News / Regulator calls for calm as providers take issue with tariff

The regulator announced on 29 January that the tariff could not be introduced in its current form after 75% of relevant providers by share
of supply objected to the proposed method of determining national prices. Under the Health and Social Care Act 2012, at least 51% of relevant providers (by number or weighted by share of supply) must object to trigger the next stage of the process. About 13% of clinical commissioning groups and 37% of relevant providers by number objected.

A spokesperson for the regulator said Monitor and NHS England were considering the feedback from the consultation and possible next steps. Options included ‘engaging with the sector then re-consulting on revised proposals or referring the method to the Competition and Markets Authority [CMA]’. `Meanwhile, commissioners and providers will be expected to continue planning for 2015/16 on the basis of the timetable and guidance already issued.’

A spokesperson also confirmed that, if a new tariff is not in place by the end of March, the current year’s tariff would roll over into the new financial year.

The CMA has limited grounds to reject the tariff proposals. These are: errors of fact in a component of the method; the decision was wrong in law; and Monitor was not acting in accordance with the role outlined in the act.

If Monitor instead revises its proposals and re-consults, there is the risk the objection mechanism will be triggered again, further delaying the publication of the final tariff.

Paul Briddock, HFMA policy and technical director, said: ‘NHS providers have been hit by high levels of sustained efficiency requirements and increasing demand – particularly in non-elective activity. Much of this has been paid for at marginal rates; the proposed new marginal rate for additional specialised services activity would have added to these challenges.

‘The service remains committed to quality and safety improvements but providers already face significant financial challenges and are clearly concerned about the sustainability of services under the proposed revised tariff arrangements.’

He added: ‘The tariff is a vital component in developing local plans for services in the run-up to the new financial year. We need to resolve this situation as quickly as possible in a way that provides the right amount of challenge to providers to improve financial and service performance, covers providers’ legitimate costs and shares risk sensibly across economies.’

King’s Fund director of policy Richard Murray said the ‘unprecedented development’ would throw financial planning into ‘disarray’. He added that it indicated the two main ways used to reduce NHS costs in recent years – limiting staff salary increases and reducing payments to hospitals – had now been largely exhausted.

‘With financial problems among hospitals now endemic, waiting times rising and staff morale a significant cause for concern, this once again indicates that the situation facing the NHS is becoming critical,’ he said.

Chris Hopson, chief executive of NHS Providers (formerly the Foundation Trust Network), said: ‘The fact that 75% of NHS providers, by activity, have vetoed the NHS tariff is hugely significant. It is a clear response from the NHS front line that they can no longer guarantee sustainable and safe care and meet constitutional performance targets from 1 April 2015 unless immediate changes are made to the way they are paid for their services.’