payment
REUTERS/Toby Melville
The benefits of using PbR are: •
The provider bears the performance risk. If it does not perform well, it will not get paid.
•
It represents value for money and accountability as the public body only pays if the service delivers.
•
It enables more freedom on the provider to innovate. The idea is that if the provider bears the risk, they decide how to achieve the outcomes with as little prescription as possible from the commissioner. So the specification for the service will be very pared down, expressing the outcomes may be enough.
Spotlight on the Work Programme The Work Programme, launched in June 2011, aims to enable the long-term unemployed back into work. The payment is composed of three elements: •
Attachment fee: a fee for service component to providers of £400-600 in year one, reducing to nothing in later years of the contract, claimed when a participant joins the programme.
•
Job outcome fee: a PbR component of £1,000-3,500, claimed after a participant has been in work for three or six months.
•
Sustainment payments: a PbR component of £2,200-9,600, claimed for up to two years for every four weeks that a participant remains in work4.
The model therefore places considerable risk on providers for as long as two years after service commencement. http://data.gov.uk/sib_ knowledge_box/paymentresults-history 5 Does sector matter? Understanding the experienced of providers in the Work Programme, James Rees, Rebecca Taylor and Chris Damm, Third Sector Research Centre (February 2013) 4
In addition, payments were weighted depending on the benefit the participant had been claiming, with enhanced payments for those considered hardest to place. However, in spite of those additional incentives, the model has raised complaints of “creaming and parking” (see below), the practice of focussing services on those most likely to be placed, and therefore to trigger payment, and ignoring those hardest to place.5
LOC ALG OVL AW YER .CO.UK
7