The Department of Health is considering a year-of-care tariff for telehealth technology which varies according to the number and severity of a patient’s long-term conditions.

The move to assessing the overall acuity of these patients over a year rather than paying for treatment by condition is thought to be a first.

Stephen Johnson, DH head of long term conditions, told HSJ his team was looking at a tariff that could be included in the 2013-14 operating framework.

He said: “We have seen evidence recently from Scotland that if you target diseases you probably only reach 50 per cent of your population. Long term conditions management has got to be around the whole patient.”

Telehealth ranges from monitoring vital signs in the home to remote consultations by phone and video. Early results from a large scale NHS trial of telehealth technology showed significant reductions in emergency admissions and mortality rates.

A report from consultancy Laing and Buisson in November estimated that the 200,000 people with severe chronic obstructive pulmonary disease, heart failure and diabetes constituted a £300m market for telehealth.

Mr Johnson described the two biggest barriers to take-up of telehealth technology as “cost and awareness”.

He was speaking a month after NHS chief executive Sir David Nicholson announced a drive to “improve at least three million lives with assistive technology” over the next five years. Sir David also said the private sector could provide start-up capital funding for telehealth systems.

Mr Johnson stressed nothing was finalised in developing the tariff but suggested the private sector could be reimbursed through shared savings schemes or a payment per patient, with the former having upper and lower financial limits.

“The [next] six months will be about how we do this, what the business models are and getting the NHS leadership community to help develop some of the commissioning models,” he said.

Meanwhile, a briefing document prepared for the Treasury’s growth review, revealed last week under the Freedom of Information Act, said the expansion of telehealth technology would offer “opportunity for growth for UK firms”.

“Firms such as Tunstall, Philips, Cisco and Buddi will all welcome the announcements on assisted living technology. They would prefer central government to mandate take-up rather than incentivise it,” it said.

NHS Confederation deputy policy director Jo Webber said the year-of-care tariff could work better than the current system, adding: “You would have to grade the severity [of a patient’s needs]. With an elderly, frail population they don’t just have one thing.”

Roberta Carter, a partner at KPMG, which has worked on the evidence base for telehealth, said: “There’s a lot of merit to a year-of-care tariff in encouraging providers to overcome organisational boundaries. It also fits quite nicely with the idea of personal budgets.”