Most NHS providers opt for 'Enhanced Tariff' for 2015/16

6 Mar 2015 11:29 AM

A large majority of NHS hospitals, community health services and mental health trusts have decided to move to a new voluntary tariff option for 2015/16.

Monitor and NHS England recently reported that 211 out of 241 NHS trusts and foundation trusts (88% of all NHS providers) will move to the new voluntary tariff option (the ‘Enhanced Tariff Option’) for 2015/16.

They will gain their share of the improved tariff funding made available to the NHS in December’s Autumn Statement, worth up to £500 million.

The ‘Enhanced Tariff Option’ (ETO) will help:

• reduce the funding pressures on acute hospitals, without raiding necessary investments in mental health, primary care and other services
• support wider action to unlock provider and commissioner-led efficiencies, while ensuring the orderly management of the overall NHS budget within the cash limit set by Parliament
• enable the timely completion of the annual NHS contracting round and give more certainty to commissioners and providers for 2015/16

Under the ETO, the marginal rate providers are paid for extra emergency admissions will increase from 30% now to 70%; the marginal rate for extra specialised services will also increase from the originally proposed 50% to 70%; and the headline efficiency requirement will be 0.3% lower than originally proposed.

The ETO incorporates an allowance for service developments in mental health and changes to trusts’ clinical negligence premiums. Participating providers will join an NHS-wide efficiency collaborative to help them track and manage cost pressures, including temporary staffing costs and procurement savings.

The minority of providers who have not affirmatively opted in to the ETO will continue on current prices (the 2014/15 ‘Default Tariff Rollover’, or DTR) until such time as a new tariff is established. This will not be until later this year, possibly following a referral by Monitor to the Competition and Markets Authority.

As previously notified, since providers on the 2014/15 DTR would not be contributing proportionately to the shared NHS-wide 2015/16 efficiency goals through the tariff deflator, they will instead be ineligible for discretionary payments, including CQUIN, next year.

Contracting Timetable

A revised timetable for planning, contracting and dispute resolution in 2015/16 has already been agreed between Monitor, the NHS Trust Development Authority and NHS England. In revising the timetable we sought to:

• ensure that sufficient time is allowed before draft full plans are submitted
• allow enough time between the draft and final plans for feedback to be responded to
• give due consideration to other commitments such as year-end accounting.

The final NHS Standard Contract will be issued next week, together with an updated version of the ‘Dispute Resolution Process for 2015/16’, and more detail on administering the ETO and DTR.

It remains essential that commissioners and providers make every effort to have signed contracts in place by 31 March 2015.