West Midlands SHA The New NHS Contract Briefing for CEOs

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West Midlands SHA The New NHS ContractBriefing
for CEOs DirectorsThursday 25th October 2007
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Welcome and introductionEamonn Kelly Director
of Commissioning West Midlands SHA
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West Midlands SHA The New NHS ContractBriefing
for CEOs DirectorsThursday 25th October 2007
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The New NHS Contract for 2008 and Beyond

• The Policy Context
• 1010 1030

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The NHS is changing because the world is changing
The cost of new drugs is increasing
Quarter more over 85s by 2015

• Lucentis and Macugen
• NICE will rule this year on two treatments to
  prevent blindness in people with AMD
• These new drugs could cost the NHS between 60m
  and 180m a year.

Rising consumer expectations
Diseases of modern lifestyles
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There has been unprecedented investment
By 2008 NHS investment will have trebled, but
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Weve established a comprehensive reform
programme
Better care Better patient experience Better
value for money
Choice Commissioning (demand-side reforms)
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Failure of Commissioning

• NHS has commissioned for over a decade, but
• Command control delivery model has
  consistently reinforced the provider line
• Commissioners have lacked robust levers
• Not all available levers have been used
• Inadequate regulatory regime bail out
• Low investment in developing commissioners
• Highly variable fragmented practice
• Lack of legitimacy (linked to voice patient
  /public engagement)
• Very limited range of providers

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Re-launching Commissioning

• Commissioning Framework (July 06)
• Practice-Based Commissioning Guidance (November
  06)
• Interim New NHS Contract (December 06)
• Care and Resource Utilisation demand management
  (December 06)
• Commissioning Framework for Health, Care
  Well-being (March 07)
• A Vision for World Class Commissioning (Planned
  for December 07)

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New Approach to Contracting

• The need for a new NHS contract was introduced
  with in the Commissioning Framework, July 2006
• It becomes the main tool for achieving
  accountability and improving performance in a
  system with more autonomous providers
• It is legally-binding for NHSFTs, the IS and
  Third Sector
• Interim contract introduced for 2007/08 only for
  NHS bodies

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Learning from the Interim Contract

• The interim contract was generally well-received
• Co-ordinating commissioner arrangements are
  broadly right
• The contract is a useful as a framework across
  the NHS to support consistent behaviours
• Each set of parties felt that the risk was
  unfairly weighted against them
• Very few participants were able to describe
  accurately the levers and sanctions in the
  interim contract
• In a number of cases mandatory elements of the
  contract were deleted during negotiations

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Learning from the Interim Contract

• There was not enough time to prepare and
  implement properly
• Greater clarity is need on what is mandatory and
  what is negotiable
• The roles of the SHA, PCT, Co-ordinating
  Commissioner and associates need to be clearly
  described
• The Co-ordinator / Associate role needs to be
  developed around a binding standard consortium
  agreement, supported by clear and consistent
  guidance
• The legal language needs to be simplified and
  explained
• The implementation arrangements and guidance need
  to be significantly improved

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Current Status

• The contract is not yet completed
• Some policy elements remain to be concluded and
  we are continuing to seek stakeholder views
• Todays presentations on the contracts structure
  and controls represent current thinking and
  proposals
• The final contract framework and supporting
  documentation will be issued with the operating
  framework (early December)
• Further implementation support events will be
  scheduled in Dec and Jan

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Overarching Aims

• To facilitate patient choice
• To support a greater diversity of providers
• To assure the achievement of key performance
  priorities
• Eg. 18 weeks
• To underpin improvements in quality and patient
  safety

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West Midlands SHA The New NHS ContractBriefing
for CEOs DirectorsThursday 25th October 2007
16
New NHS Contract For 2008 and beyond

• Aims and Requirements
• 1030 1110

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What is the Contract?

• The NHS Contract for Acute Hospital Services,
  will cover agreements between PCTs and providers
  for the delivery of acute hospital based Care
• Is legally binding
• It has a default duration of 3 years from 1st
  April 2008. Guidance will be issued to enable
  shorter or longer contract periods.
• Providers can be Foundation Trusts, NHS Trusts,
  Independent Sector and (rarely) Third Sector.
• We will not produce a separate SLA for NHS Acute
  Trusts
• Contract for Out of Hospital Services, based on
  this contract, will be issued in the new year
  specifically covering Mental Health and
  PCT-provided services

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Who will use the new Contract

• The Contract will apply to agreements from
  2008-09 as follows
• All NHS Trusts
• Foundation Trusts
• New FTs and existing FTs whose contracts expire
  in 2007/08, are required to adopt the new
  Contract for 2008/09 onwards.
• FTs with contracts which extend beyond 2007/08
  may adopt the new Contract or retain their
  existing contracts until the required notice
  period passes. The former is strongly
  recommended.
• Independent Sector Providers
• The contract is designed for use by IS providers,
  who will be required to have a contract to
  register on Choose-and-Book.
• However, until legislation is changed to enable
  IS membership of CNST the IS providers are
  required to contract via ECN and FCN
  arrangements.
• Third Sector Providers
• Where a 3rd Sector provider is currently able to
  obtain CNST membership it must use this contract.
• Otherwise it should use the ECN/FCN arrangements
  or an unexpired contract until CNST legislation
  is in place. In any event it should transition to
  the new contract as soon as is practical after
  resolution of CNST.

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Stakeholder Principles

• The contract should
• Reflect vision, long term planning and change
• Recognise the community interest
• Provide clarity on commitments that need to made
  to stakeholders
• Clarify and define respective roles and
  responsibilities
• Recognise that open information is required from
  both parties to manage the contract
• Underpin a relationship between equals
• Understand mutual dependency and benefit of the
  parties in aiming for a partnership approach
• Support co-operation and collaborative behaviours
  that benefit both parties and cement the positive
  relationship between them.
• Be based on terms that are deliverable in practice

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Expected behaviours

• Find and support win-win solutions
• Achieve appropriate risk sharing, and sharing of
  any benefits that are realised by mutual effort
• Maintain mature, regular dialogue within a
  professional code of conduct
• Ensure flexibility where there are genuine
  problems in delivery
• Provide incentives as well as penalties
• Recognise investment required to achieve
  requirements over a reasonable time period
• Support providers to change their service offer
  over time in relation to changes brought about
  through patient choices
• Maintain honesty and transparency across both
  parties and with patients and the public

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Aims of the New NHS Contracts

• Patients can choose where they are referred for
  elective care and their time from referral to
  treatment to be no longer than 18 weeks
• Providers and commissioners achieve genuine
  agreements about the volume and flow of acute
  hospital activity that is both affordable and
  sufficient to achieve the March 2008 18 week
  milestones and the December 2008 target
• Providers are paid by commissioners at full
  tariff for the work they do and manage their
  capacity flexibly to accommodate the choice of
  provider that patients make
• The risk to commissioners is mitigated where
  providers conducting activity exceeding the
  activity plans, unless this is due to an
  demonstrable increase in the referrals for which
  activity is necessary.
• Commissioners and providers collaborate on the
  introduction of prior approval, utilisation
  management and capacity review schemes where
  reasonable
• Commissioners and providers achieve a civilised
  commercial relationship, recognising the
  importance of culture, values and partnership
  working

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Main Features Heads of Terms

• Standard terms and clauses the boiler plate
• Activity planning and review
• Demand management requirements Prior Approval
  and Utilisation Management schemes (CRU Guidance
  14/12/06)
• Delivery of 18 weeks agreement of pathways,
  potential financial deductions, capacity reviews
• National and locally-agreed quality standards
• Compliance with booking and choice
• Requirements on information flows and provision
  potential financial consequences
• Co-ordinating commissioner arrangements
• Dispute resolution arrangements
• Contractual Control mechanisms

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New NHS Contract For 2008 and beyond

• Structure of the Contract

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Structure of the Contract
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Why stand-alone standard NHS TCs?

• To supports NHS principles, values and standards
• To provide a consistent minimum fair playing
  field and prevent some contracts being unfair
  compared with others
• To simplify and focus the contract negotiation
• To avoid nationally-required generic changes
  having to be executed through multiple contract
  changes
• To remove the bulky legal and boiler plate
  elements from the procurement

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Draft Standard NHS Terms and Conditions

• Definitions and Interpretation
• NHS Principles and Values
• Services Environment and Equipment
• Emergency preparedness, Business Continuity Plan,
  Duty of Partnership
• Prices (PbR) and Payment
• Representatives
• Consent
• Complaints
• Staffing and Employment issues
• Emergencies Critical Care
• Death of a Patient
• Reporting, Analysing Learning from Patient
  Safety Incidents
• Quality
• Discharge Obligations
• Clinical Governance and Audit
• Patient Health Records
• Confidential Information
• NHS Branding and Promotion
• Chaplaincy

• Discrimination
• Dispute Resolution Procedure
• Monitoring
• Performance mechanisms (including mechanisms for
  retention of payments)
• Suspension and Termination (including partial)
  and Consequences
• Remedies
• Inducements to Purchase
• Variations
• Representations and Warranties
• Notices
• Force Majeure and Major Incidents
• NHS Counter Fraud and Security Management
• Third Party Rights
• Waiver
• Assignment and Sub Contracting
• Exclusion of Partnership
• Non-solicitation
• Costs and Expenses
• Governing Law and Jurisdiction

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Structure of the Contract
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Draft must-have elements for local negotiation

• Consortium agreement between Co-ordinating
  Commissioner and Associates
• Pricing local agreement of non PbR elements
• Activity Plan and Review,
• Care pathways for 18-weeks and Capacity review
• Commencement and Duration, and Contract Review
• Information flows and reporting provisions
• Service specifications and requirements
• Service Improvement/Development
• Clinical Networks and Screening Programmes
• Serious Untoward Incident and Patient Safety
  Incident Reporting
• Service Targets and Cancelled inpatient
  appointments and Operations
• Information Audit
• Demand Management requirements including prior
  approval and utilisation management
• Termination clauses local elements
• Quality Standards Nationally required and
  consortium level
• Retention of payments thresholds / ranges
• Performance - indicators, thresholds / ranges
• Any contract specifics that need legal input

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Structure of the Contract
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Elements Entirely for local agreement

• Examples might include
• Agreed care pathways
• Treatment protocols
• Performance and quality incentive schemes
• Additional Quality Standards
• Additional information requirements
• Additional staffing and training requirements

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New NHS Contract For 2008 and beyond

• Activity profiles and monitoring

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Activity Plans

• The format for the Activity Plan will be
  centrally mandated
• Is expected to be in the form of the 2007/8
  Activity Plan (excel spreadsheet)
• This is necessary because a consistent approach
  will help all providers and commissioners where
  there are any associates
• It is recognised that this is not always ideal
  but the overall benefits outweigh the
  disadvantages
• Providers or Commissioners can request additional
  information be added to the Activity Plan to suit
  specific requirements but this should be done
  with the agreement of all parties
• Commissioners and Providers should be thinking
  about their Activity Plans now (the new contract
  will not alter the Activity Plan content)

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The Plan and monthly profiles

• The Activity Plan includes a monthly forecast of
  elective and non-elective care
• This activity profile is critical in establishing
  monitoring and contract management methodologies
• The profile needs to enable 18 week and other
  targets (AE waits, cancer waits) to be achieved
• The Plan and the profile should take into account
  the effect of Utilisation Management schemes and
  seasonality.
• The Plan allows for the setting of upper limits
  for activity e.g.
• Conversion rates
• Average cost per unit of activity
• Consultant to consultant referral rates
• Where the Plan or the Ratios are exceeded the
  commissioner MAY be able to apply financial
  deductions

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• Panel Discussion

1110 1130
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West Midlands SHA The New NHS ContractBriefing
for CEOs DirectorsThursday 25th October 2007
36
Refreshments11.30 11.50
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West Midlands SHA The New NHS ContractBriefing
for CEOs DirectorsThursday 25th October 2007
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New NHS Contract For 2008 and beyond

• Contract Controls and Levers
• 1150 1240

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Why have Controls Levers

• A contract enables parties to agree rules and
  sets out the methods for dealing with and the
  consequences of failure.
• Parties can resolve issues without resorting to
  the contract but the contract sets the boundaries
  in a clear and agreed form.
• If a party breaches a contract where there are no
  levers then the other party has only two choices
  ignore or terminate.
• Where services, especially clinical services, are
  concerned there are targets which dictate the
  level of service that is to be provided. The
  contract levers allow this to be monitored and
  for appropriate corrective measures to be agreed.
• Where failure occurs defined consequences act as
  a reasonable deterrent where termination may be
  unreasonable or impossible.

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Protection

• Control systems, if used properly protect both
  parties from
• each other
• the Law
• In a world where Chief Executives and Board
  Members may face serious consequences it is vital
  that pathways to resolve performance issues are
• realistic
• functional
• agreed
• followed
• The consequences of failure (the teeth) should
  be clear and apparent to both parties and should
  be the end point not the beginning

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Incentives

• The contract allows for incentives schemes to be
  developed and agreed locally
• These require local funding
• Incentive schemes are encouraged
• There will be no centrally mandated incentive
  schemes
• There are no additional funds so this would
  require top-slicing

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Contract Controls

• Clinical
• MRSA / C. Difficile
• Clinical quality performance
• Non-Clinical
• Information provision
• Activity and Demand Management
• Other behaviour cancellation/slots
• Performance priority
• 18 weeks
• Other Targets (AE, Cancer)
• Termination Suspension
• Partial or full

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Purpose of Controls

• Clinical
• To improve performance
• To engender continuous improvement
• To mitigate failure to implement agreed change
  (not failure to hit targets)
• Non-Clinical
• To mitigate poor performance
• To provide risk, not certainty of penalty
• To increase commissioner control over spend
• Performance priority
• To underpin delivery of key national policies and
  targets
• To ensure consistency and fairness
• Termination
• To ensure Patients and the NHS is protected from
  poor contractors

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The Controls

• NOTE - In all cases the controls require warning
  and/or remedial action before any consequences
  are enacted. This is
• To expose and improve not penalise
• In the spirit of co-operation
• NOTE - The Provider is always protected from
  controls and consequences where the Commissioner
  is the cause of the event.
• The next slides deal with the controls in the
  order in which they appear in the contract
• Information
• General Performance
• Clinical
• Activity Demand Management
• 18 Weeks

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Non-Clinical Control Information Provision
(Clause 29)
Closed
NO
NO
YES
YES
CC May withhold 10 of Monthly Sums until
Information Provided
Is information inaccurate, incomplete or late
Information supplied within 5 days of notice
Has Provider Evidenced that retention was not
justified
Written Notice of Intention to retain
Is there and Excusing Cuse
NO
YES
NO
i.e. is Provider failure cause by a
Commissioner Clause to be added
YES
On receipt of information CC must pay withheld
funds within 5 days
Does CC accept evidence
Dispute Resolution Procedure
NO
YES
CC pays Default Interest Rate on retained sums
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General Performance Controls(Clause 32)
Provider or CC has a QUERY about contractual
Performance
If RAP is implemented but fails then the parties
should meet to discuss the next steps (new RAP or
closed)
Contract Query issued
Issuing Party Satisfied
Recipient responds in 10 op days
YES
YES
Closed
NO
Excusing Notice issued
NO
NO
IF Material breach is not remedied within the
time specified in PN 3 or more PNs are accrued A
PN is not resolved in the period specified (max 3
months)
YES
EN or Meet within 4 operational days
Remedial Action Plan (RAP) agreed
Provider or CC has reasonable evidence of
performance failure
RAP Breached
Issuing Party in Breach re WN
Performance Notice (PN) issued
Warning Notice (WN) issued
Meet re WN
YES
NO
Within 5 Operational Days of breach of RAP
If PN is agreed to have been unjustified it is
cancelled
Within 5 Operational Days
NO
YES
CC obeys quality, volumes, audit, complaint,
regulator, breach, Sch 6 or 8 Provider obeys
payments or Sch 6
OTHERWISE If PN is resolved
Issued to Board of Directors, or SHA or Monitor,
or Healthcare Commission, or OFCARE
Exception Report issued
Discretionary Consequences
Closed
This is a significant non-fiscal penalty
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Schedule 4BPerformance Indicators Consequences
D R A F T
More Indicators can be added
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Clinical Control (Clause 33)

• CQPI Clinical Quality Performance Indicator
• Some are mandated (MRSA) but moist will be
  locally defined including the agreement of the
  consequences

If the CQPI remains in breach despite a completed
RCAP the process will start again (the agreed
RCAP having failed not the intentions of the
parties)
Incidents / Incident Reports from Competent
Authority
Closed
If the JCI is not satisfied it should propose the
RCAP
YES
NO
YES
YES
Remedial Clinical Action Plan (RCAP) agreed
(including consequnces)
Monthly Clinical Quality Review Meeting
Are any CQPIs in breach
Satisfied or an Excusing Notice Applies
CC and Provider Joint Clinical Investigation (JCI)
JCI Satisfied
RCAP Complete per plan
YES
NO
NO
NO
Voting rights balanced between CC Provider, CC
provides chair and the casting vote
Meeting agrees Terms of reference and timescale
for investigation
Agreeing detailed plan, timescales and
responsibilities
Excusing Notice
Has CC fulfilled its RCAP obligations
YES
Clinical Quality Performance Report
NO
CONSEQUENCES
Revert to Clinical Review Meeting Provider not
liable for any RCAP consequences until CC has
performed
Process should not prevent rights of termination
/ suspension under other parts of this agreement
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Schedule 4AClinical Quality Performance
Indicators Consequences
D R A F T
More Indicators should be added
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Non-Clinical Control Activity and Referral
Management (Schedule 3)
Schemes require 1 months notice to change CC will
react to Prior Approval requests within 3 days
CC must vary activity plan
Finish
NO
Parties collaborate to agree and implement
Are all PA / UM Schemes working / thresholds
appropriate
Utilisation Management Schemes
Immediate Notification of Over Performance
NO
Activity Management Plan
Activity Managt Plan
Plan Breached
YES
Prior Approval Schemes
YES
If Activity Threshold, UM or PA schemes are
breached EITHER PARTY may instigate with 5 days
notice
If not in dispute
CC issues written notice
Activity Plan Thresholds Clause 2
YES
NO
Provider Complies
Co-ord Comm (CC) manages referrers Provider
manages demand against Activity Plan obeying
conversion rates follow ups, consultant to
consultant rates and complying with reasonable
requests
Monthly Service Performance Review
Provider struggling to meet 18w targets
NO
IF Action is required
Financial Adjustments SEE NEXT SLIDE
YES
Capacity Review Notice
Reviewing activity, activity trends, breaches in
thresholds, Prior Approval and Utilisation
Management schemes
See 18w Control Slide
Provider can issue this notice at any time acting
reasonably
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Appropriateness of Financial Adjustments at
Year-End (Schedule 3 Part 1 Clause 7)
NO
Was the Activity Subject to An Activity
Management Plan ?
Has any Activity Breached Thresholds?
Did the Activity breach a Prior Approval Scheme?
Did the Activity breach an agreed Activity
Management Plan ?
Joint Annual Reconciliation
NO Financial Adjustments
YES
NO
YES
NO
This is at CCs discretion and it can review
excess activity as detailed
YES
NO
YES
Within 30 Operational Days of year end
Are the breaches the Providers responsibility
(Co-ordinating Commissioners discretion)
NO

• There is no penalty only a non-payment for work
  that has
• not been commissioned or
• was not appropriate
• To get to a financial adjustment the Provider
  must be culpable

YES
Provider is culpable and may not be paid for the
activity
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18-Week Control Mechanism
NO Financial Adjustments
Provider Capacity Constraint - Provider
receives more referrals than it is capable of
processing which must be in excess of the
Activity Plan and should demonstrate that the
Provider has flexed itself wherever possible NOT
provider failure to perform (e.g. failure to
secure sufficient staff, or to open a ward on
time, or theatre failure)
CC must vary activity plan
Joint plan to achieve 18w RTT for this
Activity No Financial Adjustments for Activity
above agreed levels
YES
Demand Mgmt Schemes Working
CC must either enforce DM schemes or vary
activity plan
NO
Financial Adjustments
Within 10 days
YES
YES
Capacity Review
Provider Capacity Constraint
Under Commd Activity
Provider Breach in spite of
Provider becomes aware it its going to breach 18w
Capacity Review Notice
NO
NO
YES
Provider will be the first party to identify this
Financial Adjustments are at CC discretion
Provider Breaches 18w without requesting a
Capacity Review
FINANCIAL ADJUSTMENTS APPLY
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Consequences

• Consequences
• are a work in progress
• may be nationally mandated
• may be for local agreement (the DH will provide
  guidance that may include min/max)
• Types of Consequences (examples)
• Delayed Payments partial (i.e. information at
  10)
• Delayed Payments returning less than that
  withheld
• Fiscal (i.e. 18 weeks)
• Not paying for relevant Patient but Provider must
  complete treatment
• Provider pays alternative provider (and is not
  paid)
• Reputational
• Scale of Consequence (example for delayed
  payment)
• 10 of a typical FT (c.15m/month) is 1.5m
  cost being interest on the cash (1.5m _at_7 300
  per day)
• Provider will lose interest Commissioner will
  gain cash flow

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Summary

• Contract controls provide a framework for
  improvement
• Consequences are for failure to act not the
  breach itself
• Most indicators (clinical or otherwise) will be
  for local agreement
• Some consequences will be for local agreement
  DH will provide guidance
• The control mechanisms protect both parties
• Reputation risk in a choice world may be the
  greatest consequence
• The regimes are constructed in a spirit of
  co-operation not penalisation
• Termination remains the ultimate sanction

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• Questions, Summary Close

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