NHS providers back revised tariff

9 Mar 15

A majority of NHS providers have backed a revised payment structure for the next financial year that will provide hospitals with more money to cover the cost of emergency admissions.

NHS England and health service watchdog Monitor announced on Friday that 88% of all hospital trusts had approved the enhanced tariff option for 2015/16, which was put forward in a bid to end a deadlock over the NHS payment structure.

Under the revised tariff, the amount paid to providers will be cut by a standard ‘efficiency factor’ of 3.5%. This is lower than the proposed reduction of 3.8% in the initial plan, which in January failed to gather enough support among providers to pass the threshold for implementation.

Following this rejection, NHS England and Monitor set out a revised plan that would distribute part of the extra £2bn for the NHSannounced by Chancellor George Osborne in the Autumn Statement. The revised structure also included an increase in the ‘marginal rate’ at which hospitals are reimbursed for emergency admissions and some specialised services above benchmark levels from 30% of current costs, and the 50% proposed in the initial tariff, to 70%. This comes as accident and emergency departments face record levels of demand.

The revised scheme was offered on a voluntary basis to NHS trusts and has now been accepted by 211 of 241. Those that did not agree to the new option are set to continue on a default tariff, which will continue with 30% funding for some emergency admissions and will also not benefit from additional funding 2015/16 for mental health.

Responding to the announcement, the NHS Confederation said local health systems now had certainty about prices for 2015/16.
However, chief executive Rob Webster said the delay in agreeing prices had an unfortunate impact on planning services.

‘The enhanced tariff option has not been agreed by everyone,’ he added. ‘Urgent work is needed to resolve the delay in agreeing prices for 2015/16 with those providers on the default tariff rollover.’

He said it was ‘too simplistic’ to think of the tariff rejection as a battle between commissioners and providers.

‘The financial challenge for the NHS means this year’s tariff was always going to be difficult. There is simply not enough money in the system to comfortably balance provider budgets with the ability of clinical commissioning groups to manage their local health economy effectively.’

Adam Roberts, a senior economics fellow at the Health Foundation, said it was positive that the majority of providers now had clarity on the national prices they will be using from April, and could start to plan how they would meet cost pressures.

‘We note however that even with the new more generous tariff there is still a drop in income of over £1bn for the provider sector.

‘With providers already running an in-year deficit of over £700m, even the enhanced option still represents a substantial challenge for 2015/16. Without large efficiency savings, we can expect the level of deficit to become even greater next year.’

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