DoH threatens trusts with penalties for finance breaches

Organisations that fail to comply with a new code of conduct on payment by results will be penalised using a 'range of mechanisms' depending on the severity of the breach, the government has warned. And the Department of Health has said protracted disputes between commissioners and providers will be seen as a 'failure'. Details of the disagreements - including the sum concerned - will be made public.

Trusts and other bodies have until the beginning of November to respond to DoH proposals for the rules. They are designed to prevent damaging disputes breaking out under the new NHS finance system.

Calls for rules to govern the system grew after commissioners and Bradford Teaching Hospitals foundation trust fell out over billing for treatments.

The document was drawn up by the DoH after a series of lengthy negotiations with NHS finance directors and chief executives and relevant bodies such as Monitor and the Healthcare Commission.

The DoH wants views on how the code should be policed and what penalties should be used to punish organisations that do not comply. The NHS Counter Fraud Service and the Audit Commission are already working on a new assurance framework, which will monitor coding of invoices.

They are looking at potential penalties for deliberate up-coding (ie increasing the cost of treatment) and discussing who should be responsible for policing it.

The Healthcare Commission is set to take on responsibility for ensuring that commissioners adhere to the code via a new set of performance indicators. But the debate about whether enforcement would be the role of the commission or other bodies is thought to be ongoing.

Birmingham and the Black Country strategic health authority strategy director Peter Spilsbury, a member of the reference group that helped draw up the code, said he would like to see a two-tier structure. He said the 'technical policing' of coding and billing should be monitored by a body responsible for implementing the assurance framework.

However, the rules that govern organisations' relationships should be policed by SHAs.

University College London Hospitals foundation trust chief executive Robert Naylor said it would be difficult to impose the proposed penalties because of the nature of the legal relationship between PCTs and acute trusts.

A DoH spokesperson said: 'Ministers have not agreed to any specific proposals on a policing function or penalties for non-compliance with the code of conduct. Draft proposals would be subject to further consultation.'

Aside from the policing of the code, it is also proposed that when a payment is in dispute the commissioner must place the cash with a third party until the argument is settled. This is designed to prevent disputes being used to resolve cash flow problems. It is also suggested that organisations should be allowed to share the tariff if parts of the care pathway are delivered by different providers.

Mr Spilsbury said this could only happen when based on care planning agreements, not 'retrospective' portioning out of funds, and when there is a clear indication of who carries the financial risk if community providers do not deliver.

DoH hangs on to price-setting powers - for now
The government is likely to hang onto its central price-setting role for NHS procedures until 2008 - even though the code of conduct repeatedly refers to a 'tariff-setting body'.

NHS chief executive Sir Nigel Crisp told HSJ that the Department of Health 'needs to keep control... when dealing with something as important as how you develop the tariff.' However, he added that 'in 2008 and beyond... it may be appropriate to have new institutions and new arrangements' to ensure the service is managed in a 'more bottom-up' way. The document says in-year tariff changes will be at the health secretary's discretion, although they will be limited to 'exceptional circumstances'.

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