How to set budgets â€“ early learning from the personal health budget

PERSONAL HEALTH BUDGETS GUIDE

How to set budgets – earlylearning from the personalhealth budget pilot

Author: Martin Cattermole

Thanks to: Esther Bolton, Trudy Corsellis, Kim Dodd, Jo Fitzgerald, Andrea Ford, Deb Fox, Steven Gill, Carole Green, Azra Iqbal, Gail Johnston, Mark Justesen, Kevin Lewis, Graham Manning,Gemma Newberry, Graeme Niven, Andrew Northall, Sally Scott, Ashy Shanker, Julie Smee, Gill Stewart,Andrew Taylor, and Georgina Walton.

How to set budgets – early learning from the personal health budget pilot

1

Personal health budgets 2

1 Introduction 3

2 Personal health budgets for people with long-term conditions 4

3 Implementing personal health budgets well 6

4 Issues and challenges in setting budgets 7

5 Practical examples – approaches to budget setting 8

6 Conclusions 29

Contents

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A personal health budget is an amount of money to support a person’s identifiedhealth and wellbeing needs, planned and agreed between the person and their local NHS team. Our vision for personal health budgets is to enable people with long term conditions and disabilities to have greater choice, flexibility and controlover the health care and support they receive.

What are the essential parts of a personal health budget?

The person with the personal health budget (or their representative) will:

n Be able to choose the health and wellbeing outcomes they want to achieve, in agreement with a healthcare professional

n Know how much money they have for their health care and support

n Be enabled to create their own care plan, with support if they want it

n Be able to choose how their budget is held and managed, including the right to ask for a direct payment

n Be able to spend the money in ways and at times that make sense to them, as agreed in their plan

How can a personal health budget be managed?

Personal health budgets can be managed in three ways, or a combination of them:

n Notional budget: the money is held by the NHS

n Third party budget: the money is paid to an organisation that holds the money on the person's behalf

n Direct payment for health care: the money is paid to the person or their representative

The NHS already has the necessary powers to offer personal health budgets, although onlyapproved pilot sites can currently make direct payments for health care.

What are the stages of the personal health budgets process?

n Making contact and getting clear information

n Understanding the person's health and wellbeing needs

n Working out the amount of money available

n Making a care plan

n Organising care and support

n Monitoring and review

Personal health budgets

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This good practice guide is aimed atpeople working in the NHS who areimplementing personal health budgets. Itbrings together learning from thepersonal health budgets pilot programmeon how the amount of a personal healthbudget can be decided.

While there is an expectation that the NHSwill offer personal health budgets for peoplereceiving NHS Continuing Healthcare, there islocal flexibility to offer personal health budgetsmore widely. This guide provides advice andpractical examples on setting budgets forpeople with long-term conditions, peoplewith mental health problems, and people whohave both health and social care needs.

A separate document provides more detailedadvice on setting budgets for people eligiblefor NHS Continuing Healthcare.

The guide also gives examples of howpersonal health budgets relate to otherrelevant policy initiatives such as payment by results.

Along with this document, we havepublished other good practice guidance that gives more information on the overallapproach to personal health budgets,including aspects such as care plans andmanaging risk. These materials are availableon our learning network at:www.dh.gov.uk/personalhealthbudgets.

1 Introduction

http://www.dh.gov.uk/personalhealthbudgets

Personal health budgets promote a moreeffective and equal relationship betweenNHS professionals and people who usethe NHS. They will only work well if theylead to everyone making changes in theirthinking, feeling and behaviours. Thisrequires changes of role for individuals,health professionals and commissioners.

Personal health budgets are about moving toan outcome-focused way of working thatlooks at what people want to achieve, ratherthan focusing on what services the NHScurrently provides.

Personal health budgets are closely linked toother initiatives that aim to promote self-management and to change the relationshipbetween the person and healthcareprofessionals.1 Examples include the year ofcare initiative for people with diabetes 2, andco-creating health.3

Pilot sites have offered personal healthbudgets with a wide range of people. Mostsites have implemented personal healthbudgets for people eligible for NHSContinuing Healthcare. Some sites havedeveloped joint budgets for people who haveboth social care and health needs. Pilot siteshave also offered budgets to other groupsincluding people with:

n Long-term conditions, such as COPD or diabetes.

n Stroke.

n Acquired brain injury.

n Mental health problems.

The Audit Commission has highlighted the potential for personal health budgets to provide more person-centred and joined-up approaches for people with long-term conditions, and other people with substantial health needs.

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2 Personal health budgets for people with long-term conditions

1 Making shared decision-making a reality: No decision about me without me. Kings Fund, 2011.

2 Year of care: Report of findings from the pilot programme:www.diabetes.nhs.uk/year_of_care, 2011.

3 Helping people help themselves: A review of the evidence considering whether it is worthwhile tosupport self-management. The Health Foundation, 2011.

http://www.diabetes.nhs.uk/year_of_care

This could reduce the use of NHS services andunnecessary hospital admissions:

“Many people with a long-term conditionhave co-morbidities. They see all their careneeds as a whole and don’t divide them intoprimary, secondary and tertiary care; or healthand social care; or disease group. Personalhealth budgets allow them more scope tochoose what services they receive, fromwhom, and when. This control enables themto become participants, rather than recipients,and improve the quality of their lives bymaking care more accessible and responsive.By getting it right, there is less need for crisismanagement and more likelihood ofimproved outcomes, which can deliver realsystem level savings for the NHS.” 4

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4 Making personal health budgets sustainable: practical suggestions on how to manage financial risk.Audit Commission, 2012.


It is essential to work with front-linepractitioners, clinicians, managers andpeople with lived experience to buildsupport for personal health budgets.Personal stories are an effective way todemonstrate the benefits of personal healthbudgets. It is also important to build peersupport networks that connect people toothers who have a personal health budget.

Personal health budgets are a major changeto the way the NHS works. The process ofimplementing personal health budgets is likelyto challenge current ways of working andhighlight issues and concerns that will need to be overcome.

When setting budgets, it is important to keep in mind the purpose of personal healthbudgets. It is good practice to design systemsthat promote choice and control, and that are simple and streamlined for people usingthe NHS and for staff. There is a risk ofsubmerging staff and personal budget holders in paperwork including multipleassessments. Instead the focus should be on understanding the person's health andwell-being needs and on care planning.

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3 Implementing personal health budgets well

People may choose to meet their needs invery different ways from those traditionallyon offer. It is important to encourage apositive attitude to enable people tomake choices, balanced with the duty tohave proper arrangements in place toprotect people. It is important to ensurepeople have access to information toenable them to make decisions.

As we begin to develop personal healthbudgets and put them into practice, issuesand concerns will arise. Experience in pilot siteshas shown that the NHS can be extremelyrisk-averse, with a tendency to maintainexisting service patterns and ways of working.

There is also likely to be resistance tochanging established systems for assessingneed, allocating people to services, andmanaging spend. The process of developingways to set personal health budgets can bringthese issues to a head.

It is important to avoid these concerns beingused as reasons to impose restrictions thatlimit choice and control – for example by not

telling people the value of their budget, orrestricting the use of the budget to servicesthat are already commissioned. There is littlepoint in offering personal health budgets unlesspeople can use their budget in new ways thatare right for them. This will mean changingthe way services are commissioned, so thatmoney is no longer tied up in block contracts.The personal health budgets toolkit containsdetailed advice on market development.5

It is also important to avoid personal healthbudgets being seen as a cost-saving exercise.Personal health budgets are likely to be costneutral and a way to get better value fromthe money that the NHS already spends. Thebudget should always be sufficient to meetthe outcomes agreed in the care plan.

Implementation is likely to work better if it isbased on an objective approach to managingfinancial and other risks. The Audit Commissionhas worked with pilot sites to produce a reporton financial sustainability, which discusses theprincipal financial risks which can result fromimplementing personal health budgets, andoffers ways to manage these risks.6


5 Personal health budgets guide: National personal health budgets provider development forum,Department of Health 2012.

6 Making personal health budgets sustainable: practical suggestions on how to manage financial risk. Audit Commission, 2012.

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4 Issues and challenges in setting budgets

Who can have a personal health budget?

Personal health budgets should be available toanyone who is eligible. It is important to avoidassumptions that some groups of people can't

benefit from a personal health budget. While there is an expectation that the NHSwill offer personal health budgets for peoplereceiving NHS Continuing Healthcare, there is local flexibility to offer personal healthbudgets more widely.


5 How to set budgets

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MAKING

CONTACT AND

GETTING CLEAR

INFORMATION

UNDERSTANDING

THE PERSON’S

HEALTH AND

WELLBEING

NEEDS

WORKING OUT

THE AMOUNT

OF MONEY

AVAILABLE

MAKING A

CARE PLAN

ORGANISING

CARE AND

SUPPORT

MONITORING

AND REVIEW

The steps of the personal health budgets process

The public sector equality duty, which wasintroduced by the Equality Act 2010, requirespublic sector organisations (and othersperforming public functions on their behalf),to have due regard to the need to eliminateunlawful discrimination, advance equality ofopportunity, and foster good communityrelations in everything that they do. Inpractice, this means that providers need tounderstand how different people will beaffected by their activities so that policies andservices are accessible to all and meet differentpeople's needs regardless of their age,disability, gender, race, sexual orientation,gender reassignment status, religion or belief,marriage and civil partnership or pregnancyand maternity status.

When should the budget be decided?

Budget setting is one part of the new systemthat needs to be in place to operate personalhealth budgets. The stages of the process areshown in the diagram above. The decision onwhether a person is eligible for a personalhealth budget should come before theprocess of setting the budget.

What is an indicative budget?

An indicative personal health budget (alsoknown as an indicative budget) is an amount

of money which is identified at an early stagein the process to inform care and supportplanning. It is a prediction – a best guess – ofhow much money it is likely to cost to arrangethe care and support that would be sufficientto meet the assessed health needs and achievethe outcomes in the care and support plan.The indicative budget is a guide – it should notbe used as a limit, a fixed allocation or anentitlement. The indicative budget does notneed to be exact and in practice it is difficultto design a tool that will very accuratelypredict the costs of support for an individual:

Most approaches to setting budgets areaccurate in no more than about 80% ofcases. It is always advisable to have some built in flexibility … in order to ensure thatcommissioning organisations can satisfy their legal duties to ensure that people have adequate resources.7

What is a final personal health budget?

The final personal health budget (also knownas a final budget) is an amount of money thatis agreed once a care plan has been written.This is usually calculated by estimating thecosts of the care and support arrangementsthat are included in the plan. This is likely tobe a more accurate guide to the actual costsof support. The final budget – rather than theindicative budget – is the point at which anapproval process is needed. For most people


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7 Direct payments for healthcare. Healthcare Financial Management Association, 2012.

the final budget will be higher or lower thanthe indicative budget, and in some cases thisdifference may be significant.

What should be included in the budget?

Care plans need to focus on the person’s‘whole life’, not just on their health needs.The situation of the person and their familyshould be explored, with carers offered anassessment of their own needs.

Personal health budgets are intended topromote a holistic approach to health andwell-being. It is good practice for the budgetto cover the full range of health needs overwhich the person wants to take control.

Just because a person has a health conditionwill in itself give little or no indication of theirhealth needs or the amount of money thatwill be needed in a personal health budget.Using an approach to budget setting thatfocuses on only one condition could lead topeople undergoing multiple assessments,rather than a joined-up approach.

Pat, aged 64 and from Birmingham haschronic obstructive pulomonary disease(COPD) Her story shows how this holisticapproach can work in practice:

“Sandra, a COPD nurse, discussed my healthneeds with me and an assessment was carriedout. Sandra also visited me at home when wetalked about how I could manage mysymptoms and improve my general health andmental health. With Sandra I drew up some

health objectives. These included being ableto walk to my local bus stop within the next12 months, treating my depression, losingone stone within six months and increasingmy confidence. I was granted a personalhealth budget which was used to buy anexercise bike and complementary therapies tohelp with my anxiety.

I have dry legs with bad circulation and thereflexology, which helps relieve my anxietyaround my breathlessness, has also helped mycirculation. Sandra has been fantasticthroughout the whole process of organisingmy personal health budget. Before I metSandra I did not have anyone to talk to aboutmy depression. But Sandra was that person.She’s been unbelievable. The help and adviceshe gave has turned my life around. Sherealised I was depressed, and advised me tosee a GP who prescribed medication. This hasreally helped. I can now walk to my local busstop, and my confidence is so much better.The next thing is for me to lose more weight.Overall, my physical and mental health hasimproved dramatically.”

This is particularly important where peopleneed a high level of healthcare, and may havemany professionals involved in their lives:

In some pilot sites, the scope of a personalhealth budget has been restricted to onlyinclude personal care, leaving the clinicalaspects of the … package to be delivered bytraditional NHS services. This was largely doneas a compromise to ensure that the pilotcould move forward, given the scale of culturalchange that personal health budgets require.

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NHS Continuing Healthcare staff were more comfortable with individual choice and control for personal care than for moreclinical types of care. However, by limiting the scope of a personal health budget in this way, individuals experience choice andcontrol in some aspects of their life but not in others which can make it difficult for them to realise their goals. For example, an individual may hire his own personalassistants to get him up in the morning so he can get to work on time but will have nocontrol over when the district nurse comes to change his dressings, making it challengingto hold down a job.8

Carers provide a very substantial amount ofsupport to many people who receive personalhealth budgets. The Government strategy forcarers emphasises the need to take anapproach which considers the whole family:

Personalisation can provide individuals, carers and families with more choice, morecontrol and more flexibility in the way thatcare and support are provided. Personalisationand a whole-family approach arecomplementary – it is important to look at a family’s needs as a whole but also to make sure that individual carers’ and users’views are sought and cultural expectationsare clarified when considering how best

to support a family. No assumptions shouldbe made about a carer’s ability andwillingness to care.9

It is very important that the situation andneeds of carers are fully assessed. Carers needto be able to continue working, stay healthy,and be able to meet other familyresponsibilities, including having a break fromcaring. Outcomes for carers could thereforebe included in the care and support plan, andthe level of the personal health budget shouldtake these needs into account.

One-off personal health budgets

There are some circumstances where it maymake sense to offer smaller, one-off personalhealth budgets that replace a specific aspectof treatment, or complement other services.For some people, small one-off budgets maybe a very effective way to take control.

For example, a person experiencing depressionwho would normally be offered cognitivebehaviour therapy might opt for a one-offpersonal health budget instead. The use ofthe budget would be agreed in their careplan. However, the person might continue tobe visited by a community psychiatric nurse.The costs of these visits would not beincluded in the budget. The personal healthbudget is not an extra cost as it has beenprovided instead of the therapy sessions.

Whatever the size of the budget, the careplan should be holistic, covering all aspects of the person's health and well-being.

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8 Personal health budgets for Continuing Healthcare: The 10 features of an effective process. In Control, 2012.

9 Recognised, valued and supported: Next steps for the Carers Strategy, HM Government 2010

Razia, aged 32 and from Merseyside, used herpersonal health budget to purchase acomputer, enabling her to study at home andalso maintain supportive email contact withher family. A bus/train pass ensured she couldattend vital appointments with mental healthprofessionals:

“I was referred to a mental health servicespecialising in helping people in my situationand offered anytime-access to the service, butbecause of travel costs I could not go.

I had meetings with an independent healthbroker. Their job is to support people todecide the best way personal health budgetfunds can be used to meet a person’s needs.Together, we discussed what would help me,and what would improve my mental health.We decided a laptop would be of benefit, asit would mean I could stay in touch via emailwith my family. I also enrolled on afoundation course at a local college where Iam studying “Prepare to teach in the lifelonglearning sector” which covers the basics ofteaching in adult education.

I have to travel a lot but was finding it tooexpensive and travel time extremely lengthyand complicated. I also attend counselling ona weekly basis with an Urdu-speakingcounsellor specialising in helping people whohad suffered domestic violence, and go tohospital for physical problems related to thedomestic abuse I suffered. To get to college

I had to travel weekly by bus – a returnjourney of more than three hours – and Ineed to get to mosque. So, it was decidedthat a bus/train pass would be reallyimportant to enable me to get to all theseplaces. The pass enables me to often take onetrain, instead of many – and slower – buses.The personal health budgets for both thelaptop and bus/train pass were one-off directpayments. They are of such help to me inbuilding a new life, following the trauma andupheaval of the last 18 months. Being able tostay in contact with my family and keep up todate with my studies is so good. It’s keepingme sane, really! And without the bus/trainpass I would not be able to access the supportthat is helping me recover and move on.”

Section 5 of this good practice guide givespractical examples of how pilot sites have setone-off budgets.

What should be excluded from a personal health budget?

The costs of some aspects of healthcare shouldnot be included in a personal health budget:10

n Emergency or unplanned care.

n Medication, prescriptions and otherchargeable services.

n Most primary care services such as visiting a GP.

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10 The DH plans to carry out a consultation on new regulations which will confirm what services will be excluded from a personal health budget.

It is not practical to include acute treatmentsuch as surgery, and other needs that cannotbe anticipated, in the costs of a personalhealth budget. However part of the purposeof the budget may be to reduce or avoid theneed for hospital admissions.

What if the costs are not known?

In the NHS it is not always easy to measurecosts, and in practice quite often it will behard to calculate the costs of the servicespeople use, at an individual level. The workcarried out by pilot sites has shown that itwould probably be impractical to try to setand monitor budgets based on actual use ofNHS services. This information is not currentlyavailable in most places, and is also subject to a lot of variation over time, as people'sneeds change. Indicative budgets need only be approximate, and it is thereforeacceptable to use ‘typical costs’ to calculatethem. A final budget can be set based on acalculating the expected cost of the services in the person's care plan.

What if the person's needs change?

Many people with long-term conditions havehealth needs that fluctuate. This can beaddressed by reserving an amount of thebudget for contingencies or includingplanning for fluctuating needs in the careplan. It is impossible to plan for all situations,and it is important to take a flexible approach.

How have budgets been set in practice?

In the personal health budget pilot, sites triedout a wide variety of ways to set budgets:

n Costing the planned care package.

n Banding scales based on NHS care pathways.

n Costing previous use of NHS services.

n Flat rate one-off budgets.

n Joint health and social care budgets.

n Payment by results.

n Outcome-based budgets.

The next section gives brief details of eachapproach, illustrated by examples from pilotsites. The table below lists some criteria toconsider when deciding what approach to uselocally. No approach to setting budgets islikely to meet all of the criteria.

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Up-front It enables people to know at the start of the process how much money they have to plan with.

Transparent It is clear how the budget has been calculated, and the method is objective and fair.

Choice and control It enables people to take control and choose how best to meet their needs, and does not introduce restrictions.

Outcome focus It moves away from a medical model, and is based aroundoutcomes, rather than hours of support or other inputs.

Holistic It covers all health and well-being needs, enabling people tocontrol all or most of the money spent on their health care.

Light touch The process is simple for the budget holder and for front-line staff, without lots of paperwork.

Managing the money It can work whichever option the person chooses (notionalbudget, third party arrangement, or direct payment).

Putting it into practice It could be simple to put in to practice for large numbers of people.

Scope It could be used with lots of people and is not focused only on people with a particular health condition.

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Costed care package

At the start of working out the care plan, theperson and a practitioner work together towork out a rough estimate of the cost of theperson's package, based on how many hoursof home care support the person mightneeds, along with any other items such asequipment. This is used as an indicativebudget, to help develop a full plan. Thebudget is adjusted as the plan is worked out.

This approach can work well for people whoneed a high level of hands-on care andsupport. The budget could be set to cover awide range of needs, and also take into accountthe amount of informal support available.However, it does not provide an “up-front”indicative budget. There is also the risk thatthe plan may focus on hours of support ratherthan outcomes. It could not easily be appliedto people who don't need personal care, orwho have conditions that fluctuate a lot, andwould be hard to scale up.

Example: Oxfordshire

NHS Oxfordshire has developed an indicativebudget setting model that is based ondeveloping an initial outline of the care andsupport arrangement that would be needed to

meet the assessed needs of the person. Theelements of the package are then costed usinga spreadsheet to come to an indicative budget.The final budget is agreed once the care andsupport plan has been developed more fully.

NHS Oxfordshire is offering people in receiptof NHS Continuing Healthcare a personalhealth budget. The indicative budget settingprocess began by figuring out the averagerates for local care agencies and carrying outsome local area market research into averagepay rates for home care workers and personalassistants. For example, if a person neededthirty minutes of double handed care twice aday we would multiply the average hourlycost of care from a personal assistant or careagency by two to give us a daily rate.

It became apparent fairly quickly that personalhealth budgets needed to include more thanjust the cost of care, and other elements wereadded to the spreadsheet to calculate theoverall budget, such as:

n Different rates for waking and sleeping nights.

n Different rates for bank holidays and weekends.

n Funding to purchase supplies such as gloves and aprons.

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5 Practical examples – approaches to budget setting

n Funding to adequately train personal assistants.

n A sum of money for other ‘start up’ costssuch as advertising for staff, employers andpublic liability insurance.

A budget also includes enough money forpeople to pay for them to ‘live their life’, forexample, to cover reasonable expenses for apersonal assistant on a day out or costs toattend a day centre.

Personal health budgets have some flexibility toreflect local circumstances, for examplepersonal assistant costs for clients living in ruralareas may be higher than those for clients wholive near a town centre. All funds included inthe final weekly budget must be linked to anagreed outcome in the client’s support plan.

The personal health budget indicative budget form is broken down into thefollowing areas:

n Care agencies.

n Employed staff.

n Annual charges and start-up costs.

n Other care and support.

It is important to note that that budgetsetting is a dynamic process and NHSOxfordshire are currently on the sixteenthversion of the budget setting spreadsheet.

So far, 39 people have been offered personal health budgets based on thisapproach and it is working very well withindividuals purchasing care and support tomeet their needs.

Banding scales based on NHS care pathways

This approach has been developed by pilotsites to develop budgets for people who havea specific condition based on the cost of thetypical “care pathway”. The process starts byidentifying the costs of the services used by asample of people over the last year, or thetypical cost for the services normally provided.The second step involves developing abanding scale to rate the person's level ofneed for care and support. A simple scalecould be high, medium and low need. Each band can then be linked to a cost.People are then assessed on the bandingscale, and given an indicative budget.

This approach has the potential to enable aperson to take control over most or all of themoney spent on their care and support.However it is usually based on an assessmentof the person's level of functionality, and theseverity of their condition, which is oftenbased on what they are unable to do. It is notlinked to the outcomes that are important tothe person.

The banding scale will only work for onecondition or pathway, and does not look atthe person's health needs as a whole. Thebudget may also need adjusting if theperson's condition fluctuates, and dependingon the level of informal support available.

For people eligible for NHS ContinuingHealthcare, a national framework is in placethat includes a decision support tool. However

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using the banding approach for other groupscould require new forms of assessment to bedeveloped and agreed nationally. Work isunder way to develop a year of care tariff forpeople with long-term conditions which mayprovide a basis for this.

Example: Manchester

NHS Manchester has developed a bandingscale based on the decision support tool forNHS Continuing Healthcare. As part of thepersonal health budgets pilot programme, thetool has been tested with around 60 peopleacross six pilot sites. The tool works byestimating the costs of providing aconventional home care package that couldbe expected to meet the needs identifiedusing the decision support tool. The tool usesthe levels from the NHS ContinuingHealthcare decision support tool, and thehourly rates for home care being paid locally.This is used to estimate the cost of providingsupport using a conventional home carepackage. An adjustment is also made forsupport provided by carers, and the tool alsoallows an amount to be added to reflectcarers’ needs. The tool has been tested inOxfordshire, Somerset, Hull and Nottingham.This work has shown that the costs of careand support vary substantially betweenEnglish regions and also between city andrural areas. In particular, this is the case forservices such as home care that are providedby independent organisations.

Example: Avon, Gloucestershire,Wiltshire and Somerset cardiac and stroke network

In Swindon, Wiltshire, Gloucestershire andSomerset, personal health budgets have beenoffered to 116 people following a stroke. The aim was to help people with their recoveryfrom a stroke, and improve health and well-being for the person and their family.

To develop a budget-setting tool, the head offinance and the finance lead in one primarycare trust (PCT) looked at the actual cost datafor a sample of 51 people, to identify thecosts of services used following a stroke overa 2-year period. The costs of all the servicesused that were related to the stroke – otherservices such as podiatry were excluded. Inaddition, the level of need for each personwas rated as mild, moderate, severe or verysevere, depending on the level of impairmentand prospects for recovery. This allowedaverage costs to be calculated for each levelof need. These costs were used as the basisfor a budget-setting tool.

People offered a personal health budget in the pilot were assessed to decide which of the four bands should be used for budget setting. The budget was then used to help to produce a care plan. However,everyone in the pilot had a notional budget,so the budget needed to be used on services or equipment that the NHS was able to procure.

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There was some useful learning from this approach:

n Once the tool had been developed, itprovided a quick and simple way tocalculate a budget.

n It helped to make costs clearer, enablingpeople to make a choice on how to usetheir budget.

However, there were also disadvantages:

n It took a lot of work to gather the data oncosts and it was not always clear whatshould be included.

n Some budgets were too low or too high andneeded to be adjusted. In particular the tooltook no account of carers’ needs, or thedegree of support being provided by informalcarers which could make a big difference tothe amount of formal services needed.

n Some people recover faster than others,and both the budget and the care planneeded to be changed regularly.

n The needs scale was based on judgement, as there is no nationalassessment for stroke.

The stroke network has begun developing anew tool, which is based on the decisionsupport tool used across England for NHSContinuing Healthcare. This requires a multi-disciplinary assessment, with the person'sneeds rated on each of 12 domains. This willthen be used to identify the person's level ofneed on a 5-point scale of bands. It isintended that the tool should also take intoaccount other health conditions and theneeds of informal carers.

Costing previous use of NHS services

This approach to budget setting is based oncalculating the whole cost of the services usedby a person in the last 12 months, and usingthis to set the budget. Use of primary careand emergency services is excluded.

This approach was used in one pilot site thathad access to particularly good informationabout use and costs of services at anindividual level. This information proved veryuseful to other pilot sites, but it was evidentthat it in most places it is currently verydifficult to fully cost the use of NHS services inthis way. Also, a person's future needs maynot be closely related to their past use ofservices. In practice such a system could bevery complex to implement.

Example: Torbay

In Torbay, personal health budgets have beenoffered to people with a wide range of long-term conditions, including people withParkinson's disease multiple sclerosis, epilepsy,acquired brain injury and people who havehad a stroke.

In the pilot, personal health budgets weredeveloped by Torbay Care Trust – anintegrated health and social care trust. Thetrust has an information system called Mede,which records all use of health and social careservices at an individual level. This hasenabled managers to calculate the actualcosts of services for people offered personal

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health budgets. This provided very useful anddetailed data, unavailable in other sites.

People in Torbay were not provided with anindicative budget. As part of the support planinformation about their spend on health andsocial care services in the last 12 months wasmade available and discussed. This enabledmore informed decision making regardinghealth and care support in identifying whethergoals and outcomes were being achieved andif not how a personal health budget may beused to achieve their identified personal goals.This information was used to help understandif outcomes were already being met throughsocial care funding, to avoid funding the sameneeds twice. In some cases this has meant thatpersonal health budgets have not beenrequired. Other people have been offeredsmall, one-off personal health budgets. It hasproved possible to reduce costs for somepeople – for example by providingrehabilitation at home rather than in aspecialist residential service.

Example: Bedfordshire

In Bedfordshire, personal health budgets have been offered to individuals who havesurvived a stroke, have multiple sclerosis orParkinson’s disease. To be eligible, people hadto be getting an NHS service such asphysiotherapy, occupational therapy or speech and language therapy.

Initially budgets were based on the value ofan individual’s current therapy. For example, ifan individual was due to receive three sessionsof physiotherapy each week for the next 10

weeks, and it cost NHS Bedfordshire £30 persession, then their budget would becalculated at £900.

However, in practice it was found that withlong-term conditions, it is impossible topredict what services the individual wouldneed to access in the future. So, although thismethod could be useful, the individual wouldneed continuous re-assessments in order toprovide additional funding if their needschanged. The time this would take couldmake this an impractical option.

Example: Teesside

In Teesside, personal health budgets havebeen offered to people with chronicobstructive pulmonary disease (COPD), longterm neurological conditions, people in receiptof NHS Continuing Healthcare and peoplewith long-term pain.

At the start of the pilot NHS Tees calculatedindicative budgets by costing each person'suse of NHS services over the previous 12months, excluding primary care andemergency admissions. This approach was verytime consuming and would not be sustainablewhen personal health budgets were rolled out.

NHS Tees is looking at other ways to setbudgets. One option is to offer a flat ratebudget based on average costs – for example£800 to a person with COPD. Another optionis to develop an outcomes-based tool, whichcould work for a wide range of people, ratherthan set budgets based on the person'shealth condition.

Joint health and social care budgets

Some pilot sites have offered joint budgets topeople eligible for social care and who alsohave health needs. This has been on a smallscale, and each site has taken a differentapproach. For example, the personal budgetfor social care can be calculated by thecouncil, while the NHS carries out anassessment of the specific health needs andestimates the cost that would normally bespent. This amount is added to the personalcare budget to make a joint budget.

Another option is to develop a joint budget-setting system that looks at the whole of theperson's needs and calculates a budget. TheNHS and the council then agree how to sharethe cost, depending on the extent of theperson's health needs.

In principle, these approaches could enablethe whole of a person's care and health needsto be included in a single plan with a singlebudget. In practice, sites have found thatthere are many issues to work through todevelop joint budgets. The approaches to thatthe budget setting used so far could bedifficult to scale up. The budget could changefrequently for people whose conditionfluctuates or whose health improves so thatthey are no longer eligible for the healthcomponent of the budget. The social carepart of the budget is means-tested, while NHScare is free – so it is important to have a clearbasis for identifying the NHS contribution.These issues mean that the process is likely toinvolve extra steps for the budget holder and

for staff. There is a risk that health and socialcare needs are separated rather than lookingat the person's needs as a whole.

Example: Oxfordshire

In Oxfordshire over 300 people now havejoint health and social care budgets, withmany of these having a significantcontribution from the NHS to their care. Socialservices carry out an initial assessment and atthe same time check whether the person hasany health needs. If so, social services makes areferral to the NHS shared care team.

The PCT has developed a list of delegatedhealth tasks, which can be funded by theNHS. This has five levels according to the levelof skill required.

The time taken to complete each task iscalculated and this is converted into a cost.Based on the health needs identified in theassessment, this is used to calculate the NHScontribution to the joint budget. This can bemade as a direct payment, in addition to thesocial care personal budget. The NHS fundingmay be time-limited – for example supportwith taking medication for 6 weeks.

Example: Nottingham

In Nottingham, if a person is assessed aseligible for a joint funded support package,the council and the NHS use the social careresource allocation system to calculate a totalindicative budget. A support plan is thenwritten around this indicative budget,including input from a lead clinician.

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The support plan is then submitted to thehealth and social care panel that then decidewhat percentage of the total package shouldbe funded by health. This share is set on acase-by-case basis taking account of theextent of the health needs identified in theassessment. This has worked on a small scale,but would not be ideal if more people takeup joint budgets.

Flat rate, one-off budgets

People are offered relatively small personalhealth budgets, up to a fixed maximumamount. The money may be given for aspecific purpose. For some people, thepurpose may be to promote recovery; forothers it could be given as a preventionmeasure. The person continues to usemainstream NHS services, although part oftheir plan may be to reduce their reliance onthese services.

Alternatively the budget can be set to matchthe cost of a specific treatment or service,such as a course of therapy that the personwould normally be offered. The person canthen choose whether to take the service or touse the budget in a different way.

This approach has been tried in mental healthservices, and can fit well with the recoverymodel. However, it could also work for otherpeople. It has the potential to enable people toachieve a much wider range of outcomes, such

as education, work and reducing socialisolation, which could then in turn reduce theirneed for NHS services. While the approachprovides a simple way to set budgets, it canonly be put into practice on a large scale ifsome money is released from mainstreamservices. There is also a risk of increased costs ifsome people will continue to use mainstreamservices in addition to the budget. Theapproach does not enable people to control allthe resources spent on their support.

Example: Merseyside

In Merseyside, people with mental healthproblems have been offered personal healthbudgets as part of the pilot programme,which covers the areas served by Liverpool,Knowsley, and Sefton primary care trusts(PCTs). Mental health services in these areasare provided by Mersey Care NHS Trust.

This builds on an initial pilot that Mersey CareNHS Trust initiated that offered individualrecovery budgets to service users in the earlyinterventions in psychosis service. Over 150people have been offered one-off budgets ofup to £400 (also known as individual recoverybudgets).

A voluntary organisation, Imagine11 hasprovided support planning and brokerage topeople who have been offered a personalhealth budget. An advisor from Imaginespends time with each person and theirfamily, to help them to think through what

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11 www.imaginementalhealth.org.uk

http://www.imaginementalhealth.org.uk

they want to achieve and how they might goabout doing it. The support plan is thendiscussed and agreed with a healthprofessional, for example the person'scommunity psychiatric nurse, social worker oroccupational therapist.

People define their own health and social careoutcomes, (what in their view will contributeto their recovery and keep them well), andthe intended outcomes are recorded in thecare programme approach care plan. As longas the money is used in ways that are legaland safe, it can be used in any way thatmakes sense to the service user.

One-off recovery budgets have been used tohelp people to get back to work, foreducation and training, for holidays, and forother leisure activities. The money has beenused in ways that are very different toconventional NHS services, but which haveenabled people to achieve goals that aredirectly linked to better mental health andenabling them to rebuild their confidence.The items bought include: bus passes, singinglessons, art classes, equipment to start abusiness, fishing tackle, garden tools, laptops,computers, gym membership, short breaks,relaxation sessions and bikes. Six service userspooled their money to set up an allotmentusing vouchers for a local gardening centre.

Example: NHS Outer North East London

In the pilot personal health budgets wereoffered to people with COPD, diabetes andstroke. It proved difficult to release moneyfrom existing services to provide funding for

personal health budgets, so a separate fundwas created. The budgets were set withoutreference to the usual costs of services or theperson's previous use of services. Instead,each person was offered a one-off budget ofup to £500. Most people opted to take this asa direct payment.

This approach had the advantage of beingsimple, but some practical problems emerged:

n It was not easy to decide who should get apersonal health budget; some people weregiven a budget who would not previouslyhave had a service at that time.

n The person's condition in itself is not agood way to decide eligibility; for examplepeople with diabetes vary greatly in theiruse of NHS services.

n Some people who had a budget alsocontinued to use services leading to double-running costs.

n Some people found the idea of an indicativebudget confusing and would prefer toknow the exact amount of the budget.

To implement the approach more widely thefollowing steps would be necessary:

n Clearly define who can get a personalhealth budget.

n Be able to release money from existingservices, for example by changing contractsto enable this to happen.

n Decide which elements of a service orpathway should be replaced by a personal health budget, and ensure that the budget is instead of rather than inaddition to services.

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Since the pilot no further budgets have beenoffered to people with long-term conditions.NHS Outer North East London has insteadfocused on implementing personal healthbudgets for people eligible for NHSContinuing Healthcare, including children. Thepilot originally covered Havering and Barkingand Dagenham and has been extended toinclude Redbridge and Waltham Forest.

Payment by results

Payment by results is the payment system inEngland under which commissioners payhealthcare providers for each person seen ortreated, taking into account the complexity ofthe person's healthcare needs. Payment byresults currently covers the majority of acutehealthcare in hospitals, with national tariffsfor admitted patient care, outpatientattendances, accident and emergency (A&E),and some outpatient procedures.

The Government is committed to expandingpayment by results by introducing currenciesand tariffs for mental health, community andother services. A year of care funding model isbeing developed for people with long-termconditions. The scheme will enablecommissioners to pay providers to care for aperson with a long-term condition for a year,rather than receive payment each time thepatient is admitted to hospital.

In mental health, a new system forcommissioning mental health services is beingimplemented nationally. It currently involveseveryone who is referred to adult mentalhealth services receiving a robust assessmentof their needs. These needs are then matchedto one of a possible 20 care clusters.12 Eachcare cluster package is designed to meet theperson’s needs at that time. It is expected thata person may move between care clusterpackages according to their needs at the timeof review. Each cluster will have a tariff setlocally which would indicate the price ofmeeting that person’s need within that carecluster. It is therefore possible to develop apathway whereby following initial assessmentand the matching of the persons’ needs tothe care cluster, the person is asked whetherthey would like to consider a personal healthbudget and the care cluster price is used toindicate the the level of budget to support the personal plan.

Currently the majority of services are providedthrough block contracts to NHS trusts. However,within the tariff for the care cluster it ispossible in future to have different elementsof the person’s needs provided by differentservices, such as social care or third sectorservices. Mental health payment by results isnot setting specific, but focuses on ensuringthat services are provided to a recognisedstandard of care and support to meet theidentified need. Therefore partnership and

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12 Information and guidance on payment by results is available on the Department of Health website.Of 21 clusters only 20 are currently in use.

collaborative approaches maybe taken byproviders to enable good coverage ofprovision to meet the person’s needs.

Payment by results is intended to improvecommissioning at a population level, andprovides an average payment for people witha similar level of need.

At an individual level, there are a number offactors which can affect the extent to which aperson makes use of NHS-funded services andwhich therefore affect costs; these need to beconsidered when setting budgets for peoplewith mental health problems:

n Informal support provided by family, friends and other informal carers (this istaken into account in one of the paymentby results assessment scales).

n Use of social care services – in some places budgets are pooled, in others servces are integrated, elsewhere servicesare provided separately.

n Some people also have physical health problems and make use of other NHS services.

It makes sense for the personal health budgetand care plan to cover the whole of theperson's needs. The payment by resultssystem is currently condition-specific in that itreimburses providers for treatment of eachspecific condition in the case of acute servicesor assessed level of need in the case ofmental health services. Community servicesfor physical conditions are still currently paidfor under block contracts. Ways of combining

different payment mechanisms to create asingle budget would be needed.

These issues have been explored in moredetail in a useful report from the Centre forWelfare Reform, which can be found on thepersonalisation learning network.13

Despite these complicating factors,commissioners in personal health budget pilotsites have found that payment by results isproving to be a useful tool both at a populationlevel and when developing care plans withpeople taking up personal health budgets.

Example: Northamptonshire

In Northamptonshire, personal health budgetswere offered to people with mental healthproblems during the pilot. The commissionerfor mental health services worked closely withthe project manager for personal healthbudgets and the mental health trust todevelop the approach.

The commissioner and the mental health trustagreed to vary the normal contract arrangementsfor people taking part in the pilot. For peoplewho had a personal health budget, the trustwould only be paid for the actual use by thatindividual of the trust’s services. This enabledmoney to be freed up which the person couldspend in different ways.

For people taking up personal health budgets,the use of services in the last 12 months wascalculated, to give a baseline. The mentalhealth trust provided detailed information on

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13 Resource allocation in mental health, Centre for Welfare Reform, 2010.

costs, so that the cost of each contact aperson had with mental health services couldbe calculated. Each person then worked witha care co-ordinator to estimate what theymight have used in the following year if theycontinued to use services.

The total cost of these services was used asan indicative budget, and this figure was usedto help each person develop a support plan.The budget could be used flexibly. Somepeople opted to see their communitypsychiatric nurse or psychiatrist less often. Thisfreed up money to be used in other ways thatwould enable people to achieve the outcomesthat were important to them. For example:

n Amanda negotiated with her social worker,who she had been working with for sixyears, to release £4,600 from her personalhealth budget of £10,500 to buy twiceweekly counselling sessions, which both ofthem felt may help her to improve herhealth and help her meet the healthoutcomes she wanted to achieve. Theremaining £5,900 was budgeted to allowfor three psychiatrist contacts and 25 socialworker contacts during the year.

n Brian was given a budget of £4,800. Hedecided with his OT that 12 contacts withher, at a cost of £2,400, would be sufficientduring the year, particularly if he wasmaking progress towards his healthoutcomes. The rest of the budget was useto buy IT equipment, a personal assistantfor two hours per week, some new clothes,a drum kit and physiotherapy.

During the pilot, the trust was preparing forthe introduction of payment by results intomental health services, which started in April2012. This work is expected to continue overthe next few years before full implementationof a payment by results system is in place. Aspart of this work, it was agreed to test outwhether payment by results could also serveas an opportunity to transform services andimprove personlisation. It also had thepotential to provide a robust, standardisedapproach for assement of need andidentifying a price payment to services formeeting those needs.

During 2012-13 work has been underway toidentify the average costs for delivering servicesfor each care cluster. The new type of contractbetween the commissioner and the provider isbased on the number of people using servicesduring the period for each cluster. By makingcontracts more transparent and based on anindividual’s need, payment by results could intheory at least help to remove one of theobstacles to introducing personal healthbudgets in mental health services.

The commissioners in Northamptonshire arenow working in partnership with the mentalhealth trust to include the option of apersonal health budget for people with amental health problems as part of mainstreamservices to begin roll out from April 2013. Asteering group, chaired by a service user, hascome together to drive the work forward. Thegroup is developing a memorandum ofunderstanding between the organisationswith clear aims and objectives, one of which

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is to develop, in partnership, a proposal for aCommissioning for Quality and Innovationgoal for the 2013/14 contract and to linked tothe development and implementation locallyof mental health payment by results.14

This work includes exploring the possibility ofusing the locally agreed prices for care clusterpackages as a useful guide to the size of apersonal health budget.

The Department of Health reference costspublication for 2011-12 , for the first timedetails the assessed cost of care for eachcluster for each provider.

Commissioners are keen not to develop a twotier system of care for people accessing NHSservice but to ensure that all those using serviceshave the same opportunities. The aim is toensure that all care cluster packages offer peoplechoices and personalised care. Where the personstates it is their wish, their budget and care plancan be held by themselves (or a preferred otheron their behalf) as a personal health budget.

Outcome-based budgets

This approach extends the idea of flat ratebudgets. It involves developing a menu ofoutcomes, which are relevant to people witha wide range of health problems. Outcomesmight be linked directly to healthimprovement – such as improving mobility,getting more exercise, losing weight, reducing

drug or alcohol use, stopping smoking andreducing anxiety or depression. It would alsobe possible to include support for familycarers, or outcomes known to be indirectlylinked to health – such as social contact,education and work opportunities.

For each outcome, a budget can then beestimated based on the cost of what the NHSwould normally spend on services intended toaddress that outcome. So for example, thebudget for reducing anxiety or depressioncould be based on the cost of cognitivebehaviour therapy. The budget could bevaried according to level of need on a scale ofhigh, medium, low or no need – giving anincrease or decrease in the budget.

When a person is referred, the budget-settingtool would be part of a conversation with aNHS professional, leading to an agreement onwhich outcomes are relevant to the person'shealth, and at what level of need. The personwould then be given an indicative budget,and use this to help develop their care plan.For each outcome, the person would be ableto choose whether to use the commissionedNHS service, or use the budget in a differentway. For each outcome selected, the planwould include an agreed progress measure.

This approach has the advantage that it couldwork for people with a wide range of healthneeds, and people with multiple healthconditions. If used in primary care, it has thepotential to lead to efficiencies, by preventing

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14 The Commissioning for Quality and Innovation (CQUIN) payment framework enables commissionersto reward excellence by linking a proportion of providers’ income to the achievement of localquality improvement goals.

people needing to be referred multiple timesto different secondary healthcare services. The approach could also be adapted toinclude outcomes linked to recovery – such as rehabilitation following a head injury orstroke, but as part of a generic approach,rather than developing a different model foreach condition. For people eligible for socialcare, it has the potential to be developed as asystem to set joint budgets.

So far, this approach has only been tested onsmall scale. This has resulted in relatively smallbudgets of under £500, although such asystem could lead to much larger budgets. Itwould need more development work to testwhether the approach could be used on awider scale.

Example: Dorset

Dorset PCT decided to try using personalhealth budgets as a different way to enablepeople to recover following a brain injury. Sofar three people have taken up a personalhealth budget. Of these two live in the northof the county, outside the area covered by thecommunity rehabilitation service. The personalhealth budget was set based on the cost thatwould normally be expected for a package ofrehabilitation for each person.

This early work has proved successful. There isgood evidence that the three people have mettheir goals for recovery faster than the norm.The key features of the arrangements werethat goals were set at the start of the process,and a person-centred plan put in place,ensuring that the day-day support

arrangements remain focused on helping theperson achieve their goals.

This work has demonstrated the potential forpersonal health budgets to be given forrehabilitation, linked to specific goals forrecovery such as returning home andreturning to work. The PCT now plans toextend the use of personal budgets toapproximately fifteen people likely to needrehabilitation after leaving hospital. It is alsolooking at whether other people living inresidential rehabilitation units could beenabled to return home through having apersonal health budget.

Example: Nottingham

In Nottingham, personal health budgets havebeen offered to people eligible for NHSContinuing Healthcare, people with long-termneurological conditions such as Parkinson’sdisease, and people with dementia.

Early on in the pilot, budgets for people withlong-term conditions were set by calculatingthe cost of the services that the NHS wouldnormally offer. For example, if a person mightbe expected to have six sessions ofphysiotherapy, the cost of this would beestimated, and that amount was offered asthe budget. The person's care plan specifiedhow the money would be spent – the personcould continue to use the conventionalservices, or choose to spend the moneydifferently. This method had somedisadvantages. Basing costs on commissionedservices made it harder for staff and personalbudget holders to think of alternatives. It

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maintained a focus on specific healthconditions and health services rather thanencourage a holistic approach to careplanning. It could cause staff to worry thattheir service might be reduced as a result ofpersonal health budgets.

As a result of this learning, managers inNottingham have begun to develop anoutcome-based method of budget setting.Instead of specifying services, the tool listshealth outcomes, and identifies the costs thatmight usually be expected to be spent oncommissioned services that were linked tothat outcome. For each outcome, a high,medium or low cost is calculated based ontypical costs plus or minus 33%. The personand a clinician agree which outcomes theperson should be included in the care plan,and agree the cost band for each outcome,depending on the person's level of need.Some outcomes might be more relevant forpeople with specific conditions, but the toolaims to be holistic. The outcomes included inan early version of the tool included improvedbalance and mobility, prevention of hospitaladmission, reduced medication, improvedbreathing, control of blood sugar levels,reduced GP contact, health training/education,improved health of carers, improved speechand language and improved nutrition.

For improved balance and mobility, thebudget was calculated based on the typical cost of six sessions of NHSphysiotherapy – high needs £317, medium £238, and low £159.

In early testing of this approach, severaladvantages of the outcomes-based approach emerged:

n It encourages a focus on the whole of the person's health needs rather thanjust one condition.

n It helped everyone to be clearer about goals that the plan needed to achieve and to explore a range of options for how these could be achieved.

n The outcomes could be included in support plans, and linked to progressmeasures such as blood sugar levels anduse of medication.

So far two people have been offered personalhealth budgets based on this approach. Onewas offered a budget based on improvingbalance and mobility and chose to access thegym, the other was offered a budget toimprove mood and chose to access massageand other holistic therapies. Their budgetswere £238 and £398 respectively.

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Personal health budget pilot sites haveused a range of approaches to setbudgets. Each of these has advantagesand disadvantages. Some of theseapproaches may be a good way to getstarted with personal health budgets, butmay be difficult to implement for largenumbers of people.

It is not necessary to develop a sophisticatedbudget setting tool before beginning to offerbudgets; it is better to start on a small scaleand learn from experience. Whicheverapproach is taken, it is important to keep thepurpose of personal health budgets in mind,keep the focus on outcomes and keep thesystem simple and flexible for people withpersonal health budgets and front-line staff.

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6 Conclusions

Gateway Ref No. 18328

Personal health budgets team

Websites: www.personalhealthbudgets.dh.gov.uk/toolkit

Email: [email protected]

Department of Health customer service centre: 020 7210 4850

http://www.personalhealthbudgets.dh.gov.uk/toolkit

mailto:[email protected]

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How to set budgets â€“ early learning from the personal health budget

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