News story

Monitor and NHS England seek views on 2016/17 NHS payment system

Monitor and NHS England have today published their proposals for the 2016/17 national tariff.

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The proposals are aimed at giving commissioners and NHS providers the space to manage increasing demand, restore financial balance, and to make ambitious longer term plans to improve patient care.

The basis of the proposals is the 2015/16 Enhanced Tariff Option (ETO). There will be additional enhancements for providers and local commissioners that will lead to an average increase in national prices of 1.8%. These changes recognise the challenging financial situation facing the NHS and will help providers to manage demand and provide services to their patients more efficiently.

The adjustments to the 2015/16 ETO offer include:

  • an inflation uplift of 3.1%
  • an efficiency deflator of 2.0%
  • an adjustment to reflect the anticipated increase of 17% in contributions to the Clinical Negligence Scheme for Trusts, equivalent to a 0.7% uplift on average across national prices

Monitor and NHS England have listened to the feedback from providers and commissioners on previously proposed changes to the national tariff, and as a result are delaying some changes until 2017/18 including:

  • the move to the HRG4+ currency for payment for admitted patient care
  • the new set of top up payments for specialised services
  • a specialised services marginal rate rule (known as the risk share rule under the ETO arrangements used by over 80% of providers in 2015/16)

Toby Lambert, Director of Pricing at Monitor, said:

We know this will be a very challenging year for the NHS, and we want to help providers continue to offer quality care to patients whilst also balancing the books. We’ve listened to providers’ feedback about the national tariff, and we have responded. As an important starting point, the rollover of the 2015/16 tariff will give 87% of providers the stability and sure footing they need to navigate the tough months ahead.

The changes to payments, including the average increase, recognise the complexities of treating different types of patients and illnesses, underlying costs and wider financial pressures. We want hospitals to be able to break even in 2016/17, and believe that the changes we have proposed will give providers the breathing space they need to prioritise and focus on long term improvements.

The proposed tariff will be supported by a new £1.8bn Sustainability and Transformation Fund, which as part of the Five Year Forward View will help challenged hospitals to achieve financial balance while focusing on changing the way they provide high quality care for patients.

Recent action by Monitor to reduce how much hospitals spend on agency staff has also begun to make headway, cutting out extortionate agency staff rates and incentivising permanent workers back to the NHS.

Monitor and NHS England are seeking views on the proposals for 28 days, and depending on the outcome of the consultation the final tariff will be published by the end of March.

Published 11 February 2016