Shepherd (On Behalf of 999 Call NHS), R (on the application of) v National Health Service Commissioning Board

The statutory pricing regime permits flexible arrangements for NHS health care services. A service may include facilities, resources, bundled treatments and services provided for a defined population. The legislation does not require a separate, visible price for every individual treatment episode.

A whole-population annual payment may therefore lawfully remunerate specified and non-specified services, provided the arrangement operates in accordance with the national tariff and any applicable rules. Variations under section 116(2) are distinct from protective price modifications under sections 124 and 125. Policy objections about incentives or price competition do not determine statutory legality.

The claimant challenged NHS England’s draft Accountable Care Organisation contract. The contract proposed a Whole Population Annual Payment, calculated by reference to the population served and intended services, rather than by reference to the number and type of treatments actually delivered during the payment year.

Permission was granted on the question whether the proposed payment mechanism was permitted by the Health & Social Care Act 2012. The claimant argued that the legislation required payment for particular services at national tariff prices or under national tariff rules. The defendant and Monitor contended that the statutory scheme permitted bundled services and population-based pricing.

1. The claim was dismissed. The court considered the issue to be one of statutory construction. The WPAP was lawful if capable of operating consistently with the statutory regime.
2. “Health care services” are not confined to individual treatment episodes. They include services and facilities arranged under sections 3 and 3A of the National Health Service Act 2006, including the provision or use of premises, goods, materials, vehicles, plant and apparatus. The statutory concept may therefore include providing an A&E department or ambulance transport as well as particular treatments.
3. The statutory scheme permits services to be bundled, specified by components, or included in groups of standardised services. The national tariff may provide different methods of specification and remuneration, including prices varied by circumstances, provider type and other relevant factors.
4. Sections 115(1) and 115(2) do not impose an independent statutory debt owed by a CCG to a provider. The obligation to pay arises from the NHS contract. The legislation regulates and shapes the contractual pricing regime.
5. The WPAP did not breach section 115. The statute does not require a price fixed in advance for each individual treatment episode. A payment calculated by reference to population, expected capacity and services to be provided may constitute the price payable under the ACO contract. The services may be specified, non-specified, or a mixture of both.
6. Variations under section 116(2) are separate from modifications under sections 124 and 125. Section 116(2) concerns ordinary commercial variations, whereas sections 124 and 125 protect providers against uneconomic provision. A section 116(2) variation requires a pre-existing pricing regime capable of being varied.
7. The complaint that the WPAP was not demand-led and might encourage price competition was political rather than legal. The court found no statutory unlawfulness. The claimant’s costs liability was capped at £25,000.