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New tariff forces providers to make 4% savings annually

New tariff forces providers to make 4% savings annually


Next year’s national tariff will encourage providers and commissioners to develop innovative new models of care for patients. 

Healthcare regulator Monitor has announced new rules that allow “local experiments” in ways of paying for NHS-funded services. 

According to Monitor, this will encourage providers and commissioners to find approaches that enable better integration of care, so services are less fragmented and easier for patients to access. 

The NHS payment system sets prices and rules which help local clinical commissioning groups (CCGs) work with providers like NHS trusts and foundation trusts to identify which health care services provide best value to their patients.

Local price setting (excluding block contracts) currently accounts for about a quarter of the £67 billion covered by the NHS payment system. 

Monitor and NHS England, who have taken over responsibility for the tariff from the Department of Health, hope that the draft proposals for 2014/15 will encourage the widespread use of “flexible but transparent” local approaches.

The organisations have agreed it is reasonable for providers to make annual efficiency savings of 4%. 

The national tariff of prices and rules for 2014/15 also takes account of rising NHS costs of 2.1%, so on average the prices providers are paid for services next year should go down by 1.9%. 

This releases funds for commissioners to buy more services for patients.

Where there have been significant local increases in emergency admissions outside the control of providers, commissioners will be required to agree a revised baseline before the marginal rate kicks in.

And NHS England will ensure that the money retained by commissioners through the application of the rule will be spent transparently and effectively to enable more patients to be treated in community settings.

Adrian Masters, managing director of sector development at Monitor said: "Our proposals for the payment system in 2014/15 are designed to help commissioners and providers address the key challenges facing NHS care in their localities.

"We are offering them more freedom to encourage the development of new service models, maintaining incentives to provide care more efficiently and providing greater financial certainty to underpin effective planning for patients."

Paul Baumann, chief financial officer at NHS England, said: "Providers and commissioners face a major task in constructing robust plans for 2014/15 onward which secure clinical and financial sustainability in increasingly challenging circumstances.  

"To help them succeed in this task, we are proposing tariff arrangements for 2014/15 which provide the maximum possible continuity. Meanwhile we will be taking forward our work on longer term pricing strategies to support our emerging strategic priorities and incentivise improved outcomes for patients."


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