Future of Payment by Results (PbR) PCT network – 19 Feb 2007

1. Future of Payment by Results (PbR) PCT network – 19 Feb 2007

2. Introduction • Publication w/c 5 March (TBC) • 13 week consultation exercise • Focus = 2008/09 to 2010/11 • PbR Development sites (i.e. piloting) • Developing currencies for services outside the scope of tariff • Alternative currencies/funding models for services already covered by tariff (n.b. SHA approval and local agreement required)

3. Strengthening the building blocks of PbR (1) • Classifications • Evaluating replacements for OPCS (report in July 07) • Annual updates to OPCS (2008/09 & 2009/10) • Potential replacement in 2010/11 • Currencies • 2008/09 tariff will continue to be based on HRG3.5 • HRG4 introduced as basis of tariff from 2009/10 • Ongoing refinement informed by international experience of Diagnoses Related Groups (DRGs) • Costing • Patient-level costing introduced from April 2007 • Will inform tariff calculation from 2009/10

4. Strengthening the building blocks of PbR (2) • Improved coding and data assurance • Benchmarking of data across providers • Clinical coding audits • Addressing weaknesses in data definitions and coding standards (e.g. HRG N12) • Reporting and billing • Ongoing refinement of SUS for PbR • Providers’ data to be finalised within 30 days from 2008/09 with further improvement thereafter

5. Developing the Tariff (1) • Calculating the tariff from a sample of providers • Accredited patient-level costing sites • Potential to set prices based on costs of most efficient providers • Normative pricing to reflect efficient service models • Targeted approach focussed on high-volume HRGs • Currently considering 6 treatments based on evidence from Institute’s initial studies

6. Developing the Tariff (2) • Applying the tariff to the same service provided in different settings • HRG4 currencies: principle of ‘setting independence’ • Potential to ‘group’ activity delivered in OP and community settings, but requires coding as per admitted patient care • Unbundling the tariff • Principle is that unbundling should only take place where: • Service items are commissioned direct from primary care • High-cost, low volume items are unevenly distributed • HRG4 introduced unbundled tariffs for 8 service areas • Specialised service • Better differentiation under HRG4 • Continuing role for top-ups, exclusions and support for single-specialty Trusts

7. Future of tariff setting • Priority is to improve transparency and competency in underpinning process • Costing • Sampling techniques • Stakeholder involvement • Establishment of Clinical Advisory Panel to ensure appropriate clinical involvement in decision-making • Chaired by Dr Ian Rutter (GP and clinical advisor to DH on health reform) • No current proposals to devolve responsibility for tariff-setting to an independent body

8. Expanding the scope of PbR (1) 3 possible models: • Local currency, local price • National currency, local price • National currency, national price Potential to progress through models where appropriate and subject to data on activity and cost. No assumption of national tariff for everything

9. Expanding the scope of PbR (2) • Planned expansion of scope with introduction of HRG4 • Radiotherapy & chemotherapy • Further unbundling of diagnostics • Rehabilitation • Specialist palliative care • Next steps on developing currencies for Mental Health • Potential for new direction of travel in urgent care • Currencies for telephone triage; initial face to face assessment; and treatment ‘at scene’; • Seeking to identify PbR Development sites for currencies on community services • SHAs to collate examples and identify good practice • Evaluation and support for potential national exemplar