The Health White Paper is introducing radical changes in commissioning both in the creation of new commissioning bodies and how commissioning is to be carried out. In this article, John Chapman looks at three fundamental questions that are relevant to both commissioners and providers:

  • who will be commissioning? 
  • what is the framework for GP commissioning decisions? and 
  • what will be the contracting and payment framework?

Who commissions?

The key commissioners in the system are the NHS Commissioning Board and the GP consortia. However, local authorities will also have an important role, along with a number of other players.

NHS Commissioning Board (NCB): the NCB will take the national leadership role and set the framework for commissioning by GP commissioning consortia (GPCC). This will include developing a commissioning outcomes framework for GPCC which will flow out of the NHS Outcomes Framework.  In addition it will also take on specific direct commissioning roles in primary care services, national and regional specialised services (set out in the Specialised Services National Definition Set), maternity services and prison health and custodial services.

  • However, some points on the direct commissioning obligations of the NCB remain to be clarified, including:
  • the extent to which the NCB will ask GPCC to assist it in managing the primary care contracts
  • whether any of the specialist services will be delegated to GPCC (this is being considered in the consultation “Liberating the NHS: Commissioning for Patients”)
  • how the GPCC will work together with the criminal justice agencies and GPCC in relation to prison health and custodial services.    

GPCC: GPCC will be the main commissioners of health services within the framework set by the NCB through the commissioning contract between each GPCC and the NCB and working closely with local authorities.  Where services involve primary care areas other than primary medical services, the Commissioning for Patients consultation paper is also asking how other primary care contractors can be most effectively involved in commissioning services.

GPCC will need to consider the extent to which they wish to introduce lead commissioning arrangements - this may be driven by a number of factors including the need to coordinate commissioning, e.g. with a large acute hospital, efficiency for low volume services or in order to reduce management costs.  Limited management costs are also likely to result in many GPCC outsourcing aspects of their activity to commissioning support providers, e.g. demographic analysis, contract management.  We wait to see who may emerge as the players in this market but the independent sector and local authorities are obvious candidates.  Existing shared services agencies are also likely to be looking at developing their roles here.  Some services may also be more appropriately commissioned at sub-consortium or practice level, subject to appropriate safeguards to deal with conflicts of interest.

The Government is clear that individual practices and groups within the GPCC will have the ability to provide new services.  While in some situations the GPCC may be able to ensure adequate safeguards against conflicts of interest, this means that there may be situations where procurement may need to be managed by another party such as the NCB or a local authority.

Local authorities: PCTs may currently be operating Section 75 lead commissioning or other joint working arrangements with local authorities for health and social care services and also pooled funds and funding transfer arrangements. Consideration will need to be given how these are to operate when GPCC are established or whether new arrangements are to be introduced.

The White Paper flags up that local authorities will have an enhanced power to promote partnership working and integrated delivery of public services and the existing legal framework for partnership arrangement will be simplified and extended.  GPC will also have a duty to work in partnership with local authorities. The local authority will, of course, also be taking over the health improvement budget. This means that we may see considerably more integrated or coordinated commissioning arrangements, particularly in the areas of long term conditions and services to the elderly.

Patients: where choice applies, the patient is the ultimate “purchaser” in the system.  It is clear that the role of choice is going to be extended and the Government has indicated its intention to create a presumption that all patients will have choice and control over their treatment and choice of any willing provider, wherever relevant. The NCB is also to have a duty to promote choice including developing the NHS Choice offer.  New areas of choice which have been flagged up include choice of consultant led team and choice of provider for certain areas of mental health treatment.  The extension of personal health budgets will further extend patient choice.

What is the framework for GPCC commissioning decisions?

As noted above, the GPCC will need to take their decisions within the framework set by the commissioning contract, which will reflect the National Outcomes Framework. In our previous briefing “Surely not a mini-PCT” we also noted that GPCC will be statutory bodies and we listed some of the public law obligations that will apply to their decision making. These include obligations to comply with procurement law and the statutory obligations to involve service users in service decisions and consult with the Overview and Scrutiny Committee or Health and Wellbeing Board on substantial developments and variations in services.  The White Paper indicates that there will also be specific new duties which need to be complied with, e.g. commissioners will have a duty to act transparently and not discriminate in their commissioning of services. There will also be a prohibition on agreements or other actions to restrict competition against patients’ and taxpayers’ interests.  These obligations reflect the approach in some of the Principles and Rules of Cooperation and Cooperation (which have been updated to reflect the White Paper) and will embody them in statute.

GPCC will need to consider the Procurement Guide for Commissioners of NHS services, assuming this follows through into the “new world”. The Government has indicated that this will be reviewed following the outcome of the current consultation documents and is to be updated substantially for 2011/12 to reflect the transition to shadow GPCC and the shadow NCB. We will be watching the development of this document closely; however, it is clear that the direction of travel is towards greater competition. 

As well are regulating the provider side of the market, Monitor is to be given powers to investigate and remedy complaints about commissioners’ procurement decisions or other anti-competitive conduct.  Clearly his decision making will be influential in the development of the approach to commissioning decisions.

What will be the contracting and payment framework?

The use of national standard form contracts will continue and these will be developed to reflect the White Paper. They will include clear obligations on the provision of data to promote information for patients backed by sanctions.  The new contracts will need to address new approaches to care pathway management and integrated care models and we await more information on this.  We will be publishing a further alert on the contracts later in this series.

A key element of the contracts will be the payment mechanism. The NCB is to set the structure for payments,  working closely with Monitor in deciding which services should be subject to national tariffs and the development of currencies for pricing and payment.   Monitor will be responsible for setting actual prices in consultation with  the NCB and providers, who will have a right to challenge prices set to the Competition Commission.  The intention is that prices will be either set as efficient prices or maximum prices.

In the interim before the establishment of the new regime, the Department will be working on a more comprehensive transparent and sustainable structure of payment for performance and developing and refining tariffs.  Areas identified include:

  • refinement of the basis of current tariffs, in particular best practice tariffs, so that providers are paid according to the cost of excellent care, rather than average care.  Best practice tariffs will be introduced  in 2011/12 for interventional radiology, day-case surgery for breast surgery, hernia repairs and some orthopaedic surgery
  • development of currencies for adult mental health services (to be available by 2012/13) and child and adolescent services
  • national currencies for adult and neonatal care (mandated for 2011/12)
  • payment systems to support talking therapies
  • development of  tariffs for pathways and currencies and tariffs for community services to be accelerated
  • incentives for reducing avoidable admissions and to encourage joined up working between hospitals and social care for post discharge measures.

A greater element of payments will also be at risk as the scope and value of Commissioning for Quality and Innovation (CQUIN) payments will be extended and contractual penalties are to be included for poor quality of care.

Whilst not strictly part of the commissioning side of the picture, providers will have increased costs of “operation” through licensing fees and participation in risk pooling arrangements for insolvency.

All providers will also contribute to education and training costs whether by way of deduction from tariff or in some other way.


The commissioning and provider sides of the system will need to have a clear understanding of the frameworks within which commissioning is to be carried out and the roles of the players.  However, the local context of how commissioning is operated within the framework and how the provider market responds will also be highly relevant to ensuring continuity of high quality services.

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