Payment by results will only work if NHS data quality improves: new Audit Commission report

This new report from the Audit Commission says that the NHS needs to improve the quality of its data if the government is to expand its Payment by Results (PbR) system.

The data for ‘non-tariff’ areas such as community services and chemotherapy was often of poor quality, and it is these areas that will be brought under the PbR umbrella under the government’s plans. This data is also currently used to inform local contracts.

Extending the PbR tariff system is a key government policy. Under their plans, most or all of the £51 billion spent on acute hospital activity, as well as wider community and health services, will be subject to a PbR tariff. Currently it covers £26 billion of acute services.

The report summarises the findings of the Commission’s annual audit of data used to underpin PbR payments. This year the Commission looked at reference costs that are used to set the tariff, and also conducted the first major review of independent sector hospitals as part of its clinical coding programme.

Here are the key recommendations for the report:

Primary care trusts should:

focus on areas identified through the commissioner arrangements reviews, and support trusts to deliver action plans outlined in local audit reports;
examine the non-tariff part of their contracts to ensure they are set on robust data, and support providers to improve the quality of costing in these areas;
ensure that local contracts with the independent sector use current PbR rules;
use the National Benchmarker to explore costs and activity to ensure the levels of activity they are commissioning are reasonable for their population, and they are receiving value for money in their local contracts;
support providers in putting into effect guidance on recording short-stay surgery and short-stay emergency admissions, managing any financial impact through a transition process; and inform new commissioning groups of the work of the assurance programme to inform clinical commissioners about the quality of acute data.

Trusts should:

carry out the action plans from all local audit reports;
ensure they review their own approach to reference costs for the key issues identified nationally, using the checklist provided;
put into effect guidance on recording short-stay admissions, managing any financial impact through a transition process with commissioners;
review, and where necessary, improve their source documentation to promote accurate coding; and use the tools available in the National Benchmarker to help improve data quality and to understand better their activity in relation to others.

Independent sector providers should:

carry out action plans from all local audit reports, focusing specifically on coding diagnoses; and understand how the more sophisticated coding required under current PbR rules will affect local contracts.

NHS Connecting for Health should:

ensure that the new guidance on coding comorbidities is applied effectively, and further updated if necessary;
work with national stakeholders to improve the quality and accessibility of guidance to the NHS on data items used for PbR; and
work with national stakeholders to develop medium and long-term plans for ensuring the existing datasets that underpin PbR (and their guidance) are fit for purpose.

The Department of Health should:

address weak areas of national reference costs guidance identified during the audit programme, including guidance on how to complete the reconciliation sheets;
undertake national work on areas of consistent error in reference costs to identify ways of improving data quality;
review the suitability of reference costs for non-tariff services to inform tariff development, and consider alternative ways of developing tariffs for these services;
review the appropriateness of using data items from non-Patient Administration Systems (non-PAS) to support payment of nationally mandated tariffs;
support the NHS in putting into effect revised guidance on short- stay admissions, focusing on managing the financial impact of any changes through local commissioning arrangements; and
work with national stakeholders to develop medium and long-term plans for ensuring the existing datasets that underpin PbR (and their guidance) are fit for purpose.

The NHS Commissioning Board, when established, and Monitor should:

ensure there are satisfactory arrangements in place to assure and improve PbR data quality under the proposed new commissioning and regulatory arrangements, including exploring how provider licensing arrangements could support this;
explore different ways of setting the tariff in areas where reference costs are weak; and
ensure that guidance on PbR data items is improved and that the responsibilities of national organisations in this area are clarified.

The Audit Commission will:

work with the Department of Health, the future NHS Commissioning Board, the NHS Information Centre and regulators to develop a new data quality framework;
work with national stakeholders to improve data definitions;
share best practice from the assurance programme; and
deliver audit programmes in 2011/12 and 2012/13.

Improving coding, costing and commissioning: annual report on the Payment by Results data assurance programme 2010/11 (PDF). Audit Commission, September 2011.