NHS Tariff

NHS Tariff The NHS Tariff is a national payment framework used by NHS England and associated bodies to determine prices for clinical activities and services provided by NHS Foundation Trusts, NHS Trusts, and private providers contracted to the NHS. It standardises payments across settings such as hospitals, clinics, and community services while interacting with commissioning bodies like Clinical Commissioning Groups and national bodies including NHS Improvement and Monitor. The Tariff links to policy instruments and funding decisions influenced by legislation such as the Health and Social Care Act 2012 and interacts with performance regimes exemplified by Care Quality Commission assessments.

Overview

The Tariff provides coded prices for finished consultant episodes, outpatient attendances, emergency care, and specialised services through a national schedule that aligns with classification systems such as Office for National Statistics standards and clinical coding frameworks like ICD-10 and OPCS-4. It is applied alongside payment approaches used in other jurisdictions, comparable to systems in Scotland, Wales, and Health Service Executive arrangements in the Republic of Ireland. The framework aims to support objectives set by Department of Health and Social Care policy, King's Fund analysis, and modelling undertaken by bodies such as the Nuffield Trust.

History and development

Origins trace to earlier activity-based payment pilots influenced by international models including Diagnosis-related groups used in United States hospitals and reforms advocated after reviews by organisations such as the Griffiths Report. Major milestones include the incremental introduction of Payment by Results and the formal consolidation under policies following the Health and Social Care Act 2012. Subsequent iterations responded to reports from think tanks like Institute for Fiscal Studies and inquiries such as those by the House of Commons Health Select Committee. Reforms have been shaped by fiscal constraints following the 2008 financial crisis and strategic plans such as the Five Year Forward View and the NHS Long Term Plan.

Structure and methodology

The Tariff is structured around HRG (Healthcare Resource Group) classifications, with prices set by national teams using activity data from Hospital Episode Statistics and cost information from provider submissions, drawing on audit processes comparable to procedures by National Audit Office. Methodological components include cost-weighting, reference costs collection coordinated with NHS Digital, and adjustments for market forces via a Market Forces Factor similar in purpose to regional indices used by Office for National Statistics. The schedule includes national prices, marginal rates, and specialised service arrangements overseen with input from stakeholder organisations such as British Medical Association and Royal College of Physicians.

Pricing and payment mechanisms

Pricing blends fixed national tariffs, local negotiation, and blended payment models including block contracts and capitation, resembling approaches seen in systems like Bundled payment pilots and Pay-for-performance schemes exemplified by Quality and Outcomes Framework. The tariff uses national currency rates influenced by fiscal reports from HM Treasury and operational guidance from NHS England and NHS Improvement. Specialized tariffs cover high-cost treatments approved via processes akin to NICE appraisals, while emergency department payments and mental health services incorporate alternative contracts negotiated with Clinical Commissioning Groups and integrated care systems inspired by models in Torbay and other localities.

Impact on providers and services

The Tariff affects hospital revenue cycles, service configuration, and investment decisions at NHS Foundation Trusts and independent sector providers participating in NHS contracts. Its incentives have influenced activity levels, day-case rates, and length-of-stay metrics recorded in Hospital Episode Statistics, with analyses by organisations including the King's Fund and Nuffield Trust assessing effects on productivity and patient flow. Commissioners and providers have adapted via service redesign, alliances such as vanguards from the New Care Models programme, and collaborations with academic partners like University College London and University of Oxford health policy units.

● Criticisms and controversies ---

Critiques have targeted the Tariff’s complexity, potential to incentivise volume over quality, and its suitability for mental health, community services, and social care integration, echoed in reports by the British Medical Association, Royal College of Psychiatrists, and campaign groups. Controversies include disputes over reference costs submissions, alleged gaming of coding practices flagged by National Audit Office inquiries, and tensions during austerity measures post-2010 United Kingdom general election policy shifts. Debates also involve the Tariff’s alignment with NICE guidance and concerns raised in evidence to the House of Commons Committee of Public Accounts.

Revisions and future developments

Revisions continue in response to the NHS Long Term Plan, policy initiatives promoting integrated care systems and integrated care boards, and technological change such as electronic health record adoption championed by NHS Digital and initiatives linked to Global Digital Exemplar sites. Future developments may expand blended payments, align incentives with population health strategies advocated by Public Health England, and incorporate lessons from international examples like Medicare reforms in the United States and commissioning reforms in Sweden. Stakeholder engagement remains active, involving trade bodies such as the Association of Directors of Adult Social Services and professional colleges including the Royal College of Surgeons of England.

Category:Health policy in the United Kingdom