*** UPDATED*** The government has laid an amendment to its Health and Social Care bill removing the previous reference to the tariff being the “maximum” price.

The amendment, laid by health minister Simon Burns today removes the references to the tariff being the “maximum” price, but retains the references to the tariff being able “specify different prices” for different providers.

However the amendment adds that those different prices “may not be framed by reference to (a) whether the provider is in public or private ownership, or (b) some other aspect of the status of the provider”.

The latter amendment in effect means that although Monitor may specific different prices for different providers, that must be done on a case-by-case basis.

A statement from the Department of Health this afternoon said: “We have always opposed the suggestion that private sector providers should be paid any more than their NHS equivalents for doing the same work.  And this week we have tabled an amendment to the Health and Social Care Bill to make this absolutely clear. Previously, some private sector providers benefitted from contracts which paid them around 11 per cent more than the NHS cost.

“The amendment would allow Monitor to vary the tariff to reflect unavoidable cost differences, such as geographical variations in wages and the cost of land.  

“Monitor would not be able to vary the tariff according to the status of a provider as public or private sector. This amendment does not reflect a change in policy - it clarifies our position and puts our intentions beyond doubt.”

“We do not accept the assertion that private providers are systematically disadvantaged by 14 per cent.  The Department’s impact assessment makes clear that these issues cut both ways and the 14 per cent figure does not reflect that private providers treat less complex patients.”

The tariff already reflects geographical differences in cost through the Market Forces Factor, which is calculated for each provider.

Yesterday health secretary Andrew Lansley said: “Our modernisation plans have always been about competition on quality, not on price.

“We want the tariff to be a nationally regulated price, not a starting point for price competition. These amendments will put our intentions beyond doubt, sort out the confusion which we inherited from Labour, and put an end to the scaremongering we have seen.”

The move comes after the HSJ first reported a U-turn in policy with a letter from NHS chief executive David Nicholson on February 17 saying there was “no question of introducing price competition”.

Price competition has been widely decried by everyone from Sir David to the London School of Economics, although the flexibility to use tariff as a maximum has already been used by commissioners locally to agree a lower rate for some procedures.