NHS England to introduce payment by results for elective work

NHS England will introduce an element of payment by results for elective work from April 2022, dropping the emergency financial system it has been operating since the start of the pandemic, HSJ has reported.

Before the pandemic hit, the NHS was in the process of introducing a blended payment model which combined fixed payments with payments according to activity, known as payment by results.

During the pandemic, however, all providers were moved onto full block contracts with their commissions, meaning they were paid a fixed amount with some top-ups.

Julian Kelly, NHS England’s chief financial officer, has said that there would have to be at least a partial return to payment by results in order to meet the goals agreed with government in return for £9bn additional funding.

Speaking at the Healthcare Finance Management Association annual conference last week, Kelly said that payment by results would be the default system for paying for elective work. He added: “It is a really important part of the contract that we have with government that we, if at all possible, meet the goals for activity that they have agreed with us as part of giving us £9bn. And we still think a strong volumetric element to paying for elective work is going to be central to that.”

Use local initiatives to improve patient flow

For the fixed element of contracts, he said, NHS England will look at how funds are currently distributed, “to work out where we need, if we need, to reset allocation those baselines.” He said that the centre would issue a one-year revenue allocation in the planning guidance, published later this month, rather than the full three-year budget: “When you really see where the patient flows are, I don’t doubt we’re going to need to move some money around between systems.” 

Kelly said that trust and system leaders would need to start thinking about how to use the capital “to create better separation and protection of our emergency and our elective pathways”, and increase diagnostic capacity.

He told the audience of finance managers that they could have licence to act on local projects to improve patient flow through hospitals in order to reduce ambulance handover delays. These could include using hotel rooms or paying for a patient to go into a care home if a home care package is unavailable: “Basically, we need to see if we can free up several thousand beds. That actually has to be our goal and we need to do it as fast as we can, and we need to see if we can mitigate and reverse the effect of the increase in blocked beds that we have seen.”