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Fixed price tariff to go

PCTs will have to bargain with hospitals over prices from next year when the current fixed price tariff is abandoned and replaced with a maximum price system.

PCTs will have to bargain with hospitals over prices from next year when the current fixed price tariff is abandoned and replaced with a maximum price system.

The move, announced in the NHS Operating Framework 2010/11 published yesterday has been welcomed by the NHS Alliance whose chairman, Dr Mike Dixon, said:

‘We have long been campaigning for Payment by Results to be regarded as a maximum price rather than absolute price as a means to deliver savings and benefit patients and taxpayers.

‘PbR has inflated NHS costs and encouraged acute trusts to become profit centres. It has failed to deliver on both cost and quality.

‘In those areas where PbR has been thought to inflate costs, some trusts will be able to offer considerably under tariff and so benefit patients and the taxpayer. ‘

Anna Dixon, director of policy at The King's Fund, said while the new maximum price tariff might create opportunities for commissioners to secure better value there could be higher transaction costs incurred as a result of the new negotiating process.

‘Commissioners will need to stay focused on quality and value for money when negotiating prices.'

The framework also contains an effective real cut of 3.5 percent in the prices providers can charge due to a zero per cent uplift on the current tariff price, though the income that can be generated under a agreed CQUIN scheme has trebled to 1.5 percent of contract income.

The scale of the financial challenge ahead for the NHS is spelt out in the framework. While there are no financial cuts announced for next year, PCTs and SHAs have been told to plan to end 2010/11 with an aggregate surplus of £1 billion that will then be redistributed in the NHS the following year.

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