Health Strategy Management

Contracting and Commissioning

5th February 2015

Pam KaurGroup Finance Manager

University Hospitals Coventry & Warwickshire NHS Trust

Some things to consider….

Commissioners and ProvidersNHS structure and ongoing reformsShaping healthcare servicesContractingPricing e.g. Payment by ResultsQuality and best practice incentivesConundrum between costs and quality

Commissioners and Providers

• Commissioners ‘buy’ healthcare on behalf of patients such as :-• Primary Care – e.g. GP, Dental, Pharmacy services• Secondary and Specialist Care – typically hospital

care• Community Care – e.g. Care Homes• Mental Health

Providers can be any organisation that provides care to patients (see the interactive structure chart)

Interactive NHS Structure

http://webarchive.nationalarchives.gov.uk/20130805112926/http://healthandcare.dh.gov.uk/system/

NHS Structure

TDA

Another View…

Key actors in the system – roles & responsibilities

NHS England

Executive Non Departmental Public Body which has a mandate from the DH to improve outcomes through the total £96bn commissioning budget (80% of total allocation);

Oversight and development of the commissioning system; and

Directly commission Specialised Services from providers.

Key actors in the system – roles & responsibilities

Clinical Commissioning Groups

Commission general acute and community services from providers.

A clinically led commissioning construct - membership organisations made up of constituent GP practices;

Regulation, Accountability and Funding

Funding flow from NHSE / CCGs to Secondary Care Providers

Secondary care is commissioned to provide services; The commissioning of these services is captured in a legally

binding Contract that acts as the main lever for ensuring that Providers work in line with prescribed service standards;

All aspects of service delivery – clinical, financial and operational – are negotiated on an annual basis between Commissioners and Providers;

A large majority of funding is transacted through the Payment by Results tariff.

Shaping Healthcare Services

• Priorities for healthcare are shaped by things like :-• National Policies and Government reforms – attempting to

address health inequalities• Quality of care - e.g. 18 week targets• NHS Frameworks – e.g. Renal Services• Public health priorities - Coronary Heart Disease, Cancer• Demographics and local health needs of patients• Research and best practice – e.g. Diabetes• Collaborative working between healthcare organisations (!!!)

National Policy indicates a drive towards providing integrated health and social care packages

The Commissioning Cycle

Contracting and Pricing

• Commissioners agree ‘volumes’ and ‘budgets’ for patient care activity with Providers as part of an annual planning process.

The process uses historic trends or latest actual as a baseline adjusted for any agreed local or national service changes.

Contracts for delivery of patient care are agreed by both parties – can be a lengthy process for agreeing new service developments.

Payment by Results

• Money follows the patient

• Hospital Services are paid for under a ‘national tariff’ system

• Prices and payments are based on the type of procedure or care received, and appointment type (HRG’s and points of delivery)

• This is uplifted depending on the complexity of care or procedure and length of stay in hospital

• Further incentives for meeting best practice and quality indicators (CQUIN and QIPP)

Payment by results examples

HRG code HRG name

Combined day case / ordinary

elective spell tarif f (£)

Ordinary elective long

stay trimpoint (days)

Non-elective spell tarif f (£)

Non-elective long stay trimpoint (days)

Per day long stay payment (for days exceeding trimpoint)

(£)

Reduced short stay emergency

tarif f applicable?

% applied in calculation of reduced short stay emergency

tarif f

HA81A Sprains, Strains or Minor Open Wounds, w ith Major CC 1,457 47 2,325 34 207 Yes 0 697HA81B Sprains, Strains or Minor Open Wounds, w ith Intermediate CC 920 26 1,468 13 207 Yes 0 587HA81C Sprains, Strains or Minor Open Wounds, w ithout CC 608 5 608 5 207 Yes 1 395HA83A Head Injury w ith Major CC 1,822 35 2,907 20 207 Yes 0 872HA83B Head Injury w ith Intermediate CC 637 64 624 5 207 No - -HA83C Head Injury w ithout CC 330 15 364 5 207 No - -HA91Z Hip Trauma Diagnosis w ithout Procedure 1,300 48 1,148 48 207 No - -HA92Z Knee Trauma Diagnosis w ithout Procedure 1,073 86 995 39 207 No - -HA93Z Foot Trauma Diagnosis w ithout Procedure 890 55 613 16 207 No - -HA94Z Arm Trauma Diagnosis w ithout Procedure 863 45 449 18 207 No - -HA95Z Hand Trauma Diagnosis w ithout Procedure 348 5 558 5 207 No - -HA96Z Multiple Trauma Diagnoses w ithout Procedure 1,420 35 1,420 35 207 Yes 0 426HA97Z Other Trauma Diagnosis w ithout Procedure 647 15 647 15 207 Yes 0 194HA99Z Other Procedures for Trauma 416 26 416 26 207 No - -HB11A Major Hip Procedures for Non-Trauma, Category 2, w ith Major CC 8,273 68 8,273 68 207 No - -HB11B Major Hip Procedures for Non-Trauma, Category 2, w ith Intermediate CC 5,923 15 5,923 15 207 No - -HB11C Major Hip Procedures for Non-Trauma, Category 2, w ithout CC 5,632 10 5,632 10 207 No - -HB12A Major Hip Procedures for Non-Trauma, Category 1, w ith Major CC 6,990 31 6,990 31 207 No - -HB12B Major Hip Procedures for Non-Trauma, Category 1, w ith Intermediate CC 5,752 14 5,752 14 207 No - -HB12C Major Hip Procedures for Non-Trauma, Category 1, w ithout CC 5,035 9 5,035 9 207 No - -

Payment by results examples

HRG CODE Health Resource Group DescriptionActivity

(sessions)Best Practice

Tariff £MFF &

CQUIN £Total price

£Total Income

£

LD01A

Hospital Haemodialysis/Filtration with Access via Haemodialysis Catheter 19 years and over 5020 121 7 128 643,026

LD02A

Hospital Haemodialysis/Filtration with Access via Arteriovenous Fistula or Graft 19 years and over 8245 152 9 161 1,326,712

HRG CODE HEALTH RESOURCE GROUP DESCRIPTION Activity Tariff £ MFF £Total Price

£Total

Income £Trim Point

(days)

Excess Bed Day Rate £

LA08AChronic Kidney Disease with length of stay 2 days or more with Major CC 6 4,095 240 4,335 26,010 45 205

LA08BChronic Kidney Disease with length of stay 2 days or more with Intermediate CC 4 2,562 150 2,712 10,849 21 205

LA08FChronic Kidney Disease with length of stay 1 day or less not associated with Renal Dialysis 3 496 29 525 1,575 5 205

Payment by results – useful links

• Walkthrough National Tariff Structure – see link below• https://www.gov.uk/government/consultations/national-tariff-payment-system-201516-a-consultation-notice

• Chapters / HRGs / Diagnoses and Procedure Coding

• Basic Income Calculation

• Complexities, penalties, incentives

Useful links and referencesStrategic and Operational Planning Process 2014 to 2019http://www.england.nhs.uk/ourwork/sop/

UK NHS National Tariffs Guidance and proposals for 2015-16

HFMA – Introduction to NHS Finance (History and reforms etc)http://www.hfma.org.uk/publications-and-guidance/publicationitem.htm?publicationid=62&catid=2

Five Year Forward View Published 2014

NHS Constitution