As the government prepares to introduce free nursing care for people in nursing homes next month, Jon Glasby warns of some of the potential pitfalls in the financing system and how they could lead to cost-shunting.

I understand that the government intends to introduce free nursing care for people in nursing homes. How will the new system work?

The government's commitment to provide free nursing care to residents in nursing homes was announced as part of the NHS Plan in response to the Royal Commission on Long-Term Care. It was the belief of the Commission that all personal care (the additional cost of being looked after arising from frailty or disability) should be free to older people in care homes and that individuals should only pay for their housing and living costs (food, heating, lighting and the equivalent of rent and council tax).

This recommendation was rejected by the government, who felt that it would be too expensive, without necessarily improving services at all.

(Controversially, the Royal Commission's recommendations look set to be implemented in Scotland and the government may find itself under increasing pressure to follow suit.)

Instead of free personal care, the government is offering free nursing care. This is defined in the Health and Social Care Act 2001 as: "Services provided by a registered nurse and involving either the provision of care or the planning, supervision or delegation of the provision of care, other than services which, having regard to their nature and the circumstances in which they are provided, do not need to be provided by a registered nurse."

In July 2001, the government launched draft guidance and draft directions for implementing free nursing care. The consultation closed on 13 August 2001, with implementation to begin on 1 October. From this time, people funding their own care in nursing homes will no longer have to pay for registered nursing care where the NHS assesses such care as needed. To carry out the assessment, a nurse trained in the process will estimate the Registered Nursing Care Contribution (RNCC).

At the time of writing, details of how to assess the RNCC are not available, although the Department of Health promises that a draft tool will be available on its website.

It is currently envisaged that the NHS will pay nursing homes one of three different weekly fees, depending on the needs of the resident: £110 (high), £70 (medium) and £35 (low), although these levels have not been finalised. To implement the new system, health authorities or primary care trusts should identify a nursing home co-ordinator to act as budget manager and a lead nurse to provide advice, monitor the quality of nursing assessments and ensure staff are trained to use the RNCC.

From 1 April 2002, the NHS will also become responsible for assessing and funding nursing care required by nursing home residents supported by local authorities, and residents who entered care prior to 1993 and receive support from the Department for Work and Pensions.

Although it is early days, the new system may cause difficulties:

- Nurses will be involved in determining residents' access to financial resources. Depending on their assessment, residents will get free nursing care or have to pay fees for personal care deemed to be non-nursing in nature. While social workers have expertise in managing such financial tensions, it may be a new experience for nurses.

- There is a clear incentive in the system for health and social services to pass costs off on each other, with local authorities claiming that an individual has nursing needs, while the NHS claims they are merely personal care needs. At a time when the government is seeking to promote joint working between health and social care, the introduction of free nursing care has the potential to lead to further cost-shunting and disagreement between agencies that should be working in partnership.

Although only time will tell, the next few months are unlikely to be easy as the new system begins to operate.

John Glasby is a social worker and co-author of Paying for Social Services, a local government finance guide for socialworkers.