19/02/2020

Introduction

  • Independent providers of NHS services must hold an NHS provider licence (unless exempt) and must comply with the licence conditions, some of which are centred around monitoring and safeguarding essential healthcare services, known as commissioner requested services (CRS). These services need continuity protection because they would be hard to replace if the CRS provider got into difficulty.
  • Providers of CRS are subject to financial oversight by NHS Improvement which aims to reduce the provider’s risk of failing financially and reduce the impact on patients if a provider does fail. The risk assessment framework for independent providers of NHS services (IPRAF) describes how these providers are monitored.
  • IPRAF is the subject of the consultation which is aimed mainly at licensed independent providers of CRS.
  • From the consultation, NHS England and NHS Improvement (which came together on 1 April 2019) will analyse responses and publish a response summary after the conclusion of the consultation, and will then determine the updates to the IPRAF that will apply. NHSE aim to publish an updated IPRAF in March 2020 for implementation from 1 April 2020.
  • Note: the proposed updates to IPRAF have no implications for oversight of NHS trusts or foundation trusts.

The deadline for response to the consultation is midnight on 28 February 2020. The consultation can be accessed from the following website address: https://engage.improvement.nhs.uk/independent-providers/consultation-on-proposed-ipraf-updates/

Summary of proposed changes to IPRAF and consultation questions

Under the current IPRAF, a continuity of services risk-rating (CoSRR) score is determined for each provider of CRS using two financial metrics. A score of 1 represents the highest level of risk and 4 represents the lowest level of risk.

IPRAF provision Proposed Update Consultation Question
Making changes to metrics

Balance approach to risk assessment by:

  • introducing an operating margin CoSRR metric
  • recognising zero debt in the capital services capacity ratio scoring
  • creating an average risk rating
  • but with two overriding rules

Reason for update: Balance approach to risk assessment to ensure that risk ratings better reflect the level and distribution of risk that exists across the providers of CRS.

 Do you agree/disagree with the introduction of the proposed operating margin metric and with the proposed thresholds for the operating margin CoSRR?
Refocusing outer-year monitoring

For all providers, reduce the number of years’ forward-looking data in our standard templates to one.
For providers delivering >£5 million of CRS, collect a board-approved downside risk analysis in management’s own format for Year 2.

Reason for update: Opportunity to refocus information requirements by collecting less but better-targeted risk-focussed information.

 For providers delivering more than £5m of CRS, do you agree/disagree with replacing Year 2 and Year 3 base case forecasts with a board approved downside risk analysis for Year 2 only?
Widening the range of factors that may be considered as part of the overall risk assessment

To include:

  •  the value of liquid investments
  • group treasury policies
  • the materiality of contracts due for reprocurement
  • where relevant, sudden drops in the share price of the parent/ ultimate controller/monitored entity
  • a charity’s own reserves policy.

Reason for update: add clarity about full range of factors considered in overall risk assessment.

  
Adjusting annual plan review (APR) timescales

Align the APR budget collection template submission with the Q4 template submission, one month after year end.

Reason for update: Reduce number of conversations held with providers at their year-end.

 Do you agree/disagree with proposal to set annual submission deadline to one month after a provider’s year end to align with Q4 submissions?
Monitoring frequency for CoSRR 3 and 4

Make routine monitoring quarterly in frequency.

Reason for update: simplify monitoring frequency for providers rates residual or low risk i.e. scoring CoSRR 3 and 4.

 Do you agree/disagree with this proposal?
Monitoring frequency for CoSRR 2

Introduce flexibility to monitor providers either quarterly or monthly, depending on the underlying reasons for the risk-rating score.

Reason for update: introduce flexibility to monitor CoSRR 2 providers quarterly or monthly, according to the nature of risk presented i.e. due to structural rather than financial performance reasons.

Do you agree/disagree with this proposal at NHS Improvement’s discretion?
Licence Condition G4: Fit and Proper Persons (for all licensed providers)

Propose an annual self-certification, as opposed to certifying compliance at point of entry, against licence Condition G4.

Reason for update: currently licensees are only required to certify compliance at point of licensing, so annual self-certification will bridge gap in ongoing monitoring of regulatory compliance.

Do you agree/disagree with proposal to collect an annual self-certification against licence Condition G4?

 

Why is it important to engage in consultation?

  • Regulation of the independent healthcare sector and understanding of the drivers of financial risk have matured and evolved. As a result, NHS England and NHS Improvement are seeking to improve their monitoring approach for the benefit of the providers they oversee.
  • The consultation gives providers of CRS an opportunity to respond directly to the proposed changes to IPRAF and to provide feedback and comments on the proposals.

How can Bevan Brittan help?

If independent sector providers with licences want to discuss any of your concerns or want to interact or respond to the consultation, or require any assistance with the licencing issues, then Bevan Brittan will be happy to help. Please contact Vincent Buscemi, Commercial Health Partner and Head of Independent Health and Social Care, or Carlton Sadler, Regulatory and Compliance Partner.

vbuscemi
Carlton Sadler

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