NHS England wants to investigate the scope for scrapping payment by results for some services as early as 2015-16, its director of strategic finance has told HSJ.

Sam Higginson said emergency care and the treatment of long-term conditions were two areas where NHS England wanted to consider the possibility of moving away from activity-based payments to “pay for performance”.

Such a move might mean, for example, that a hospital no longer received a set payment every time it admitted a patient with chronic obstructive pulmonary disease. It could instead receive a core payment based on the number of people with COPD in its catchment population, but then be able to earn a significant further percentage payment for hitting performance and improvement targets.

This would mean, in effect, that the current complex system of financial incentives and penalties in the NHS contract was bundled into a single performance premium.

Mr Higginson explained: “For some types of services we would like to look at the scope to potentially move away from PbR, and a good example of that might be some types of long-term conditions.

“And on top of that… we’d also like to look at the scope for [bundling] some of the additional payments that we make.”

Asked if he was saying it might be possible to make these changes for some services from 2015-16, Mr Higginson replied: “Potentially, yes.”

He continued: “The old [payment by results] tariff system ran on a lag of about 2-3 years to update the prices. So that’s why I’m stressing potentially 2015-16, because it’s quite a challenge to move at that pace.”

“We’d like to look at it, but we can’t guarantee that the data will be robust enough to be able to do it that quickly,” he said.

Mr Higginson told HSJ that long-term conditions, emergency care, and treatment of the frail elderly were “three of the areas we’re looking at” for potential reform. “The more areas you introduce, the more complicated it gets, so potentially there are trade-offs,” he added. “But those are three obvious areas that we’re looking at.”

He emphasised that pay for performance was “one of a range of options” NHS England wanted to consider for early reform of the payment system. However, he added that it could potentially be a means of improving healthcare outcomes and changing the way patient care was delivered.

Since the start of the current period of public sector austerity, there have been frequent calls for the NHS to move away from payment by results, with people arguing that it is a barrier to integrated care and the reorganisation of services.

In May, NHS England and Monitor – which are jointly responsible for the payment system under the government’s health reforms – announced plans to encourage “local experimentation” with off-payment by results systems from 2014-15. They said information gathered from these experiments would be used to inform long term national reform of the payment system.

But Mr Higginson’s comments indicate NHS England is willing to consider significant national reforms to payment by results as early as 2015-16.