Hospitals will only be paid 30 per cent of the tariff price for emergency procedures they perform over their 2008-09 volume levels, the Department of Health has confirmed.

The so-called “marginal payment” or “two-part tariff” will apply from April next year and will be set out in next week’s NHS operating framework for 2010-11. It will be coupled with a freeze on the cash value of tariff prices and is designed to induce hospitals to work with their commissioners to reduce demand for emergency treatment.

Foundation trusts will be able to hold a financial stake in health services outside of hospital, giving them an incentive to treat patients in cheaper settings

To help that – and in a move that will be welcomed by many foundation trusts – the Department of Health has indicated it will actively support the vertical integration of hospital services with primary care and community services.

That policy shift means foundation trusts will be able to hold a financial stake in health services outside of hospital, giving them an incentive to treat patients in cheaper settings rather than drive up the volume of expensive acute services.

Although the hospital tariff will be frozen in cash terms – indicating a real terms cut in prices once inflation is factored in – hospitals will be able to earn a further 1.5 per cent if they meet the requirements of the commissioning for quality and innovation (CQUIN) framework, which will set a mixture of national and local targets.

Primary care trust allocations for 2010-11 remain unchanged since last year’s two year settlement. On top of those allocations – which give PCTs an average increase of 5.5 per cent next year – PCTs will be asked to spend £400m of their accumulated surpluses, leaving them with £1bn in accumulated surplus at the end of 2010-11.

But they will also be required to set aside 2 per cent of their allocation (approximately £1.7bn nationally and £11m each on average) for spending on one-off “non-recurrent” items only, in a bid to create flexibility should allocations or circumstances change in future years.

The DH will also warn PCTs that they need to find an additional 0.5 per cent of efficiency savings next year as the department will delegate responsibility to them for certain ophthalmic, pharmaceutical and dental services. They will receive an extra £500m nationally to do that, but that is 0.5 per cent lower than the services were previously funded at.

For more information and comprehensive coverage of next year’s operating framework, Andy Burnham’s five year strategy for the NHS and the pre-Budget report, see next week’s HSJ.

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