What is payment by results?

Payment by Results (PbR) was first introduced in 2003/04 and is a system of national tariff prices for procedures and treatments, which commissioners use to pay hospitals for the work they do.

Patient diagnosis and treatments are coded by the hospital and clusters of diagnoses and procedures that consume the same level of resources are assigned to a Healthcare Resource Group which has a tariff price assigned to it. The price is standardised across the NHS, with adjustments for market forces.

Some drugs are excluded from the PbR tariff. These are usually high-cost drugs.

PbR was introduced to improve efficiency, increase value for money, facilitate choice and enable service innovation and improvements in quality. In recent years, the NHS has reduced tariff prices in real terms, which has reduced NHS costs.

PbR continues to evolve and recent developments include ‘best practice’ tariffs, innovation payments and unbundling of tariffs to enable different aspects of treatment to be delivered by different service providers.

In 2014, NHS England and Monitor published proposals to reform the national tariff payment system to support the vision set out in the NHS Five Year Forward View.