NHS Commissioning Board deputy chief executive Ian Dalton has rejected the suggestion that its plans for 2013-14 will place disproportionate financial pressure on providers, in an exclusive interview with HSJ.

The board this week published Everyone Counts, the planning guidance for its inaugural year as the body responsible for the NHS commissioning system.

In an interview with HSJ following the publication, the board’s chief operating officer and deputy chief executive rejected the suggestion that further cuts to NHS “tariff” prices risked pushing some providers into financial failure.

He also argued that the board’s continuation of the controversial “30 per cent marginal rate” – which means providers get reduced payments for non-elective activity above a set threshold – was not intended to be “punitive”.

In the excerpts below, Mr Dalton gives his views on these issues, and on the board’s planned “fundamental review” of the contractual incentives and penalties available to commissioners, clinical commissioning group allocations, and on reforming payment by results.

On financial pressure

HSJ: You’re cutting the tariff for the third year running. In that context is there not a danger that by requiring CCGs to hold back [so much of] their funding [to provide for a 1 per cent surplus and a 2 per cent ‘top-slice’ for non-recurrent expenditure] you’re driving providers into financial failure?

Ian Dalton: No I don’t see it that way at all. I think what we’ve set out here is a prudent approach which gives the system as a whole the best chance of success. Financial success is really important to us, because it underpins the security of the system.

The key issue for the system as a whole though, providers in particular, is to make further progress next year in terms of the transformational changes under QIPP [the quality, innovation, productivity and prevention savings drive], driving forward improvements to care so we can simultaneously improve quality and reduce cost. That I think is the big issue for us all next year.

HSJ: Would you concede that most of the financial pressure at the moment is on providers, and that this planning guidance seems to maintain that pattern?

ID: I wouldn’t describe it in such a binary way to be honest…. What we’ve tried to do here is set out a prudent approach to giving the commissioning system – on behalf of patients - the best chance of working [with] its money well while improving quality next year. I think all the system, whether you’re talking about providers or commissioners, needs to be focused really hard on the QIPP agenda because ultimately that’s what will secure services for patients. So I don’t see it as a provider versus commissioner thing.

On reforming Payment by Results

HSJ: In the past year we’ve seen various reports arguing that the payment-by-results system is ill equipped to provide the kind of incentives needed to make transformational changes in services. There’s little mention of this in the planning guidance, but what is the NHSCB’s view about people locally moving away from tariff payment to models like capitated funding?

ID: You’ve got to understand we’re still a new organisation, and that’s a big set of questions. On the one hand, it’s really important not to forget that PbR has served us well in many areas, in particular in terms of giving patients access to quick elective care. But on the other hand we’re not closed to the idea that change is possible over time. What we need to do on this is talk to people and see where the thinking lies. I don’t think this is something on which we were ever expecting to see radical change in year one of the new system.

But of course any payment system, and PbR is at the end of the day merely a payment system, is our servant and not our master. And so I think those conversations will necessarily move forward, but I think it will be wrong if anybody had anticipated radical departures from current practice in year one, particularly seeing as there have been real benefits from PbR.

On contractual incentives and penalties

HSJ: Why have you decided to do a fundamental review of the contractual levers available to commissioners?

ID: Really, it’s about saying we have a system that’s developed in an incremental way over a few years, and as a new organisation it’s appropriate for us to take a step back and have a proper look at that.

We’re not launching this review because we think there’s something definitely wrong with the system, we’re launching it because as a new organisation it would be wrong of us not to have a fundamental look at this…

[For 2013-14] we’re signaling that we want to see a consistent approach to use of [existing incentives and penalties] across the country, particularly in terms of looking at penalties for situations where patients don’t get the care that they should.

Our message… to commissioners in general is don’t plan for fines, because we expect providers to offer good quality care. But if they don’t, then it’s right that in areas like 52-week waiting – where we’re so close to finishing the job and making that waiting a thing of the past – it’s appropriate that there’s some comeback.

Going forward, [the review] comes from a sense that it’s about time… that we looked right across the schemes that reward excellence and the penalties for under-performance, get the right people round the table representing all the key interests, and ask the question: is this package as a whole supportive of the kind of improvement that we need?

I go into this with absolutely no conception of what the answer is there.

HSJ: Some of the sanctions you’ve maintained don’t seem to be about punishing underperformance. For example the 30 per cent marginal rate. Is it fair to continue paying providers reduced rates for increases in activity, when the responsibility for controlling activity rests with both providers and commissioners?

ID: This isn’t about punishing people. That isn’t the objective. This is about saying we need all parts of the system to come together to ensure levels of activity are appropriate, particularly in relation to non-elective demand, and [ensuring] that there is incentive in the system to encourage new models of care and good practice to be delivered wherever possible.

The purpose [of withholding money] isn’t punitive, it’s there to then create a fund for improvement. What the [planning guidance] does is describe how that resource is then deployed to deliver new models of care.

HSJ: Does the same logic apply to [the rules governing] non-payment for emergency readmissions?

ID: I think it does…

HSJ: So is this effectively a mechanism to move funding out of the acute system and into the community?

ID: Not necessarily, I think local solutions will vary. This is about saying the NHS needs to see improvement in these areas and this is a mechanism for encouraging commissioners and providers to work together – with potentially some resource to back conversations – to create the kind of change we and our patients expect.