Monitor’s new licensing regime is to be extended to the independent sector from April 2014 – will your services fall within it?

Currently, Monitor is only the Foundation Trust regulator.  A new Monitor licensing regime came into effect for Foundation Trusts on 1 April 2013.  This will be widened from 1 April 2014 to include the independent sector in relation to NHS funded services.  Monitor describes itself as the sector regulator for health care.  Its focus is on financial stability and governance with separate ratings for each.

Monitor’s regime is based around the use of licence conditions within the following categories:

·        General conditions

·         Pricing conditions

·         Choice and Competition Conditions

·         Continuity of Services Conditions

·         NHS Foundation Trust Conditions (which as the name denotes only apply to FTs).

Monitor has a broad range of enforcement powers to secure compliance and redress if any of the conditions are breached.

Monitor is to start accepting new applications in January 2014 from independent sector providers of NHS funded services with registration to take effect from 1 April 2014.

As one would expect, there are a number of exemptions to the requirement to be licensed set out in Regulations that were passed by Parliament on 17 October: The National Health Service (License Exemptions, etc.) Regulations 2013 No 2677).The aim is to capture large independent sector providers of NHS funded services, not small providers, although small specialist services may still be caught within the regime.

The key exemption as far as community based services are concerned is an exemption for health care services that fall within the classifications of NHS Continuing Healthcare or NHS funded nursing care.  These are defined as follows in the Regulations:

·         “NHS Continuing Healthcare” means a package of care arranged and funded solely through the NHS for an individual aged 18 or over who has been assessed as having a primary health need, where such care is provided to meet physical or mental health needs which have arisen as a result of disability, accident or illness;

·“NHS funded nursing care” means nursing care provided by a registered nurse which is funded by the NHS to support the provision in a home providing such care.

It should be noted that this exemption only continues in force until 31 March 2015.  The reason for this time limit is because the Department of Health wants to consider the impact of the Care Quality Commission’s financial oversight regime for adult social care which is due to come in from 1 April 2015 (subject Parliamentary approval of the Care Bill).  The understanding is that the top 50-60 care providers in adult social care will be subject to CQC’s financial oversight regime.  The Department wants to avoid duplication and unnecessary additional burdens on providers and will be carrying out the inevitable review in the meantime.  The sector is already heavily regulated so the last thing that providers want is to be regulated on financial matters by two regulators, although this may still be the consequence for some of the largest independent providers with significant NHS funded services.

There is also an exemption for providers whose turnover from supplying NHS services is less than £10 million in a business year.  NHS Continuing Healthcare and NHS funded nursing care are excluded from a provider’s turnover for the purposes of the £10 million threshold.

There is also an exemption if a provider is not registered with CQC.

The above exemptions, however, will not apply if Clinical Commissioning Groups (CCG) or NHS England decides that the services in question come within what is described as Commissioner Requested Services.  These are services that if withdrawn because of the failure of a provider would have a significant adverse impact on the health of patients and/or on health inequalities in the absence of alternatives.  The test, therefore, is whether there are suitable alternative services available and on whether there are health inequalities implications from withdrawing a service.  The thinking is that Commissioner Requested Services need to be protected in the face of a provider’s failure.  The conclusion as to whether a service is a Commissioner Requested Service may vary from CCG to CCG depending on whether there is capacity locally to absorb the patients if the service or services in question were to close.  Monitor can impose a special administrator to preserve a service, effectively taking over the running of the failed provider as a last resort.

In most cases there will be sufficient capacity in the system but there may be pockets where there is not.  There is a decision-making framework that Monitor has produced to assist CCGs and NHS England in making decisions about whether particular services are Commissioner Requested Services.

If a CCG or NHS England were to decide that your service is a Commissioner Requested Service then a provider can challenge that decision.  Each provider will be issued with an initial notification of designation allowing for 28 days for acceptance.  If a provider does not agree with the designation, the commissioner must seek a “designation review” by Monitor.  Monitor will decide whether a provider has acted unreasonably in refusing the Commissioner Requested Service designation.  Monitor states in its guidance, “It is anticipated that strong evidence will be required for a review to overturn a commissioner’s decision.”  Multiple commissioners will be able to request a review collectively if they are affected by the same provider refusing to accept the proposed designation of a service as a Commissioner Requested Service.

We are expecting Monitor to issue further guidance on the requirement to hold a licence.  However, Monitor has already stated in its document The NHS provider licence: information for independent providers that, “If a provider is required to hold a licence and does not hold one – because they did not apply, cannot meet the criteria, or because they have had their licence revoked by Monitor – then that provider will be delivering NHS services in breach of the rules and Monitor can take enforcement action against them and impose sanctions including regulatory requirements and fines.”  These are not idle threats.  The requirement to be licensed is a statutory one and unlicensed providers who should be licensed can expect a regulatory response.

It is imperative that independent sector providers familiarise themselves with the licensing requirements to determine whether they may fall within the regime.  Please feel free to contact us for specialist advice.  We’re here to help.

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