The HCW is in charge of commissioning specialist treatment in Wales
Health Commission Wales (HCW), the controversial body which controls specialist NHS treatment, should be scrapped, an official report says.
The report, ordered by Health Minister Edwina Hart, found fundamental flaws in HCW's establishment and said it should be replaced by an independent body.
HCW was inadequately planned and not allocated enough money, it said.
Ms Hart said the new panel would increase patient and public engagement in a difficult decision-making process.
She said: "I am not one of those people who believes that lay people cannot be trusted to be involved in these sorts of decisions.
"I am convinced that substantially-increased engagement by members of the lay public in these profoundly difficult decisions will lead to improved transparency and public confidence in both the processes and its outcomes."
Ms Hart said she had asked report author Prof Mansel Aylward to provide further advice and, after consultation, to deliver a set of detailed working proposals.
The review came after several patients campaigned against decisions to deny them costly medical procedures.
HCW, which was set up in 2003, has a budget of almost £550m which pays for treatments normally unavailable on the NHS in Wales.
It looks after many forms of specialised care - from brain surgery to transplants, eating disorders to cancer care.
The new system should ensure that patients can expect timely, high quality and transparent decision-making and management of complaints
Prof Mansel Aylward
But the report found fundamental flaws in the way HCW was established, poor governance arrangements and an unsound budget allocation.
This has led to confusion over commissioning responsibilities and has left some patients paying the price, according to the report.
Prof Aylward said, in some cases the best interests of the patient were compromised.
The review also found that HCW does not have a management board with an independent chair to provide support and challenge to the organisation.
Rushed and fragmented
Due to the lack of these supporting arrangements the review concluded that senior managers were unable to operate effectively and flexibly.
An investigation into the way the assembly government determined HCW's budget was carried out but the review found this process was rushed and fragmented.
Prof Aylward cited problems arising with patients trying to move from medium secure forensic mental health facilities to low secure facilities.
HCW is legally required to commission services for patients with these needs but when patients have improved and are ready to "step down" to low secure care, which is the responsibility of LHBs, there are often insufficient places available to accommodate them.
As a result, the review found that a patient may have been inappropriately held in medium secure mental health facilities for more than three years, costing millions of pounds.
It has been recommended that HCW be replaced by an independent body
"The cost is currently incurred by HWC which has confirmed that this is a major cause of its overspend," said Prof Aylward.
"These delays... raise questions about whether there has been appropriate recognition of the rights of the patient, including possible breaches of the Human Rights Act.
"This situation is unacceptable and is in need of urgent resolution by the Welsh Assembly Government."
In the review, Prof Aylward recommends that HCW is replaced with an organisation independent from the assembly government.
He also said a budget should be allocated based on a regularly updated definition of specialised services.
An appeals board independent of the new organisation should also be set up to revise and amend the original commissioning decision on a patient, he said.
"The new system should ensure that patients can expect timely, high quality and transparent decision-making and management of complaints," said Prof Aylward.
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