FEEDBACK PAYMENT BY RESULTS

Published: 03/03/2005, Volume III, No. 5945 Page 20

Bob Dredge, senior fellow, Keele University; former Department of Health programme manager for financial reforms

Since leaving the Department of Health I have refrained from commenting on the many and various pieces that have appeared about payment by results.

However, the ideas raised by Simon Stevens in his column have drawn me to add to this important debate (Opinion, page 19, 17 February).

Simon is fundamentally right in principle, but he understates both the importance and complexity of his proposal for an arm's-length body to construct and set the paymentby-results tariff.

It is crucial that the tariff is set at a realistic and fair level. It is equally important that the tariff is technically credible and also that there is a proper and open process for improvements in the definition of the tariff.

However, if the tariff is to dynamically reflect current practice and technologies, as well as accommodate things like National Institute for Clinical Excellence recommendations, then revision is both essential and necessary.

This may not mean annual calibration or a reliance on the full reference costing process. But it does need a dynamic process that does not rely on the current model of periodic, whole-scale review of the classification tools (health resource groups), and intermediate years when the HRGs become increasingly less credible.

Simon draws attention to international models in the Netherlands and US.

I would suggest we look no further than Germany, where a cost-efficient process has been established with the creation of the INeK Institute.

Here, with a staff of 25, the INeK Institute seems to have the absolute confidence of government, providers and purchasers, and produces a transparently developed, annually modified tariff that allows for the considered input of all stakeholders.

Perhaps the DoH should also reconsider the wisdom of placing the three key elements of the tariff construction in three separate parts of it - new intervention classifications with the national programme for IT, HRGs with the new NHS's information centre and costing/tariff setting in payment by results with the DoH itself - as well as yet to be announced overall governance and regulatory frameworks that could further confuse the picture.