Revealed: Final(ish) shape of the NHS Provider Selection Regime

The Provider Selection Regime (PSR) has now taken a major step towards implementation as the government has published its response to a supplementary consultation on the detail of the PSR regulations. A firm date confirming when the regulations will be implemented has yet to be set, but commentators suggest it could be in place by the end of 2023. Until the new regime is in place, however, existing procurement rules still apply.

Greater assurance on PSR governance

A key output of the consultation concerns plans to increase oversight and scrutiny of procurement decisions under the PSR. DHSC and NHS England intend to establish a new independent panel, chaired by an independent person, that can review and advise on both issues relating to patient choice regulations (that will be made under new patient choice provisions inserted by the Health and Care Act 2022) and the PSR regulations. We shall have to wait for details on this, including the powers of the panel.

PSR overview

The supplementary consultation was originally launched in February 2022 to help develop the regulations for the PSR. Its arrival will be eagerly anticipated by Integrated Care Boards, NHS Trusts and independent sector healthcare providers alike as it confirms the structure of the new regime governing the commissioning of healthcare services in England. As a reminder, the legal framework establishing the PSR is set out in sections 79 and 80 of the Health and Care Act 2022.

You can read our earlier post on the supplementary consultation here and on the 2021 consultation here.

The government’s aim is for the “PSR to move away from the expectation of tendering for healthcare services in all circumstances and towards collaboration across the health and care system. This is intended to remove unnecessary tendering, remove barriers to integrating care and promote the development of stable collaborations.”

Additionally, the aim of PSR is to make it “straightforward to continue with existing arrangements for service provision where those arrangements are working well and there is no value for the patients, taxpayers and population in seeking an alternative provider.”

PSR has three routes to contract for decision-makers to consider:

  • continuing with the existing provider
  • selection of a new provider, for example for a new or changing service, where a competitive process is considered inappropriate
  • carrying out a competitive process where it is appropriate

Whichever route commissioners opt for, there are several key criteria which decision-making bodies will be bound to consider when deciding who to arrange services with. Broadly, these criteria are:

  • Quality (safety, effectiveness and experience) and innovation
  • Value
  • Integration, collaboration and service sustainability
  • Access, reducing inequalities and choice
  • Social value

Below we set out a summary of the key themes from the government response to the DHSC’s supplementary consultation.

The use of common procurement vocabulary (CPV) codes in regulations to define the scope of the PSR

a full list of the CPV codes they intend to use in regulations to define the scope of the PSR is set out in the response here. Further guidance to help decision making bodies determine whether a service is in scope of the PSR will be set out in guidance, alongside examples of services that are in scope. This will aid consistency in how the PSR is applied.

The procurement of services usually out of scope of the PSR alongside in scope services (‘mixed procurement’)

the DHSC’s intention is that the regulations will make clear that the PSR can be used to procure in scope healthcare services alongside any goods and services that are out of scope. This would only apply when the main subject matter is healthcare. Further details on provisions for mixed procurement under the PSR will be set out in the regulations and statutory guidance.

Considerable change between old and new contracts

DHSC received overall support (48% agreed or strongly agreed) for its proposal that a ‘considerable change’ should be defined as jointly a change of a set amount (£500,000 or higher) in contract value and a percentage change in contract value (25% or greater). This means that change would only be identified as considerable when both criteria are met. Therefore, decision making bodies would not be permitted to continue with the incumbent and must select a provider either by identifying the single most suitable provider or running a competitive tender.

Considerable change during the contract term

The supplementary consultation also sought views on the point at which changes during the course of the contract term were such that commissioners should return to the PSR. DHSC’s approach here will use the same figures as above but this time it’s either a change of a set amount (£500,000 or higher) or a percentage change in contract value (25% or greater).

How the PSR should be applied when decision-making bodies voluntarily establish provider lists to offer patients choice, but where these lists are limited and there is no statutory right for patients to choose

In line with recent government announcements on patient choice, there is now a renewed clarity on NHS commissioners to offer patients choice as set out in the response:

“Consistent with current patient choice rules, decision-making bodies will continue to not be able to limit the number of providers that patients can choose from where patients have a legal right to choice. Under NHS England proposals, regulations on patient choice will be strengthened by introducing a set of standard provider qualification criteria. Where a provider meets these stated criteria and wishes to be an option for patients, they must be offered the NHS standard contract by the decision-making body.”

Interestingly there is also provision for the extension of patient choice to those services where patients don't have a legal right to choice, such as community services providing audiology.

Requirements on decision-makers to ensure transparency of decisions made under the PSR

The government’s response on issues of transparency will support efforts to reduce the likelihood of legal challenge and support the opinion of the large majority (87%) of respondents who agreed with the government’s proposals here. Comments in support included:

  • Independent Healthcare Providers Network:

“IHPN strongly supports strict requirements for transparency under the new PSR, noting that the presence of provider organisations on integrated care boards heightens the risk of conflicts of interest unduly affecting contract awards thereby undermining public confidence in the regime.”

  • Voluntary, community or social enterprise provider:

“[the suggested provisions] would help to encourage transparency in decision-making processes and enable providers of services to better understand commissioner priorities and considerations in awarding contracts.”

NHS commissioners will need to publish award notices including their rationale for selecting a provider and the balance of key criteria they used. They will also need to publish annual summaries of their contracting activity ie outlining their application of the PSR.

For those that expressed concern that these proposals could lead to a requirement to publish information that is commercially sensitive, the response makes clear that the expectation is that NHS commissioners will not publish confidential or commercially sensitive information.

Next steps

Draft regulations will need to be presented to Parliament, but this will now happen after the summer recess. However, we can expect statutory guidance to follow alongside the regulations and we are told that NHS England will publish a suite of toolkit products (such as process maps and templates) to support implementation, and will hold a series of webinars on the PSR.

If you’d like to discuss any of the issues raised here, please do contact Rona McPherson or Victoria Armitage

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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