Mastek Blog

Will a Two-Year Tariff Benefit the NHS?

13-Sep-2016 05:11:24 / by Mike Pemberton

Mike Pemberton

During the first stage of the consultation on the National Payment Tariff, NHS England and NHS Improvement have proposed moving towards a new two-year payment tariff to reassure and steady the sector in the wake of budgetary uncertainty.

NHS Two-Year Tariff

The proposal is to set a single tariff that will be applied for the next two years. The duration that a tariff is valid was proposed to be multi-year in the 5 Year Forward View published in October 2014. This consultation is the first to propose a 2 year Tariff to be applied in 2017/18 and 2018/19.

Two main challenges exist:


The proposal raises questions of credibility, as the previous two annual tariffs set by NHSI and NHSE have either been rejected by the service providers (2015/16) or they have simply rolled over the previous year (2016/17) tariff. This tariff will be the first constructed by NHSI and NHSE. How confident will Providers be that the new tariff, which will be based on HRG4+ provide a revenue stream that will support providers in avoiding deficit at year end?


The timing is also questionable since the new two-year tariff will start in April 2017 and end in March 2019 during which time the largest fiscal upheaval GB will have endured, Brexit, will have occurred. The uncertainty of Brexit is already being felt in the commercial world and its effect on staffing within the NHS is unknown.

The proposed two-year tariff should be applied to previous year’s activities to formulate how each Trust’s revenue stream will change. This will require re-grouping for HRG4+ and re-working all tariff logic.

A major downside to a two year-tariff is the inability to change or add new models of care payments which may have a detrimental effect on the development of new care pathways. This will have to be balanced against the certainty of revenue across two years to allow Trusts to plan better.

What are your thoughts on this two-year tariff? Share your feedback in the comments section below.

Topics: NHS, Healthcare

Mike Pemberton

Written by Mike Pemberton

Mike is an Enterprise Architect and Subject Matter Expert in NHS Payment solutions at Mastek. He is the technical lead for NHS projects such as PBR, Lord Carter Review and various Analytics solutions.

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