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Monitor and NHS England seek views on first National Tariff for NHS services

National prices for hospital services will be broadly set at present levels next year while a new payment system for NHS-funded healthcare providers is established. Rules for making local payments will also remain largely unchanged.

This commitment to maintain stability for 2014/15 subject to inflation and efficiency gains, is made jointly by Monitor, the sector regulator, and NHS England, the commissioning board, who are together taking over the payment system from the Department of Health.

Under the Health and Social Care Act 2012, Monitor will set prices for groups of health services that are determined by NHS England.

Ahead of a formal consultation in the autumn, both organisations are seeking views from providers and commissioners about the key principles underpinning the new National Tariff that comes into effect in April 2014.

Proposals set out in a suite of documents include:

  • Prices for 2014/15 will be substantially the same as for 2013/14, apart from the addition of a handful of changes to ensure prices remain clinically relevant. There will be an uplift for inflation but this will be offset by a target for efficiency improvements among providers of between 3% and 4.5%
  • Rules for local payment, including local variations to national prices and local price-setting of services without national prices, will be reviewed. The National Tariff rules should allow flexibility for service redesign and innovation, particularly around models of  integrated care that will benefit patients
  • Local modifications to national prices may be agreed by Monitor in very limited circumstances where it would be uneconomic for a provider to supply services at national prices
  • Monitor will enforce the National Tariff for NHS foundation trusts and other providers through the licensing regime, and separately for commissioners (including NHS England as a specialist commissioner). Monitor will also advise the NHS Trust Development Authority on breaches by NHS trusts.

A preliminary impact assessment also suggests that the combination of an inflation increase and efficiency improvements should lead to insignificant changes in tariff income for providers, while commissioners find services more affordable.

The National Tariff document will contain the national prices for many hospital-based NHS services, together with rules for local price-setting for other services, and thus underpin the reimbursement of NHS-funded healthcare. Monitor anticipates publishing the 2014/15 document in December 2013 after a statutory consultation.

We are undertaking early engagement with stakeholders to give commissioners and providers ample time to plan for the new regime. Under the Act, Monitor would have to revise its proposals or refer them to the Competition Commission if a majority of either commissioners or providers objected to its methodology for determining national prices.

Adrian Masters, Managing Director of Sector Development at Monitor, said: "The payment system is one lever that can help bring about necessary changes in patterns of NHS care for the benefit of patients. Before publishing the formal National Tariff document in the autumn, we want to test responses to some proposals which we believe will help providers and commissioners deliver better outcomes."

Paul Baumann, Chief Financial Officer for NHS England said: "We are working to develop and design a new payment system that does more for patients. It is very important that we get the views of practitioners and so we are asking for feedback in any areas where they have ideas or concerns. We urge the sector to engage fully with our proposals."

Notes to editors

  • For media enquiries please contact Jon Hibbs, Media Relations Director, on 020 7340 2446 or
  • Monitor is the sector regulator of NHS-funded healthcare services. Under the Health and Social Care 2012 Act its main duty is to protect and promote the interests of patients.
  • Monitor is working closely with NHS England (formerly the NHS Commissioning Board) to ensure that the prices paid to providers of NHS services are designed in a way that drives improvements in quality, and is also fair and transparent, rewarding efficient providers.
  • The two organisations have already set out a direction of travel for making widespread changes to the payment system from 2015/16 onwards here.
  • We are seeking responses by July 9 to the following documents:
  • Final figures for inflation, other NHS cost pressures and efficiency assumptions will be published in the National Tariff itself.
  • Last year commissioners spent £67 billion on acute, community and mental health services in England, of which about £29 billion reimbursed providers through the Department of Health’s payment by results framework.
  • Further information about Monitor's role can be found here.
  • Follow us on Twitter - @MonitorUpdate.

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