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Strategic options for costing

Published on: 19 June 2012

This independent report recommends that Monitor should collect patient-level cost data from providers that can meet a mandated cost allocation methodology and assurance requirements. Monitor and HFMA held a joint webinar on 24 July to update stakeholders on the key recommendations in the Strategic Options for Costing report. The whole session can be viewed again here.

On 3 September 2012 we published a summary of stakeholder responses to the report.

Download - Strategic options for costing - (960.25 KB)

Download - Summary of stakeholder responses to the Strategic Options for Costing report (510.38 KB)

Under Payment by Results (PbR), the National Tariff is used to reimburse acute providers for certain NHS-funded services. In 2011, £28bn worth of NHS-funded secondary care was paid for through PbR. The National Tariff is based on Reference Costs – the average reported cost of a service across NHS providers. The independent report An Evaluation of the reimbursement system for NHS-funded care found that the information underpinning reimbursement (including Reference Costs) needed significant improvement.

Monitor commissioned PwC to identify and assess options to improve the cost data from acute providers that is used to set prices. PwC was then asked to make recommendations, based on this assessment.

PwC has consulted widely with industry stakeholders – including providers and public bodies – and worked closely with a health costing academic. They have drawn on existing evidence and insights from health costing overseas. In coming to its recommendations, PwC assessed the options against five criteria:

  1. Data quality
  2. Representative data
  3. Timeliness of tariff process
  4. Burden on providers
  5. Additional use of data by providers

Improving data quality was the foremost objective of PwC's assessment.

Thanks for your feedback

This report, which was published on 19 June 2012, makes a number of recommendations, and will inform Monitor's policy development on requirements on providers for the collection and submission of costing data. Monitor intends to develop and publish a costing strategy based on this later in the summer.

We asked stakeholders to comment in particular on the recommendations made by PwC, the suggested implementation timescales, and the applicability of the recommendations to non-acute care settings. A summary report of these responses is now available here.

Thank you to everyone who submitted a response.

You can sign up to receive emails when we publish information on pricing, and on our proposed new role in general, here on our website.

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