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The rules dictating how much trusts are paid for emergency admissions, including under the much maligned marginal rate tariff, could be significantly changed under proposals being considered by system leaders, I have learned.
Senior sources told me the shake-up could also involve changes to how hospitals are paid for the rapidly growing number patients discharged without an overnight stay – so called “zero day” admissions.
It is quite possible that the rate paid for zero day admissions – as with the marginal rate – is now out of step with the cost of the care being delivered. So changes, which are being discussed at the top of both NHS England and NHS Improvement, would be welcome.
But policymakers are walking a tightrope in how they develop new rules intended to curb rising emergency admissions, incentivise quality care, fairly remunerate providers and don’t simply shunt costs to struggling commissioners.
The marginal rate emergency tariff (MRET) means hospitals only receive 70 per cent of tariff for emergency admissions (originally it was just 30 per cent, but has risen over the years).
It cost providers £312m last year, according to NHS Improvement, accounting for around a third of the sector’s £931m projected deficit for 2017-18.
Introduced in 2010, the MRET was supposed to “provide an incentive for closer working between providers and commissioners, to support the shift of care out of [hospitals] to keep the number of emergency admissions to a minimum”.
But the policy has demonstrably failed. Providers have long argued, justifiably, that they are underpaid for emergency admissions, they shouldn’t be penalised for something they cannot control and the MRET should be scrapped altogether.
HSJ understands discussions do not involve scrapping the marginal rate completely, but centre on a debate around handing a greater share to trusts. Maybe as much as 80 or 85 per cent of tariff, instead of the current 70 per cent.
But, with commissioners not in a position to suck up the cost, this appears unlikely be on offer free of charge.
Nuffield Trust senior policy analyst Sally Gainsbury raised to me that providers should perhaps be “wary” of any deal offered on MRET because it “could, for example, be offered in exchange for a change to tariff for zero day admissions, which NHS England has been closely watching of late”.
Sure enough, a senior source familiar with the discussions confirmed to me that such a deal may well be being cooked up. Zero day admissions accounted for two-thirds of emergency admissions growth in recent years, and is an area considered ripe for reform by NHS England.
As highlighted by HSJ, the average payment for admissions not transferred to an overnight ward is around £600, but the treatment and its cost can vary substantially. One zero day episode could involve a two hour stay and prompt the question of whether the admission was necessary in the first place. Commissioners want to discourage this, possibly with financial penalties.
But another zero day admission could require ambulatory care – a costly but valuable string of interactions with senior clinicians and diagnostic tests over, say, 15 hours, which prevents an overnight stay. This would represent the best care, both clinically and financially. Commissioners, understandably, want to encourage this.
Shades of grey
Of course, there are many shades of grey in between these cases. The problem is the current “zero day” definition does not distinguish between them. The whole point of the A&E tariff is that trusts do not have to get into this level of detail to bill their commissioners – it is supposed to be an average.
The last thing anyone wants is more bureaucracy, and segmentation of zero day admissions would not be simple. But it will be necessary if the centre wants to use the tariff to incentivise desirable zero day admissions and discourage inappropriate ones.
So what would be the effect if NHS England did give with one hand by increasing the marginal rate proportion for trusts, only to take with the other by lowering the total amount paid out for inappropriate zero day admissions?
One central source argued it would mark progress, because it would both address the flawed marginal rate issue, and (hopefully) incentivise better practice and more equitable payments for zero day admissions.
But such a move would change incentives without affecting the sum spent on emergency care nationally. This would inevitably benefit some trusts at the expense of others, which would be controversial and destabilise some trusts without saving any money overall. For that reason it would be hard to sell to trusts.
Providers would not view a MRET/zero day tradeoff as a step forward, as it would not address their fundamental concern: that they are being underpaid for emergency admissions as a whole.
One component that would make negotiations less fractious would be more money, of course. NHS Providers chief executive Chris Hopson said there were a number of other moving parts around the 2019-20 NHS financial framework that could influence this debate.
He said: “These include the size of the overall NHS spending envelope, which should be increased after the prime minister’s recent announcement, the balance of spending between primary and secondary care and, within the latter, the balance between acute, ambulance, mental health and community services.
“If we’re trying to move care out of hospitals into the community it would, for example, be odd to scrap the marginal tariff at the expense of spending on community services, but we could potentially do both if the NHS gets a more generous financial settlement.”
The funding debate will rumble on over the coming months, especially with the NHS’s 70th birthday on 5 July, but the debate around how the money will be routed will be of equal importance.
NHS England was invited to comment.