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The Provider Selection Regime: Supplementary Consultation on the Detail of Proposals for Regulations

Details

The Department of Health and Social Care (DHSC) recently published the Provider Selection Regime: supplementary consultation on the detail of the proposals for regulations. This does not repeat or reopen NHS England/Improvement’s consultation (‘the NHSEI consultation’), which we have written about previously, but instead sets out areas that would benefit from stakeholder attention to ensure that the Provider Selection Regime (PSR) regulations/guidance achieve DHSC’s aims when released.  

In terms of the timing of those regulations, and therefore the new PSR regime coming into force, the DHSC has confirmed that this will not happen, as many had expected, in line with the establishment of integrated care boards (ICBs) on 1 July 2022. Rather, the intention is to implement the PSR ‘as soon as possible’ after this time. Recent guidance indicates that the earliest technical date on which the regime could be implemented is 1 August 2022, but that ICBs should make contingency plans for it being later than this.

What is Proposed?

Overview 

The PSR will replace existing procurement rules for healthcare services and set new flexible and proportionate rules for a fit for purpose decision-making process. The aim is to move away from the expectation of competition in all circumstances and encourage flexibility to promote the interests of patients, taxpayers, and the population, and remove barriers to integration and collaboration. 

Decision-making circumstances

The process outlined by the DHSC consultation aligns with the process outlined in the NHSEI consultation, setting out three key circumstances where procurement decisions will need to be made: 

  1. Existing arrangements are to continue – where the incumbent is the only viable provider due to the nature of the particular services, or the incumbent is doing a good job (as judged against the key criteria) and the service is not changing.
  2. A new most suitable provider is needed for new or considerably changed arrangements – this might be where the incumbent no longer wants to continue the service, or where the decision-making body wants to use a different provider which it can identify without a competitive process.
  3. Competitive procurement is required – this may be because a single provider cannot be identified without a competitive process, or if the decision-making body wants to test the market.

Key criteria

As per the decision-making circumstances, this aligns broadly with the NHSEI consultation, specifically that certain criteria should be considered in the decision-making or used to justify a decision, by the decision-making bodies, and a record must be kept. 

The criteria to be considered in making the decision are: 

  • Quality and innovation
  • Value
  • Integration, collaboration, service sustainability
  • Access, inequalities, disparities, and choice
  • Social value

Scrutiny and standstill

There will be a standstill period following a decision to award a contract or large contract variation to allow providers to make representations to the decision-makers, to discuss concerns/issues, and for decision-makers to respond to those representations. 

Scope

Primary legislation and regulations will set out three criteria which must apply for an arrangement to be in scope for the PSR: 

  1. It must be for the purposes of a ‘health service’, as defined in section 1(1) of the National Health Service Act 2006
  2. It must be a healthcare service that provides directly for individuals or has an outcome directly for individuals such as a diagnostic service, but it is intended to exclude ‘healthcare adjacent’ services, for example hospital catering and cleaning contracts
  3. It must be arranged by: 
    a) ICBs or NHSE commissioning healthcare services for the purposes of the health service (NHS or public health)
    b) Local / combined authorities arranging healthcare services as a part of their public health functions or as part of section 75 partnership arrangements with the NHS
    c) NHS trusts / foundation trusts arranging the provision of healthcare services by other providers. 

Mixed procurements

This is a key area in which the DHSC consultation builds on responses to the NHSEI consultation. The regulations will define healthcare services as being the key scope of the new regime, but also permit its application where the primary aim is to deliver a healthcare service, but a single contract may be awarded which also includes additional elements, the example being a vaccination service which requires a substantial administrative input. 

Also included in the proposals are social care services which, while excluded from the scope of the regime on a standalone basis, might need to be included with healthcare services to support collaborative / integrated practices and to ensure improved outcomes. Examples given include NHS continuing healthcare, BCF packages, discharge to assess, mental health aftercare and prison healthcare.

Threshold for Considerable Change

DHSC proposes a well-formulated and robust threshold for what will constitute ‘a considerable change’ to differentiate between contracts which would end naturally / roll over, and those where, a comparison will need to be made between alternative providers either with or without competitive tendering. This is intended to ensure that the PSR is applied in the best interests of patients, taxpayers, and the population. 

To determine ‘considerable change’ DHSC proposes the decision maker assesses all variations to the service since the last contract was awarded together with any proposed new services if the contract is re-awarded. To avoid capturing relatively small changes to large contracts / missing out on considerable changes to small contracts it is proposed that some changes are expressly included in the regulations which would not be deemed to be considerable. 

Likewise, under the proposals, any change which ‘materially alters the nature of the contract’ would be deemed considerable, as would changes meeting all the following conditions: 

  • initiated by a decision-making body
  • a cumulative change in the lifetime value of the contract above £500,000
  • the cumulative change in the lifetime value of the contract is above 25% of the original lifetime value. 

In respect of contract variation during the lifetime of the contract, DHSC proposes that regulations set out clearly when the re-application of the PSR is required to ensure that arrangements remain in the best interests of patients, the taxpayer and the population.

Patient Choice

In line with the Health and Care Act, DHSC recognises the need to safeguard patients’ rights – specifically for choice of provider for elective treatments, through use of a provider list. It will not be possible for a decision-making body to limit the number of providers to deliver an elective service under an Any Qualified Provider list – if the patient has a statutory right to choose a provider. 

DHSC agreed with the NHSEI proposal that a list of stated service criteria should be introduced into the regulations on patient choice adding that where a provider meets the criteria, they must be offered an NHS standard contract, by the decision-making body, and on the electronic referral system. 

The decision-making bodies will also have the power to voluntarily establish additional lists of providers for non-legal right to choose services (ie other than first outpatient appoint with consultant, member of their team, or mental healthcare professional).

Transparency

The main aim of transparency arrangements in the PSR is to ensure decision outcomes are made public and involve sufficient scrutiny. The DHSC consultation confirmed steps which will be required to ensure this, dependent on the decision-making circumstance. These include: 

  • Publishing details of the intended approach in advance
  • Publishing a notice for competitive tender
  • Recording the decision-making process and rationale internally
  • Responding to unsuccessful bidders
  • Publishing an intention to award notice
  • Standstill / resolution periods
  • Publishing the award confirmation

In addition, decision-making bodies must publish an annual summary that outlines their use of the PSR. 

Impact of the changes

The PSR is intended to give ICBs and others commissioning healthcare services much greater freedoms to make commissioning decisions which affect their own geographical footprint without always having simply to put every service out to competition (something which it is fair to say currently doesn’t always happen in any event). However, as is always the case with this kind of regulation, the devil will be in the detail around what hurdles commissioners need to navigate in terms of decision making process and what risks they face in terms of possible legal challenges. A keen eye will be kept on how these proposals develop – and we will keep you informed as more is made public as a result of this long-running consultation.

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