The health regulator Monitor has signalled its intention to move the mental health sector away from block contract funding in the near future.
Mental health providers will be required to adopt new payment systems as part of the new initiative from April 2016.
As plans for the new payment system accelerate, Monitor has launched a consultation on the subject.
This plan would mean that mental health providers and commissioners would be forced to adopt either year of care, episode of treatment, or capitation payment systems.
Monitor has also signalled its intention to move away from the payment of services based on the clustering of mental health patients according to type and severity.
The health regulator has stated that the existing payment system does a poor job of incentivising early intervention and recovery-focused care.
In addition, block contracts have also been associated with other problems in the NHS.
It is thought that cuts in mental health funding in recent years can be attributed to this contractual system.
But although it is generally acknowledged that a payment by results system would be superior, delays have been multiple in recent years, ensuring that such a system has yet to be put in place.
The quality of mental health cluster data has been a particular barrier to implementation, with the information available not compatible with a payment by results system.
Launching its consultation into the matter earlier this week, Monitor stated that changes would “increase equity of access to evidence-based services and reward quality and outcomes.”
Additionally, the health regulator suggested that block contracts failed to incentivise “delivery of the objectives in the Five Year Forward View.”
The consultation will run until 19th November, and is attempting to collate views on the methods that providers would be most likely to adopt in the forthcoming financial year.
Additionally, any challenges implied in the implementation of these plans will also be assessed by Monitor.
Contractual issues in the mental health sector can be considered particularly important considering the financial challenges that the NHS faces in the coming years.
It is already expected that the NHS will accumulate a financial deficit of £2 billion by the end of the financial year, with this figure already approaching £1 billion after just one quarter.
This is indicative of the overall picture of NHS finances, with the publicly-funded health service required to make £30 billion of savings by the end of the decade.
Although some of this figure will be offset by increased funding, efficiencies are still considered to be extremely important, with the government seeking in the region of £20 billion worth of such efficiency savings by the end of the decade.