Shepherd (On Behalf of 999 Call NHS), R (on the application of) v National Health Service Commissioning Board, Court of Appeal - Administrative Court, May 15, 2018, [2018] EWHC 1067 (Admin)

Resolution Date:May 15, 2018
Issuing Organization:Administrative Court
Actores:Shepherd (On Behalf of 999 Call NHS), R (on the application of) v National Health Service Commissioning Board
 
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Case No: CO/5025/2017

Neutral Citation Number: [2018] EWHC 1067 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Hearing at Leeds Combined Court Centre,

1, Oxford Row, Leeds LS1 3BG

Judgment handed down at

Manchester Civil Justice Centre

1 Bridge Street West,

Manchester M60 9DJ

Date: 15/05/2018

Before:

THE HON MR JUSTICE KERR

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Between :

- and -

(1) NHS CALDERDALE CLINICAL COMMISSIONING GROUP

(2) MONITOR

Interested Parties

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DAVID LOCK QC and LEON GLENISTER (instructed by Leigh Day) for the Claimant

FENELLA MORRIS QC and ROSE GROGAN (instructed by DAC Beachcroft LLP) for the Defendant

FENELLA MORRIS QC and IAIN STEELE (instructed by NHS Improvement Legal Team) for the Second Interested Party

The First Interested Party did not appear and was not represented

Hearing date: 24th April 2018

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JudgmentThe Hon Mr Justice Kerr:

Introduction

  1. In August 2017, the defendant (the Board, also known as NHS England) published a draft contract setting out payment mechanisms for providers of health services, called ``Accountable Care Organisations'' (ACOs). That draft contract (the ACO contract) provides for a payment mechanism called the ``Whole Population Annual Payment'' (WPAP), which, as its name suggests, is linked to the number of people living in the area in which the ACO operates.

  2. The claimant brings the claim on behalf of a campaign group called ``999 Call for NHS'', which campaigns on behalf of NHS patients for high quality NHS services. She objects to the WPAP, broadly on the ground that it abandons the concept of payment by results and reverts to the concept of a block contracting arrangement, where providers are paid a fixed payment without reference to the quality of service they provide as measured by results.

  3. The claimant asserts that the WPAP is not just bad for the quality of service, because it is (in her phrase) ``decoupled from the number of patients who are treated or the complexity of the needs of those patients'', but also unlawful under the applicable statutory provisions. The Board, supported by the second interested party (Monitor), the statutory regulator, disagrees and submits that use of the WPAP is lawful.

  4. The first interested party did not appear at the hearing. It is a ``Clinical Commissioning Group'' (CCG) with the function of commissioning NHS services in the Calderdale area, where the claimant lives. It filed an acknowledgment of service supporting the Board's position but indicating that it did not intend to make detailed submissions of its own.

  5. The claimant seeks a declaration that the WPAP set out in the ACO contract would, if included in an NHS commissioning contract, be unlawful and that the legislation does not permit such a payment mechanism. She also seeks an order quashing the decision to publish the ACO contract and an order restraining the Board from permitting CCGs to use the WPAP in any commissioning contract.

  6. On 21 December 2017, Males J granted the claimant permission to proceed on one ground only: the issue of statutory construction which I have to decide, namely (in the words of Males J) ``whether the proposed WPAP is a scheme of payment for NHS services which is permitted under the Health & Social Care Act 2012''.

    Background

  7. The relevant history of NHS funding was not controversial and was provided in a helpful summary annexed to the joint skeleton argument of the Board and Monitor, not disputed by the claimant. I gratefully draw on that summary.

  8. Until the passing of the National Health Service and Community Care Act 1990, health authorities received funding allocations from the Secretary of State, from which they funded NHS services. The 1990 Act paved the way for the introduction of an internal market for NHS services, commissioned by health authorities from providers, which were primarily NHS trusts.

  9. The providers were normally paid under ``block contract'' arrangements whereby a single contractual payment was made in return for provision of specified services within a particular financial year. This led to a perception that providers lacked incentives to improve performance. From about 2000 onwards, NHS policy documents introduced the concept of ``payment by results'' (PbR).

  10. The purpose of PbR was to meet the criticism that block contract payments had led to competition based on price alone rather than quality, and that price competition was perceived as not working because the provider is paid the same for a given NHS service irrespective of the quality of the service. Instead, a proposal was developed in 2002 to establish ``Healthcare Resource Groups'' (HRGs).

  11. HRGs were not groups of people as the uninitiated might think, but ``[c]linically meaningful groups of diagnoses and interventions that consume similar levels of NHS resources'' (according to a helpful glossary provided to me). During the hearing, examples of HRGs were mentioned, such as a hip replacement or other standard operation or procedure.

  12. The identification of HRGs was intended to lead to the establishment of a standard tariff for particular forms of diagnosis and treatment, regardless of the provider; rather than a payment whose amount depended on which provider was providing the service and in what circumstances.

  13. PbR was implemented nationally with national tariffs for 15 identified HRGs in the 2003-4 financial year. It developed apace from then on; by 2007-8, the ``national tariff'', as it became known, covered most acute inpatient admissions, outpatient attendances and accident and emergency (A&E) attendances. The policy objective was eventually to eliminate the old block contract arrangements and replace them with PbR arrangements.

  14. A 2010 NHS White Paper called Equality and excellence: Liberating the NHS included proposals for further development of PbR and for introducing a statutory system of price regulation overseen by Monitor, which was to become the statutory regulator. The result was the bill introduced in January 2011, which became the Health and Social Care Act 2012 (the 2012 Act).

  15. During the passage of the bill through parliament, many statements were made to the effect that price competition does not work and that competition between providers should be on the basis of the quality of service provided and not its price. I was referred to some such statements, which I looked at de bene esse.

  16. For example, the minister responsible for the bill in the House of Lords, Earl Howe, stated during a debate on amendments to the bill on 6 March 2012:

    ``To put matters beyond doubt, the national tariff would be a fixed price, with any competition based on quality and choice, not price. We listened to representations made to us about this, and we amended the Bill to make clear that the tariff would not be based on a maximum price. Of course I understand the points made very ably ... by the noble Lord, Lord Davies, and the noble Baroness, Lady Murphy. We all want to see best value for money for taxpayers in the way that services are provided, but our judgment was that .... that is not the right way to go. Where services were not covered under the national tariff, there would be rules to govern those prices locally. Prices and rules within the national tariff would be legally binding and independently enforceable by Monitor to eradicate any abuses. ...

    ... The purpose of the tariff is to ensure that providers are reimbursed fairly for the services they provide and to allow competition to be based on quality and not price. ...''

  17. That passage broadly described the intended effect of what became the provisions of the 2012 Act debated before me. It clearly indicated the broad intent and purpose of the reforms introduced by the 2012 Act; but I do not think that or any of the other statements shown to me from the debates in the two Houses came near to meeting the Pepper v. Hart criteria for admissibility as an aid to statutory construction.

    Law

  18. The 2012 Act added a new section 1A to the National Health Service Act 2006 (the 2006 Act). It required the Secretary of State to exercise his functions in relation to the health service ``with a view to seeking continuous improvement in the quality of services ...'' (section 1A(1) of the 2006 Act); and in discharging that duty, to ``act with a view to securing continuous improvement of outcomes that are achieved from the provision of services''.

  19. The 2012 Act also modified section 3 of the 2006 Act. A CCG must arrange, to the extent it considers necessary to meet the reasonable requirements of persons for whom it has responsibility, for provision of hospital and other accommodation and medical, dental, ophthalmic, nursing and ambulance services; other ``services or facilities'' for care of pregnant and breast feeding women and for young children; and such other ``services or facilities as are required for the diagnosis and treatment of illness'' (section 3(1)).

  20. A new section 3A of the 2006 Act, added by the 2012 Act, conferred a power on CCGs to ``arrange for the provision of such services or facilities as it considers appropriate for the purposes of the health service that relate to securing improvement ... in the physical and mental health of the persons for whom it has responsibility ...'' (section 3A(1)(a)), or ``in the prevention, diagnosis and treatment of illness in those persons'' (section 3A(1)(b)).

  21. In section 275(1) of the 2006 Act, as amended, the definitions there set out include one of ``facilities'', which ``includes the provision of (or the use of) premises, goods, materials, vehicles, plant or apparatus''. The word ``facilities'' bears the same meaning where it appears in Part 3 of the 2012 Act, to which I am coming soon; see section 150(1) of that Act.

  22. The Board, more commonly known as NHS England, was created by section 9 of the 2012 Act, supplemented by a new Schedule A1 inserted into the 2006 Act. It has the function of ``arranging for the...

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