There is a £202m discrepancy between what foundation trusts think they are owed by commissioners, and what commissioners think they owe them, Monitor has revealed.
Speaking at the regulator’s board meeting on Wednesday, its director of finance, reporting and risk Jason Dorsett said the gap could “cause the sector to come in worse than it would otherwise have done” at the end of the financial year in April.
Monitor, together with NHS England, the NHS Trust Development Authority and the Department of Health, conducts an exercise three times a year in which providers and commissioners report their balances.
The first of these exercises for 2013-14 was held last December, and it revealed foundation trusts were reporting a significantly higher receivable balance than the corresponding payable balance reported by commissioners.
The “net receivable balance” is £202m, with £135m of the alleged dues relating to clinical commissioning groups, and £67m relating to services commissioned by NHS England. Foundation trusts reported they were owed a total of £1.8bn in December.
The volume of activity flowing through the system means that balances are not necessarily expected to align exactly, and the figure may change in the later two exercises when organisations are likely to have a clearer view of their finances, but the size of the discrepancy is still much larger than usual.
A paper presented to Monitor’s board states: “This net receivable balance is much higher than previous years when it fluctuated between a small net receivable and small net payable.”
Mr Dorsett explained to the board that different interpretations of how much was owed arose for a variety of reasons, including because of “judgmental areas” in provider contracts, relating to things like risk-share agreements, over-performance, and contract penalties.
These sorts of contractual areas, where how much a provider should be paid is not always clear cut, “tend to end up getting negotiated towards the end of the year”, Mr Dorsett said, and this may reduce the gap.
However he added the discrepancy could also represent evidence that either foundation trusts or commissioners were being overly optimistic in their reporting, and that if this is the case it could have an impact on the overall financial performance of the sector.