Clause 66 - The NHS payment scheme

Part of Health and Care Bill – in a Public Bill Committee at 12:45 pm on 23rd September 2021.

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Photo of Edward Argar Edward Argar Minister of State (Department of Health and Social Care) 12:45 pm, 23rd September 2021

I express my gratitude—I may be less grateful when I sum up—to hon. Members for tabling the amendments, and for the discussion that we are going to have about the NHS payment scheme. The Bill replaces the national tariff with a new NHS payment scheme, with additional flexibilities to allow the NHS to deliver population-based funding and more integrated care approaches. The NHS payment scheme, which will set rules about how commissioners pay providers for services, will apply to all providers of NHS services, including NHS trusts and foundation trusts, the voluntary sector and the independent sector.

Amendment 84 aims to ensure that payment to private providers can be made only at tariff price. While we will not introduce competition on price, rather than quality, there may be scenarios where it is appropriate to pay non-NHS providers different prices from those paid to NHS providers, to take account of differences in the cost of providing those services—for example, different staffing costs or a different range of services provided. There may also be cases where the financial regimes of different providers make it appropriate to set different prices or pricing rules. When setting any prices, NHS England will aim to ensure that the prices payable represent a fair level of pay for the providers of those services, as well as fair pay between providers of similar services.

I reassure the Committee that we do not expect to see the rules being used to give a premium to private providers to encourage them to enter the market. We do not expect to pay the independent sector 11.2% greater than the NHS equivalent cost, as the King’s Fund briefing on independent sector treatment centres set out in 2009. Nor do we expect commissioners to pay for 100% of the contract value regardless of whether the activity reached the contracted level. Instead, the new payment scheme delivers what the NHS has asked for to implement its long-term plan. For that reason, we encourage Opposition Members not to press the amendment to a Division, but I may be pressing them in vain.

The Government will also, I am afraid, oppose amendment 100, which would require the NHS payment scheme to be approved by the Secretary of State. The NHS payment scheme will be published by NHS England, following consultation with relevant providers and commissioners, and, where relevant, the publication of an impact assessment. Integrated care boards and relevant providers will be able to make representations and formally object in response to consultations on the NHS payment scheme, as they can with the national tariff. Where the percentage of objections exceeds the prescribed threshold for either ICBs or relevant providers, or both, NHS England must further consult the representatives of the ICBs and providers that were objecting. NHS England may then publish a revised payment scheme, with another consultation for significant changes. It will also be able to publish the proposed scheme without amendment, but will be required to publish a notice stating that decision and setting out the reasons for it.

The Government are responsible for setting out overall funding for NHS England, who in turn will continue to be required to have regard to fair levels of reimbursement for providers in setting the details of the payment scheme. The Department and NHS England will continue to work closely together in the development of the NHS payment scheme, as we do with the national tariff. However, as a last resort, derived from clause 37 powers of direction, the Secretary of State will be able to require NHS England to share the NHS payment scheme before publication. The Secretary of State will also be able to direct NHS England not to publish a payment scheme without his approval, and about the contents of the payment scheme under his general powers of direction under clause 37.