Payment by Results for Mental Health (England)
Introduced in 2002, Payment by Results (PbR) is the system used by commissioners in England to pay for the majority of acute physical hospital treatment and care.
By 2012-13, the Department of Health (DH) plan to fully introducePbR for mental health in both acute hospital and community care.
The Royal College of Psychiatristsgenerally welcomes this introduction of PbR – to date, its absence has disadvantaged mental health services when competing for NHS funding
and improving quality. However, the College has concerns about its implementation:
- Time scale–the short time available to allocate financial costs to all clustered
clinical data for payment purposes, and the untested process of assessment and
patient transitions between clusters, are key concerns.
- No national tarifffor mental health- a core principle of PbR - a level playing field between providers from any sector across England - will not be achieved. Consequently, providers will not be able to keep any efficiency savings they would have made by ‘coming under’ a national tariff.
- Uncertainty about the tariff - there is insufficient consensus on what should be included in a mental health tariff. For example, should initial assessments which do not lead to any intervention be included?
- Pathway problems – it is not clear on how PBR’s payment mechanisms are linked into the redesign of efficient and high quality care pathways, or the monitoring of patient outcomes. PbR could therefore, potentially, become a barrier to service redesign.
- Poor communication – the lack of a strong communication and governance process for introducing PbR (which is transparent to all those involved in development and implementation) is a weakness that needs to be addressed.
- Management overload – at a time when the NHS is seeking significant financial savings, the introduction of mental health PbR could potentially divert management and clinical time from other important quality initiatives.
To help resolve these concerns, the College Lead for PbR (Dr Bohdan Solomka) is working with the Department of Health ( as is the Joint Commissioning Panel for Mental Health which is co-chaired by the College’s Dr Neil Deuchar (
Explanatory notes
What is PbR?
Prior to PbR, commissioners and hospitals could negotiate a total price for an agreed activity. This approach did not always encourage efficient or high-quality care.‘Block contracts’, for example, could involve a total price being agreed for an entire service without specifying the number of patients/cases needed to be treated. Consequently, the incentive to increase clinical activity/reduce waiting times was weakened.
Under PbR, hospitals are now paid on a ‘per patient’ basis for the specific treatment or
care they received. These prices are fixed nationally in advance by the DH.
How does PbR work?
First, PbR uses a ‘tariff’ - commissioners pay providers a national price (the tariff)
for each treated patient. Providers can be NHS trusts, NHS Foundation Trusts (FT) or the independent sector.Each tariff describes the cost of patient care from admission to discharge (the spell of care).The tariff is ‘looked up’ using a list of over 1,000 tariffs. These tariffs cover a total of 28,000 different interventions or diagnoses (grouped
together under a common tariff because they consumer similar levels of resources).
Second, PbR uses a currency - The ‘list’ of tariffs is called the Healthcare Resource Group 4. The groups of diagnoses and interventions within it are referred to as the currency.Traditionally, the tariffhas been based on (i) an average cost of relevant NHS services with (ii) adjustments for regional factors, market forces, overall pay/price pressures, short/long stays in hospital, specialist service use, and efficiency requirements, There is now a moveto set tariffsbased on best clinical practice, rather than average cost.
Third, it uses a coding system - when a patient is discharged, the type of care they received is coded into a hospital’s database and a national database (called the Secondary Uses Service). Reports from the SUS database allow commissioners to pay providers. Payments are made monthly (by adjusting contract values in the NHS standard contract).
Why was PbR introduced?
The DH contended that PbR could encourage more efficient and higher-quality care by:
- Reducing costs– any service running above a fixed national price would need to
reduce their costs to avoid running at a loss;
- Managing demand- aseach patient now had a cost attached to them, there was an
incentive for commissioners to manage the overall demand for care;
- Reducing waiting timesby paying for the volume of clinical work done, rather than
a ‘block fee’;
- Rewarding providers by allowing them to retain any difference if they could provide the required standard of care at a lower cost than the national price;
- Reducing contracting costs by removing the need for commissioners and hospitals to negotiate local prices, and refocusing discussions towards service quality not price;
- Supporting patient choiceby allowing money to ‘follow the patient’ to different
types of provider.
How will PbR be introduced into mental health?
Unlike physical health, PbR for mental health will cover hospital and community care.
It willfocus on working aged adults and older people using secondary care mental health services, with child and adolescent mental health services being covered later.
Preparation began in 2010,when the mental health currency –the care cluster– was published.The care cluster approach involves clinicians assessing the clinical need of patients using secondary mental health care services. Patients are then placed into one of 21 clusters depending on their care needs. Within each cluster, there are different ‘bundles’ or combinations of evidence-based interventions which can meet these clinical need (care packages)when delivered by trained and experienced clinicians.Each care clusteris the same across England, but the delivery of different care packages will be locally determined. Over time, as people progress through a spell of care, they may move to a different care cluster, or receive a different care package. Mental health providers now need to allocate patients to care clusters by December 2011.
Policy enquiries: Richard Meier, Policy Unit ()
Parliamentary: Will Pickering, Public Affairs Manager ()
Media: Liz Fox, Press Officer ()
In 2012-13, the clusters will be fully used as the mental health currency. However, these will use locally negotiated prices, rather than a national tariff. The reason for using local prices is due to the significant regional differences in the type of care that people receive. A move towards a national tariff will occur at the earliest by 2013/14.