1. www.england.nhs.uk Mental Health Payment System Katie Brennan Pricing Development Lead 11 December 2014 GOV.UK/monitor 1

2. Overview Strategic context for the health system – the Five Year Forward View and key objectives Plans for mental health payment system development in 2015/16 National Tariff Rules: how the payment system can enable better care Further work to support the sector 2

3. www.england.nhs.uk The future NHS The Forward View identifies three ‘gaps’ that must be addressed: Radical upgrade in prevention Back national action on major health risks Targeted prevention initiatives e.g. diabetes Much greater patient control Harnessing the ‘renewable energy’ of communities Health & wellbeing gap 1 1 New models of care Neither ‘one size fits all’, nor ‘thousand flowers’ A menu of care models for local areas to consider Investment and flexibilities to support implementation of new care models Care & quality gap 2 2 Efficiency & investment Implementation of these care models and other actions could deliver significant efficiency gains However, there remains an additional funding requirement for the next government And the need for upfront, pump-priming investment Funding gap 3 3 3 3

4. www.england.nhs.uk Developing new care models There is wide consensus that new care models need to: o Manage systems (networks of care), not just organisations o Deliver more care out of hospital o Integrate services around the patient o Learn faster, from the best examples around the world o Evaluate success of new models to ensure value for money There are already examples of where the NHS is doing elements of this However, cases are too few and too isolated The answer is not ‘one size fits all’, nor is it ‘a thousand flowers bloom’ We will work with local health economies to consider new options that provide a viable way forward for them and their communities 4 4

5. National Tariff Rules (l) Local payment rules apply + 1. Data: data submission for MHLDDS and reference costs based on care clusters are mandatory regardless of the form of payment 2. Currencies: providers and commissioners must use care clusters as the currency for payment, unless they develop an alternative approach that will deliver better care for patients (which are subject to local variation rules) 3. Transparency: we expect all local payment contract arrangements to be transparent and take account of patient needs 4. Accountability: We will clarify how we plan to promote compliance with rules 5

6. National Tariff Rules (ll) Guidance Introduce framework that outlines expectations for payment arrangements: using local payment or local variations how providers & commissioners can ensure transparency and accountability Support Provide payment examples that highlight innovative payment arrangements to help the sector move toward the long-term objectives. Tariff uplift Revised approach to setting the efficiency factor. Consult on the service development uplift for 15/16 -IAPT -Liaison Psychiatry -Secure and Forensic -Outcomes based/risk share -Evidence-base (e.g. NICE) -Right treatment at the right time & place (inc. coordination of care) -Ensure value for patients -What is payment linked to, ensure standards are met Need constructive engagement between commissioners and providers 6

7. “Block” payment arrangements The value of any top-line payment needs to be generated using a clear evidence-based methodology This does not mean payment needs to be based on a calculation using cost for the volume of service provided – it could be based on a capitated payment approach, a capacity payment to meet expected demand or a combination of approaches. The value of any top-line payment needs to be generated using a clear evidence-based methodology This does not mean payment needs to be based on a calculation using cost for the volume of service provided – it could be based on a capitated payment approach, a capacity payment to meet expected demand or a combination of approaches. Block payment may be appropriate in some circumstances…. such as where it facilitates service transformation or delivery of the most effective care (e.g. to facilitate greater coordination of care). All contracts, including those associated with a block payment, should clearly spell out: (i)how the top-line payment value is generated based on evidence of costs and patent need; (ii)the services that will be provided under the agreement; (iii)associated quality/outcomes standards; (iv)what monitoring, data collection and evaluation are required; (v)who is accountable for meeting the service specification; (vi)how over or underperformance will be treated (including any associated rewards or sanctions) All contracts, including those associated with a block payment, should clearly spell out: (i)how the top-line payment value is generated based on evidence of costs and patent need; (ii)the services that will be provided under the agreement; (iii)associated quality/outcomes standards; (iv)what monitoring, data collection and evaluation are required; (v)who is accountable for meeting the service specification; (vi)how over or underperformance will be treated (including any associated rewards or sanctions) 7

8. 2015/16: Improving rigour of national price- setting method (e.g., input costs, efficiency factor) Transition towards long-term system by testing new payment designs (e.g., UEC, integrated care) Initial currency design and data collection for CAMHS Rollout of HSCIC quality and outcomes reports, develop further analysis of MHLDDS 2015/16: Improving rigour of national price- setting method (e.g., input costs, efficiency factor) Transition towards long-term system by testing new payment designs (e.g., UEC, integrated care) Initial currency design and data collection for CAMHS Rollout of HSCIC quality and outcomes reports, develop further analysis of MHLDDS 2016/17: Continued improvements to rigour, especially costing data Rolling out priority long-term payment redesigns Enabling widespread service change in line with 5 year commissioning and provider strategies 2016/17: Continued improvements to rigour, especially costing data Rolling out priority long-term payment redesigns Enabling widespread service change in line with 5 year commissioning and provider strategies What else will progress the Mental health payment system? 8

9. In summary where do we hope to get to? By April 2015 all contracts to be underpinned by an understanding of need, evidence-based responses to need and expected outcomes By April 2016 all contracts to include clear incentives for the delivery of outcomes, outcome and quality driven payment models will have been introduced in a limited number of areas AND have robust data on cost, activity, quality and outcomes By April 2017 a wholesale shift to outcome-focused contracting 9

10. Katie Brennan Pricing Development Lead Monitor katie.brennan@monitor.gov.uk katie.brennan@monitor.gov.uk 10