New payment approaches for mental health services

Support for commissioners and providers of mental healthcare to shift to new payment approaches.

Applies to England

Introduction to the new payment approaches

The Five Year Forward View (5YFV) sets out objectives to transform the way in which health and care is organised and delivered. These include an increased focus on person-centred and co-ordinated care for patients. Mental health has a crucial role to play in supporting these objectives.

With increasing pressures on mental health services, providers and commissioners must introduce transparent payment approaches that support timely access to NICE-concordant care. This results in better patient outcomes, and can lead to long-term benefits for the local health economy, as patients have a more sustained recovery with fewer readmissions. Commissioners and providers also need to meet the new access and waits standards, as they are introduced.

Payment arrangements need to support the delivery of holistic, integrated and evidence-based care for the biological, psychological and social issues related to people’s mental health, in the least restrictive setting as close to home as possible, and recognise the delivery of the outcomes that matter to those who use services.

Effective use of data, information and evidence are key to achieving these objectives. Providers and commissioners must work collaboratively to ensure that components are in place to allow them to use data and information to improve care. Further, processes should feed back data and information to frontline staff to support care of individuals, and inform continuous improvement in service design.

This data and information will help providers and commissioners to:

  • identify the healthcare needs of the local population
  • consider service design and resource use to meet those needs in the most efficient and effective way
  • provide clarity on accountability for service delivery, quality of care and potential investment needs
  • better facilitate and enable constructive, evidence-based discussions between providers and commissioners
  • develop robust local prices
  • enable continual improvement to care

Meeting these objectives will help establish parity of esteem between mental, physical and community healthcare by 2020. Changes to the payment system are essential for meeting the objectives set out for mental health in the 5YFV.

Proposed changes to local payment rules covering mental health services

In October 2015 Monitor and NHS England launched a consultation setting out 2 payment options for adult and older people mental health services in 2016/17. These are:

  • an episode of treatment or year-of-care payment approach
  • a capitated payment approach

The response from commissioners and providers to the consultation supported these payment development options.

These webinars from Monitor and NHS England provide further information on our shared vision for mental health payment development.

Mental health payments: vision and approaches

This first webinar explains the overall vision for mental health payment in the future, and outlines the different payment approaches of capitation, and year of care/episode of treatment.

Mental health payments: implementing the new approaches

This webinar goes into further detail about the 2 payment options, including:

  • how to adopt these approaches
  • potential issues
  • pros and cons for each approach

Read our answers to questions (PDF, 199 KB, 10 pages) that were submitted during these webinars.

Payment approaches for mental health services

These short guides explain and outline the key components of payment approaches for adult and older people mental health services.

Additional resources

We’ve also produced these additional resources to help providers and commissioners to move towards more transparent payment systems for mental health services.

Published 23 December 2015
Last updated 18 February 2016 + show all updates
  1. Added an item on CAMHS currency development

  2. Update made to episodic short guide: the review process for cluster 18 should be an annual review and not a 6 monthly review.

  3. First published.