Payment by Results (PbR) aims to support NHS modernisation by paying hospitals for the work they do, rewarding efficiency and quality. It also carries risks that need to be managed effectively both locally and nationally.
Since the introduction of PbR in 2003/04, the Commission has periodically completed major studies on its implementation and delivered an annual assurance programme for the data that underpins PbR payments.
In 2004, the Commission published Introducing payment by results, the first of three studies on PbR. This was followed in 2005 by Early lessons from payment by results. In 2008, the Commission published The right result? Payment by results 2003-07, the main findings were:
- The change in the financial regime, in particular the increased level of risk to individual organisations, encouraged both providers and commissioners to strengthen their financial management and information systems, as well as their overall planning, and performance and contract management.
- PbR encouraged a better understanding of costs among trusts. Trusts increasingly devolved financial management to clinical departments and specialties within their organisations.
- Interest in information and improving data quality within the NHS increased as a result of PbR. Completeness of coding and overall recording of activity improved.
- PbR encouraged PCTs to strengthen their commissioning function and, on the whole, PCTs had stronger arrangements in place for monitoring provider activity and performance after the implementation of PbR.
- PbR had limited impact as an incentive scheme, mainly reinforcing existing trends to increase numbers of day cases.
Since 2007, the Audit Commission has delivered an assurance programme for PbR. Our work comprises analysis, research, pilot reviews, benchmarking and an audit programme that has checked the accuracy of over £200 million of payments under PbR.
The Commission has published four annual reports on the findings of its assurance work. Improving data quality in the NHS, published in 2010, was the last report on clinical coding accuracy at all acute trusts. The report found the accuracy of clinical coding had improved since 2007. The coding error rate dropped from 16 per cent to 11 per cent in three years, which shows that NHS organisations made real progress in tackling the quality of their data. But there remained wide variation between the best and worst performing trusts, even if the gap was narrowing. Errors continued to affect payments. We estimated that of the £21 billion spent on the four specialties we audited for three years, £1 billion (5 per cent) was paid wrongly.
The latest report, Improving coding, costing and commissioning published in 2011, focused on the accuracy of reference cost data used to calculate national tariffs. The report found reference cost data produced in 2010/11 was generally good. However, the data for 'non-tariff' areas such as community services and chemotherapy was often of poor quality. This data is already used to inform local contracts and is important for the expansion of the scope of PbR.