s first attempt at reference costs using HRG4, particularly in terms of costing on a spell basis. But Ms Butler said that the finished consultant episode-based costings for core HRGs were robust. As well as the difficulties with spell costs, she admitted there were quality issues with data collected on the new unbundled HRGs, partly because of the incomplete uptake by trusts of the underpinning revised procedure classifications.

While the launch of the HRG4 tariff remains on track, Ms Butler said that the Department’s analysis of the reference costs would inform decisions about the tariff scope and the detailed implementation.

Chris Watson, the Department’s head of development in the payment by results team, said the key message from the 2006/07 reference costs was that it seemed to have ‘gone back to being a finance exercise’, with some organisations submitting figures that had not been sense-checked by clinicians. He added that there had been ‘too much top-down costing and too much reliance on length of stay’ to apportion costs.


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