DH to clip major hospitals’ power to veto tariff

A document released this morning unveils the department’s plans to steeply raise the thresholds that provider objections must clear in order to force a reconsideration of tariff proposals by the NHS pricing authorities.

The move is an attempt to prevent a repeat of the issues seen earlier this year, in which an unprecedented wave of provider objections was able to block tariff proposals and leave Monitor and NHS England unable to set official prices before the start of 2015-16.

The current tariff objection process was introduced under the Health Act 2012, and the past financial year was the first time provider objections were so numerous as to block tariff proposals.

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Under current rules, a proposed tariff must be revised or referred to the Competition and Markets Authority for review if 51 per cent or more of commissioners or providers object to the planned method for setting prices. The same rules apply if it receives objections from providers responsible supplying more than 51 per cent of the relevant NHS services.

It was the latter threshold that scuppered the 2015-16 tariff – those who objected amounted to only 37 per cent of relevant providers, but accounted for 75 per cent “share of supply” for the relevant services.

The DH consultation launched today proposes to scrap entirely the use of an objection threshold for providers by share of supply, meaning that major teaching hospitals would have no greater ability to object to tariff proposals than other NHS providers.

It also proposes to raise the proportion of commissioners or providers that must object from 51 per cent to “between 66 per cent and 75 per cent”.

The consultation states that, in relation to the 2015-16 tariff, a “small number of large trusts were able to use the share of supply element of the objection process to object to a number of issues, not all of which fell within the objection process”.

“The result was significant disruption to the financial planning of the whole sector,” it adds.

It suggests that major teaching hospitals used the objection process to protest against proposals for a marginal rate for specialised services, “rather than the underlying method for [determining] the price”.

On proposals to raise the proportions of providers or commissioners that must object to a proposal, the consultation says: “While [the proposed new thresholds] represent an increase over the current threshold level, we believe these are proportionate and reasonable at a time of financial constraint – when efficiency savings must be found and changes may be made to the pricing system outside the method (but which might prompt objections via the method).”

Providers will have less than a month to respond to the proposals, with a consultation deadline of 11 September.

Chris Hopson, chief executive of representative group NHS Providers, said: “Objecting to the tariff isn’t a decision that providers of these essential services take lightly. It has repercussions for all and its very use is an early warning of system failure. But it is one of the very few ways in which provider leaders can formally raise concerns about their ability to deliver the right quality of care.”

He added: “Raising the objection threshold and abolishing the ‘by share of supply’ trigger make it more difficult for providers – those who actually deliver care at the frontline – to make their voice heard. There are no compensating proposals to enable the richer and deeper dialogue that is needed. We will obviously reflect our members’ views in our response to the consultation, but we are concerned that these proposals make it easier for the NHS to end up with an undeliverable tariff, at the cost of high quality patient care.”