On 13 July, the government published a further consultation response in respect of the NHS Provider Selection Regime (PSR). At the moment, we expect the PSR to come into force later in 2023.

Read our previous insight on the PSR here.

The PSR will cover the procurement of healthcare services which are delivered to patients and service users - and only when they are arranged by relevant healthcare authorities including NHS bodies and local authorities (referred to as “decision makers”). When making decisions, the following key criteria will be applied:

1. quality (safety, effectiveness and experience) and innovation
2. value
3. integration and collaboration
4. access, inequalities and choice
5. service sustainability and social value.

This insight summarises the key points from the recent consultation – the most notable being the establishment of panels to review decisions made under the PSR.

CPV codes

Common Procurement Vocabulary (CPV) codes are used in contract notices in public procurement processes. The Department of Health and Social Care (DHSC) has confirmed that it will specify the CPV codes for healthcare services that can be used by decision makers when describing their contracts in notifications to the market. Decision makers should then know what falls within scope of the PSR and providers of healthcare services will be able to use the CPV codes when searching for opportunities.

The DHSC confirmed that the procurement of goods is outside the scope of the PSR but there may be “mixed procurements” combining healthcare services and goods (for example wheelchair services).

It has been confirmed that CPV code 85149000-5 (pharmacy services) will not extend to community pharmacies that are arranged under The National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013.

The full list of CPV codes is set here.

Mixed procurement under the PSR

The DHSC noted that respondents had provided examples of two types of mixed procurement namely:

1. services that combine elements of healthcare and social care such as homeless and rough sleeping services, domestic abuse support services and rehabilitation services
2. procurements that combine healthcare services with services that cannot be considered social care - for example, IT and digital services and solutions.

The DHSC confirmed 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, provided 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.

Variations to contracts

The regulations will define when a variation to a healthcare service contract will be deemed to be a “considerable change”. This means that the decision maker would have to either select a provider by identifying the single most suitable provider or run a competitive tender exercise.

The DHSC confirms that a cumulative change in the lifetime value of the contract would only be identified as considerable when both the change is valued at £500,000 or above and 25% or more of the original contract value.

It was also confirmed that a contract change would be deemed considerable if it materially alters the nature of the contract – this would include where a contract is changed to include different services from those included at the start. This means that decision makers will need to carefully consider their scope from the outset and draft in potential variations if they expect other services to be included during the term – this often happens where a staggered approach is taken to changes in pathways.

Use of the PSR in relation to lists of providers to offer patient choice

The consultation response confirmed that patients will continue to have the legal right to a choice of provider for the first consultant or mental healthcare professional led outpatient appointment. 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 criteria and wishes to be included on the list of available providers, they must be offered the NHS standard contract by the decision-making body.

The DHSC proposes that where decision making bodies decide to offer patients a choice of a limited number of providers of services for which patients do not have a legal right to choice, they must either:

• use the decision making circumstance to award to the most suitable provider without competitive tender
• carry out a competitive tender process to select the provider(s) from which patients can choose.

This will ensure decision making processes are transparent and proportionate, and decisions are made in the best interests of patients, the taxpayer and the population.

Where decision making bodies do not intend to limit the number of providers from which patients can choose, the decision making body must offer a contract to any provider that meets the standard qualification criteria without a provider selection process.

Information to be set out in “intention to award notices” and “annual summaries”

In most circumstances, before awarding healthcare services contracts, decision makers will have to publish “intention to award notices”. The DHSC confirmed that the “intention to award notice” will include a statement explaining the decision-making body’s rationale for choosing the selected provider with reference to the relevant key criteria (listed above).

Decision makers will also be required to publish annual summaries to provide high level data on contracting to allow better understanding of commissioning activity and trends.

Independent review of decisions

There has been concern across the system as to how “challenges” or complaints in relation to healthcare service contract awards could be made by providers. 

The recent consultation set out that an adversarial system which relies on litigation to resolve disputes can act as a barrier to the effective arrangement of services which prioritises the interests of patients, taxpayers and populations. 

The latest consultation has confirmed that DHSC and NHS England intend to establish two panels, both of which will be chaired by an independent person, which can advise on 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.

DHSC and NHS England will continue to work together to further develop the details of these panels ahead of bringing the PSR into force and will work with representatives from across the health and care system to ensure that the PSR panel is well equipped to review decisions made under the PSR.

This will be welcomed by providers and those competing for healthcare services contracts.

How Capsticks can help

Capsticks continues to support commissioners of healthcare services and providers of health and care services prepare for the PSR and manage healthcare procurements in this transitional period prior to the implementation of the PSR.

We can:

• develop template documents
• draft or update policies
• provide advice on governance around the decision making processes
• provide advice on managing conflicts of interest
• provide training on what the PSR will mean in practice.

If you have any queries around what's discussed in this article, or the impact on your organisation, please speak to Mary Mundy, Peter Edwards or Dylan Young to find out more about how Capsticks can help.