22 December 2015 DELIVERING THE FORWARD VIEW: NHS PLANNING GUIDANCE 2016/17 TO 2020/21 BACKGROUND Over the past week, details have emerged about the planning and financial framework for 2016/17-2020/21. This briefing provides a summary of the key documents and announcements which have been made so far, including: 2016/17 planning guidance (published today, 22 December) 2016/17 financial settlement (published 17 December) Additional information on 2016/17 National Tariff (published today, 22 December) The Mandate from the Department of Health to NHS England (published 17 December) Local authority allocations (published 17 December). Chris Hopson published a blog in the HSJ this week on the planning guidance and our press release is included at the end of this briefing 1. THE PLANNING GUIDANCE The planning guidance was published today by NHS England, in partnership with the five arms length bodies (NHS Improvement (Monitor and TDA), Health Education England, the National Institute for Clinical Excellence, Public Health England and the Care Quality Commission). This year s guidance has been published in the context of the recent spending review announcements, and is explicitly positioned to set out how the sector is expected to deliver the Five Year Forward View by 2020, restore and maintain financial balance and deliver core access and quality standards for patients (p.3). This year, organisations within the NHS will be required to produce two plans: 1. All local health and care systems will be required to develop a five year sustainability and transformation plan (STP), covering the period October 2016 to March 2021 subject to a formal assessment in July 2016 following submission in June 2016 2. All NHS foundation trusts and trusts are required to develop and submit one year operational plans for 2016/17. These plans will need to be consistent with the emerging STP and in time to enable contract sign off by end of March 2016. NHS Providers ON THE DAY BRIEFING Page 1
Local health system sustainability and transformation plans Place based planning Local health and care systems are required to produce a STP covering the period October 2016 to March 2021. These plans should be a holistic and ambitious local footprint for accelerating the implementation of the Five Year Forward View and closing the gaps in health inequalities, quality and finance. Given the scale of the task ahead, there is a helpful acknowledgement within the guidance that we don t have the luxury of waiting for perfect plans (p.3) however the service is clearly being encouraged to progress as swiftly as possible, and there is a clear indication that place based planning will increasingly supplement individual organisational plans in future. Local leaders are encouraged to come together to develop a shared plan. However where local areas are not able to develop a plan, NHS England and NHS Improvement will be more hands on than at present in seeking and securing remedies (p.4). Access to future transformation funding For the first time, local NHS planning will become the application process for additional national funding through the sustainability and transformation fund. This protected funding is for initiatives including the spread of new care models, primary care access and infrastructure, technology roll-out and clinical priorities such as diabetes, learning disability, cancer and mental health. Many of these funding streams will form part of the recently announced Sustainability and Transformation Fund (STF) however for 2016/17 separate processes will continue to operate to allocate any additional funds in a timely way. The guidance states that the most compelling and credible sustainability and transformation plans will secure the earliest funding (p.5). In releasing funding for STPs, NHS England will consider: The quality of plans, scale of ambition, track record of delivery, evidence of learning from others Reach and quality of the engagement process with partners and the community Strength and unity of local partners and governance Their confidence that implementation actions will be delivered as intended, underpinned by governance and capability. Content of STPs The STPs are expected to cover all areas of CCG and NHS England commissioned activity including specialised services where the planning will be led by ten collaborative commissioning hubs; primary medical care; and better integration with local authority services including prevention, social care and reflecting health and wellbeing strategies. NHS organisations are also reminded that they will need to consider a system wide approach to finance and sustainability within their STP. Annex 1 of the Planning Guidance document sets out a list of national challenges to be considered within the STP and which may give an early sense of what is needed to gain sign-off and attract additional NHS Providers ON THE DAY BRIEFING Page 2
investment (p.17). Members will wish to familiarise themselves with Annex 1 of the Planning Guidance so we have not reproduced the detail in this briefing, however the prompts are structured around the three gaps of health inequality, care and quality and funding identified in the five year forward view. Agreeing transformation footprints Local health and care systems are asked to consider their planning footprint and make proposals to NHS England and NHS Improvement by 29 January 2016. These footprints should be locally defined, but will require national agreement. They should be based on natural communities, existing working relationships, patient flows and take account of the scale needed to deliver the services, transformation and public health programmes required. The sector is encouraged to use existing place-based governance arrangements. There is an expectation that hose within the success regime or involved in devolution bids will use those geographies as their STP footprint. Further guidance Further guidance on the STP process will be issued by the ALBs in January, along with new support and engagement events. Providers are also invited to volunteer to work with NHS England to develop exemplar, fast-tracked plans and to provide early reactions on the STP process to: england.fiveyearview@nhs.net with the subject title STP feedback. NHS Providers will of course continue to feedback and seek to influence the planning process on your behalf, and we would equally welcome your feedback. National must do s for 2016/17 NHS foundation trusts and trusts are required to submit one year operational plans for 2016/17. One year plans must be submitted earlier than STPs but the one year plan should reflect the emerging STPs. In addition to a dedicated section on organisational planning for 2016/17 (see below), the planning guidance articulates nine must do s for the year ahead (please see the document for the full text, p.8): 1. Develop a high quality and agreed STP and subsequently deliver agreed milestones in 2016/17 2. Return the system to aggregate financial balance, including NHS providers engaging with Lord Carter s productivity work programme, and complying with agency rules, and CCGs delivering savings by tackling unwarranted variation in demand through implementing the RightCare programme in every locality 3. Developing and implementing a local plan to address the sustainability and quality of general practice including workforce and workload issues 4. Getting back on track with access standards for A&E and ambulance waits (95% patients wait no more than four hours in A&E and that ambulances respond to 75% of Category A calls within eight minutes) 5. Improvement and maintenance of NHS Constitution standards for referral to treatment (more than 92% patients on non emergency pathways wait no more than 18 weeks from referral to treatment) including offering patient choice NHS Providers ON THE DAY BRIEFING Page 3
6. Deliver Constitutional standards on cancer care, including the 62 day cancer waiting standard and the constitutional two week and 31 day cancer standards, making progress in earlier diagnosis and improving one year survival rates 7. Achieve and maintain the two new mental health access standards (more than 50% people experiencing a first episode of psychosis will commence treatment with a NICE approved package within two weeks of referral; 75% referrals to IAPT will be treated within six weeks and 95% within 18 weeks). Continue to meet dementia diagnosis targets 8. Deliver actions in local plans to transform care for people with learning disabilities including enhanced community provision, reducing inpatient capacity and rolling out care and treatment reviews 9. Develop and implement an affordable plan to make improvements in quality particularly for organisations in special measures. In addition providers are required to participate in the annual publication of avoidable mortality rates by individual trust. In addition, this section of the planning guidance document draws particular attention to: The delivery of seven day services: notably the ambition that by March 2017, 25% of the population will have access to acute hospital services that comply with four priority clinical standards every day, and that 20% of the population will have enhanced access to primary care. The document articulates three challenges with regard to implementing seven day working: reducing excess deaths at the weekend; improving access to out of hours care; and increasing capacity within primary care to improve access to services at weekends and in the evenings The document also articulates an expectation that the development of new care models will feature prominently within STPs (p.9) In addition to existing approaches, two new approaches will be trialled with volunteers in 2016/17 which are: - Secondary mental health providers managing care budgets for tertiary mental health services; - The reinvention of the acute medical model in small district hospitals. We will be working with NHS England and NHS Improvement to seek more information about these two approaches as a priority. If you are interested to volunteer to take part as a trust, you are invited to contact NHS England by 29 January at: england.fiveyearview@nhs.net Organisational operational plans 2016/17 Local leaders are asked to run a shared and open-book operational planning process for 2016/17 (p.10) covering activity, capacity, finance and 2016/17 deliverables emerging from the STP. Commissioner and provider plans for 2016/17 will need to be agreed by NHS England and NHS Improvement based on contracts, signed by March 2016. Further detail will be provided in a technical appendix to be published in early January, however, the 2016/17 Operational Plan should be regarded as year one of the five year STP and contribute to the transformation agenda. All operational plans will need to demonstrate: How to reconcile finance with activity (and where a deficit exists, how to return to balance) NHS Providers ON THE DAY BRIEFING Page 4
Planned contribution to efficiency savings Plans to deliver the must do s for 2016/17 set out above How quality and safety will be maintained and improved for patients How risks across the local health economy plans have been jointly identified and mitigated through an agreed contingency plan How the plan links with and supports local emerging STPs. A support programme is under development by the national bodies to assist in preparing robust plans for 2016/17 and beyond. Planning timetable NB: NHS England will announce the timetable for consultation and issuing of the standard contract separately to the planning guidance and a more detailed timetable will be included in the technical guidance that will accompany this document. NHS Providers ON THE DAY BRIEFING Page 5
2. THE FINANCIAL SETTLEMENT The spending review 2016/17 2020/21 On 25 November, the Comprehensive Spending Review was delivered, setting out the budget for each department over the course of this parliament 1. The Department of Health s budget will increase from 116.4bn in 2015/16 to 133.1bn in 2020/21, an average annual increase of 0.8%. NHS England s budget will increase from 101.3bn in 2015/16 to 119.9bn in 2020/2, an average annual increase of 1.5% (table 1). TABLE 1: DEPARTMENT OF HEALTH AND NHS ENGLAND TOTAL DEPARTMENTAL LIMITS 2016/17 2020/21 Year Department of Health NHS England Remaining DH budget Budget ( bn) Increase in real terms (%) Budget ( bn) 2016/17 120.4 1.8% 106.8 2017/18 123.5 0.8% 110.2 2018/19 126.1 0.2% 112.7 2019/20 128.9 0.1% 115.8 2020/21 133.1 1.0% 119.9 Real term increase ( bn) 3.8 1.5 0.5 0.9 1.7 Increase in real terms (%) 3.6% 1.4% 0.4% 0.6% 1.4% Budget ( bn) Increase in real terms (%) 13.7 10.7% 13.4 3.9% 13.4 1.4% 13.1 4.3% 13.1 2.1% Av annual change 0.8% 1.5% 4.6% Total change 3.9% 7.5% 20.8% Local authority allocations The Department for Communities and Local Government (DCLG) has announced the provisions Local Government Financial Settlement for 2016/17 and indicative figures up to 2019/20. The department suggests that there will be an extra 3.5bn for adult social care in this parliament through a combination of the new 2% social care precept which would generate up to 2 billion if every council were to levy this and the Better Care Fund. NHS England commissioning allocations and efficiency from 2016/17 NHS England s budget will be increasing from 106.8bn in 2016/17 to 119.9bn in 2020/21. The approach for distribution of funding between NHS commissioning streams has been based on a number of factors including: o Predictability to support long-term planning. Firm three year allocations have been set for CCGs, followed by two indicative years. CCG allocations will rise by 3.4% in 2016/17 and no CCG will be more than 5% below its target funding level. The real terms element of 1 For a detailed analysis of the Spending Review, please see our on the day briefing: https://www.nhsproviders.org/media/1517/on-the-daybriefing-comprehensive-spending-review-final.pdf NHS Providers ON THE DAY BRIEFING Page 6
growth in CCG allocations for 2017/18 onwards will be contingent on the development and sign-off of STPs during 2016/17 o Place-based planning. Allocations for CCG-commissioned spend, primary care spend and specialised commissioning spend will be published at the same time. NHS England will in principle support proposals from groups of CCGs who agree to accelerated cross-area pace of change policies. This will, for example, allow local health economies to redistribute funding from CCGs that are above target to neighbouring CCGs that are below target. NHS England and NHS Improvement will also explore applying a single financial control total across local commissioners and providers with a few local systems. o Setting a reasonable level of efficiency challenge for each commissioning stream Additional funding will be directed towards primary care - the allocation to primary medical care will increase by 4-5% each year, compared to 3.4% for CCG allocations Specialised services funding will increase by 7% in 2016/17, and by at least 4.5% in each subsequent year. This reflects pressures from new mandated drugs and treatments from NICE, including new drugs for Hepatitis C and Cystic Fibrosis. However, this funding increase is towards the lower end of the projected cost range for the future specialised commissioning portfolio. This suggests the specialised budget will be further pressurised in future years. As noted in the tariff section below, there will be no specialised marginal rate for 2016/17, and the introduction of new specialist top-ups and the HRG4+ currency design will be postponed to 2017/18 NHS England reasserts the commitment to parity of esteem but has not set a target percentage uplift for mental health services expenditure. CCGs must continue to increase investment in mental health services each year at a level that at least matches their overall expenditure increase. This commitment may form part of the CCG assurance process to hold commissioners to account. Additional funding for parity of esteem may be challenged in CCGs which are in cumulative deficit, or who will only receive cash terms increases in their future allocations. Providers have also noted concerns with the effectiveness of the CCG assurance process as a means for flowing appropriate funding to providers CCGs (excluding public health and specialised commissioning) will be required to deliver a cumulative 1% surplus or at least break-even for 2016/17. CCGs will also be required to hold an additional contingency of 0.5% as in previous years. CCGs with cumulative deficits are expected to use their increased allocations to improve their financial position in 2016/17, rather than funding new national policy requirements. CCGs are expected to hold 1% of their allocations as uncommitted non-recurrent expenditure at the start of the financial year. TABLE 2: NHS ENGLAND COMMISSIONING STREAM ALLOCATIONS 2016/17 2020/21 NHS Providers ON THE DAY BRIEFING Page 7
FIGURE 1: NHS FUNDING ALLOCATION FOR 2016/17 AND PERCENTAGE CHANGE FROM 2015/16 Almost 40% of NHS England s additional allocation for 2016/17 will be made up of a 2.1bn Sustainability and Transformation Fund, linked to the planning process and submission. This will consist of: o 340m for transformation which is intended to support on-going development of new care models and implementation of policy commitments in areas e.g. 7 day services, GP access, Cancer, Mental health and prevention o 1.8bn for sustainability which is to support NHS Improvement to bring the provider sector back to financial balance in year o Over the five year period, the split between sustainability and transformation requirements for local health economies will change, if the provider sector s finances improve. NHS Providers ON THE DAY BRIEFING Page 8
The detailed workings of the 1.8bn sustainability fund are still emerging and more details are expected in the January 2016 technical guidance for the planning process. o Allocation of sustainability and transformation funding The distribution of sustainability funds will be calculated on a trust by trust basis by NHS Improvement and then agreed with NHS England This sustainability funds will replace direct Department of Health funding to providers More clarity is needed on how the sustainability funds will be allocated to eligible providers, including whether the funding distribution is in part based on the mix of services a foundation trust or trust provides. More details on this are expected in the technical guidance. This week, we ran a poll for members asking how this funding should be allocated 2 : 35% thought it should be allocated on the basis of turnover seen to be the most objective way of allocating funds; 29% to trusts on the size of their deficit/deficit as a proportion of turnover (with caveats that this could disincentivise providers with better financial positions); 24% to providers according to the type of services they provider and 11% would allocate to commissioners for them to allocate funding to providers. o Accessing funding It is likely, but not confirmed, that the sustainability funding will have to pass through commissioners. If it does pass through commissioners, rather than being directly administered by NHS Improvement, there will be additional processes in place to assure that this funding is reaching NHS foundation trusts and trusts in a timely and effective manner Sustainability funds will be released on a quarterly basis to foundation trusts and trusts, based on achievement of three recovery milestones: 1. Deficit reduction trusts will be expected to agree with NHS Improvement how they will break even in a reasonable timeframe. This will include agreeing a control total for their 2016/17 budget. The deficit reduction plan will be expected to include a reporting and delivery plan for how the trust will meet the savings outlined by Lord Carter as part of his review into NHS productivity, and delivering of reductions in agency spending. 2. Delivery of constitutional access standards 3. Progress on transformation, as demonstrated through the collaborative STP process noted above. The sustainability funding is linked to very strict conditions for providers, and we have urged the regulators to be proportionate and realistic in doing this. Meeting 2 Poll based on sample size of 54 NHS Providers ON THE DAY BRIEFING Page 9
many of the conditions above will require cross local health economy working, rather than being solely in the gift of individual providers to achieve The approach of quarterly instalments of funding based on meeting conditions implies a different approach to contract performance management for 2016/17. The planning guidance notes that providers who are eligible for sustainability and transformation funding in 2016/17 will not incur penalties as well as losing access to funding a single penalty will be imposed. This may mean that the consequence of under-performance against national standards may now be the withholding of funding, rather than a financial sanction or penalty deduction against base funding/payment agreed for the year. It is unclear whether this approach will have wider implications for how providers and local commissioners manage contracting arrangements for 2016/17, and further information is expected in the technical guidance. Update on the national tariff We are expecting the statutory consultation to be published between January-February. The emerging proposals for consultation are set out in Additional information on 2016/17 National Tariff published on 22 December: HRG 4+ postponed to 2017/18. o HRG4+is the new currency design proposed for the admitted patient care national tariff. It is assumed that this currency design will more accurately reflect the complexity of the work providers undertake. o Monitor and NHS England have decided to postpone the introduction of HRG4+ to 2017/18 to provide more stability for providers and maintain a focus on returning to provider sector to financial balance over 2016/17. o In our discussions with Monitor and NHS England over the past months we have recognised the need for support and stability during this period of financial challenge. We have noted it would have a potentially destabilising effect on some providers if the national price-setters simultaneously retained the marginal rate for specialised services, introduced HRG4+, and significantly changed specialist top-ups in 2016/17. o Given the widespread support across our members for HRG4+ we have asked the price-setters to make a clear commitment to its introduction, and to set out a clearer and more collaborative approach to implementation that ensures the full impact of implementing HRG4+ is sufficiently modelled, understood and tested with NHS foundation trusts and trusts. We will be working with Monitor and NHS England over the coming months to support the successful introduction of HRG4+. A headline net adjustment to prices of +1.1% for 2016/17 (with CNST adjustments in addition to this). Based on: o 2% efficiency factor for 2016/17. Though the planning guidance notes (paragraph 39) that this efficiency factor is predicated on the provider meeting a deficit position of 1.8bn at the end of NHS Providers ON THE DAY BRIEFING Page 10
2015/16. Any further deterioration of this position would require new efficiency requirements to meet the control totals set by NHS Improvement o 3.1% cost uplift (including a one-off adjustment for the effect of changes to pensions). We understand the difference between this and the 3.6% cost uplift suggested in earlier economic assumptions relates primarily to revisions by the Office of Budgetary Responsibility of public pay pressure o CNST it is expected that clinical negligence scheme for trusts (CNST) contributions will increase by 17% for 2016/17. Prices in specific sub-chapters of HRGs will be adjusted to reflect this. On average, the CNST uplift will be equivalent to a 0.7% uplift on national prices. National Business Rules o The specialised service marginal rate is being suspended from 2016/17 from national price contracts o The marginal rate for emergency admissions is retained at the 70% level agreed for providers on the enhanced tariff option (ETO) o No significant changes to the market forces factor (MFF) The significant proposed changes to specialist top ups for 2016/17 (based on the new Prescribed Specialised Services methodology) will be delayed until 2017/18 Draft prices have been published alongside the planning guidance, in advance of the statutory consultation notice in order to support negotiations between providers and commissioners. 3. THE MANDATE On 17 December, the Department of Health (DH) published the government s mandate to NHS England for 16/17, the key document against which NHS England is held to account. This year the objectives in the mandate are underpinned by goals for 2020 and deliverables for 16/17. The objectives in the mandate are reflected in greater detail within the planning guidance however members may wish to familiarise themselves with the information on NHS England s funding (p.11), and seven day services which is given considerable prominence in the document and is a priority for the secretary of state. The Mandate puts forward seven objectives (our additions are in italics): 1. Through better commissioning, improve local and national health outcomes, particularly by addressing poor outcomes and inequalities including implementing the new CCG assessment framework 2. To help create the safest, highest quality health and care service including delivering seven day services against four clinical standards in relevant specialties; a reduction in avoidable deaths for all trusts; an increase in providers achieving positive CQC ratings; improvements in maternity care; a new culture of learning; a sustained focus on patient experience; delivering the recommendations of the cancer taskforce 3. To balance the NHS budget and improve efficiency and productivity including working with NHS Improvement to ensure the NHS balances its budget; securing 1.3bn through implementing the Carter recommendations (in 16/17); reducing agency spend; rolling out rightcare methodology to NHS Providers ON THE DAY BRIEFING Page 11
reduce variation in outcomes; supporting primary care; supporting the goal of releasing 2bn from estates and surplus land 4. To lead a step change in the NHS in preventing ill health and supporting people to live healthier lives including a reduction in child obesity; a focus on diabetes; and dementia care 5. To maintain and improve performance against core standards including a focus on national targets for A&E, ambulance response times and referral to treatment times 6. To improve out-of-hospital care including improved access to routine GP appointments at weekends; reduction in emergency admissions; implementation of the better care fund and progress in integrating health and social care; 5,000 extra doctors in general practice; and a focus on improving parity of esteem for mental health, learning disability and autism services 7. To support research, innovation and growth including improving the UK s international ranking for health research, delivering commitments on genome research; supporting more personalised services using technologies; improving data standards and security; reducing the disability employment gap; improving the health and wellbeing of the NHS workforce. 4. WHAT TO LOOK OUT FOR IN THE NEW YEAR We are waiting for the following documents still to be published in the New Year A technical appendix to the Planning Guidance which will provide more detail on the process, due in January 2016 with a series of roadmaps providing more detail for CCGs, GPs and providers respectively CCG allocations, due to be published in January 2016 Draft standard contract, due to be published in January 2016 CQUIN guidance, expected in January 2016 The national tariff statutory consultation notice expected January to February 2016 The development of a programme from the ALBs to support this year s planning process. NHS Providers ON THE DAY BRIEFING Page 12
NHS PROVIDERS VIEW We are conscious that the new approach to planning will have significant implications for our members, both as we approach 2016/17 and with regard to longer term planning with local health economy partners. We will be working with NHS Improvement and NHS England closely to understand the full detail behind these proposals, some of which require further information. We are keen to support members to make the most of the new approaches to planning, and the support available, and to reflect back your concerns and experiences to enable the process to run as smoothly as possible. Please share your feedback with: phillippa.hentsch@nhsproviders.org or siva.anandaciva@nhsproviders.org Today we issued the following press release: Welcome news, but a huge and complex task ahead: NHS Providers response to the planning guidance Responding to the publication of the NHS planning guidance, Chris Hopson, chief executive of NHS Providers, said: Today s planning guidance contains three welcome announcements for NHS trusts and foundation trusts. A net 1.1% increase to the 2016/17 tariff - the price paid to NHS providers for the work they do compared to last year s net reduction of 1.9%. Access to a 1.8 billion sustainability fund to help providers turn this year s projected 2.5 billion deficit into a surplus. And a recognition that local health and care systems need three year plans to create a sustainable future. This turns a previously impossible looking 2016/17 task into one that looks just about deliverable, albeit extremely challenging. But this extra early investment is only temporary and comes with conditions attached. Trusts and foundation trusts will have a year to turn around their finances, develop long term efficiency savings plans and identify the long term changes their local health and care system need. All this must be delivered whilst continuing to deliver outstanding care to a million patients every 36 hours. Restoring short term stability must lead to long term sustainability. NHS providers will need significant support to deliver this sizeable and complex task. The pragmatism of today s guidance and November s spending review settlement are important steps forward. However there are still major hurdles to overcome: finding solutions to longer term problems such as increasing the proportion of GDP we invest in healthcare; ensuring rapid and widespread development of new and integrated care models; and delivering the move to seven day services. NHS Providers ON THE DAY BRIEFING Page 13