Health Foundation reacts to 88% of providers opting for Enhanced Tariff Option

It has been announced today (6 March 2015) that 211 out of 241 NHS trusts have agreed to accept a new offer for national prices for services from NHS England and Monitor, the health service regulator. This will enable them to formalise financial plans for 2015/16.

The remaining 30 trusts, mostly large teaching hospitals and specialist trusts, will continue with the 2014/15 prices until a new formal set of prices for the coming year is agreed. However, they will not be eligible to receive Commissioning for Quality and Innovation (CQUIN) payments for the whole of 2015/16, even following the implementation of these prices.

Providers of NHS services, including hospitals, had until Wednesday this week to decide whether or not to accept a new offer of national prices for 2015/16 (called the Enhanced Tariff Option). This follows the objection last month to the formal proposed amounts by 37% of providers, accounting for 75% of total share.

If all providers had accepted the enhanced offer, it would have meant an extra £500m for the provider sector to deliver services compared to the original proposal, but would still mean a drop in total income of over £1bn.

Adam Roberts, Senior Economics Fellow at the Health Foundation, comments: 'It is positive that the majority of providers now have clarity on the national prices they will be using come April this year, and can start proper planning on how they will meet the costly pressures that are still associated with this enhanced option.

'We note however that even with the new more generous tariff there is still a drop in income of over £1bn for the provider sector. With providers already running an in year deficit of over £700m, even the enhanced option still represents a substantial challenge for 2015/16. Without large efficiency savings, we can expect the level of deficit to become even greater next year.'

The key changes between the original proposal and the enhanced offer are:

• 70% of costs for emergency admissions above the 2014/15 level will be paid, instead of 50% originally proposed, and the current rate of 30%
• 70% of costs for additional specialised activity will be paid, instead of 50% originally proposed
• the required productivity growth included in the tariff reduced to 3.5% from the 3.8% originally proposed.

The Health Foundation hopes that NHS England and Monitor can now work with the remaining 30 NHS Trusts to come to a mutually acceptable agreement quickly.

Media contact

Mike Findlay, Senior Media Manager
T: 020 7257 8047
E: mike.findlay@health.org.uk