Managing the care of people with long-term conditions: Monitor's Response to the Committee's Second Report of Session 2014-15 - Health Committee Contents


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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