Appendix - Monitor response
Monitor assumed responsibility for the payment system
from the Department of Health in autumn 2013. Our first national
tariff came into effect in April 2014. This was a new responsibility
for Monitor within a newly restructured NHS. Monitor and NHS England's
long-term aim is to develop a transparent, flexible and accountable
NHS payment system that rewards good-quality, efficient care that
delivers the best possible outcomes for patients in a sustainable
way.
Monitor has indicated that a final version of
the joint long-term strategy on reform of the payment system will
be published in the summer of 2014. We recommend that this strategy
explicitly include processes to identify and eliminate perverse
incentives in the present payment structure and to develop systems
which incentives models of care centred upon all the needs of
the service user. We further recommend that Monitor and NHS England
evaluate the results of any tariff flexibilities use in the 14
integration pioneer sites, as well as the general flexibilities
introduced in the 2014/15 tariff, and that the interim and final
findings of the evaluation should be published. (Paragraph
184)
As advised in our response to the Committee's report
on the 2013 accountability hearing with Monitor, submitted 30
June 2014, we aim to publish the joint long-term payment strategy
in Autumn 2014 to follow on from NHS England's Forward View.
Proposals for the long-term payment strategy will
reflect the differing needs of different types of healthcare users,
differentiating: those benefiting from proactive long-term care
coordination; those requiring highly specialised treatments; and,
other users who are episodically unwell. These different types
of healthcare users will require different care models and payment
arrangements to promote beneficial outcomes. For example, someone
with multiple long-term conditions may benefit from a capitation
based payment (year of care) and we are investigating design options
for innovative payment approaches like this. Integral to the payment
system design is the need to ensure that cost, quality and activity
data is systematically collected and fed back into the system
to ensure continuous refinement.
As we design these new payment approaches we are
working with local areas which are innovating their service delivery
models and are keen to explore how currency design and price-setting
can assist their efforts. For example, we are working with three
of the integrated care pioneers on capitated payments for those
with long-term conditions: North West London and Waltham Forest,
East London & City, and East Cheshire. In addition we are
working with Oxfordshire on mental health outcomes based payments.
This engagement is helping to ensure we identify and eliminate
perverse incentives through the newly designed payment approaches,
mitigate the potential for new perverse behaviours to occur and,
importantly, design payment approaches that are adequately supported
by input from local data systems.
The process for developing data-evidenced payment
approaches takes time. It will be a number of years before these
approaches can be adopted consistently at scale. However, to make
sure we are learning as we go, we are considering undertaking
'formative' evaluations with short-term feedback loops that allow
us to refine the payment approaches iteratively. We are also investigating
the scope to learn from evaluations which are conducted locally
that consider the impact on patient outcomes of new service models
and new payment arrangements. Where evaluations are conducted,
we will seek to disseminate findings and learnings.
In addition to our own development of payment approaches,
we are gathering and analysing the payment variations (tariff
flexibilities) in use in 2014/15. So far we have received over
100 local variations from commissioners. We are currently cataloguing
these and identifying those that represent exemplary practice.
All of the payment variations will be published on Monitor's website.
We find it difficult to understand how parity
of esteem between physical and mental health services can be established,
let alone maintained, when Monitor and NHS England have introduced
a pricing structure for 2014/15 which has the explicit effect
of reducing expenditure for mental health services at a greater
rate than expenditure on acute services to treat physical conditions.
We agree with the Minister of State that the differential pricing
structure is flawed: in our view, it risks a disproportionate
reduction in funding to mental health services. Monitor and NHS
England must set out in their response to this report what steps
they plan to take to support parity of esteem, both through the
present tariff system and their proposals for tariff reform.
(Paragraph 186)
Monitor is fully committed to parity of esteem between
mental and physical health and believes it can be best achieved
through the payment system by putting users' needs at its centre.
In this context, it was not an intended consequence of the 2014/15
National Tariff Payment System (NT) rules on local payment to
signal to commissioners that they should reduce funding for mental
health services differentially without regard to the consequences
on patient access and quality of care. Indeed, Monitor has introduced
principles for local price-setting, where there were previously
none, which require patient-centred and transparent negotiations.
This means that where providers put forward an evidenced case
for alternative payment arrangements or price levels (up or down),
the NT would not prohibit this. NHS England's analysis of commissioning
plans shows that CCGs plan to spend more on mental health services
in 2014/15 compared to 2013/14, suggesting that appropriate local
discretion has indeed been exercised.
Below we set out details of our programme of work
for the next five years in support of NHS England's commissioning
strategy for mental health. This includes some of the steps we
are taking in 2015/16, which includes providing further guidance
on how efficiency and cost uplifts should be applied to locally
priced services, such as mental health.
The 2015/16 national tariff is a key step in developing
suitable payment approaches for mental health, and we are responding
to the increasing concern of providers, commissioners, service
users and stakeholders that current arrangements are inadequate.
We have prioritised the development of alternatives to block contracts
that can drive value and the delivery of outcomes that matter
to service users. We are using the 2015/16 National Tariff to:
· require
providers and commissioners to contract and evaluate services
using existing care clusters, with an option to use alternative
payment approaches if they work better for patients;
· provide guidance
that clarifies expectations that all contract arrangements should
be transparent (i.e. require activity and quality reporting) and
take account of patient needs;
· amend data
submission and reporting requirements to aid production of robust
data and information for the sector; and
· explore how
we can improve guidance on the local agreement of suitable cost
uplifts and efficiency factor for mental health services, using
the value proposed for services with a national price as a starting
point.
The impact of this is that we expect all providers
and commissioners, as a minimum, to stop using block payments
that have limited levels of transparency regarding service provision,
patient outcomes, quality and value. Moreover, to further encourage
the shift to new patterns of care, we are proposing to support
providers and commissioners by providing detailed worked examples
of innovative payment designs that are aligned to Monitor and
NHS England's emerging ideas of long-term payment system redesign
that enable integrated mental and physical health. All of the
payment designs will include quality and outcome metrics.
Over the longer term, we are working with NHS England
to examine: capitation payment for long term conditions including
mental health; crisis response payment as part of the urgent and
emergency care pathway; and, outcomes based payment for the seriously
mentally ill, including young people. As is our approach across
our payment redesign we will be providing on-going support to
commissioners and evaluating payment approaches in these areas.
As well as exploring longer term changes in payment
design, we continue to make the regulatory process relating to
the NHS payment system more transparent and rigorous. We are working
to improve the integrity of the cost data available to inform
national and local price-setting, including quality and outcomes
data from physical and mental health settings. Critical to this
is collecting detailed patient level cost data, while continuing
to support greater consistency in reference cost and cluster data.
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