The consultation on the proposed 2023/25 NHS Payment Scheme is now open in England


Jan 2023

On December 23, 2022, NHS England published a preliminary 2023/25 NHS Payment Scheme and launched a consultation. The deadline for comments submission is January 27, 2023.

NHS Payment Scheme (NHSPS) will replace the National Tariff Payment System from April 1, 2023. The NHSPS will be set for two years. The key proposed changes are presented below.

As in the previous year, the leading payment mechanism to cover almost all secondary care activity will be an aligned payment and incentives (API) approach. These will apply to contracts between a commissioner and an NHS provider with an expected annual activity value above £0.5 million. API payments will include two parts: the fixed and variable components (“elements”):

  • The fixed component should be set between the commissioner and provider to cover funding for an agreed level of acute activity, maternity, mental health, community and ambulance services, expected quality achievement (Best Practice Tariff, BPT, and Commissioning for Quality and Innovation, CQUIN), implementation costs of MedTech Funding Mandate (but not the products itself), and some other activities;
  • The variable component will include actually provided elective activity paid using HRG (Healthcare Resource Groups, the term used for DRGs in England) tariffs. The more elective activity is delivered, the more funding the provider receives. The variable component is also used to reflect actual attainment for elective activity BPTs and CQUIN metrics.

The other three payment mechanisms will be the following:

  • Low volume activity (LVA) block payments will cover secondary care from NHS providers under contracts with the expected value of the annual activity of £0.5 million or less;
  • Activity-based payment using HRG tariffs will apply to services delivered by non-NHS providers;
  • The local agreement will apply to activities not covered by another payment mechanism.

There will be two types of HRG tariffs published in Annex A NHS Payment Scheme workbook 2023/24 (Annex A will be updated and reissued for 2024/25):

  • Unit prices must be used for the variable component of API and the activity-based payments to non-NHS providers;
  • Guide prices can be used as benchmarks and to support local payment arrangements.

Best Practice Tariffs (BPTs) will be divided into two payment categories: “annual” (included in the fixed component of API) and “elective activity” (payment using the BPT tariffs for actually provided activity).

As in the previous year, all High Cost device categories will be excluded from the basic payment mechanism. No changes are proposed for MedTech Funding Mandate (MTFM). The cost of MTFM products is still excluded from API fixed and variable components. However, the fixed component of API should include the implementation costs of MTFM (as in the previous year).

See the full details here.

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