Marginal specialised tariff would hit critical and neonatal services, providers warn

In a response to NHS England and Monitor’s proposed national tariff, the representative body for NHS providers said its members will have to take decisions that will have “profound implications for patient services”, such as reducing the size of critical care units and halting plans to expand neonatal care if a marginal rate for specialised services is introduced.

A marginal rate for specialised services would see providers paid only half the price of treatment once activity rises above agreed levels. These are generally expected to be the same as providers’ 2014-15 contracted levels.

NHS Providers said such an approach might force some providers to stop providing specialised services, which could mean patients have to travel further for treatment.

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The consultation response also said the introduction of the tariff would “adversely affect” all providers of specialised services, not only dedicated specialist trusts. This, it said, undermined one of the national bodies’ justifications for the policy: the stronger financial performance of specialist hospitals compared to other providers.

NHS Providers said its members are concerned there is a conflict of interest because NHS England is jointly responsible for setting the tariff, “but at the same time is the beneficiary of this policy” as the commissioner of specialised services.

There is also concern that contracts signed in “good faith” in 2014-15 will now penalise providers because their activity levels are proposed as the baseline for the marginal tariff.

The response said: “Providers signed contracts in good faith last year with commissioners, often lower than the 2014-15 predicted activity in order to contain contract plan values and support NHS England with their budgetary pressures; this is now being used to penalise them further in 2015-16.”

NHS Providers also said the “scale of the challenge” set out in the proposed national tariff, which requires all providers to deliver 3.8 per cent in efficiency savings, has reached “unprecedented levels”.

Instead, it said the factor should not be more than 1-2 per cent “with the efficiency and funding gap met by local and national commissioners through demand management, more strategic [quality innovation productivity and prevention efficiency programmes] and some consideration given to commissioning less care”.

Financial difficulties are now reaching the point where they will have “implications for quality and safety in the near future”, the response warned.

It added: “Our membership of acute, ambulance, community and mental health trusts consider that the national tariff proposals for next year are undeliverable and will place the provider sector into financial distress.”

There is also concern over the “slow pace of change” in developing different payment mechanisms across mental health, community and ambulance sectors.

The marginal rate proposal has proved controversial and more than 300 consultants wrote an open letter last month to NHS England chief executive Simon Stevens saying that the tariff would cause “avoidable deaths”.