CCGs urged to use freedoms to set prices following tariff row

The two organisations, which share responsibility for the national payment system, have been criticised for setting a tariff demanding savings a fifth higher from the mental health and community sector than from acute providers.

Now in a joint statement to HSJ, which first revealed the differential tariff last month, NHS England and Monitor have reminded commissioners that they have the freedom to set their own local prices in relation to locally negotiated block contracts for mental health and community services.

The statement said: “The national tariff payment system for 2014-15 allows commissioners and providers to negotiate and agree local prices where there is no national price. It is therefore open to a commissioner to agree a price which reflects the particular costs of their local provider.”

The statement said NHS England was committed to delivering parity of esteem for mental health. It warned CCGs: “We intend to review commissioners’ plans for 2014-15 to ensure that this happens.”

While CCGs have the freedom to set locally agreed prices they have to follow the process set down by Monitor and NHS England. In its national payment system guidance published in December, Monitor said commissioners and providers “should have regard” to the efficiency requirements set by regulators, which means local negotiations for mental health and community providers could still be disadvantaged compared to their acute counterparts.

In an attempt to justify the decision to impose the differential deflator, the joint statement pointed to the costs of implementing the friends and family test and continued to claim the £150m cost estimated for the Francis and Keogh reports “relate primarily to acute health services”. The statement said: “It was therefore decided that the cost uplift should apply specifically to the acute sector.”

NHS England and Monitor said they were committed to understanding cost pressures across the system as they developed the tariff for 2015-16 and were “committed to moving towards a more evidence based approach to pricing”.

The decision to set a differential tariff has been condemned as “flawed and unacceptable” by health minister Norman Lamb and labelled “negligent” by Stephen Dalton, head of the Mental Health Network.

Mr Dalton described the joint statement as “woefully inadequate”, adding, “commissioners have their own pressures and the starting point for negotiations will be a differential”.

He said: “The issue is as much about the principle as it is about the money. The policy doesn’t make a lot of sense suggesting Francis applies more to acute than to non-acutes. That is a matter of fact which needs to be challenged. The question is do the board of NHS England believe what is in the policy?”