• Potentially over £1bn of provider sustainability fund to be transferred to tariff in 2019-20
  • Control totals retained for at least one more year despite “negative consequences”
  • Marginal A&E admissions rate and other fines to be scrapped from April 2019, Dalton confirms

A significant chunk, potentially over £1bn, of the £2.45bn provider sustainability fund will be diverted into the tariff in 2019-20 as a part of a radical shake up of NHS funding, Ian Dalton announced today.

The NHS Improvement chief executive said it would go into “the urgent and emergency tariff price” specifically.

He also said trusts would, however, face another year of the unpopular control total regime, though he pledged to scrap the arrangement as soon as it was possible without destabilising financial performance.

He also told the NHS Providers annual conference a number of fines, such as the 30 day readmission rate penalty charge, would be scrapped and confirmed the marginal rate for emergency admissions would be ditched from April 2019.

Mr Dalton’s comments followed NHS England boss Simon Stevens pledging yesterday that the major reforms to the NHS funding arrangements, linked to the NHS long term plan and kicked off with the publication of tariff proposals for 2019-20, would deliver a “fairer, more transparent” system. These include introducing a “blended” payment model for urgent and emergency care in 2019-20.

Mr Dalton said: “From 1 April I would like to see the provider sustainability fund, currently £2.45bn, to be very significantly reduced, potentially by up to a ten figure number, and the funds going directly into the urgent and emergency tariff price which, as we know, has been significantly underfunded.”

He added that while controls had had some “negative consequences” like driving short term decisions based on non recurrent savings, the system would be retained next year because it was the best way for the “NHS as a whole [to balance] the books”.

Control totals for many trusts would however need to be “re-based” to make them “achievable” while system leaders would need to “grasp the nettle and move beyond control totals decisively” after 2019-20 so trusts can set their own financial plans again.

Next year would be “transitional”, he said, as the system begins a five year journey towards a “simpler, fairer system”.

The NHSI boss suggested the control total regime as currently operated, combined with PSF - whose payment depends on meeting control totals - was unfair, with some providers “potentially slipping into a deeper and deeper financial problem, while at the same time some trusts are increasing their surpluses”.

He said the focus of the changes next year would be on fairer “funding of urgent and emergency care [and] moving away from potentially antagonistic contractual models, to blended payments”.

At present most PSF is allocated to acute trusts providing emergency care, but receiving on it depends on them agreeing and meeting financial and performance targets.