It flagged up the recent Audit Commission report that has suggested that errors in estimating PBR costs may vary by up to 10%.
Dr Michael Dixon, chairman of the NHS Alliance, said that this level of error 'may well be the equivalent of total savings required at a time of deficit'.
The independent body said that tariff prices have sometimes been set high, inflating NHS costs. They also suggested that PBR has encouraged acute trusts to increase the volume of activity regardless of benefit.
The NHS Alliance recommended PBR should be regarded as maximum price payable for a procedure rather than average cost. It said that this will allow some trusts to undercut PBR to benefit patients and taxpayers and allow PCTs to tender according to best value.
Dr Dixon said: ‘Freezing costs, as PBR has, is no longer appropriate at a time when every part of the NHS will be financially stretched.'
He added: ‘It is time to redress the balance and give commissioners the power to choose and the ability to save money.'
A DoH spokesman said: 'Independent evaluation has found that PBR has led to lower costs of care. If the tariff price was the maximum allowable price it would reintroduce negotiation around price, causing a lack of transparency and very serious problems for those services where the cost is currently above average.'
He added that the reference to the Audit Commission report was misleading, since it estimates the impact of errors found on tariff income and while the errors which are identified can lead to too much being paid to providers, they can equally lead to too little being paid.
The spokesperson added that these Audit Commission figures are 'based on small, targeted samples and the results cannot be extrapolated with any significance'.
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