Board to monitor new NHS payment scheme

The government is to set up a monitoring board to oversee the radical new payment system being introduced to fund hospitals, it has emerged.

The decision to put in place an overseeing body for payment by results was announced in amended guidance developed from its phased introduction so far.

Payment by results was introduced last year for a handful of treatments with long waiting lists, such as cataract operations and hip and knee replacements. It will be extended to almost all hospital treatments from next April, when 70% of hospitals' income will be derived from the new scheme.

Payment by results is replacing locally determined 'block' funding for hospital treatments, with a more sensitive payment system which will see money paid by primary care trusts depending on the number of patients.

Hospitals will code each treatment patients receive according to nationally-set payments or 'tariffs' derived for a wide range of different treatments, or healthcare resource groups (HRGs).

The fixed amounts are an attempt to bear down on national variations in cost and efficiency, with those working to above average costs encouraged to bring down their prices, while those hospitals delivering treatments at below tariff costs will be allowed to keep the surplus.

The scheme is intended to standardised costs across the NHS, encourage hospitals to deliver services patients need most, bring down waiting lists, improve patient choice on the basis of appropriate care rather than cost considerations, and make the NHS more accountable.

The standing board will oversee governance arrangements for the new scheme, and report to the government on any unforeseen problems, as well as keeping an eye on the tariff structure.

A DoH spokesman said the new set-up was "still very much in its formative stages". "No one been appointed and no terms of reference have been drawn up yet. But it will be a permanent fixture which will offer independent advice on the system and the tariff."

The first wave foundation trusts, established in April and June last year, are testing the scheme on a larger scale, ahead of the widespread implementation next year for all NHS hospitals.