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Audit Commission - Government's Payment by Results plans are dependent on better data

The NHS needs to improve the quality of its data if the government is to expand its payment by results (PbR) system, the Audit Commission said yesterday.

In its annual report looking at the PbR data assurance programme, the Commission says the data used to inform the current PbR tariff in the last financial year was generally good.

However, the data for 'non-tariff' areas such as community services and chemotherapy was often of poor quality, and it is these areas that will be brought under the PbR umbrella under the government's plans. This data is also currently used to inform local contracts. 

Extending the PbR tariff system is a key government policy. Under their plans, most or all of the £51 billion spent on acute hospital activity, as well as wider community and health services, will be subject to a PbR tariff. Currently it covers £26 billion of acute services.

The report summarises the findings of the Commission’s annual audit of data used to underpin PbR payments. This year the Commission looked at reference costs that are used to set the tariff, and also conducted the first major review of independent sector hospitals as part of its clinical coding programme.

Andy McKeon, MD of Health at the Audit Commission, said:

'Good data is crucial to the payment by results tariff. The quality of reference cost data in areas not currently covered by the tariff is not good enough to support its expansion. For some, this will not be easily fixed as it may require changes to information systems. The Department of Health should therefore explore other ways in which the tariff can be set in new areas.'

Reference cost data can also be used to show the relative efficiency of individual hospitals. This overall measure is usually reliable although there are exceptions. Information from one in eight trusts was so inaccurate that it had a dramatic impact on the measure. For example, one trust incorrectly included £2.4 million of supplementary income in its calculations, which increased its reference cost index (RCI - the measure of relative efficiency) by 2.5 percentage points. Another trust saw its RCI reduce by 4.6 percentage points because it miscalculated the number of outpatients it had seen.

Andy McKeon continued:

'An important finding from our research is that there are simple solutions available to trusts wanting to improve their data. Greater use of basic checks by trusts would lead to improved data quality. These include checking submissions against other data sources, and benchmarking unit costs against those of other providers. Better senior leadership within organisations and greater clinical involvement are also needed.

'Trusts should also pay close attention to their annual audit reports and implement the suggested changes. Our report finds trusts that followed recommendations from their auditors saw the quality of their data improve substantially.'

A checklist covering 10 key areas that senior hospital managers can use to improve reference cost data quality is included in the report. The Commission's award-winning National Benchmarker can also be used to check for discrepancies in data. Ends

Notes to editors

  1. The Audit Commission is a public corporation set up in 1983 to protect the public purse.
  2. The Commission appoints auditors to councils, NHS bodies (excluding NHS Foundation trusts), police authorities and other local public services in England, and oversees their work.
  3. We also help public bodies manage the financial challenges they face by providing authoritative, unbiased, evidence-based analysis and advice.
  4. In August 2010, the government announced plans to disband the Audit Commission and put in place new arrangements for auditing England's local public bodies.
  5. The Commission is undertaking a procurement exercise to outsource the work of its in-house Audit Practice. Beginning in 2012/13, the Commission will award contracts of three to five years to private audit firms.
  6. The government is currently considering responses to its consultation on the ‘future arrangements for local public audit’ that are intended to replace the Audit Commission.
  7. The Audit Commission will continue to deliver audit programmes for health bodies in 2011/12 and 2012/13.

For further information please contact:
Louise Neilan, Media Relations Manager
Tel: 020 7166 2132
Mob: 07766 697 801
Email :
l-neilan@audit-commission.gov.uk

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