CCGs complain to NHS England 'in strongest terms' over budget cuts

In a note seen by HSJ, NHS Clinical Commissioners said it had written to the national body “in the strongest terms” over the potential impact of the tariff on CCG finances.

As a result of the new payment system, which includes the HRG4+ currency and new top up payments for specialised services, CCGs’ allocations will reduce by a combined £156m in 2017-18 and £158m in 2018-19, in comparison to allocations published earlier this year.

Some CCGs have seen their allocations reduce significantly, such as Dorset, which will receive £10m less than expected in next year’s allocation. Yorkshire and Humber will have the biggest regional reduction, of £37m.

HSJ has spoken to several CCG leaders, who report that the changes have frustrated work on contracts for 2017-19, and undermined sustainability and transformation plans - which were submitted shortly before the allocation changes were released - by significantly altering their health system budgets. Many CCGs are understood to be reporting the reductions in their budgets as “unmitigated risks”, and a significant number are said to have raised concerns in response to the formal consultation on the 2017-19 tariff, which ended on Tuesday.

In a briefing documents seen by HSJ, NHS England says the adjustments should be neutralised by changes in the prices paid by CCGs under the tariff.

But in the note to CCGs from NHSCC, the representative body said: “Over recent weeks there have been increasing concerns and anxieties raised about the impact of the shift to HRG4+ and the consistent application of identification rules for specialised services.

“The impact of this is supposed to be cost neutral, but we are hearing from many of our members that they do not believe it is, and these adjustments are causing significant and material financial pressures and playing through into contract negotiations and also potentially into CCG views about the tariff consultation…

“We are also writing to Paul Baumann (finance director of NHS England) in the strongest terms about the potential impact of the HRG4+ changes to CCG allocations, as if this is materially not cost neutral at a local level and creates considerable commissioner volatility then we would be extremely concerned and as such we are asking them to urgently review the impact at the local level.”

In a note from NHSE which has explained the methodology, also seen by HSJ, the national body said: “The purpose of the HRG4+ adjustments is to seek, to the extent reasonably possible, to neutralise the cost impacts of changes in the tariff system at commissioner level through commensurate adjustments to commissioner resource limits.

“We do this by estimating changes in costs faced due to the shift to HRG4+, and the associated revision in specialist top-ups, as proposed in the national tariff consultation. Ultimately these system changes are intended to be neutral nationally, though they have a differential impact between individual commissioners (and providers) depending on activity mix.”

An NHS England spokeswoman said: “The long awaited move to HRG4+ means that to ensure budget neutrality as between individual CCGs, and as between CCG commissioned and the specialised services their residents receive, NHS England has to adjust these respective budgets. Having tested the approach in CCGs around the country, the modelling supporting these adjustments is robust.

”There are a small number of cases where there are specific local issues and for those CCGs we are giving them a bit more time to submit their local analysis. But for the vast majority of CCGs this turns out not to be an issue, when the agreed national methodology is correctly applied by the individual CCG.”

Last month, HSJ reported how a number of specialist orthopaedic NHS trusts, as well as independent providers, had raised serious concerns about the impact of the tariff.