A business critical briefing from HSJ’s Payment by Results conference.

Key themes

  • What is the future of payment by results? There is a move to block it for some pathways, but the current health secretary understands the details and likes the technical aspects.
  • Payment by results was developed to increase acute sector activity in a time of growth - will the principles fit other services in a time of financial cuts?
  • The tariff in 2011-12 will be as planned; the only question is the size of the negative reduction. 
  • The current position is not sustainable – trusts feel the impact of a 30% marginal rate and no payment for re-admissions within 30 days. PCTs also feel the impact - demand management schemes are not effective.
  • In mental health, there is significant unmet demand; it is assessed that only 25% of people who need access to treatment receive the appropriate services.
  • For future tariff development, the National Commissioning Board will set the structure and Monitor will regulate the price.
  • GPs will need to share their own data in order for consortia to be effective.

Action points

  • Understand avoidable re-admissions – the data and reasons.
  • Where commissioning across pathways that involve acute and community providers, or where risk needs to be managed differently, then consider block contracts.
  • For HRG, version four coding quality is essential and could be improved.
  • Transforming community services must be service-led in order to be effective and not just a transfer of budgets with a top-slice for savings.
  • For all best value tariffs, good data and project management is required, as is a map of the clinical pathway.
  • Providers need to reduce variations in clinical practice to work within tariff.
  • Commissioners need to understand thresholds for admission and in comparison to the national average.
  • Mental health managers need to start to understand the care pathways which are required/used to support the currencies.

Key questions and answers

Q What is the future of payment by results?

  • There are already some health economies moving away from tariff where they have resolved what to measure and have mechanisms for risk share and payment. It is recognised that in some areas (e.g. for the elderly and long-term conditions), payment by results is not the answer. It is recognised that demand management is often unsuccessful. Mental health is challenging and if a community price list included every district nurse visit, for example, it would be unworkable.

Q What can you say about the sustainability of the current position due to the rise in emergency admissions?

  • This is a significant issue which is sometimes ignored by the policymakers. The original payment by results implementation was to increase elective activity and incentivise trusts. Now, moving to a different environment where the tariff system inhibits new developments, the service could see a tariff system based on pathways and a prime contractor model with appropriate subcontractors. There will need to be new business rules. It is not possible to go back from a tariff basis, especially with the current organisation in the NHS and the move to regulated environment.

Q What is the relationship between NICE and PbR?

  • It is expected that NICE will produce guidelines on quality, pathways and design that will allow the regulator to price in the most cost efficient manner. The role of NICE will change. Value-based prescribing is still very unclear; the issue is how to set a price compared to value. It is expected that the coalition government will try to push down prices but is not clear how this will be done. With NICE recommendations not being mandatory, GPs may be responsible.

Q Do competition and choice require spare capacity?

  • There will be capacity in the system if trusts go to best practice and effectively use the community services that are in place. Hospitals will need to redesign and use capacity in different ways. The tariff helps in this regard although in the future this may be seen as a maximum price.

Q How are mental health trusts using the third sector?

  • Mental health trusts already subcontract to the third sector. Where these are small providers then often little or no information is provided. However, the providers continue to be used if they are better value or provide specific services. Some third sector providers are large organisations and therefore can generate all the data that is required.

Q What about drugs and alcohol treatment?

  • There is a spare cluster available for addictions. The extent of co-morbidity and the links to drug and alcohol commissioning are key elements of treatment. The current way that drug and alcohol services are commissioned is not conducive to good patient care. The DAT are only concerned with re-offenders. For example, a patient requiring treatment for alcohol detox would not receive services if they had not offended; the advice from DAT was for the patient to attend A&E and hope to receive some sort of service.

Q What is the mental health experience of the tariff?

  • The development has been slow because of limited central resources and the initial phases trying to use the architecture from the acute hospital services. The clusters have been developed by the Northern and Yorkshire region and do show a user perspective and clear view of the future.

Q How will the outcomes be measured?

  • Patient reported outcome measures are to be extended to more services e.g. diabetes, heart failure. These types of outcome measures have not been tried before and reflect new areas to be measured. It is expensive to implement, i.e. cost to date has been £7m centrally plus local costs. There is an international interest in these outcome measures. PROMs are not used for trauma cases and hip fractures, because 30% of the patients have dementia and a large number have poor vision.

Q When the Audit Commission is abolished, where will the benchmarking tool go?

  • We do not know in detail, but are hopeful that the benchmarking tool will continue and there are current discussions with various organisations. The plan is to continue development in 2011-12. The timetable for transfer of functions etc. will be published by Christmas.

Derek Miller is an independent consultant and currently working at Commissioning Support for London.

Payment by Results