Hospital Dr News

Objections throw pricing plans into disarray

The controversial NHS 2015-16 tariff proposals have been resoundingly rejected by the large hospitals.

Providers responsible for 75% of all NHS services had lodged formal objections to the proposed tariffs.

Once objections have breached 51%, the pricing authorities must either refer their proposals to the Competition and Markets Authority for review, or consult the health service again on revised prices taking into account the objections.

It follows uproar over the plans to cap payments for any specialist services activity above 2014-15 levels at 50% of normal rates.

This plan would be felt particularly by specialist trusts and the major teaching hospitals, which garner a significant chunk of their income from specialist services commissioned by NHS England.

It marks the first time NHS objections have scuppered a proposed tariff since the new pricing rules introduced by the Health Act 2012 came into effect.

Whichever course pricing authorities decide to take, it is now certain that they will not be able to get a new tariff for 2015-16 confirmed before the start of the financial year.

Monitor’s CEO David Bennett said he was working with NHS England, which shares joint responsibility for the tariff, to decide “as soon as possible” whether to refer their tariff to the CMA or to revise it and re-consult.

Because a new tariff will not be agreed by 1 April, the prices for the current year will be rolled over into 2015-16 and remain formally in place until a new set of prices can be agreed.

“It’s not a vote of no confidence,” Bennett said. “It’s an absolute recognition that the system is under huge pressure, and it’s very difficult to construct a tariff that is satisfactory to both commissioners and providers at a time of considerable stress.”

There have also been objections to a real terms cut in aggregate prices of 3.8% next year. While this “efficiency target” is marginally lower than the annual 4% target that has been imposed in recent years, providers believe it is still unattainable coming after years of similar price squeezes.

Furthermore, providers don’t believe that the pricing authorities have taken the cost pressures into account of recruiting extra staff in the wake of the Francis Inquiry.

There were also claims that specific individual prices, such as the prices for bariatric surgery, have been set too low.

The King’s Fund’s Richard Murray said: “It signals that the policy of implementing year-on-year reductions in the prices paid to hospitals for their services has reached the end of the line.

“This is an unprecedented development. It is not clear what the outcome will be but, with just three months to go before the start of the financial year, it will throw financial planning in the NHS into disarray.

“With financial problems among hospitals now endemic, waiting times rising and staff morale a significant cause for concern, this once again indicates that the situation facing the NHS is becoming critical.”

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2 Responses to “Objections throw pricing plans into disarray”

  1. Malcolm Morrison says:

    Further evidence that the numerous QANGOs which now ‘govern’ the NHS – in this instance the ‘pricing authority’ – do not live in ‘the real world’!

    One sees the smae problem ‘in the community’, where residential or nursing homes (even those run by charities) are going out of business because they cannot deliver the service on the ‘rates’ that Local Authorities are prepared to pay – which also leads to a lack of ‘places’ and, thus, ‘bedblocking’ when patients are ready for discharge from hospital.

  2. Bob Bury says:

    Tariffs have been nonsense since well before i retired. In radiology, they often didn’t even cover the costs of consumables, especially for interventional procedures.

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