New activity management processes implemented in 2025/6 NHS Standard Contract

NHS Standard Contract 2025/26: Changes to Managing Contract Activity 

On 8 May 2025 NHS England published its response to the Further Consultation on the NHS Standard Contract 2025/26 confirming that the mechanisms and obligations relating to Indicative Activity Plans and Activity Management Plans will change, with immediate effect.

This update is relevant for all providers who perform services for the NHS that are paid for on an activity basis.

Background

NHS England published its response to the Further Consultation on changes to the NHS Standard Contract 2025/26 (the “Consultation”) alongside the final NHS Standard Contract Service Conditions and General Conditions for 2025/26 on 8 May 2025. 

The Consultation response confirms that NHS England has adopted its proposed changes to Indicative Activity Plans (“IAPs”) and Activity Management Plans (“AMPs”).

The Consultation follows NHS England’s consultation on the 2025/26 NHS Payment Scheme earlier this year which originally proposed the introduction of a payment limit for elective services and all services paid for on an activity basis where the planned value of activity is above £0.1million. 

NHS England confirmed in its consultation response that it would not be introducing the proposed payment limit.

The consultation response published by NHS England does not detail why the proposal was withdrawn, however, it is widely understood that concerns were raised as to how the payment limit would impact patients’ legal right to exercise choice and referral management. 

Key Changes to the NHS Standard Contract

Indicative Activity Plans:

Under the NHS Standard Contract IAPs must now be agreed for any ‘Services Paid for on an Activity Basis’ (which excludes block arrangements) within three months of the service commencement date or by 30 June 2025 for existing contracts. 

However, providers should note that commissioners still have discretion to agree IAPs for other types of activity not caught by this new requirement. 

Where a commissioner and provider are unable to agree an IAP within the prescribed timescales, the commissioner may set an IAP. Failing that, an indicative activity of zero will be deemed to apply. 

Providers should note that the provision to default to zero is not new. The updated Technical Guidance confirms that an IAP is indicative only and if a provider provides more or less activity than included in the IAP this will not be a breach of contract. 

The NHS Standard Contract is silent on how IAPs are intended to work where a provider delivers non-contract activity (“NCA”). The Technical Guidance confirms that a commissioner can seek to agree an IAP with an NCA provider “if activity reaches a level that may require activity management.” It remains open to interpretation as to what levels of NCA would require an IAP.

Activity Management Plans:

NHS England has amended the NHS Standard Contract so that where a commissioner and a provider are unable to agree an AMP the commissioner has a discretionary right to set an AMP (see Service Condition 29.14). 

This is a change to the 2024/25 NHS Standard Contract which provided either party with the right to escalate the matter as a dispute under the dispute resolution procedure.

In response to the Consultation, NHS England has updated the Technical Guidance to clarify that where an AMP is put in place it must not restrict patient choice. 

The guidance also clarifies that an AMP may include financial consequences for not adhering to the AMP which could, for example, include a commissioner not paying for activity which has not been managed in accordance with the plan. 

In addition, the Technical Guidance has been updated to include principles which commissioners must take into account when setting an AMP. These include:

1. Considering demand, capacity, performance and activity across their system if they intend to use the AMP to reduce activity to the levels set out in the IAP;
2. Consider and discuss with providers potential equalities and quality impacts of any AMP, including patient safety and experience; and 
3. Follow the contractual process to agree an AMP with the provider before setting one.

Commissioners are also required to consider similar principles when setting IAPs.

Escalation Procedure:

A key change to the NHS Standard Contract is the introduction of the Escalation Procedure which providers can invoke instead of the dispute resolution procedure where:

1. the commissioner has set an IAP and/or AMP; and
2. the provider considers that the commissioner has not complied with the relevant process set out in the Technical Guidance.

It is intended that the Escalation Procedure is used where all other avenues have been exhausted.

The new Escalation Procedure requires providers to submit an Escalation Form to NHS England within 25 working days of an IAP and/or AMP being set and notified by the Commissioner.

Providers should note that they must complete the Escalation Form within 10 working days of being sent the IAP and/or AMP by the Commissioner as a failure to do so will mean that the Escalation Procedure will no longer be available.

On receipt of a completed Escalation Form, an Escalation Panel will consider whether the criteria for escalation are met. The Escalation Panel will comprise of (a) NHS England where the commissioner is an ICB or (b) where NHS England is the commissioner an independent panel will be convened.  

Pending the outcome of the Escalation Procedure, providers must comply with the disputed IAP and/or AMP.

This new process is in addition to the dispute resolution procedure and providers will still be able to utilise the dispute resolution procedure where:

1. the Escalation Panel does not accept the provider’s referral;
2. the Escalation Panel concludes that the commissioner has complied with the Technical Guidance; or
3. the provider is not satisfied with the commissioner’s actions and/or any revised IAP and/or AMP after the Escalation Panel has concluded the Escalation Procedure.

Practical Guidance for Providers:

Commissioners and providers will inevitably have a busy period between now and 30 June 2025 to agree IAPs. Aside from these changes to the standard contract, Commissioners are also in the process of managing significant budgetary cuts which at times could impact their ability to engage with providers. 

Nevertheless, it will be important for providers to:

• seek early engagement with commissioners; 
• organise robust data sets of historic and anticipated activity levels, which can support discussions with Commissioners; 
• be aware of the information that Commissioners should provide when IAPs are being set, specifically in relation to demand, capacity, performance and activity across their system. Providers can reasonably question IAPs that are being proposed by Commissioners if this information is not provided. This information should be provided on a service-by-service basis.
• when using the Escalation Procedure, respond promptly and ensure there are processes in place to ensure Escalation Forms are submitted within the specified time limits.

If you would like to discuss any of the above please contact a member of our Healthcare Team.

This article was written by Lisa Mulholland, Patrick Parkin, Scarlett Sulivan and Lizzy Marke.