How does a primary care trust (or GP practice or commissioning group) know if it is getting value for money? Where is it paying more than expected? Likewise how does a hospital know where it is charging more or less than expected?

The annual cost for admitted patient care through payment by results to a PCT is£30m-£350m (depending on its size) and equivalent income for an acute hospital is£40m-£270m (excluding market forces factor).

The healthcare resource group determines the national tariff, the base from which a patient's tariff is calculated. The HRG in turn is determined mainly by procedure and diagnosis coding so variations here have a direct effect: there will be excess cost to a commissioner if, on average, their patients get coded to costlier HRGs.

The first chart provides examples of 10 (anonymised) PCTs. The figure on the right shows the proportion of tariff cost judged to be excess - ie coded at a more expensive level than national patterns would predict. It includes the five PCTs paying most excess and the top five paying less than expected. To be clear, for the first PCT, 11.65 per cent of the tariff income is 'excess', while the last PCT paid 10.99 per cent less than expected given the national distribution of HRGs.

The second chart takes the PCT paying the most excess and breaks down the data by specialty. Clearly there is huge variation in excess HRG tariff, from the£367,000 excess in female reproductive system to hepto-biliary and pancreatic system where the PCT is actually being charged 1.9 per cent less than would be expected.

The third chart shows 5 PCT/HRG combinations with large excess tariffs or 'HRG drift'. All show at least 90 per cent of the cost as excess.

The important point is that, rather than being caused by cynical gaming, there seem to be reasonable explanations for the excesses. The first example (normal delivery) is a specialist unit likely to be dealing with more complicated cases. The next three examples (renal replacement and disease) are likely to be caused by regular attenders being incorrectly coded as ordinary admissions. The fourth one (biliary tract - very major procedures) is a clear example of no cholecystectomies having been coded. The last excess for respite care suggests that age is not always adjusted for as strongly as it should be.

While gaming undoubtedly goes on, this analysis shows there are often innocent explanations for excessive charges that can be easily dealt with between trust and provider.