The Department of Health and Social Care (“DHSC”) has published another consultation paper on the Provider Selection Regime (“PSR”). The consultation will obtain feedback to be used to achieve greater flexibility when arranging healthcare services through the new regulations. The consultation paper describes different circumstances and what will be required to comply with the new regime. Read on below to learn the key points in the DHSC’s consultation paper and its implications for those commissioning and providing healthcare services for the NHS.

As a reminder, in 2021, NHS England and Improvement (“NHSEI”) launched a consultation on the PSR, and later confirmed that it would be recommending to Parliament that the regime is implemented in the way described in that consultation.  Our briefing on that consultation can be read here.

What we can be sure of is that the PSR will not come into force to coincide with Integrated Care Boards (ICBs) being given legal footing. At the time of writing, ICBs should become legal entities in the summer. The PSR may come in later in 2022. 

To which organisations and procurement processes will the PSR apply?

When it becomes law, the PSR will replace the current regime for commissioning healthcare services under the Public Contracts Regulations 2015 (“PCR”) and NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (the “current NHS Services Procurement Regime”). 

At the moment, the current NHS Services Procurement Regime only applies to NHS England and Improvement (“NHSEI”) and Clinical Commissioning Groups when they are procuring healthcare services for the NHS. When the PSR comes into force, it will apply to “decision makers” including:

• ICBs (once given legal footing) when commissioning healthcare services for the purposes of the health service (whether NHS or public health);
• NHS England when commissioning healthcare for the purposes of the health service (whether NHS or public health);
• local authorities and/or combined authorities when arranging healthcare services as part of their public health functions;
• local authorities and/or combined authorities when arranging NHS healthcare services as part of section 75 partnership arrangements with the NHS;
• NHS trusts and foundation trusts when arranging the provision of healthcare services by other providers.

The PSR will aim to give these organisations a flexible, proportionate decision-making process and it is to be applied whenever contracts for healthcare services are coming to an end, changing considerably (see below) or being awarded for the first time. The PSR will not apply to social care services although they will fall under it where they are part of procurement processes for a mix of healthcare services.

What are the key changes?

There will be greater focus on transparency

The PSR will be prescriptive in the types of notices to be published in Find a Tender (see table here). There will be more notices to publish in comparison to under the current NHS Services Procurement Regime which technically only requires a prior information notice (“PIN”) or contract notice and contract award notice at the end of the process. 

The decision making circumstances

Under the PSR, the first step for the decision maker will be identifying which “decision circumstance” will apply. You can find a comprehensive summary of all circumstances and their specific requirements here.

When will a service be “changing considerably”?

When considering variations, the consultation sets out that decision makers need to complete an assessment based on all variations made to the service since the last contract was put in place and any proposed new changes that may be put in place. This is the same process that would be applied where a contracting authority is making a change under the PCR.

The consultation also proposes that there should be permitted changes that are not deemed “considerable” such as:

• The variation is clearly and unambiguously provided for in the original contract and published as part of the original process under the PSR;
• The variation is solely as a result of the provider identity changing (resulting from a corporate restructure for example) where this does not affect the ability of the (new) provider to deliver the service and there are no other considerable changes to the contract;
• The variation occurs due to external causes beyond the decision maker’s control, including but not limited to:
  • Changes in contract value driven by changes in patient volume;
  • Changes in contract value related to uplifts in prices published in the NHS payment system (national tariff) or in accordance with a formula (indexation) provided for in the original contract and referenced in the published contract award notice as part of the original application of the PSR

Changes would be deemed considerable if they materially alter the nature of the contract or when all of the following conditions are met:

• The change is initiated by the decision making body;
• The cumulative change in the lifetime value of the contract is above £500,000
• The cumulative change in the lifetime value of the contracts is over 25% of the original lifetime value of the contract

The consequence of meeting the considerable change test is to rule out a simple roll-over – the decision maker would need to ascertain whether they go down the “most suitable provider” route (circumstance 2) or a competitive tender (circumstance 3). Decision makers will need to ensure that they factor in potential variations into their procurement documents where they want to rely on them in the future.

Standstill requirements

For decision-making circumstances 1C, 2 and 3 and/or where there has been a large contract variation, decision makers will have to be able to justify their decisions in relation to the key criteria and keep a record of this. There will also be a 30-day standstill period to be applied following a decision to award a contract (this has to close before the contract can be awarded).

The period will allow providers (who may be impacted by the decision and who have reasonable grounds to believe the decision maker has not applied the PSR correctly) to make representations to the decision maker and to discuss them. These representations would have to be initiated in the first ten days of the standstill period. The decision maker will have to respond to representations received.

What this means for decision makers and providers

Decision makers: You will need to develop your healthcare service award processes around the new circumstances and ensure that you build enough time into your timetables for the periods where you have to notify the market. There is clearly going to be a big shift towards more transparency but the record keeping aspects should not be dissimilar to the records that should be kept under the current NHS Services Procurement Regime.

Providers: You will no doubt welcome the transparency requirements. Having to make representations within ten days of a standstill process will require you to act quickly if you have any concerns about an award process.

Anyone interested in to PSR should respond to the consultation.

How Capsticks can help

Our procurement team will continue to provide updates so that you’ll have the most up to date guidance at every step of the way. Our experts can:

• provide tailored training sessions on the impact of the reforms and what they mean practically on a day to day level for both procurement teams and bidders;
• update templates and policies;
• provide guidance on record keeping obligations;
• advise on resource implications for procurement teams.

For more information or to discuss the procurement of healthcare services, please contact Mary Mundy or Dylan Young.