Last week we blogged about Monitor's report of its findings into price setting for NHS-funded care see Monitor reports its findings into price setting for NHS- funded care and flagged Monitor's forthcoming consultation. This arrived on 3 October, literally hours after our blog was published, when Monitor published its joint proposals with NHS England for the 2014/15 National Tariff Payment System. The proposals are out for a short 28-day consultation period, so if you want to comment please note you must do so by 31 October 2013. The consultation documents are available here.  The proposals for the national tariff will be finalised in December and come into effect in April 2014.

The Department of Health's former responsibility for the national tariff has been passed to Monitor and NHS England this year. Under their joint arrangements NHS England will determine the groups of health care services and Monitor will sets the prices and rules for those groups in 2014/15.

The proposals are stated to seek to balance the need for innovation in service delivery with stability during a time of transition and also to encourage providers as well as commissioners to develop local approaches that are flexible but transparent and support improved integration of care.

It is clear that Monitor and NHS England have been listening to providers and commissioners, as their proposals include improved incentives to manage the growth in emergency admissions to hospitals and to encourage the treatment of more patients in the community. There are two important changes to the current rule under which providers are paid 30% the tariff price for each emergency admission over an agreed baseline, with the remaining 70% being retained by commissioners to invest in keeping patients out of hospital. These changes impact primarily on commissioners and require them to do additional work before they can apply the 30% tariff and after they have applied it and are spending the money saved.

Firstly, where there have been significant local increases in emergency admissions outside the control of providers, commissioners will be required to agree a revised baseline before the marginal rate kicks in.

Secondly, NHS England will ensure that the money retained by commissioners through the application of the rule will be spent transparently and effectively to enable more patients to be treated in community settings.

The proposals also introduce new elements to the payment system, such as the potential for ‘Local Modifications’ to be made to national prices, which allows local experimentation in paying for NHS-funded services.

The proposals also announce the 2014/15 annual efficiency savings that providers to be expected to achieve - these will be at 4%. Therefore despite an allowance for rising NHS costs of 2.1%, on average the prices providers are paid for services next year should go down by 1.9 per cent.

For further information, please go to the Monitor website.

Monitor - press release.