Moving to HRG4+ phase 3 currency design 1. Existing policy We currently use HRG4 currency design to set national prices. This currency design relies on cost and activity data from 2011/12. HRG4 currency does not reflect the latest clinical practice in terms of the mix of care that is delivered to patients and recent innovations in the way that services are delivered. 2. Proposed change We propose to implement phase 3 of the HRG4+ currency design. Further information on the proposed change from HRG4 to HRG4+ can be found . HRG4+ phase 3 takes existing HRGs and splits them up to allow more levels of complexity. shows an example of this. HRG4+ phase 3 also introduces a complexity and comorbidity score to allocate the appropriate HRG to the relative complexity of treating the patient. 3. Rationale HRG4+ phase 3 provides a more granular currency design. This means it’s better able to identify and pay for the resources used to treat patients with different levels of complexity. Moving to HRG4+ phase 3 would allow us to use the latest available data, from 2014/15, to set prices. We have evidence to show that data variation between providers for HRG4+ phase 3 is lower than for HRG4 or HRG4+ phase 2. This suggests that reference costs are better defined within HRG4+ phase 3. We have published a supporting document (Annex D) with our evidence. Introducing HRG4+phase 3 would be a big change. Retaining this design for 2018/19 would give certainty and stability to the service. 4. What does this mean? Moving to HRG4+ phase 3 would change the structure of national prices, chapters and subchapters. It is important that commissioners and providers consider the effect that this move would have on them. We welcome your feedback on these effects as part of this consultation. HRG4+ phase 3 would mean that providers are more accurately paid for the care they provide. The extra detail within this currency design would help providers to plan more effectively with commissioners to deliver better care for patients.
Top-up payments for specialised services 1. Existing policy Specialised services are accessed by comparatively few patients from a small number of providers with the right expertise. They are relatively expensive and account for around 14% of the total NHS budget. Top-up payments for specialised services were introduced in 2005 to reflect the additional costs of complexity. 8 shows the current top-ups. Our proposal to move to HRG4+ phase 3, combined with new , changes the need for top-up payments. 2. Proposed changes We propose to: Move to top-ups based on the Prescribed Specialised Services (PSS) definition of specialised services (). Move to top-up payments for 2017/18 that adopt the recommendations from the . Mitigate the impact by transitioning to the new rates over four years for services that would lose income from the new rates. Other rates will be scaled to maintain a total payment amount of around £415 million. 3. Rationale We have reviewed specialised top-ups to reflect the new specialised service definitions and the HRG4+ currency design. This change would use the latest reference costs and HES data, and a methodology developed by the University of York with input from the service and the Specialist and Complex Care Advisory Group. Moving straight to the new top-up rates could destabilise providers. We are also analysing how complexity is captured by the national tariff. As we will not conclude this analysis in time for proposals to be included for the 2017 to 2019 national tariff, we believe that is appropriate to transition to the new top-up levels. 4. What does this mean? If we moved straight to the PSS flags the total top-ups would increase from about £320 million to about £415 million. Given the other changes proposed within the system, we consider it appropriate to transition areas that see significant reductions under the new approach (paediatrics and orthopaedics) over a period of four years. We remain committed to exploring the reasons for cost variation in specialised and complex care with the service, and to develop policies that address your concerns. We would move to the second year of the transition path for 2018/19.
New non-mandatory currencies 1. Existing policy We would make non-mandatory currencies available for services where we would like to test the currency design before implementing mandatory currencies. Where we do this, we will seek feedback and evidence from the service on whether the currencies are appropriate. We may pilot a set of currencies with a small group of providers before making these available to the wider service. In 2015 we ran pilots of wheelchair service currencies and palliative care currencies. 2. Proposed change We propose to introduce non-mandatory currencies for Wheelchair services () Palliative care () Prosthetics Cleft lip and palate Paediatric critical care Bone marrow transplant. In addition, we will investigate the possibility of developing an outcome-based non-mandatory currency for IVF services which could be made available for use locally. 3. Rationale We consider it appropriate to introduce non-mandatory currencies in this way for the service to test. The feedback we receive will determine the future of currency design for these services. 4. What does this mean? Non-mandatory currencies are not subject to the national tariff. Providers and commissioners would still need to agree a price locally, in line with the rules for local pricing in section 6 of the national tariff. We will seek feedback from providers and commissioners over the course of the year regarding the appropriateness of these currencies. If we adopt a two year national tariff, the introduction of a new mandatory currency in these areas would not take place until 2019/20. In the interim, we may consider changes to the non-mandatory currency for 2018/19 in response to feedback.