Comment / Tariff – just part of the change toolbox

In September I represented the HFMA at a workshop run by the NHS Commissioning Board to look at the future of the tariff. The event marked the formal start of the new board’s work to develop a pricing strategy as part of its shared responsibility for currency and tariff development with Monitor.

It is probably fair to say that Monitor is slightly ahead in thinking through this area as both bodies move towards taking over responsibilities from the Department of Health and having their first tariff in place for 2014/15. Monitor too has engaged well around its current thinking. In general there is an openness that is to be applauded.

Any currencies that are developed have to be clinically meaningful with prices that encourage and reward the right response. That will require an inclusive approach to development and the finance voice – with its detailed experience of how the existing tariff works locally and where the problems lie – needs to heard.

What is clear is that there is enthusiasm to expand the scope of payment by results. England continues to move towards PBR for mental health and has taken the first steps towards pathway tariffs in the areas of maternity and cystic fibrosis. Best practice tariffs continue to develop and we are pushing on in other areas too – ambulance services, for example.

But current attention appears to be on how we can incentivise greater integration – more pathway or bundled tariffs and other currencies such as year-of-care are flavour of the month. With pure acute tariffs seen by some as an obstacle to redesigned pathways, the rush of interest in this area is understandable. But we need to understand the challenges too. Whatever approaches we take to tariffs, we will need the data flows. That will require investment in systems and changes in the way people record activities.

It will also take time. New data sets, cost collections and modelling will all be needed. We should rightly be ambitious, but also realistic in our expectations.

And the focus cannot be exclusively on expanding the scope. We also need to ensure we get right the bits we are already doing. Clinical engagement is vital to new and old tariffs and yet there is a danger that existing approaches to efficiency requirements – at times focused narrowly on the acute sector – can actually work against this engagement.

Marginal rates may have a role to play, but we need to understand what level they should be set at and how they add to the overall efficiency challenge.

There are other wicked issues too – and ones that we in finance can help with. For example, we need a more sophisticated understanding of how tariff covers organisations’ capital costs.

Perhaps overall we need to gain a clearer understanding of what we can expect the tariff to deliver and what we need to leave for other mechanisms. There is a danger that the tariff is seen as a cure-all. We need a different configuration… Can we create a tariff to incentivise it? We need greater specialisation… Can we use tariff to force the change?

Instead, the tariff – based on a range of currencies and payment approaches – needs to be seen as just part of the toolbox. For many of the changes we will need to see, the tariff will need to support the direction of travel, reinforce it, but it can’t be expected to drive that change. And in many cases we can’t afford to wait for new tariffs to start making the necessary changes.

Paul Briddock is chairman of the HFMA’s Payment by Results Special Interest Group