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Health and Social Care BillPage 120

(c) the matters likely to be taken into account by Monitor in determining
the amount of any variable monetary penalty to be imposed (including,
where relevant, any discounts for voluntary reporting of breaches in
respect of which a penalty may be imposed), and

(d) 5rights to make representations and rights of appeal.

(5) Monitor must have regard to the guidance or (as the case may be) revised
guidance in exercising its functions under sections 105 and 106 and Schedule
11.

109 Publication of enforcement action

(1) 10Monitor must include information about the following in its annual report—

(a) the cases in which a discretionary requirement has been imposed
during the financial year to which the report relates, and

(b) the cases in which an enforcement undertaking has been accepted
during that financial year.

(2) 15But Monitor must not include information which it is satisfied is—

(a) commercial information the disclosure of which would, or might,
significantly harm the legitimate business interests of the person to
whom it relates;

(b) information relating to the private affairs of an individual the
20disclosure of which would, or might, significantly harm that person’s
interests.

(3) The reference in subsection (1)(a) to cases in which a discretionary requirement
has been imposed does not include a reference to a case where a discretionary
requirement has been imposed but overturned on appeal.

110 25Notification of enforcement action

(1) As soon as reasonably practicable after imposing a discretionary requirement
or accepting an enforcement undertaking Monitor must notify the following of
that fact—

(a) the National Health Service Commissioning Board,

(b) 30such clinical commissioning groups as are likely to be affected by the
imposition of the requirement or the acceptance of the undertaking,
and

(c) any person exercising regulatory functions in relation to the person on
whom the discretionary requirement was imposed or from whom the
35enforcement undertaking was accepted.

(2) In subsection (1) “regulatory functions” has the same meaning as in the
Legislative and Regulatory Reform Act 2006 (see section 32 of that Act).

Transitional provision

111 Imposition of licence conditions on NHS foundation trusts

(1) 40Where Monitor is satisfied that the governance of an NHS foundation trust is
such that the trust will fail to comply with the conditions of its licence, Monitor
may include in the licence such conditions relating to governance as it
considers appropriate for the purpose of reducing that risk.

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(2) The circumstances in which Monitor may be satisfied as mentioned in
subsection (1) include circumstances where it is satisfied that the council of
governors, the board of directors or the council of governors and board of
directors taken together are failing—

(a) 5to secure compliance with conditions in the trust’s licence, or

(b) to take steps to reduce the risk of a breach of a condition in the trust’s
licence.

(3) A condition included under subsection (1) has effect until this section ceases,
by virtue of section 112, to have effect in relation to the trust.

(4) 10Monitor may modify a condition included under subsection (1).

(5) Where Monitor is satisfied that the trust has breached or is breaching a
condition included under subsection (1), Monitor may by notice require the
trust to—

(a) remove one or more of the directors or members of the council of
15governors and appoint interim directors or members of the council;

(b) suspend one or more of the directors or members of the council from
office as a director or member for a specified period;

(c) disqualify one or more of the directors or members of the council from
holding office as a director or member for a specified period.

(6) 20Where Monitor is satisfied that a person has failed or is failing to comply with
a notice under subsection (5), Monitor may do one or more of the things which
it may require the trust to do under that subsection.

(7) Subsection (5) does not prevent Monitor from exercising in relation to a
condition included in a licence under subsection (1) the powers conferred by
25sections 105 and 106 (breach of licence condition etc: enforcement powers
which apply during and after period in which this section and sections 112 to
114 have effect).

(8) Where Monitor includes a condition under subsection (1), it may also make
such incidental or consequential modifications as it considers necessary or
30expedient of any other condition of the licence concerned which is affected.

(9) Where Monitor includes a condition under subsection (1) by modifying a
standard condition of the licence concerned, the modification does not prevent
any other part of the condition from continuing to be regarded as a standard
condition for the purposes of this Chapter.

(10) 35In this section, a reference to failing to discharge functions includes a reference
to failing to discharge those functions properly.

(11) Omit section 52 of the National Health Service Act 2006 (failing NHS
foundation trusts); and in consequence of that, omit—

(a) section 39(2)(f) of that Act (copy of notice under section 52 of that Act
40to be on register), and

(b) paragraph 22(1)(f) of Schedule 7 to that Act (copy of that notice to be
available for public inspection).

112 Duration of transitional period

(1) Section 111 ceases to have effect in relation to an NHS foundation trust on such
45day as the Secretary of State may by order specify.

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(2) Different days may be appointed in relation to different NHS foundation
trusts.

(3) A day specified under subsection (1) must not—

(a) in the case of an NHS foundation trust authorised on or before 1 April
52014, be before 1 April 2016;

(b) in the case of an NHS foundation trust authorised after 1 April 2014, be
before the end of the period of two years beginning with the day on
which the trust was authorised.

(4) In this section, a reference to being authorised is a reference to being given an
10authorisation under section 35 of the National Health Service Act 2006.

(5) Section 111 is repealed as soon as there are—

(a) no NHS foundation trusts in relation to which it has effect, and

(b) no NHS trusts in existence (whether because they had all ceased to exist
without section 179 having come into force or there are none continuing
15in existence by virtue of subsection (3) of that section).

113 Orders under section 112: criteria for deciding applicable trusts

(1) Where the Secretary of State proposes to make an order under section 112, the
Secretary of State must notify Monitor.

(2) Monitor, having received a notification under subsection (1), must set the
20criteria that are to be applied for the purpose of determining to which NHS
foundation trusts the order should apply.

(3) Before setting criteria under subsection (2), Monitor must—

(a) consult the Care Quality Commission and such other persons as
Monitor considers appropriate, and

(b) 25obtain the approval of the Secretary of State.

(4) If the Secretary of State approves the proposed criteria, Monitor must—

(a) publish the criteria,

(b) determine, by applying the criteria, to which trusts the order should
apply,

(c) 30notify the Secretary of State of its determination, and

(d) publish a list of the trusts concerned.

(5) If the Secretary of State does not approve the proposed criteria, Monitor must
propose revised criteria; and subsections (3)(b) and (4) apply in relation to the
proposed revised criteria as they apply in relation to the criteria previously
35proposed.

(6) The Secretary of State, having received a notification under subsection (4)(c),
must review Monitor’s determination under subsection (4)(b).

114 Repeal of sections 112 and 113

(1) Sections 112 and 113 are repealed immediately after section 111 is repealed;
40and in consequence of that—

(a) in section 67(2)(a), omit “or under sections 111 and 113 of this Act
(imposition of licence conditions on NHS foundation trusts during
transitional period)”,

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(b) omit section 67(3),

(c) in section 87(4), after paragraph (a) insert “and”, and

(d) in section 87(4), omit paragraph (c) and the preceding “and”.

(2) This section is repealed immediately after sections 112 and 113 are repealed.

CHAPTER 4 5Pricing

115 Price payable by commissioners for NHS services

(1) If a health care service is specified in the national tariff (as to which, see section
116), the price payable for the provision of that service for the purposes of the
NHS is (subject to sections 124 and 125) such price as is determined in
10accordance with the national tariff on the basis of the price (referred to in this
Chapter as “the national price”) specified in the national tariff for that service.

(2) If a health care service is not specified in the national tariff, the price payable
for the provision of that service for the purposes of the NHS is such price as is
determined in accordance with the rules provided for in the national tariff for
15that purpose.

116 The national tariff

(1) Monitor must publish a document, to be known as “the national tariff”, which
specifies—

(a) certain health care services which are or may be provided for the
20purposes of the NHS,

(b) the method used for determining the national prices of those services,

(c) the national price of each of those services, and

(d) the method used for deciding whether to approve an agreement under
section 124 and for determining an application under section 125 (local
25modifications of prices).

(2) The national tariff may provide for rules under which the commissioner of a
health care service specified in the national tariff and the providers of that
service may agree to vary—

(a) the specification of the service under subsection (1)(a), or

(b) 30the national price of the service.

(3) Where a variation is agreed in accordance with rules provided for under
subsection (2), the commissioner of the service in question must maintain and
publish a written statement of—

(a) the variation, and

(b) 35such other variations as have already been agreed in accordance with
rules provided for under that subsection in the case of that service.

(4) The national tariff may also—

(a) specify variations to the national price for a service by reference to
circumstances in which the service is provided or other factors relevant
40to the provision of the service,

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(b) provide for rules for determining the price payable for the provision for
the purposes of the NHS of health care services which are not specified
under subsection (1)(a), and

(c) provide for rules relating to the making of payments to the provider of
5a health care service for the provision of that service.

(5) Rules provided for under subsection (4)(b) may specify health care services
which are not specified under subsection (1)(a).

(6) The national tariff may also provide for rules for determining, where a health
care service is specified in more than one way under subsection (1)(a) or in
10more than one way in rules provided for under subsection (4)(b), which
specification of the service is to apply in any particular case or cases of any
particular description.

(7) The national tariff may include guidance as to—

(a) the application of the method specified under subsection (1)(d),

(b) 15the application of rules provided for under subsection (2), (4)(b) or (6),

(c) the discharge of the duty imposed by subsection (3), or

(d) the application of variations specified under subsection (4)(a),

and a commissioner of a health care service for the purposes of the NHS must
have regard to guidance under this subsection.

(8) 20Different methods may be specified under subsection (1)(b) for different
descriptions of health care service.

(9) The national tariff may, in the case of a specified health care service or health
care services of a specified description, specify different national prices or
different variations under subsection (4)(a) in relation to different descriptions
25of provider.

(10) A description for the purposes of subsection (9) may not be framed by
reference to—

(a) whether the provider is in the public or (as the case may be) private
sector, or

(b) 30some other aspect of the status of the provider.

(11) The national tariff may not specify a national price for a health care service
provided pursuant to the public health functions of the Secretary of State, or of
a local authority, under the National Health Service Act 2006.

(12) The national tariff has effect for such period as is specified in the national tariff
35(or, where a new edition of the national tariff takes effect before the end of that
period, until that new edition takes effect).

(13) In exercising its functions under this Chapter, Monitor must (in addition to the
matters specified in section 66) have regard to the objectives and requirements
for the time being specified in the mandate published under section 13A of the
40National Health Service Act 2006.

117 The national tariff: further provision

(1) The ways in which a health care service may be specified in the national tariff
under section 116(1)(a), or in rules provided for in the national tariff under
section 116(4)(b), include in particular—

(a) 45specifying it by reference to its components,

Health and Social Care BillPage 125

(b) specifying it as a service (a “bundle”) that comprises two or more health
care services which together constitute a form of treatment,

(c) specifying it as a service in a group of standardised services.

(2) In the case of a service specified in the national tariff under section 116(1)(a),
5the national tariff must—

(a) if the service is specified in accordance with subsection (1)(a), specify a
national price for each component of the service;

(b) if it is specified in accordance with subsection (1)(b), specify a national
price for the bundle;

(c) 10if it is specified in accordance with subsection (1)(c), specify a single
price as the national price for each service in the group.

(3) In the case of a service specified in rules provided for in the national tariff
under section 116(4)(b), the rules may—

(a) if the service is specified in accordance with subsection (1)(a), make
15provision for determining the price payable for each component of the
service;

(b) if it is specified in accordance with subsection (1)(b), make provision for
determining the price payable for the bundle;

(c) if it is specified in accordance with subsection (1)(c), make provision for
20determining the price payable for each service in the group.

(4) Where the commissioner of a health care service for the purposes of the NHS
agrees to pay a price for the provision of the service other than the price that is
payable by virtue of this Chapter, Monitor may direct the commissioner to take
such steps within such period as Monitor may specify to secure that the
25position is, so far as practicable, restored to what it would have been if the
commissioner had agreed to pay the price payable by virtue of this Chapter.

(5) Where the commissioner of a health care service fails to comply with rules
provided for under section 116(2), (4) or (6), Monitor may direct the
commissioner to take such steps within such period as Monitor may specify—

(a) 30to secure that the failure does not continue or recur;

(b) to secure that the position is, so far as practicable, restored to what it
would have been if the failure was not occurring or had not occurred.

118 Consultation on proposals for the national tariff

(1) Before publishing the national tariff, Monitor must send a notice to—

(a) 35each clinical commissioning group,

(b) each relevant provider, and

(c) such other persons as it considers appropriate.

(2) Monitor must also publish the notice.

(3) The notice must specify—

(a) 40the health care services which Monitor proposes to specify in the
national tariff,

(b) the method or methods it proposes to use for determining the national
prices of those services,

(c) the prices, determined in each case by using the applicable method
45specified under paragraph (b), that Monitor proposes as the national
prices of those services, and

Health and Social Care BillPage 126

(d) the method it proposes to use for deciding whether to approve an
agreement under section 124 and for determining an application under
section 125 (local modifications of national prices).

(4) The notice may specify such rules as Monitor proposes to provide for in the
5national tariff under which the commissioner of a health care service and a
provider of the service would be entitled to vary—

(a) the specification of the service in the national tariff, or

(b) the national price of the service.

(5) The notice may also specify—

(a) 10such variations (by reference to circumstances in which a service is
provided or other factors relevant to its provision) as Monitor proposes
to specify to the prices that it proposes as the national prices,

(b) such rules as Monitor proposes to provide for in the national tariff for
determining the price payable for the provision for the purposes of the
15NHS of health care services not specified for the purposes of subsection
(3)(a), and

(c) such rules as Monitor proposes to provide for in the national tariff for
determining, where a health care service is specified in more than one
way for the purposes of subsection (3)(a) or in more than one way in
20rules specified for the purposes of paragraph (b), which specification of
the service is to apply in any particular case or cases of any particular
description.

(6) The notice may include such guidance as Monitor proposes to provide for in
the national tariff as to—

(a) 25the application of the method specified for the purposes of subsection
(3)(d);

(b) the application of rules specified for the purposes of subsection (4) or
(5)(b) or (c);

(c) the application of variations specified for the purposes of subsection
30(5)(a).

(7) The health care services specified for the purposes of subsection (3)(a) are only
such services as the National Health Service Commissioning Board considers
should be so specified and—

(a) as the Board and Monitor agree will be so specified, or

(b) 35in default of agreement, as are determined by arbitration as being
services that will be so specified.

(8) A method specified for the purposes of subsection (3)(b) or (d) is only such
method, and such guidance on the application of the method specified for the
purposes of subsection (3)(d) as is included for the purposes of subsection (6)
40is only such guidance, as Monitor considers should be so specified and
included and—

(a) as Monitor and the Board agree will be so specified and included, or

(b) in default of agreement, as is determined by arbitration as being the
method that will be so specified and the guidance that will be so
45included.

(9) The prices specified for the purposes of subsection (3)(c) are only such prices
as Monitor considers should be so specified and—

(a) as Monitor and the Board agree will be so specified, or

Health and Social Care BillPage 127

(b) in default of agreement, as are determined by arbitration as being the
prices that will be so specified.

(10) Such variations as are specified for the purposes of subsection (5)(a), and such
guidance on the application of those variations as is included for the purposes
5of subsection (6), are only such variations and such guidance as Monitor
considers should be so specified and included and—

(a) as Monitor and the Board agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
variations that will be so specified and the guidance that will be so
10included.

(11) Such rules as are specified for the purposes of subsection (4) or (5)(c), and such
guidance on those rules as is included for the purposes of subsection (6), are
only such rules and such guidance as the National Health Service
Commissioning Board considers should be so specified and included and—

(a) 15as the Board and Monitor agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
rules that will be so specified and the guidance that will be so included.

(12) Such rules as are specified for the purposes of subsection (5)(b), and such
guidance on those rules as is included for the purposes of subsection (6), are
20only such rules and such guidance as Monitor considers should be so specified
and included and—

(a) as Monitor and the Board agree will be so specified and included, or

(b) in default of agreement, as are determined by arbitration as being the
rules that will be so specified and the guidance that will be so included.

(13) 25A notice under this section must specify when the consultation period in
relation to the proposals ends; and for that purpose, the consultation period is
the period of 28 days beginning with the day after that on which the notice is
published under subsection (2).

(14) In this section, a “relevant provider” is—

(a) 30a licence holder, or

(b) such other person, of such description as may be prescribed, as
provides health care services for the purposes of the NHS.

119 Consultation: further provision

(1) For the purpose of securing that the prices payable for the provision of health
35care services for the purposes of the NHS are such as to result in a fair level of
pay for providers of the services, the National Health Service Commissioning
Board and Monitor must, in exercising functions under section 118, have
regard to—

(a) differences in the costs incurred in providing health care services for
40the purposes of the NHS to persons of different descriptions, and

(b) differences between providers with respect to the range of health care
services that they provide for those purposes.

(2) In exercising functions under section 118(7), the Board and Monitor must act
with a view to securing the standardisation throughout England of the
45specification of health care services in the national tariff under section
116(1)(a).

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(3) In exercising functions under section 118(12), Monitor and the Board must act
with a view to securing the standardisation throughout England of the
specification of health care services in rules provided for in the national tariff
under section 116(4)(b).

(4) 5In carrying out the duty under subsection (2) or (3), the Board and Monitor
must have regard to whether, or to what extent, standardisation is likely to
have a significant adverse impact on the provision of health care services for
the purposes of the NHS.

120 Responses to consultation

(1) 10If Monitor receives objections from one or more clinical commissioning groups
or relevant providers to a method it proposes under section 118(3)(b), Monitor
may not publish the national tariff unless—

(a) the conditions in subsection (2) are met, or

(b) where those conditions are not met, Monitor has made a reference to
15the Competition Commission.

(2) The conditions referred to in subsection (1)(a) are that—

(a) the objection percentage for clinical commissioning groups is less than
the prescribed percentage,

(b) the objection percentage for relevant providers is less than the
20prescribed percentage, and

(c) the share of supply percentage is less than such percentage as may be
prescribed.

(3) In subsection (2)—

(a) the “objection percentage” is the proportion (expressed as a percentage)
25of clinical commissioning groups or (as the case may be) relevant
providers who objected to the proposed method, and

(b) the “share of supply percentage” is the proportion (expressed as a
percentage) of relevant providers who objected to the proposed
method, weighted according to their share of the supply in England of
30such services as may be prescribed.

(4) A reference under subsection (1)(b) must require the Competition Commission
to determine whether the method proposed under section 118(3)(b) is
appropriate.

(5) The functions of the Competition Commission with respect to a reference
35under this section are not to be regarded as general functions of its for the
purposes of Part 2 of Schedule 7 to the Competition Act 1998; instead, Schedule
12 to this Act (procedure on a reference under this section) has effect.

(6) Regulations prescribing a percentage for the purposes of subsection (2)(c) may
include provision prescribing the method used for determining a relevant
40provider’s share of the supply in England of the services concerned.

(7) In this section and section 121 and Schedule 12, “relevant provider” has the
meaning given in section 118(14).

121 Determination on reference under section 120

(1) In carrying out a determination on a reference under section 120, the
45Competition Commission must have regard, to the same extent as is required

Health and Social Care BillPage 129

of Monitor, to the matters to which Monitor must have regard in carrying out
the functions of its to which the determination relates.

(2) In carrying out the determination, the Competition Commission must also
have regard to such representations as are made to it by clinical commissioning
5groups or relevant providers who made objections to Monitor in accordance
with paragraph 2 of Schedule 12 about the method proposed under section
118(3)(b).

(3) In carrying out the determination, the Competition Commission—

(a) may also have regard to matters to which Monitor was not able to have
10regard in the case to which the determination relates, but

(b) must not, in the exercise of the power under paragraph (a), have regard
to a matter to which Monitor would not have been entitled to have
regard in that case had it had the opportunity to do so.

(4) The Commission may determine that the method proposed under section
15118(3)(b) is not appropriate only if it is satisfied that Monitor’s decision to
propose the method was wrong on one or more of the following grounds—

(a) that Monitor failed to have regard to the matters referred to in
subsection (1),

(b) that the decision was based, wholly or partly, on an error of fact,

(c) 20that the decision was wrong in law.

(5) Where the Commission determines that the method proposed under section
118(3)(b) is appropriate, Monitor may use that method for the purposes of the
national tariff accordingly.

(6) Where the Commission determines that the method proposed under section
25118(3)(b) is not appropriate, it must remit the matter to Monitor for
reconsideration and decision in accordance with such directions as the
Commission may give.

(7) A direction under subsection (6) may, in particular, require Monitor to make
such changes to the method in question as are specified in the direction.

(8) 30A determination on a reference under section 120—

(a) must be contained in an order made by the Commission,

(b) must set out the reasons for the determination, and

(c) takes effect at the time specified in the order or determined in
accordance with provision made in the order.

(9) 35The Commission must give notice of a determination on a reference under
section 120 to—

(a) Monitor,

(b) the National Health Service Commissioning Board, and

(c) such clinical commissioning groups or relevant providers as made
40representations in accordance with paragraph 2 of Schedule 12.

(10) The Commission must also publish the determination; but it must exclude
from what it publishes information which it is satisfied is—

(a) commercial information the disclosure of which would, or might,
significantly harm the legitimate business interests of an undertaking
45to which it relates;

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