National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 - Secondary Legislation Scrutiny Committee Contents



APPENDIX 1: NATIONAL HEALTH SERVICE (PROCUREMENT, PATIENT CHOICE AND COMPETITION) REGULATIONS 2013 (SI 2013/257)

Department of Health memo to the Secondary Legislation Scrutiny Committee

BRIEF SUMMARY OF THE POLICY INTENTION

The Government is absolutely committed to the principle that clinical commissioners will decide how to secure improvements in NHS services because they are best placed to understand patients' needs and to determine which providers are best able to meet those needs. The regulations provide a framework for these decisions that protects patients' interests and is overseen by a specific regulator for the health sector whose main duty is to protect and promote the interests of patients.

As a result of these regulations patients' rights to choice under the NHS Constitution would be protected. Commissioning processes would be much more transparent and there would be safeguards to protect patients from conflicts of interest, discrimination and anticompetitive conduct.

The requirements of the regulations continue the approach put in place by the previous administration which established a sector-specific framework known as The Principles and Rules for Cooperation and Competition.

CONSISTENCY WITH COMMITMENTS GIVEN TO PARLIAMENT

Commissioners' flexibility to decide where and how to use competition

Andrew Lansley's letter to prospective clinical commissioning groups on the 16 February 2012 committed that commissioners would be able to determine where integrated services are required and commission them accordingly.

Firstly, the regulations make clear that commissioning decisions must be in the best interests of patients:

  • The overarching objective for procurement under Regulation 2 is that commissioners must act to secure provision of services that meet patients' needs and improve quality and efficiency.
  • Regulation 10 prohibits anticompetitive conduct that is against the interests of patients. This means that arrangements that are necessary to achieve benefits for patients will not be prohibited even where they involve restrictions on competition. This approach reinforces the principle that commissioners should decide on how best to meet patients' needs and should not be forced to fragment services in the name of promoting competition and at the expense of integration.

Secondly, with regard to procurement, the regulations reinforce the fact that commissioners are best placed to determine requirements for improving services and to decide which provider or providers are best able to deliver those requirements:

  • For example, it must be for commissioners to decide where services should be provided as a bundle, for example:
    • to enable patients to access a broad range of hospital services on a single site, or
    • delivered in an integrated way as part of primary medical care or by multidisciplinary teams of clinicians working in the community.
  • Commissioners should also be free to decide when it may be appropriate to unbundle services, for example, to increase patient choice or enable smaller providers to offer more bespoke services tailored around the needs of particular patient groups. This principle is enshrined under Regulation 3.
  • Regulation 3 also requires that commissioners act transparently and non-discriminatorily in determining the provider or providers best able to deliver their requirements for meeting patients' needs and improving services. This requirement establishes important safeguards for protecting patients' interests. It would prevent commissioners from arbitrarily favouring particular providers and ensure that their decisions are transparent and based on fair and objective criteria. These safeguards are further reinforced by Regulation 6, which seeks to prevent commissioning decisions being influenced by conflicts of interest.

The creation of markets

Ministers gave assurances that commissioners would not be forced to create markets (Lords Hansard, Tuesday 6 March 2012 Col 1689). Andrew Lansley's letter of 16 February 2012 committed that it would be for commissioners to take decisions on when and how to use competition.

Under the regulations, commissioners have discretion to decide whether, where and when to introduce the conditions needed to stimulate or create a market for services. In particular there is no requirement through the regulations for commissioners to:

  • unbundle or fragment services in order to facilitate competition, (i.e. to separate out individual services in order that they could be provided by a larger range of providers); or
  • offer contract terms (eg prices, and contract durations) that enable new providers to enter a market by offering a return on the investment cost of market entry.

When and whether to create these conditions and the services to which they apply remain entirely with a commissioner to decide. So, for example, a commissioner may decide not to create the conditions to enable a market for a fully integrated service (say for End of Life Care, or frail older people with multiple complex problems, or maternity services, or sexual health services - linked to screening, particularly where patients are offered choice of treatment, setting and/or clinician).

Commissioners will also have the discretion to set criteria for service requirements to ensure quality standards, guarantee access or promote integration which in practice may limit the potential for competition. For example, a commissioner could restrict the number of providers to ensure that clinical volumes are maintained to protect patient safety. These limits on competition would not be unreasonable, disproportionate or unfair - they would be entirely legitimate and necessary.

Just as there is no requirement imposed by the regulations for commissioners to unbundle services, there is discretion for commissioners to decide that services should be provided in an integrated way for the benefit of patients. This would allow, for example, a clinical commissioning group to procure a fully integrated service (say for musculo-skeletal services) replacing some services offered under patient choice of any qualified provider, where this was in patients' interests in improving outcomes and experience.

The ability to award a contract without a competition

Andrew Lansley's letter of the 16 February 2012 was clear commissioners would not be forced to fragment services, or put services out to tender against the interests of patients. The Department is aware that it has been suggested that the regulations would prevent commissioners from ever awarding contracts without a competitive tender, or extending contracts with providers that are performing well. This is absolutely not our intention and this would not be the effect of the regulations:

  • Regulation 5 specifically provides for commissioners to award a contract without a competition where there is only one provider capable of delivering their requirements. The requirements would be those specified by the commissioner as necessary to meet patients' needs, improve quality and efficiency, enable patients to access services in particular locations, to deliver services in an integrated way or to improve health outcomes. In many cases, there will only be one provider capable of delivering those requirements for 'technical reasons' as envisaged under Regulation 5 (Paragraph 2(a)). Examples of services where there may typically only be one capable provider include:
    • acute hospital services on single sites and accessible 24 hours a day 7 days a week;
    • a range of integrated services delivered in the community;
    • highly specialised care; or
    • services in more rural or remote areas of the country.

The intention of Regulation 5 is to recognise that in such circumstances commissioners should be able to award contracts without the unnecessary cost and delay of a competitive tendering process where they are satisfied that there is only one provider capable of delivering their requirements.

Where there are several providers capable of meeting a commissioner's request (e.g., to provide a new service), the regulations would protect against commissioners discriminating in favour of a particular provider, and will require a transparent and fair process to determine who can best meet the needs of their populations.

These requirements go no further than existing UK procurement law (the Public Contract Regulations 2006). This law already applies to Primary Care Trusts - and this was reflected in the previous administration's procurement guidance since 2008 - and will continue to apply to clinical commissioning groups in the future.

European Competition Law will not apply to commissioners

Turning to the application of competition law to commissioners, Ministers previously made clear that commissioners would not be undertakings for the purposes of competition law. Earl Howe said in the House on 13 December 2011 (Col 1142) that:

''My noble friend Lord Clement-Jones cited the BetterCare and FENIN cases as an example of how NHS commissioners might act as undertakings. As we have previously made clear, the Government's view is that the NHS Commissioning Board and CCGs will not be undertakings. Unlike in the BetterCare case, neither the board nor the CCGs will be able to provide services. They will only be responsible for commissioning services for the NHS, which will not be an economic activity for the purposes of competition law.''

The Department's view has not changed and nothing in the regulations would extend the application of competition law (i.e. the Competition Act 1998) to clinical commissioning groups or the NHS Commissioning Board. For example, the regulations do not give Monitor any powers to apply the Competition Act 1998 to commissioners.

Regulation 10 continues the approach under the previous administration's Principles and Rules for Cooperation and Competition by providing a sector-specific protection for patients from anticompetitive behaviours that are against their interests.

Monitor's powers

The regulations provide for Monitor to oversee the regulations as an expert health-sector regulator with an overarching statutory duty to protect and promote patients' interests. We have argued that this would be preferable to a situation where the only means of redress for poor procurement practice was through the Courts. The powers given to Monitor by the regulations are consistent with the Health and Social Care Act 2012 (section 76):

  • The Government amended the Health and Social Care Bill to remove provisions for these regulations to give Monitor power to direct commissioners to put services out to competitive tender. We did this in response to the NHS Future Forum's recommendations that Monitor's role should not be to promote competition.
  • In line with our commitments the regulations would give Monitor the power to direct a commissioner to take measures to prevent a breach of the regulations or to mitigate the impact of a breach, including by varying or withdrawing a tender or varying a contract for the provision of services.
  • As a last resort, Monitor would have the power to declare a contract ineffective as a result of it having been awarded in breach of the regulations. This would mean that the contract would need to be wound up in an orderly manner. However, Monitor would not have power to go further and direct a commissioner to put a particular set of service requirements out to tender. It would therefore be for the commissioner to reconsider its options for how best to meet their patients' needs, including options for revising its requirements and whether to competitively tender for a new contract or vary an existing contract to secure those requirements. The relationship between Monitor and the commissioner is therefore regulatory rather than managerial, with there being no circumstances in which Monitor taking decisions on behalf of the commissioner.

Furthermore, it should be noted that Monitor has a general duty to exercise its functions with a view to enabling health care services to be provided in an integrated way where this would improve quality or reduce inequalities. Monitor is already acting on this, for example, through the new provider licence that was published on 14 December 2012. The licence includes a condition which has the purpose of ensuring Monitor can protect patients' interests by being able to step in where integrated care is not being delivered, in spite of decisions and efforts made by commissioners.

Guidance and Advocacy

Finally, Ministers gave assurances that a key benefit of having a sector specific regulator would be that Monitor could support the system with guidance.

Monitor and the NHS Commissioning Board will support commissioners through advice and guidance. The two organisations have committed to doing this jointly. This will include guidance to help commissioners make decisions on the circumstances in which competitive tendering would be likely to be effective and where this would not be appropriate. [see further questions below] In addition, Monitor is required (under section 78 of the Health and Social Care Act 2012) to publish guidance explaining how it will use its investigative and enforcement powers under the regulations. This will reduce uncertainty for commissioners and give them greater confidence that decisions in patients' best interests should not lead to regulatory intervention. Monitor is required to consult on this guidance, including any subsequent revisions, and the guidance must be approved by the Secretary of State.

DEPARTMENT OF HEALTH

27 FEBRUARY 2013

Additional questions:

Q: In the EM it says that the Board will publish guidance early in 2013 - is it yet available? If so please provide the link.

A: The NHS Commissioning Board Authority has already published guidance on procurement to support clinical commissioning groups. An overview of the content of the guidance is below with the link to the guidance itself:

''Procurement of healthcare (clinical) services: Briefings for CCGs

Working with CCGs and others, the NHS Commissioning Board Authority has developed a series of procurement briefings for CCGs that summaries the key elements of legislation and guidance currently governing NHS procurement of healthcare services. These briefings also provide an overview of the different procurement approaches that CCGs may adopt and outlines some of the key considerations when undertaking a procurement process.

The briefing papers cover:

  • How does procurement fit with the different stages of commissioning?
  • How should a procurement process be conducted?
  • Introduction: Why do CCGs need to understand procurement?
  • Summary of the decision-making process.
  • What are the procurement options?
  • Which rules apply to a procurement process?''

http://www.commissioningboard.nhs.uk/resources/resources-for-ccgs/

A briefing for clinical commissioning groups and providers, as part of the Choice and Competition Framework, on matters of choice and competition is expected to be available from the NHS Commissioning Board and Monitor in March 2013.

Further procurement guidance is planned to be published shortly.

Q: In the note it says that Monitor must consult on its guidance before it is published - has that consultation yet commenced?

A: The consultation has not yet commenced. Monitor plan to formally consult on its draft guidance in March.

Q: What are the plans for the implementation of these Regulations - they come into effect on 1 April - what provision is being made to train CCG procurement staff in its requirements?

A: The NHS Commissioning Board is responsible for authorising clinical commissioning groups. As part of the authorisation process CCGs were required to demonstrate that they have:

  • systems and processes established to translate commissioning plan into contracts and delivery.
  • Aware of current procurement requirements, with systems in place to handle those requirements.
  • Systems in place to track and manage performance and providers including taking action when required standards are not met, and responding to concerns raised about safety, quality or other risk issues.

The NHS Commissioning Board has confirmed that these requirements have not been an issue for clinical commissioning groups during authorisation.

It is important to note that the staff with an expertise in procurement and contracting are within Primary Care Trusts and these will either be transferring into clinical commissioning groups or their supporting Commissioning Support Units (CSUs)

The NHS Commissioning Board via the CSU Managing Directors will be arranging training for their teams on the regulations.

DEPARTMENT OF HEALTH

28 FEBRUARY 2013


 
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