07 April 2020

Following publication of the letter to NHS bodies from Sir Simon Stevens and Amanda Pritchard on 17 March 2020, the NHS has published further guidance relating to 'Revised arrangements for NHS contracting and payment during the COVID-19 pandemic'.

Independent sector (IS) acute hospitals

National arrangements have been agreed to buy capacity and support from IS acute hospitals. These arrangements will be in place from 23 March 2020 and will run for at least 14 weeks, with at least one month’s notice being given to terminate the national arrangements and revert to 'business as usual'.

  • Payment to IS providers will be made direct by NHS England and NHS Improvement.
  • Other CCG or NHS England contracts (and sub-contracts from NHS trusts and foundation trusts) with these providers will be set aside for the period covered by the national arrangements, and will then be re-activated on the resumption of 'business as usual'.

What happens to existing contracts?

In respect of an IS acute hospital provider who has an existing contract with an NHS commissioner which does not expire at 31 March 2020 or has agreed a new 2020/21 contract, the existing contract will be suspended until the resumption of 'business as usual', when the arrangements temporary COVID response arrangements will be terminated.

This is in contrast to an IS acute hospital provider whose existing contract expires at 31 March 2020 but has not yet agreed a new contract for 2020/21. In this case, there is no immediate requirement to put a new contract in place. However, on termination, if the parties do not choose to enter into a new agreement for the remainder of 2020/21, the NHS guidance provides that the default position that will apply. This includes:

  • Providing only elective services;
  • The provider will be commissioned to provide the same range of services commissioned under its 2019/20 contract; and
  • Terms of the 2020/21 NHS Standard Contract, the 2020/21 National Tariff Payment System and the Particulars of the local 2019/20 contract will apply.

Other non-NHS providers commissioned under the NHS Standard Contract

For providers which are not NHS bodies and services which are, in general, not covered by national prices, written contracts for 2020/21 need to be agreed as soon as possible. The guidance sets out some general principles for agreeing these, which includes ensuring that contracts are in the form of the NHS Standard Contract 2020/21, although the short-form NHS contract will usually be appropriate and core funding for the services commissioned is covered.

Block payments

A block payment approach is not mandatory for the period of April to July 2020, except where services are being provided that will be essential to the local COVID-19 response. Notably, this differs from the position for NHS providers – for whom the move to block contracts is mandatory.

Block payments made to Trusts and non-NHS providers (except for those providers operating under national prices) for April to July 2020 would include the national uplift for inflation and the Clinical Negligence Scheme for Trusts (CNST), but not the 1.1% increased efficiency requirement.

Other payment methods, such as an 'activity x price' basis where providers provide elective services on an Any Qualified Provider (AQP) basis, or a mixed economy approach in relation to care homes is also covered in the guidance.

Most importantly, whilst it is important to follow the guidance, contracting processed must not delay or impede the necessary response to COVID-19.


This speed with which this guidance on payments under the NHS Standard Contract has been issued will be welcomed. The letter issued by NHS England last week introduced a range of changes, but required clarification over its application for independent providers. The simplification of the contracting process by adopting block contract arrangements where possible and adopting the short form Standard Contract is also likely to be welcomed.

For any further information on this guidance please contact Patrick Parkin or your usual Burges Salmon contact.

This update was drafted with the assistance of Nicole Marks, Legal Apprentice.

Key contact

Patrick Parkin

Patrick Parkin Partner

  • Healthcare
  • Procurement and State Aid
  • Commercial

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