LEGAL MATTERS
How to get ready for challenging fee negotiations
Providers continue to face significant challenges in not being paid fair and sustainable rates to meet the needs of the people they care for. Ramjeet
Kandola and Laura Jordan, Partners at Anthony Collins Solicitors, explain what
providers can do to prepare for challenging fee negotiations.
Years of underfunding by central Government has led to public bodies not receiving the extra funding required to increase provider fee rates. The latest 9.8% increase in the National Living Wage, along with the freezing of the employers’ national insurance threshold, will have a considerable impact on a provider’s cost base. Inflation remains high and the Local Government Association recently reported that one in five local authorities are at risk of serving a Section 114 notice (according to the Local Government Act 1988). Social care is deemed a core service and therefore should not be impacted; however, the long-term viability of many providers is increasingly coming under scrutiny.
What should be done by providers?
Firstly, providers should determine the actual cost of care to establish whether the contract with the commissioner is both sustainable and considers the best interests of the individual.
If the data shows the commissioner is not paying at a sufficient level to preserve the best interests of the person supported, the contract with the commissioner should be
reviewed carefully to establish whether it provides for an automatic uplift or whether there is a discretion to review fees. Negotiating will always be recommended as a starting point to agree on terms amicably and to maintain a good working relationship with the commissioner. Contracts contain many levers providers can utilise to exert pressure on commissioners. Providers should be proactive and assertive.
Social care placements and local authority commissioners
Remind the local authority of their duties and obligations under the Care Act 2014 and the statutory guidance that accompanies it. Inform the authority of the reasons for the review; it may be because the rates are insufficient for care to be provided in compliance with statutory wage requirements and at the level of quality required, or due to the provider’s necessary costs to deliver great-quality care outweighing the fees being received.
Providers should establish a clear narrative with their operational, commercial and finance colleagues. Be clear on the objective and what the minimum price is that must be achieved so that they can negotiate properly and confidently. There needs to be a long-term plan and colleagues need to be persistent in bringing commissioners to the negotiating table.
It is important to review the local authorities’ market sustainability plans and market position statements available on their websites, along with market sustainability
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improvement fund reporting and capacity plans (many of which are available via the Care England MINT system and website) to ascertain specifically what the local authority’s key priorities, challenges and target areas are.
Health-funded placements and integrated care boards (ICBs)
For health-funded placements, ICBs are required to have regard to the National framework for NHS continuing healthcare and NHS-funded nursing care document for the NHS (the 'Framework'), and the NHS payment scheme (specifically section 3), which sets out the principles which must be applied when agreeing on any payment approach in the best interests of people. Under the Framework, ICBs are required to promote transparency and ensure that providers and ICBs engage constructively when agreeing to a payment approach. It is worth reviewing the Framework of individual ICBs and ascertaining whether ICBs have accountability and transparencyrelated policies, to see if they are complying with their own arrangements and the NHS payment scheme. This will no doubt assist as a lever to ensure there is transparency in their decision-making.
It may well be worth providers reminding ICBs of the requirement for the continuing healthcare decision-making process to be person-centred. Providers should help the person supported to express their wishes as part of any negotiations and remind ICBs that they are under a statutory duty to involve service users. It may be helpful for an advocate to be appointed for the person supported to assist with ensuring their voice is heard in relation to the ongoing funding of their care.
Providers should also remind ICBs that the Framework requires ICBs to ensure that fees paid are based on genuine costs of the individual’s needs, and/or the provider’s actual costs and must not therefore be setting arbitrary assumed costs or limits.
Also, submitting a Freedom of Information Request can often be beneficial to ascertain information on what the commissioner is paying others and how they are calculating fees. Finally, as some ICBs are failing to even respond to fee negotiations, one way of seeking engagement from the ICB is to submit a formal complaint to the ICB internal complaints team.
Last resort options
If negotiations fail, it may be necessary to check any termination clauses in the contract with the commissioner if the contract is not sustainable and the best interests/care needs of the person cannot be supported due to the low funding. Threatening termination (if termination is permitted without cause) may also lead to the commissioner negotiating on more favourable fees for the provider if the provider genuinely is unable to sustain services needed at the rates paid.
If a person’s needs cannot be met by the low fees paid by the commissioner, then given the risk to the supported person’s wellbeing as the safety of their placement is under threat, providers could also consider if reporting a safeguarding concern against the local authority is an option. Ultimately, it is important to ensure that commissioners are behaving appropriately and hold them accountable if not. Along with reporting a safeguarding concern, providers can also escalate concerns to ADASS, the LGA and the Parliamentary Health Service Ombudsman (in the case of ICBs). Anthony Collins can assist providers should they wish to pursue these routes as part of negotiations.
The ultimate sanction could be the threat of a judicial review claim against the commissioner if they are failing to comply with its public law duties.
Take-home message
If negotiations fail then unfortunately it may be that more formal legal action, depending on the prospects of success, must be taken. Gathering evidence by way of financial information is therefore key throughout the process.
Ramjeet Kandola is a Partner at Antony Collins Solicitors.
Email: ramjeet.kandola@anthonycollins.com
Laura Jordan is Head of Corporate Law at Anthony Collins.
Email: laura.jordan@anthonycollins.com
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