Funding of mental health services: Do available data support episodic payment?

Research output: Working paperDiscussion paper


The primary method of funding NHS mental health services in England has been block contracts between commissioners and providers, with negotiations based on historical expenditure. There has been an intention to change the funding method to make it similar to that used in acute hospitals (called the National Tariff Payment System or NTPS, formerly known as Payment by Results (PbR)) where fixed prices are paid for each completed treatment episode. Within the mental health context this funding approach is known as episodic payment. Patients are categorised into groups with similar levels of need, called clusters. The mental health clustering tool (MHCT) provides a guide for assignment of patients to clusters. Fixed prices could then be set for each cluster and providers would be paid for the services they deliver within each cluster based on these fixed prices, although the emphasis to date has been on local pricing. For this episodic payment system to work, the MHCT needs to assign patients to clusters, such that they are homogenous in terms of 1) patient need, and 2) resource use.
Original languageEnglish
Place of PublicationYork, UK
PublisherCentre for Health Economics, University of York
Number of pages82
Publication statusPublished - Oct 2016

Publication series

NameCHE Research Paper
PublisherCentre for Health Economics, University of York


  • Health of the Nation Outcome Scale (HoNOS)
  • Mental Health
  • Payment System
  • National Tariff Payment System (NTPS)
  • episodic payment
  • Mental Health Clustering Tool (MHCT)
  • Mental Health Services Dataset (MHSDS)

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