Health and Care Bill: NHS payment scheme
Updated 10 March 2022
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In 2019, the Health and Social Care Select Committee said:
Providing more flexibility will help local providers and commissioners to remove perverse incentives, especially in managing patients with multiple long-term conditions.
This fact sheet explains how the government plans to replace the NHS national tariff with a new NHS payment scheme, to promote population-health management and integration across the health system.
Background
The national tariff (“the tariff”) sets out prices and rules for determining prices payable by NHS commissioners (like Clinical Commissioning Groups) to providers (for example, a hospital) for providing NHS-funded healthcare
It was introduced as part of a package of reforms including allowing patients to choose which hospital they are treated, and the tariff enabled the money to follow the patient. Alongside this, it also means that all providers of NHS-funded services received the same amount of money per operation or appointment, ensuring providers competed on quality.
The tariff is currently published by NHS Improvement (the operational name for Monitor and the NHS Trust Development Authority) with the agreement from NHS England.
As we move towards more integrated care focused on population health, we want to ensure that the payment system supports that direction of travel. Therefore, we are proposing to replace the national tariff with a new NHS payment scheme designed specifically to support more joined-up ways of delivering services.
What the will Bill do
This Bill will repeal the existing legislation supporting the national tariff. It will introduce a new NHS payment scheme.
The NHS payment scheme will set rules around how commissioners establish prices to pay providers for healthcare services for the purposes of the NHS, or public health services which are commissioned by an integrated care board, or NHS England, on behalf of the Secretary of State for Health and Social Care.
These changes mean that NHS England, who will publish the new NHS payment scheme, will have the freedom to set payment rules in a more flexible way than compared to the tariff.
For example:
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NHS England may set prices as a formula so that the price payable can reflect local factors. This will mean a multi-year payment scheme can include factors like inflation which can be included at a specific point in the future rather than having to forecast them at the point at which the payment scheme is published
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NHS England will be able to make adjustments to the payment scheme (subject to consultation) within a payment scheme period, for example to reflect a new treatment, rather than having to consult on a new payment scheme in its entirety for even a minor proposed change
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The NHS payment scheme will include pricing and rules for public health services, commissioned by integrated care boards or NHS England on behalf of the Secretary of State for Health and Social Care. The inability to set prices for these services previously has created difficulties where these services are part of a patient pathway for a particular service, for example, screening new-born babies’ hearing as part of their mothers’ maternity care
The new flexibilities will allow the NHS to provide single, joined-up pricing structures covering entire care pathways.
The right of providers to apply to Monitor to make local modifications to tariff prices will be removed, as will the power for Monitor to refer contested pricing rules to the Competition and Markets Authority.
How these provisions will help to reduce bureaucracy
The NHS Long Term Plan prioritised the need for as many people as possible to be treated closer to home, in primary care and community settings.
The current tariff system works well for a traditional model of care whereby people are referred to hospital, treated, cured and then discharged, but less well for the management of patients with multiple long-term conditions.
The new NHS payment scheme will promote the shift to population-based funding and will make it easier to redesign care across providers, and support the move to preventative, pro-active care models we aim to deliver through integrated care.
Further information
The National Tariff Payment Scheme, NHS England and NHS Improvement