News / PBR faces review

Payment by results is facing a review to test its ability to operate during the recession, NHS chief executive David Nicholson has revealed.

The review comes amid concerns that the current payment system was built to incentivise activity as the service strove to meet the 18-week target. However, with additional activity attracting full tariff rates, some commissioning managers fear the system provides the wrong incentives in times of restricted growth, with excess capacity driving up demand.

One PCT manager told Healthcare Finance: ‘With the current system, providers can trade their way out of difficulty. Can it continue? Yes. Is it affordable? No it isn’t.’

In his annual report (right), Mr Nicholson acknowledged the current system was built during a period of growth. ‘Payment by results, foundation trusts and national service frameworks are all things that have been built in an era of increasing growth and capacity,’ he said. ‘We need to look at the system reform levers we have put in place and test them to see if they are robust and strong enough to take us through a recession.’

This review, described by Mr Nicholson as ‘prudent’, will form part of the preparation for the 2010/11 operating framework.

This year’s contracting round – based on the new HRG4 tariff – has been described by some managers as the most difficult ever. In some areas there has been a cap on the income providers can receive from payments for outpatient procedures – which are covered by a non-mandatory tariff for the current year. There have also been agreements around non-PBR activity to ensure overall activity levels are affordable.