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Accountable care organisations

Health iStock 000005083391XSmall 146x219The Administrative Court recently considered a challenge to the creation of a new model for the provision of health and social care in England. Jonathan Auburn analyses the outcome.

The proposal at the heart of the dispute in R (Hutchinson & Anor) v Secretary of State for Health and Social Care & Anor [2018] EWHC 1698 (Admin) was the Accountable Care Organisation model (“ACO model”). At present, local Clinical Commissioning Groups (“CCGs”) arrange the provision of health care in their areas by entering into contracts with health care providers. CCGs have a wide statutory discretion in carrying out this procurement process. Nevertheless, common practice is that CCGs enter into a number of contracts with a range of different providers. These contracts may be relate to different services, and different localities within a CCG’s broader geographical remit. Further, these contracts tend to be short term: recent research shows that 50% of all contracts are for a duration of less than two years, with only a handful being over three years. In contrast to this current practice, the ACO model seeks to encourage contracts to be entered into with much larger organisations, to provide a wide range of health and social care services, over a broad geographical area, and for a long period of time (potentially 10 years). The purpose of this model is to achieve greater service integration and efficiency.

The ACO model is a policy. It will not be mandatory for local CCGs to adopt the ACO approach. The policy will be implemented through the use of NHS England’s power to draft model commissioning contracts for use by CCGs. NHS England have already produced a draft ACO model contract which, if finalised, CCGs can choose to use. While CCGs retain a discretion, the Secretary of State and the NHS Commissioning Board have been promoting the full use of the model. The effect of adoption of the ACO model at its ‘max’ (as Mr Justice Green put it) would entail a single ACO provider being responsible for most of the health and care services in a defined locality. They would be operating under a long-term contract, pursuant to which the ACO provider would be responsible for making a very high proportion of service provision, resource allocation and budgetary decisions. An ACO provider could be a public or private entity. This potential ‘max’ version of the ACO model was the subject of judicial scrutiny in the Hutchinson case.

The Claimants were healthcare specialists with strong professional interests in the provision of health care in England. They were supported by the British Medical Association. The Claimants contended inter alia that the changes proposed were so radical that they fell outside the scope of National Health Service Act 2006. They argued that changes of this nature required primary legislation, with attendant Parliamentary scrutiny.

The essence of the Claimants’ objection to the ACO model was that it amounted to a de facto delegation by CCGs of their statutory powers and duties to ACOs, and that this was impermissible under the National Health Service Act 2006. This was of particular concern, given that ACOs were not subject to statutory duties and accountability mechanisms imposed on CCGs under the 2006 Act. A further complaint was that the ACO model, as expressed to date, lacked clarity and transparency.

The Claimants lost on both grounds. In determining that the ACO policy fell within the scope of the 2006 Act, Mr Justice Green noted that the statutory duties imposed on CCGs are framed in broad and non-prescriptive language. Parliament had accorded CCGs a wide discretion as to how their functions are to be performed. Further, these duties are to be read in the context of the main responsibility of CCGs, which is to engage in commissioning. It followed that if CCGs are to observe and perform their statutory functions, they must in large measure do so through the commissioning process, by including in contracts with service providers obligations which reflect the duties placed on them. The Defendants had squarely considered, in the draft ACO model contract, what mechanisms would be necessary to ensure that CCGs could retain a measure of oversight and ensure compliance with their duties. The draft ACO model contract imposed a duty on ACOs to ensure they do not act in a way which would place the CCG in breach of any statutory duty. It also includes provision for continuing supervision to take into account changing circumstances, and for unilateral changes to the contract to be made in certain necessitous circumstances. Accordingly, Mr Justice Green held that the ACO model did not amount to an unlawful delegation by the CCG of their powers and duties: under the ACO model CCGs are still materially able to exercise their statutory functions. Therefore, the ‘max’ version of the ACO model was lawful, being within the scope of the 2006 Act.

The Claimants’ alternative challenge, concerning a lack of clarity and transparency in the ACO model, failed on the basis that it was premature. Mr Justice Green noted that the principle of clarity and transparency should not become engaged until an appropriate point, when the policy being challenged is sufficiently mature. Prior to this point being reached, a public authority should be given wide leeway to moot proposals, brainstorm, take soundings, play devil’s advocate, work up and then reject ideas, try out different texts or drafting proposals and then discard them, and even make mistakes, all without fear that inadequacies will be subjected to litigation. To impose the duty at too early a point could exert a chilling impact upon policy formulation. As the ACO model was currently at the pre-consultation stage, Mr Justice Green held it had not sufficiently matured to attract the application of the principle of clarity and transparency.

Jonathan Auburn is a barrister at 11KBW. He can be contacted on 020 7632 8500 or This email address is being protected from spambots. You need JavaScript enabled to view it.. This article first appeared on the set's Community Care Law Blog.

Clive Sheldon QC and Holly Stout of 11KBW appeared for the Secretary of State for Health and Social Care.

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