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Health sector regulator Monitor and NHS England are working together to reform the way NHS services are paid for.

Hospitals are currently paid through the Payment by Results system, which has been in operation for nearly a decade and has delivered benefits. However feedback from the health sector is that the current system is not sufficiently patient focused, not always based on good quality information, and can act as a barrier to delivering integrated care.

While NHS medical services are free at the point of use for the patient, the system is taxpayer funded. It must deliver more and better health care for the foreseeable future within the level of funding available.

The transfer of responsibility for the design and oversight of the NHS payment system to Monitor and NHS England offers a good opportunity to look at how the system works today and how it can develop in the future.

The two organisations are publishing a joint discussion paper, which asks for views on the future of the payment system, and a call for evidence on the way hospitals are reimbursed for some emergency admissions. The discussion paper also sets out possible improvements and presents early thinking on setting objectives and designing the NHS payment system.

Adrian Masters, Managing Director of Sector Development, Monitor said:  “We believe the way NHS services are paid for can help deliver the best possible care for patients, for example by encouraging more integrated care, as well as helping the NHS deliver better value for the taxpayer.

"This is an opportunity for us to make a real difference to NHS services and we want to work with the sector to achieve this."

Paul Baumann, Chief Financial Officer, NHS England said: “We are keen to use this opportunity to develop and design a new payment system that does more for patients. We are asking people to contribute by answering the four questions set out in the document.

"Changes to this system will not happen overnight, and it is important we get this right. As part of this engagement we are gathering evidence to support short and longer term improvements to the payment system."

There will be minimal change to the 2014/15 National Tariff in order to provide continuity and help providers with their planning. However in the long term Monitor and NHS England are looking at more widespread changes from 2015/16 onwards.

Notes to editors

• For media enquiries please contact Emma Shepherd, Media Relations Manager, on 020 7340 2438 or (emma.shepherd@monitor.gov.uk) or the NHS England Media team on 07768 901 293 (nhscb.media@nhs.uk).
• Monitor is the sector regulator of NHS funded health care services. Under the Health and Social Care 2012 Act its main duty is to protect and promote the interests of patients.
• The Health and Social Care Act 2012 gave Monitor and NHS England joint responsibility for the NHS payment system with NHS England specifying the services to be priced and Monitor designing and applying the methodology for pricing them.
• The two organisations will publish the prices annually in the National Tariff.
• The joint discussion paper on the payment system sets out the 2014/15 National Tariff timetable.
• A link to a summary of Monitor and NHS England’s early work on designing a comprehensive payment system for NHS services can be found here.
• Information about Monitor's role can be found here.
• Follow us on Twitter - @MonitorUpdate.