Monitor launches consultation on new NHS provider licence

Monitor has published a consultation on the proposed NHS provider licence which all NHS services providers will be required to hold, save for any applicable exemptions. The exemptions are currently subject to a separate consultation process (published 15 August 2012) for which responses are required by 22 October 2012. The new licensing regime will be Monitor’s key mechanism for regulating both NHS and private providers of NHS services.

21/08/2012

Monitor has published a consultation on the proposed NHS provider licence which all NHS services providers will be required to hold, save for any applicable exemptions. The exemptions are currently subject to a separate consultation process (published 15 August 2012) for which responses are required by 22 October 2012.  The new licensing regime will be Monitor’s key mechanism for regulating both NHS and private providers of NHS services. 

Background

The Health and Social Care Act 2012 (the "2012 Act") changes the way in which NHS service providers are to be regulated. Monitor has been given new duties and powers, and regulation will take the form of a licence for all NHS service providers. When the 2012 Act was a Bill, Monitor published pre-consultation papers on the proposed licence which set out tough conditions particularly with regards to continuity of service.

Secondary legislation will set out more detail – for example, Monitor will be able to make changes to a provider's licence and regulations should add clarity as to how a provider could challenge this. Watch this space.

What is the purpose of the licence?

Monitor’s primary duty will be to protect and promote the interests of patients by promoting health services that are economic, efficient and effective. The licence should reflect this. Monitor will perform its duties through three key functions:

  • working with the NHS Commissioning Board to provide independent pricing regulation for NHS services
  • protecting patient choice and using its specialist knowledge and healthcare expertise to address anti-competitive behaviour which acts against patients’ interests and
  • working with commissioners to secure continuity of services, where necessary

These functions are to be underpinned by the licensing regime, which will enable Monitor to set and enforce licence conditions irrespective of who provides NHS services.

Whom does the licence apply to?

The 2012 Act sets out that any person who provides an NHS care service will need to hold a licence unless they are exempt under regulations which will be made by the Secretary of Health. The Department of Health is undergoing its own consultation in relation to this so presently no NHS service provider can assume they will not need to be concerned. The proposals around the exemptions are:

  • A provider will not require a licence where an alternative body is well placed to take action to address failings (i.e. licensing and enforcement by Monitor would not be necessary). For example, the NHS Trust Development Authority will performance manage NHS Trusts on behalf of the Secretary of State
  • A provider is de minimis in scale and potential economic impact (the de minimis threshold is will be considered on the outcome of the consultation)
  • No exemptions where a provider supplies "commissioner requested services"
  • Any provider who is not required to register with the CQC will be exempt (unless they are providing commissioner requested services)
  • NHS Trusts are initially exempt (although they are subject to the NHS Trust Development Authority’s supervision)
  • Providers of primary medical services and primary dental services under a NHS Commissioning Board contract would initially be exempt (although would be expected to meet similar requirements with oversight from the NHSCB) and
  • Adult social care services (which are not contracted to provide some NHS-funded services such as continuing care) are outside Monitor's provider licence regime

The consultation sets out that the intention is that prior to the grant of a licence a provider must have CQC registration and be able to confirm their governors and directors, or equivalents, are “fit and proper” – this means they must not have any recent convictions, be disqualified from being a director or be an undischarged bankrupt. This should not be problematic for most providers.

How is the licence put together?

The licence will set out conditions with which the provider must comply.

  1. General conditions – apply to all providers
    General licence conditions set out the standards of behaviours which Monitor expects from all licence holders.  There are 10 proposed general conditions including the publication of information as required by Monitor; setting transparent patient eligibility and selection criteria; and in accordance with the application requirement requiring licence holders to ensure that directors and governors are fit and proper persons.
  2. Pricing licence conditions – apply to all providers
    Monitor will be jointly responsible with the NHS Commissioning Board for the pricing of NHS services. The pricing licence conditions oblige providers to record information that Monitor needs to set prices, check that data is accurate and, where required, charge commissioners in accordance with the National Tariff.
  3. Choice and competition licence conditions – apply to all providers
    These proposed conditions require providers to help patients choose the right provider and, where there is a risk to patients' interests, prohibit anti-competitive behaviour. Proposed conditions include informing the Office of Fair Trading of mergers; and preventing providers from entering or maintaining agreements that have the object or effect of restricting or distorting competition against the interests of health service users.
  4. Integrated care licence condition – apply to all providers
    These proposed conditions enable the provision of integrated services by obliging licence holders to support these services where they improve the quality of care to patients. 
  5. Continuity of services licence condition – apply to providers delivering "commissioner requested services"
    In a move away from the pre-2012 Act consultation, it is now proposed that continuity of services conditions will only be used for "commissioner requested services". There will be guidance on how commissioners should select such services but the suggestion is commissioners should ask themselves "is this a service which we would struggle to have provided from another provider, with acceptable access, should the current provider get into difficulty?" This is only likely to be a small percentage of services that are currently provided by the private sector and for Foundation Trusts services currently listed as "mandatory" will initially be "commissioner requested services" when their licences are issued.
  6. Governance licence conditions – apply to Foundation Trusts
    The proposed conditions translate Monitor’s current regulation of Foundation Trusts by imposing requirements relating to appropriate standards of governance. Proposed conditions include: providing information to Monitor so it can maintain the register of Foundation Trusts; registration fees payable to Monitor; and expectations around governance arrangements. 

Monitor will, for a transitional period, be able to place a governance-related condition on a Foundation Trust's licence to reduce the risk of it failing to comply with its licence conditions as a result of its governance inadequacies. If these additional conditions have been breached, Monitor may require remedial action including the removal, suspension or disqualification of directors or governors. This provision will remain in place until at least 2016.

Enforcement

The 2012 Act sets out the enforcement powers which Monitor will have to ensure compliance with the licence. Monitor has stressed it may not always tackle a breach using its formal powers in a bid to focus its resources appropriately. The discretionary requirements that Monitor could impose are an obligation on the provider to:

  • Pay a "variable monetary penalty" determined by Monitor (not higher than 10% turnover in England)
  • Take such steps, specified by Monitor, to ensure the breach does not continue or recur or
  • Take such steps, specified by Monitor, to restore the position to what it would have been if the breach had not occurred.

Monitor could of course, where required, revoke the provider's licence.

Another option is for Monitor to accept an enforcement undertaking where the provider agrees with Monitor what action it will take. Where this is the case and the provider complies with it Monitor cannot impose discretionary requirements or revoke the licence.

The licence consultation

Monitor’s licence consultation was published on 31 July 2012 and closes on 23 October so there is plenty of time to mull it over and consider how this will affect you going forward and provide them with any comments you have using the response form.

Click on the following link to view the consultation document .

Monitor will also hold stakeholder feedback events on its licensing proposals in September and October 2012. Further information can be found on the Monitor website .

Timings

In terms of applying for a licence FTs will go first in early 2013, with other providers likely to be phased in over subsequent months/years.

How can Bevan Brittan help?

We have looked beyond the 2012 Act to the post-reform landscape, which is indeed a changing one, where providers want to exploit commercial freedoms, but are equally aware of their need to protect and develop brand reputation whilst managing risk and developing business potential.

Our commercial team has extensive experience in advising FTs on constitutional and governance issues as well as commercial and corporate matters.  We would be happy to assist you with understanding the 2012 Act reforms and the implications it will have for your organisation.

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