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Earl Howe: I am grateful to the Minister for that full reply. It raises some interesting questions upon which we shall want to reflect. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.30 p.m.
Earl Howe moved Amendment No. 11:
The noble Earl said: This amendment has a dual purpose. The first is to relieve insurers of the duty to apply for an additional certificate where the ceiling for NHS charges has already been reached under previous certificates. The second purpose is to avoid a situation in which the uprating of charges would trigger a requirement to apply for a certificate when previously the ceiling for charges had been reached.
There are quite a few occasions when an insurer may wish to make an interim settlement in respect of a personal injury claim and settle any NHS charges at the same time. Interim settlements occur where there is a dispute over liability or where time needs to elapse before a full assessment of the size of the settlement can be made, but where the victim is in need of early compensation, for example for the costs of care.
Occasionally claim settlements may be structured over a period of time, perhaps to pay directly for rehabilitative treatment that is received privately. In these cases the insurer likes to be able to discharge his liability to pay NHS charges as early as possible, and the insurer also wants to avoid having to reapply for certificates which will record a nil charge when a further payment is made. The Minister may say that it may not be possible to estimate the full extent of charges when an interim settlement has been made, but that could be dealt with easily enough by specifying that it only applied in cases where the ceiling had been reached, and that is what the amendment seeks to do.
There will be very few cases where an insurer would want to make an interim settlement but where the hospital stay was below the maximum, because one has to bear in mind that £10,000, which is the limit that the Government have indicated, equates to 22 days in hospital. The sort of provision I have suggested has the added benefit, where it was clear that the maximum had been reached, that it would allow an insurer to apply for a certificate well before making a settlement. He could settle the certificate at that stage and would not have to reapply at the time of making the settlement.
The amendment also seeks to address another point. If an insurer has paid the prescribed maximum in NHS charges under the terms of a certificate issued to him, what happens if those charges are uprated while the casualty is still in hospital? It does not seem equitable, or indeed very sensible, to require of the insurer that he applies for another certificate when, as it were, the goal posts of the charging tariff have moved. If an insurer were required to do this, there would once again be a sniff of retrospection creeping into the provisions of the Bill, because new laws would essentially be applied to the liabilities of insurers under old policies.
I should be grateful for the Minister's comments on that; in particular, what assurances can he give that insurers will not find themselves caught by uprating, and how often in any event will such uprating take place? I beg to move.
Lord Hunt of Kings Heath: I hope that I can set the noble Earl's mind at rest on this matter. For obvious reasons, we would not want a system whereby an insurer could apply for a certificate of NHS charges at a very early stage in the handling of a case, simply to limit his exposure to those charges in cases where NHS treatment is continuing. Where an insurer has applied for a certificate and the accident victim has already received treatment with a cost in excess of the maximum, which initially is to be set at £10,000 in any one case, we intend to issue a certificate which would have indefinite validity. Such a power has been expressly provided in Clause 2(4)(c).
Where NHS cases, at first and subsequent interview, are not at the maximum, certificates would then have a cut-off date related to the occurrence of a specified event, so that there would be some flexibility in operating the system.
I hope that I have reassured the noble Earl on that matter and that he will withdraw the amendment.
Earl Howe: I am grateful to the Minister. I think I have followed what he has said, and I shall of course read it in Hansard with care. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Howe moved Amendment No. 12:
The noble Earl said: This is a very simple amendment. It is designed to give some teeth to the obligation, which I am sure will be imposed on the compensation recovery unit by the Secretary of State, that it should expedite the issue of certificates with the maximum speed. It is not fair on an insurance company to have to wait interminably for a certificate to be issued. I am therefore suggesting that, if the CRU
Lord Hunt of Kings Heath: I have every sympathy with the aim of the noble Earl. The Bill does not bind the Secretary of State to produce a certificate for insurers in a set time period following an application; it simply asks that he do so "as soon as reasonably practicable".
I certainly agree that any insurer who waited more than three months for a certificate would be entitled to think that the Secretary of State had failed in that respect. We have deliberately not specified a timescale in the Bill, however, because the compensation recovery unit, acting on behalf of the Secretary of State, will not have the information needed to verify a claim to hand. It will in the main be dependent on NHS trusts to supply the necessary details.
We have no intention whatever of keeping insurers waiting for their certificates. We intend to specify in the service level agreement between the health departments and the compensation recovery unit that a certificate should be sent within 28 days of application. Where the CRU cannot meet this timescale because of failures on the part of the NHS, we would expect them to notify the relevant health department. It would then be a matter for management action between the health department and the relevant NHS trust to rectify the situation.
I hope that that reassurance will be sufficient for the noble Earl and that he will withdraw the amendment.
Earl Howe: Once again I am grateful to the Minister. I find what he has said reassuring. It will be incumbent upon everybody, most especially the CRU, to ensure that this system works as smoothly as we all wish it to work, and I have every reason to expect that the CRU is up to the task. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Information contained in certificates]:
Earl Howe moved Amendment No. 13:
The noble Earl said: In speaking to this amendment, I shall also speak to Amendment No. 27. Amendment No. 13 seeks to ensure that when a certificate is issued to an insurer clear details are spelt out on that certificate, not simply of the aggregate charge but of the basis on which that charge has been arrived at.
I believe that an insurer is entitled to know how many days of in-patient treatment the casualty has received and what tariff has been applied to those days; and preferably the dates rather than just the number of days should be included. It is straightforward information which the insurer should have ab initio in the interests of transparency and for internal auditing purposes. It is
During a patient's stay in hospital the charging tariff may be uprated and unless it is possible for an insurer to see exactly how the aggregate chart has been arrived at queries about certificates will multiply. The insurer will wish to see, and I believe that he deserves to be told, the basis on which the total amount has been calculated.
Allied to that is the point I raised under Amendment No. 27. The Bill specifies that one of the grounds of appeal against a certificate is that the amount specified on it is incorrect. The amount on the certificate is clearly the product of two figures--the number of days spent in hospital, and the rate of charge per day. Amendment No. 27 picks up my earlier amendment to Clause 3 and seeks to create a further ground of appeal; namely, an error in the number of days' treatment specified on the certificate. The Minister will tell me that taken at face value it is unnecessary because if there is an error in the number of days there will be an error in the amount. That is right. However, the amendment is intended to point out a different issue; namely, the definition of a day. That may sound trivial but it is not. Either a day is a continuous period of 24 hours or it is a calendar day.
I should be concerned if, for the purposes of calculation of charges on a certificate, a day were to be defined as a calendar day. If it were so defined it would mean that a casualty admitted one evening and discharged the following morning would incur two days' worth of charges. That seems extremely unfair and would be likely to result in a huge number of claims incurring charges which, strictly speaking, were not warranted. In other words, insurance companies would find themselves subsidising other types of hospital costs.
Concern has been expressed to me by the insurance industry that the provisions of the Bill might act, however subtly and subliminally, as an inducement to hospitals to admit patients unnecessarily or encourage them to pursue claims in order to receive the NHS charge. If a day is defined as a calendar day, the likelihood of that happening must increase. Let us assume that a bed is available overnight. A hospital could be tempted to convert an out-patient charge of £354 into an in-patient charge of twice £435. That is a considerable difference. I shall be interested to hear the Minister's comments.
On Amendment No. 27, I hope that the Minister will tell me that for the purposes of the Bill a day will be counted as a period of 24 hours and not a calendar day. I beg to move.
Lord Hunt of Kings Heath: I speak first to Amendment No. 13. One of the overriding principles when revising the scheme was to make arrangements as simple as possible. In that way we think that everyone benefits, both the NHS and insurers. Using a tariff structure to assess charges means that the amounts
Because of that, we have opted at the outset to have a tariff which involves a daily rate for charges. It is therefore important to be clear about the numbers of days for which a charge is being sought and we intend, again from the outset, that certificates of NHS charges will include, as a matter of routine, the number of days involved and the total amount therefore due.
The tariff is, however, a new departure. Its ease of use is one of the factors we shall consider when the scheme is reviewed after a period in operation. I cannot foresee any reason why the tariff should not succeed, but I suppose it is a possibility that, at some point in the future, it may be decided that a daily rate charge is no longer appropriate.
Should such a change be made then your Lordships will, of course, have the opportunity to scrutinise and comment as the tariff must be specified in regulations and is therefore subject to the usual lines of parliamentary scrutiny. Placing a requirement for the number of days to be specified on the certificate on the face of the Bill ties us tightly to the newly derived tariff. We have no intention of changing the system--we think that it will work well--but it would not be sensible to force the House to reconsider primary legislation should it prove necessary to change what is essentially a matter of administration.
The noble Earl raised the question of appeals. The grounds of appeal are currently that the amount specified in a certificate is wrong, that the amount takes into account non-NHS treatment or that the payment being taken into account is not a compensation payment. We have opted at the outset to use a tariff which involves a daily rate of charges. The amount or amounts specified on a certificate will of necessity depend on the number of days spent by the victim in hospital. Therefore, if the number of days is wrong, the amount will be wrong and the compensator will be able to appeal.
The noble Earl then asked about the definition of a day in health service terminology. We are talking about a charge of over £400 a day, I can understand that insurers might feel irritated when on what I believe will be rare occasions, they must meet a charge for two days when the accident victim has spent just over 24 hours in a hospital bed. However, I ask the Committee to reflect that, for reasons of simplicity, which is very much in the interests of insurers, we have opted to have a tariff system where average charges are being sought. I think that averages implies swings and roundabouts. Regulations will make clear that the daily rate charge is to apply from the date of admission increasing with every midnight stay. This means that insurers will pay the full daily rate for the initial part day of admission. But it also means that they will pay nothing for the part day of discharge.
We have gone out of our way to be flexible with insurers. It is a scheme under which we are attempting to recover actual costs. However, where an insurer would find it easier to apply for a certificate of NHS
One has also to consider what the alternative implies. Hard-pressed nursing staff will be required to record not just the dates of admission and discharge but hours, minutes and seconds. Because the nursing staff will not know at the time of treatment whether or not the accident victim will make a claim for compensation, let alone whether the claim will succeed, such information will need to be captured for every patient.
The noble Earl suggests that the scheme for daily payment might contain a perverse incentive for the NHS to keep patients in hospital longer than required. That is not my experience of the normal pressures under which the NHS operates. He will know that while that kind of motivation might have existed under the internal market, as we move to a co-operative partnership that perverse incentive will not exist.
I recognise that there will be cases where the insurer may feel hard done by in relation to the rule that we propose. However, because we wish to keep the scheme simple, with swings and roundabouts, and to reduce the administrative burden on the NHS, I believe that it is a sensible proposal and I urge the noble Earl to withdraw the amendment.
Page 3, line 20, at end insert--
("(9A) Subsection (1) does not apply where in respect of a traffic casualty a person making a compensation payment has previously been issued with one or more certificates, giving rise to an aggregate liability which equates to such maximum sum as may be set out in, or determined in accordance with, such regulations made under section 3(2) as are for the relevant period in force.
(9B) In subsection (9A) above, "the relevant period" means the days during which the traffic casualty has received NHS treatment at a health service hospital in respect of his injury and in respect of which the certificate, or certificates, have been issued.").
Page 3, line 26, at end insert--
("( ) No certificate issued more than three months after the making of an application under subsection (8) shall have any legal effect.").
Page 3, line 29, after ("amounts") insert ("(expressed as the product of the amount set out in regulations under subsection (2) and, where applicable, the number of days that a traffic casualty has received NHS treatment at a health service hospital in respect of his injury)").
4.45 p.m.
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