Revised arrangements for NHS contracting and payment during the COVID-19 pandemic - note for NHS and Independent Sector providers supplying services to the NHS

Following publication of the letter to the NHS bodies from Sir Simon Stevens and Amanda Prichard on 17 March 2020, NHS England and NHS Improvement have published a technical guidance note on 26 March 2020 on the revised arrangements for NHS contracting and payment during the COVID-19 pandemic clarifying the implications of contracting between commissioners and a) NHS Trusts/NHS Foundation Trusts and b) other non-NHS providers.

The Guidance Note provides the central principles for NHS Trusts, NHS Foundation Trusts and non-NHS providers supplying services to the NHS about the revised arrangements for contracting and payment during the COVID-19 pandemic for the period April to July 2020.

The Guidance Note covers:

  1. existing contracts which are going to be rolling forwards; and
  2. new contracts.

It does not cover contracts that are due to expire or have indeed expired, and in either case without variation to extend the term.

The Guidance Note applies to:

  1. NHS Trusts/NHS Foundation Trusts;
  2. Independent sector acute hospitals; and
  3. Other non-NHS providers of services commissioned under the NHS Standard Contract (this category of contract is further sub divided into those contracts that relate to essential services for the COVID–19 response and other services e.g. elective services under the AQP (any qualified provider) framework)).

In this context, the Guidance Note provides that:

NHS Trusts / Foundation Trusts

  • NHS Commissioners and NHS providers are not required to sign contracts for 2020/21 at this time. The nationally mandated terms of the NHS Standard Contract for 2020/21 will apply from 1 April 2020 with no variation from the national terms.
  • Payment will be made on a block basis for each month for April to July 2020.
  • Block payments will be deemed to include CQUIN. The operation of CQUIN for Trusts will be suspended from April to July 2020 and so providers will not need to take action to implement CQUIN requirements, nor submit CQUIN performance data.
  • Where NHS Commissioners and NHS providers have already agreed a new contract and/or financial deal for 2020/21, this should be set aside for April to July 2020.
  • Where NHS Commissioners and NHS providers have an existing contract in place, payment to the NHS Trust will be made as block payments rather than in accordance with the existing contract.
  • The contract management arrangements remain with NHS providers needing to comply in a timely and accurate way with the mandatory data flows and national reporting requirements (unless notified otherwise).
  • NHS Commissioners must recognise that national service requirements may not always be achieved in full during the COVID-19 outbreak, nevertheless, NHS providers must do all that they can reasonably do to continue to comply with the national service requirements.
  • Normal contract management meetings and processes should in general be suspended with NHS Commissioners focussing on helping NHS providers to prepare and respond to the COVID-19 emergency and so relax local reporting requirements and any other burdensome local contract measures for provider staff. NHS Commissioners should waive the General Condition 28 requirement for formal notification in relation to Events of Force Majeure.
  • NHS England and NHS Improvement will shortly publish the 2020/21 National Tariff Payment System.

Independent sector acute hospitals

  • National arrangements have been agreed to purchase capacity and support from independent sector acute hospitals so that staff and facilities can be used for urgent surgery, as well as repurposing beds, operating theatres and recovery facilities to provide respiratory support for COVID-19 patients.
  • The national arrangements are in force from 23 March 2020 for at least 14 weeks.
  • These national arrangements will involve payment direct to the independent sector acute providers direct from NHS England and NHS Improvement. Other CCG, NHS England or sub-contracts from NHS Trusts and NHS Foundation Trusts will be set aside for the period covered by the national arrangements.
  • Where an independent sector acute hospital holds an existing contract with an NHS commissioner which does not expire at 31 March 2020 or has agreed a new 2020/21 contract with an NHS commissioner, then this contract should be suspended for the period when the national arrangements are in force.

Other non-NHS providers commissioned under the NHS Standard contract

Essential services for the COVID – 19 response

  • A block payment approach protecting the provider’s historic level of income should be adopted for essential services for the COVID-19 response; this may include community nursing and therapy services, intermediate care, end of life care, mental health inpatient services and community teams, and patient transport services, for instance.

Other Services

  • Where non-NHS providers provide elective services on an Any Qualified Provider basis (for example, diagnostic and treatment services), where levels of activity are likely to reduce significantly during the pandemic, and where there is little scope for the provider’s staff to be redeployed – it will be more appropriate to retain an “activity x price” basis for payment. In such instances, where the provider’s income from NHS Commissioners fall, non–NHS Providers do have access to the wider financial protections offered by the government for businesses and employers, including the Coronavirus Job Retention Scheme.
  • Appropriate contractual arrangements with care homes is explicitly mentioned, with reference being made to a mixed economy approach being appropriate, so that CCGs and local authorities continue to pay for existing NHS Continuing Healthcare cases on the basis of a weekly rate, whilst also purchasing additional bed capacity to support hospital discharge on a block or similar basis.

These revised payment and contract management arrangements will be reviewed before the end of July and will be extended as necessary; further guidance relating to the period beyond 31 July 2020 will be issued in due course.

Key actions for all providers of NHS services

  • NHS Trusts and NHS Foundation Trust providers should consider the implications of block contracts on revenue and reporting requirements.
  • Independent sector acute hospitals supplying services to the NHS under the national arrangements that apply from 23 March 2020 should seek to suspend any local contracts for the period when the national arrangements are in force, but recognise that normal contractual arrangements will be reactivated on conclusion once “business as usual” resumes following the COVID-19 outbreak.
  • Other non-NHS providers commissioned under the NHS Standard contract should review and consider the redeployment of provider staff if levels of activity reduce significantly during the COVID-19 pandemic.

Bevan Brittan’s COVID-19 Advisory Service

The growing impact of the Coronavirus (COVID-19) is having an unprecedented generational impact on the health and wellbeing of society across the UK and around the world. The impact is being felt in our everyday lives and is now having far-reaching consequences for all types of organisations and businesses.

Organisations and businesses are responding to this rapidly changing situation to manage the strategic and operational risks of delivering a safe, good quality service for service users and customers, including managing the workforce, commercial supply chain disruptions and working with regulators

All of this against a background of managing an organisation’s or business’ reputational, financial and/or regulatory exposure.

Our COVID-19 Advisory Service draws upon the expertise of a range of Bevan Brittan legal and regulatory teams. This team is already supporting organisations and businesses with safety issues, managing operational workforce issues, contractual obligations and transactions, pressure on supply chain management, insurance exposure and dealing with the relevant regulators.

For more information or for assistance contact:

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