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Where next for Payment by Results?

How will PbR look in the next decade and what should GP commissioners be doing now to ensure the tariff is up to the job? Miranda Griffin asked four experts for their views

Our experts:

  • Dr Shane Gordon (SG) is a GP in Colchester and co-lead for the NHS Alliance’s Clinical Commissioning Federation
  • Dr Tim Richardson (TR) is a GP in Epsom and on the executive committee of the NAPC
  • Peter Saunders (PS) is head of health data assurance & analysis at the Audit Commission
  • Graham Poulter (GP) is managing director of iQ Business Ltd (Medical)

What is the future of PbR under the white paper proposals?

TR The feeling is that PbR will be retained. There will be a tariff but it will be flexible and allow for negotiation, with the tariff as the upper level of what the provider could expect to be paid for NHS work. A lot of the current PbR costing is excessive. Monitor will become the price regulator and will have to ensure against predatory pricing (providers deliberately underpricing to kill competition).

SG I think there will be a framework of charges set nationally by Monitor and the framework itself will be set by the NHS commissioning board. There will also be a continued downward pressure on the values.

The question for me is whether PbR is fit for purpose. The level of description that you get is inadequate and you can’t use the data for anything other than paying the invoice. It’s like getting a bill in a restaurant that says ‘Food and Drink’. Validation of activity for invoicing doesn’t drive quality but what does is agreeing pathway changes that make sense to the provider as well as the commissioner or using some other sort of incentive like Commissioning for Quality and Innovation (CQUIN). Hopefully as it gets a bigger percentage of acute trust income it gives more leverage over incentivising results rather than activity, turning PbR into what it should have been in the first place.

GP Hospitals working to tariffs are going to be competing with other more competitive services. PbR will exist in much the same form but tariffs will vary locally, except for highly specialised ones that have to be done in hospital – for example, amputations – where the tariffs will be sacrosanct.

PS Payments will be linked to outcomes and incentivising efficiency and quality, building on developments already being introduced around CQUIN, best practice tariffs and on payment for performance schemes already introduced in the NHS. The tariff will also be extended to other services, such as mental health.

Do consortia need to start getting their PbR house in order now and what should they be doing?

SG Consortia need to make sure they’re involved in contract negotiations agreeing the right type and level of activity with the trust. They have to be able to handle the information that’s provided to monitor that activity – that means having the technical capability that allows you to see what’s happening and that what you’re being billed for is accurate. Then there’s the overarching question of are you achieving outcomes rather than just accuracy of billing?

GP It’s a little early yet. Until all the movement settles down and the management contribution issue is resolved GPs are focusing on the working arrangements and financial aspects of running the clusters. They will be taking a bottom up approach and PbR is a later piece of the jigsaw.

PS PCTs need to engage and involve GPs in contracting over the transition period to ensure PCTs’ knowledge and experience are transferred and retained. GPs need to get a better understanding of the whole contracting process and in particular how the payment system works. We will review the adequacy of PCT contracting arrangements with particular focus on reviewing how PCTs engage with GPs and how they are managing the transition in this area.

TR Until the rules change they will still have to pay tariff unless a provider is willing under local pricing arrangements to agree a variation in price but, as most local pricing applies to non-PbR activity, I’m not sure there is much consortia can do at the moment.

Are we going to see a return to the bureaucracy involved in fundholding? How can this be avoided?

SG No, we’ve got SUS now, which provides some degree of automation and a nationally structured activity categorisation system. There’s still going to be a lot of local nuance so you need capability for that. One of the areas where GP clusters will collaborate is external sources of support for contractor payment (such as invoicing), so you get economies of scale.

GP As it stands today, yes. The Information Centre will set standards for information but will leave market forces to provide the products and services needed. Practices will be buying services from other practices in local clusters, giving a mini version of the SUS arrangement. There is currently no way to manage that efficiently.

PS The current contracting arrangements established by PCTs will continue in the medium term. Providers will be keen to see that GP consortia work together and manage on a lead commissioner basis as outlined in the white paper to avoid the issues encountered with fundholding. Lead commissioning needs to deliver if this is to be avoided.

TR There wasn’t a massive paper trail in fundholding. It was extremely efficient and allowed real-time budget allocation based on accounting activity as it went into the system, compared to what we currently have where commissioners only know what they’ve spent when they get the bill three months in arrears. To manage a budget you need a system that records activity as it happens and can make a judgment about what it costs against budget. Until we have the IT tools for this then yes, we would have to do it on paper.

There are 1,400 HRG codes. Which are the important ones to ensure quality control over?

TR The ones that create the greatest cost – either the high volume/low cost or low volume/high cost. Good management IT systems, which would pick up any discrepancy between what is predicted when the GP refers the patient and what actually happens and is billed for, are essential.

GP What’s most important is making sure you can reconcile what’s billed with what’s paid out. The error rate in correct charging of SUS data is astronomical and has increased as the number of codes has increased. In one PCT alone we identified £48m of errors. Up until now the PCTs haven’t been too challenged about these, but GPs with full responsibility for the budget will not pay a bill that’s not correct.

PS Over the last three years, our work on the PbR data assurance framework has highlighted the need to improve data quality. It’s important not only for payment purposes – much of the data we review is also used to inform commissioning and efficiency decisions and also underpins quality measures. It’s essential that there remains an assurance process over the quality of the data used by the NHS.

When are we likely to see a tariff for community and mental health services?

SG It’s difficult to have a tariff that describes the complexity of the sort of relationship these services have with the system. We are likely to see them, but whether they’ll be any good I don’t know.

PS The timetable indicated by the previous government for mental health is to have currencies in 2011/12 with local prices in 2012/13. If national tariffs are introduced for mental health activity, the earliest these will be available is 2013/14. The timetable for community services is less clear. Both mental health and community services data collection, recording and quality needs to be considerably improved before reliable national tariffs can be set.

What are the ‘lay’ GPs in a consortium going to need to know about the importance of coding? What’s the incentive for them to do that?

SG All GPs know about the importance of coding as a large part of our income depends on it. Information systems and infrastructure are the lifeblood of commissioning. If we don’t get control of information handling and information systems for the NHS, that’s an anxiety for me.

GP A lot of practices have been lax in maintaining the quality of Read coding and will have to improve this. They will need to make sure they put in detailed Read coding, not just the higher level coding. They’ll have to improve the coding quality to get the right quality of information to know what services they’ll require going forward and how it will be costed.

TR The average GP won’t need to know individual codes and prices, but when the bill comes back they’ll have to check any anomalies against what they expected should have happened.

PS It’s essential GPs understand and have assurance over the quality of clinical coding. It is key to the planning and payment of health services they will be commissioning for their patients.

Miranda Griffin is a freelance journalist

PbR – A summary

• Payment by Results (PbR) is the hospital payment system in England in which commissioners pay providers a national tariff or price for the number and complexity of patients treated or seen.

• There are national tariffs for admitted patient care, for outpatients and A&E.

• The currency, or unit of payment, for the admitted patient care tariff is Healthcare Resource Group 4 (HRG4), covering a spell of care from admission to discharge.

• When a patient is discharged, clinical coders translate their care into codes using two classification systems, ICD-10 and OPCS-4.

• Patient data is submitted to a national database called the Secondary Uses Service (SUS), which groups clinical codes into HRGs and calculates a payment.

• Commissioners agree monthly contract payments to providers in the NHS standard contract, which are then adjusted for the actual value of activity in the monthly SUS report.

Source: A simple guide to payment by results, published by Department of Health, 30/9/2010

Services where PbR is under development

• Ambulance services
• Community services
• Integrated sexual health services and HIV outpatients
• Mental health
• Palliative and end-of-life care
• Rehabilitation (admitted patient and community)
• Services covered by unbundled HRGs
(eg critical care and chemotherapy)
• Specialised services (eg cystic fibrosis and spinal injuries)

Source: A simple guide to payment by results, Department of Health, 30/9/2010

Where next for PbR? Where next for PbR?