Feature / Special case

Specialised commissioning services have largely remained outside payment by results, but work to develop a tariff for cleft lip and palate services could see this change

Since 2000, specialised commissioning groups have commissioned cleft lip and palate (CL&P) services from just nine specialist provider centres across England. This set-up followed a review of services that called for a concentration of expertise and set strict guidelines covering staffing levels and structures. But while service delivery has changed, the basis for funding has not. No acute-style move to payment by results for cleft lip and palate services is planned; instead they remain on crude block contracts.

An estimated one in 700 babies each year are born with a cleft lip or palate (or both). Treatment tends to go in phases, with significant amounts of surgical intervention in the first few years, before extensive speech therapy as the child grows up and then, often, further surgery in the teenage years.
 
Block contracts fail to recognise that services face different costs depending on the age make-up and severity of their cohort of patients.

A tariff has appeal to both providers and commissioners. Some providers see it as an opportunity to ensure equity in funding levels across the country, while for others it is a way to ensure income flexes with increased activity, ensuring the prescribed standards can be maintained. For commissioners, a tariff means that payment can track activity on an annual basis, avoiding the danger of agreeing block contract funding on the basis of short-term activity pressures.

The Northern and Yorkshire health economy started work on a tariff for CL&P services a number of years ago. Recognising concerns within the Northern and Yorkshire Cleft Lip and Palate Service about rising activity levels (delivered from two sites in Leeds and Newcastle), the Northern Specialised Commissioning Core Team – Norscore – first agreed a marginal rate for additional activity in 2005/06 (measured as the number of births with CL&P above a baseline originally set at 55 new cases/births a year at the Newcastle site). This marginal rate of £15,600 was clearly seen as a temporary measure as it provided the service with a funding boost in year one, while the costs of that additional patient would be borne over multiple years. The longer term aim was to calculate a more detailed tariff.

Some CLP centres have attempted to devise tariffs that reward specific interventions. But the Norscore approach took a simpler path, focusing instead on four key stages in the patient pathway: birth to two years old; three to seven; eight to 14; and 15 to 21.
After putting its project on hold, when it seemed a national approach might be developed, it resumed the project when the Department of Health announced its payment by results pilot project and Norscore was accepted as one of the national pilots.

Having already determined percentages to apportion costs across age bands as part of its earlier work, the Newcastle site set about reviewing these figures and establishing costs for its cohort of patients as of April 2008.

The full costs of the CL&P service were identified, including the direct costs of staff (medical, nursing, theatre and others), non-staff costs and indirect costs and overheads. Using the reviewed percentages, these costs were then apportioned to each age band. An annual tariff was then calculated for each age band by dividing the costs in each band by the cohort of patients in each band (see box).

The work also established that the current cohort of patients at Newcastle (as at 1 April 2008) was 1,202 patients across all age bands. This equates to 57 new cases/births a year (across 21 years) and compares with the 55 new cases/births a year that was the premise on which the service was set up – and the basis for funding (a cohort of 1,155).

The larger cohort at the proposed tariff rates suggested an increase in the baseline contract value of £160,000.  However, overpayments for additional new births above the baseline of 55 in 2007/08 had amounted to £140,000. Despite this modest increase in real cost and risk, other cost pressures meant the North East Specialist Commissioning Group did not back the introduction of the tariff in 2009/10, although it is being taken back to the group for 2010/11.

John Anderson, head of contracting and performance at Norscore, accepts that the approach is still about averages. ‘There are clearly different levels of cleft lip and palate, requiring different support and intervention,’ he says. ‘We recognise we are not matching payments exactly to specific interventions and that different patients within each tariff band may in fact have very different care needs and costs. But we have a simple approach that is workable and recognises changes in activity rates throughout the patient pathway.’

Peter Hodgkinson, consultant cleft and plastic surgeon at Newcastle’s Royal Victoria Infirmary, says the tariff ‘more accurately identifies our costs’. He says current funding arrangements, linking funding to births, fail to recognise costs associated with new older patients or that a big fluctuation in birth rate one year will only have a marginal impact on the size of the cohort. He adds that there is a consensus across cleft centres that the banding approach reflects how care is delivered.

Norscore primarily sees its tariff as a local solution, although there has been interest from further afield and some joint work with the East of England cleft lip and palate service based at Cambridge University Hospitals NHS Foundation Trust. It is also understood to have impressed in the national evaluation of pilot sites. However there are issues that would need to be addressed. In the current climate, cost is possibly the big issue – with some centres in the south believing they are substantially underfunded. But there are other issues around data sets and robustly recognising CL&P patients. Further validation is also likely to be necessary, which might suggest that a national roll-out is still some time away.