1. 1 Mental Health Pricing and Payment The National Picture Sue NowakDeb Moore Head of Expanding the Scope PbRMental Health Tariff Development Manager sue.nowak@dh.gsi.gov.ukdeborah.moore@dh.gsi.gov.uk deborah.moore3@nhs.net

2. 2 Overview  The policy context  Progress to date for the mental health payment system and implementation in 2013-14  What’s new for 2014-15?  Progress in payment reform for other mental health services

3. 3 Future of tariff Monitor clauses: General duties: To protect and promote the interests of people who use health care services To promote provision of health care services which is economic, efficient and effective To maintain or improve the quality of services To enable integrated care Monitor must also have regard to: Maintaining patient safety Desirable continuous improvement Commissioning fair access to services based on clinical need and making best use of resources Providers cooperating to improve quality Promoting research High standards for education and training NHSE clauses: Requirements including: To adhere to the overall budget mandated by the SoS To exercise its functions effectively, efficiently and economically To exercise its functions with a view to securing continuous improvement in quality of services To promote commissioner and provider autonomy To reduce inequality To promote patient involvement and choice To obtain appropriate advice To promote innovation To promote integration Responsibility for 2014-15 and beyond rests with NHS England and Monitor, and the Health and Social Care Act sets out their duties: DH PbR team working as agents of Monitor and NHS England in 2013-14

4. 4 New responsibilities…  From 2013/14: 1.NHS England responsible for tariff scope and structure 2.Monitor responsible for price setting 3.Both organisations need to agree key decisions 4.DH team working as agents of NHSE and Monitor in 2013-14  So timing of the introduction of any national tariff and currencies for other services is the responsibility of the NHSCB and Monitor

5. 5 5 Mental health funding in England Programme Budgeting estimated England level gross expenditure for all programmes,2010/11 £ billions 2010/11 % of programme budget Infectious Diseases1.80 1.7% Cancers & Tumours5.81 5.4% Disorders of Blood1.36 1.3% Endocrine, Nutritional and Metabolic Problems3.00 2.8% Mental Health Disorders11.91 11.1% Problems of Learning Disability2.90 2.7% Neurological4.30 4.0% Problems of Vision2.14 2.0% Problems of Hearing0.45 0.4% Problems of Circulation7.72 7.2% Problems of the Respiratory System4.43 4.1% Dental Problems3.31 3.1% Problems of the Gastro Intestinal System4.43 4.1% Problems of the Skin2.13 2.0% Problems of the Musculoskeletal System5.06 4.7% Problems due to Trauma and Injuries3.75 3.5% Problems of the Genito Urinary System4.78 4.5% Maternity and Reproductive Health3.44 3.2% Conditions of Neonates1.05 1.0% Adverse Effects and Poisoning0.96 0.9% Healthy Individuals2.152.0% Social Care Needs4.18 3.9% Other Areas of Spend/Conditions25.95 24.3% Total107.00 100.0% Source: Department of Health:Programme Budget National Level Expenditure Data 2010/11

6. 6 Mental health spending in England Weighted Expenditure on Mental Health Services

7. 7 Mental health funding in the UK https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/152684/dh_130861.pdf.pdf

8. 8 8 The case for moving towards the PbR type funding approach for mental health Mental health was the single biggest tranche of secondary health care not covered by mandated currencies and tariffs Investment around the country in mental health services does not reflect local needs but historical block contracts Rising spend on acute and secure services mean that investment on other mental health services is being squeezed and is vulnerable to disinvestment Mental health services were characterised by a lack of transparency in funding, care provision and outcomes Including mental health emerged as the leading suggestion in DH consultation on future of PbR in 2007 New approach can help support service transformation

9. 9 Mental Health PbR sits at the centre of improved mental health services and must support current policy Mental Health PbR Quality Indicators Reduction of variation in mental health services Service Organisation and SLM Recovery and policy objectives Enhanced personalisation and choice Value for money Parity of esteem Improved, comparable data

10. 10 What’s been achieved nationally so far?  Care clusters made available for use – February 2010  Cost data collected on a cluster basis – September 2011  All service users allocated to care clusters – December 2011  Mental health currencies mandated for use in contracts April 2012

11. 11 Continuing the implementation in 2013-14 (1)  No national tariff 2013-14  Publication of indicative prices for each cluster period  Use of cluster period (rather than per diem) as the contract currency  Require providers and commissioners to rebase their contracts on to a cluster basis and submit these local prices centrally  Begin to use quality & outcomes measures in contracts  Continue to have risk-sharing mechanisms in place

12. 12 Continuing the implementation in 2013-14 (2) (and beyond)  National algorithm published for use and feedback during 2013 – a decision support tool for clustering  Working with those using the algorithm to identify any required amendments  Monthly MHMDS data submissions to HSCIC and reports  Further data analysis from MHMDS for commissioners and providers to support outcomes and quality indicators with new tools April 2014  Work on complexity factors to inform cluster pricing  Work to look at alignment of clusters with diagnosis  Work on guidance to support choice of provider policy and payment in the absence of a national tariff  Guidance for 2014-15 to support moving to a contract based on cluster case load rather than income guarantee, with Q&O forming part of the payment

13. 13 Mental Health PbR in 2014-15  Timetable contracted for producing 2014-15 tariff  Monitor’s National Tariff document, published for consultation on 3 October 2013  Final National Tariff document publication mid-December  Changes proposed for 2014-15: 1. No income guarantee, contracts based on cluster caseload, with risk sharing, within caps and collars 2. Guidance to support choice of mental health provider 3. Paying for quality, mandating the use of some metrics

14. 14 Local modifications New for 2014-15 are local modifications can take the form of agreements or applications. There are additional requirements for applications 1.Provider and commissioner agree that it is uneconomic to provide specific services at national price 2.Provider and commissioner have considered alternative means of providing the service 3.Proposed local modification reflects reasonably efficient cost for the service Conditions for agreements Benchmark costs against appropriate peer group to show provision is reasonably efficient Additional conditions for applications 1.Provider has tried to reach local modification agreement 2.Provider cannot cease to provide the service 3.Provider has a deficit equal to or greater than 4% of revenues at an organisational level There are two type of local modifications Local modification agreements – agreed between commissioner and provider Local modification applications – provider applies to Monitor without the agreement of its commissioners

15. 15 Local variations These allow commissioners and providers to agree adjustments to prices, currencies or payment approaches where it is in the interests of patients The current payment system includes local ‘flexibilities’ We have updated the rules for agreeing local ‘flexibilities’, which are now referred to as ‘local variations’ Local variations can be used to agree adjustments to prices, currencies or payment approaches where it is in the interests of patients to support a different service mix or delivery model. This includes: 1.bundling and unbundling of services with and without national prices; 2.delivery of care in new settings; 3.use of innovative clinical practices; 4.differences in patient casemix; and 5.arrangements to change the allocation of financial risk. To agree a local variation, commissioners and providers must follow the principles and the local variation must be published by the commissioner

16. 16 What are the local price setting rules for 14-15?  General rules  Adhere to the principles of local prices (NEW)  must be in patients’ best interests  must promote transparency  must engage constructively  Have regard to NT efficiency and cost uplift factors  Use national currency if mandated  disclose local prices to Monitor (NEW)  if agree not to use the national currency follow LV rules on disclosure and publication (NEW)  Specific rules apply to some services with nationally mandated currencies (e.g. using the MH clustering tool). These must be followed regardless of whether providers and commissioners deviate from using the national currency as a basis of payment

17. 17 Development of other services  CAMHS 1.pilots collecting data on resource usage using CYP IAPT dataset 2.some draft clusters but will be reviewed after pilots 3.currencies available in 2014/15  Forensic services 1.Testing proposed clustering approach 2.Currencies available in 2014/15  Learning Disabilities 1.Data collection to test clustering approach 2.Decision required on way forward  Psychological medicine 1.Benchmarking survey undertaken further work now underway Aim is to have alignment with the care cluster approach