Struggling providers will be able to ask Monitor for permission to raise their prices above nationally set “tariff” rates, under proposed government changes to the Health Bill unveiled today.

Department of Health guidance on its new amendments to the Health Bill states that providers will be able to “apply to Monitor for a modification to the price determined in accordance with the national tariff”.

It insists: “This modification would not constitute a ‘bail out’; rather it would reflect strong economic arguments to modify the price where commissioners’ requirements were otherwise uneconomic to provide.

“For example, when a provider delivering an essential service is located in a sparsely populated area, it could cost more because the volume of patients is insufficient to deliver the service within tariff price.”

This would “help ensure continuity of services where there were unavoidable additional costs of delivering a particular service,” it adds.

Under the proposed failure regime for foundation trusts, also unveiled by the DH today, this would also be one of the potential solutions available to the trust special administrator charged with securing the continuity of a financially failing FT’s services.

“In this case, the provider’s services, which are considered to be essential, would be delivered by the previously unsustainable provider,” the guidance states.

“On an ongoing basis, notwithstanding the need to address any inefficiencies, the commissioner may face a higher cost associated with service provision reflected in the higher tariff approved by Monitor.”

Foundation Trust Network director Sue Slipman said the department was right to say that additional payments of this kind would not be “bail outs”.

“This would have to be done on the basis of a business plan – they would have to have proven that the tariff was insufficient for whatever reason.”

She added that the tariff was set according to national average costs, and there were “a lot of different factors in different localities that mean some people can be severely impacted”.