This chapter has been updated in June 2014
Payment to GPs under Practice Contracts with NHS England.
This chapter contains:
1.1 The payment which is due to the service provider under a commercial contract is one of the key features of the contract. However in GP practice contracts payment terms are not straightforward. The payment obligation depends on the type of GP practice contract and on whether the services which the contractor agrees to provide are essential, additional or enhanced services. Further the payment terms (as well as other terms) are reviewed on an annual basis and, for those practices holding GMS contracts, can be changed by the unilateral action of a person who is not a party to the contract, namely the Secretary of State. Changes cannot be made to PMS agreements without the consent of the contract holder.
2.1 The sums due to a GP practice that holds a GMS contract are only partially set out in the GMS contract but are mainly set out in Directions made by the Secretary of State. The Direction are known as the General Medical Services Statement of Financial Entitlement Directions (“the SFE”). This document defines the amounts that are payable for essential, additional and enhanced services to GP practices that hold a GMS contract.
2.2 The legal basis for payments being set by directions is in section 87 of the NHS Act 2006 which provides as follows concerning payments to GP practices that hold a GMS contract:
(1) The Secretary of State may give directions as to payments to be made under general medical services contracts.
(2) A general medical services contract must require payments to be made under the contract in accordance with directions under this section.
(3) Directions under subsection (1) may in particular—
(a) provide for payments to be made by reference to compliance with standards or the achievement of levels of performance,
(b) provide for payments to be made by reference to—
(i) any scheme or scale specified in the direction, or
(ii) a determination made by any person in accordance with factors specified in the direction,
(c) provide for the making of payments in respect of individual practitioners,
(d) provide that the whole or any part of a payment is subject to conditions (and may provide that payments are payable by the Board only if it is satisfied as to certain conditions),
(e) make provision having effect from a date before the date of the direction, provided that, having regard to the direction as a whole, the provision is not detrimental to the persons to whose remuneration it relates.
(4) Before giving a direction under subsection (1), the Secretary of State—
(a) must consult any body appearing to him to be representative of persons to whose remuneration the direction would relate, and
(b) may consult such other persons as he considers appropriate.
(5) “Payments” includes fees, allowances, reimbursements, loans and repayments”
2.3 Consideration of changes to the GP contract and the payment rates follows an annual cycle. The Secretary of State has delegated the job of negotiating the changes to GP contracts to staff at NHS Employers, who hold the consultations referred to in section 87(4). The “representative” tends to be the General Practice Committeeof the BMA. These discussions are often described as “negotiations” to seek to reach a common conclusion about changes to the GP contract and payment rates but, in law, this is a consultation. This means that the Secretary of State has to take due account of the views expressed by the GPC on behalf of working doctors but the Secretary of State remains as the ultimate decision maker. Hence the GPC can register its support or objection to a proposed change of terms but, once those consultations are completed, the Secretary of State makes the final decision. The Secretary of State then issues Directions which set out the changes to the existing SFE that affect GMS practices will be paid in the coming year.
2.4 In 2013 the Secretary of State revised the SFE and published an entirely new document rather than making Directions which contained reference to previous versions. The 2013 SFE can be accessed here. The 2013 Directions document runs to 141 pages. It is beyond the scope of this website to seek to describe every aspect of the payment system but it builds on previous structures. In 2014 the Secretary of State published Directions which built upon and amended the 2013 Directions. The 2014 amending Directions can be accessed here. It follows that the sums payable to a GMS practice in 2014 are set out in the 2013 SFE as amended by the 2014 SFE.
2.5 The Directions take effect as a term of the GMS contract by clause 18.1.2 (of the standard GMS contract published by NHS England) which provides:
“The Board shall make payments to the Contractor in such amount and in such manner as specified in any directions for the time being in force under section 87 or 98A of the 2006 Act.Where, pursuant to directions made under section 87 or 98A of the 2006 Act, the Board is required to make a payment to the Contractor under the Contract but subject to conditions, those conditions are to be a term of the Contract”
2.6 Thus the Directions made by the Secretary of State form a term of the GMS contract. The contract also includes “set off” provisions under which NHS England are entitled to set off any sums which are due to NHS England from the contractor against any sums payable under the Directions. All payments must be made promptly by NHS England under clause 18.1.1. which provides:
“>The Board and the Contractor shall make any payments under the Contract promptly and in accordance with both the terms of the Contract (including, for the avoidance of doubt, any payment due pursuant to clause 18.1.2), and any other conditions relating to the payment contained in directions given by the Secretary of State under section 87 of the 2006 Act, subject to any right the Board may have to set off against any amount payable to the Contractor under the Contract any amount-
a) that is owed by the Contractor to the Board under the Contract; or
b) that the Board may withhold from the Contractor in accordance with the terms of the Contract or any other applicable provisions contained in directions given by the Secretary of State under section 87 of the 2006 Act”
2.7 In practice payments are made monthly by NHS England to GMS practices.
3.1 The power to set up different types of commercial arrangements with GP practices was first set out in the NHS (Primary Care) Act 1997. That power is now included in the NHS Act 2006 (as amended by the Health and Social Care Act 2012). These new forms of agreement were originally temporary but were made into permanent agreements in 2004. Section 94 of the NHS Act provides that the Secretary of State can make Regulations about the terms to be included in PMS agreements. Section 94(4) then provides:
“The regulations may also require payments to be made under the arrangements in accordance with directions given for the purpose by the Secretary of State”
3.2 Regulation 13(1) of the PMS Regulations 2004 provided that PMS agreements were required to contain a term that payments were to be made in accordance with Directions issued by the Secretary of State. That Regulation reads as follows:
“Subject to paragraph (2), the agreement must contain a term which has the effect of requiring the relevant body to make payments to the contractor under the agreement promptly and in accordance with both the terms of the agreement and any other terms based on which the payment is made and any other conditions relating to the payment contained in directions given by the Secretary of State under section 17 (Secretary of State’s directions: exercise of functions) or 28E(3A) of the Act”
3.3 This statutory scheme appeared to envisage that the Secretary of State would make directions to set out the payments due to PMS practices in the same way as directions were made for GMS practices. However the Secretary of State has not made any Directions which fix the sums that PMS contractors are required to be paid for the provision of essential services because these remain a matter for local negotiation. The Secretary of State retains a power to issue directions which would define the sums that would be paid to PMS practices but, at this point, there is no evidence that the Secretary of State has contemplated using that power. The sums payable thus continue to remain a matter for negotiation between NHS England and PMS practices.
3.4 The Secretary of State issued directions in 2013 to PMS practices which cover payments due to doctors working on the Flexible Careers Scheme, the Returners Scheme and the Doctors’ Retainer Scheme, all of which were designed to keep as many GPs as possible working within the NHS. These Directions are accessible here.
3.5 However Directions have been made which refer to the payments that are to be made for the following Enhanced Services provided by PMS practices:
a) Extended Hours Access Scheme;
b) Alcohol Related Risk Reduction Scheme;
c) Learning Disabilities Health Check Scheme;
d) Childhood Immunisation Scheme;
e) Violent Patients Scheme;
f) Minor Surgery Scheme;
g) Patient Participation Scheme;
h) Dementia Scheme; and
i) Avoiding Unplanned Admissions and Proactive Case Management Scheme.
3.6 In each case the PMS Directions set out the type of conditions that must be considered when NHS England is entering into a PMS contract for each of the above schemes with a PMS practice. However, unlike the GMS Directions, when it comes to payment the Directions do not fix the sums that a PMS practice are to be paid if the practice agrees to participate in any of the above schemes. The Directions say that in determining the amount to be paid by NHS England to the practice, NHS England must “have regard to” the sums paid under the relevant part of the GMS Directions. The phrase “have regard to” means that the payments under the GMS Directions must be a starting point for any negotiations between the PMS practice and NHS England for the provision of an Enhanced Service but allows NHE England and the PMS practice to agree a higher or lower sum to be paid for the provision of the service.
3.7 If the practice and NHS England were unable to agree the amount to be paid to a PMS practice for an additional service then theoretically NHS England would be able to define the sum that was to be paid and, if the PMS practice wished to continue to provide the service, it would have to accept the sum that was stipulated by NHS England. However, in that case, NHS England would need to have considered the sum payable under the SFE for the provision of the services and to have justifiable reason for departing from that sum in the PMS agreement with the practice.
3.8 The absence of directions to cover essential services and terms such as premises costs means that PMS contracts need to be read carefully to determine the payments due without necessarily any reference to the equivalent GMS terms. A large number of PMS agreements define that the sums paid to the practice will be fixed by reference to the SFE. If this is the case then, as the terms of the SFE are varied each year, so the terms of the PMS contract are varied. However in the absence of an express term incorporating the SFE as a term of the PMS agreement, in principle, terms agreed for GMS contracts will only apply to PMS agreements if there is a written agreement between the parties that varies the contractual terms to incorporate the new term.
3.9 In this context it is particularly relevant whether the PMS agreement has an “entire agreement” clause. Although no standard PMS agreement was produced by the Department of Health, many of the forms of PMS agreement used by PCTs (and the contract promoted by the BMA) contained an “entire agreement” clause. This clause provides that the written document contains the entire agreement between the parties and thus makes it very difficult if not impossible to allege that implied terms should supplement the terms of the written agreement.
3.10 An example of the way this works is shown in the FHSAU decision 15512. In this case a PMS contractor sought to change the basis of its premises payment from a Cost Rent basis to a Notional Rent basis, in accordance with the National Health Service (General Medical Services - Premises Costs) (England) Directions 2004. However these 2004 Directions only apply to GMS contracts and not PMS agreements. The PCT refused to change the basis of the premises payment and referred to an “entire agreement” clause in the contract. The PCT thus disputed that the PMS practice was entitled to rely on the 2004 Directions. The FHSAU sided with the PCT saying
“I am not satisfied that the PCT agreed to move to a Notional Rent reimbursement under the Directions with effect from August 2008 or that this should be applied to August 2005 for the same reasons. I am satisfied that the PCT have agreed to accept the effective rent review dated 1st August 2008 and that the parties have varied the PMS Agreement to reflect this agreement”
3.11 Thus the sum to be paid for premises under this agreement was fixed by the agreement itself. The position was repeated in FHSAU casedated 29 June 2010 where the FHSAU said:
“PCTs are not directed by the Secretary of State to make payments in accordance with the Directions to PMS Contractors. In the absence of any conditions relating to payment contained in Directions given by the Secretary of State in relation to PMS Agreements, the arrangements for payment under a PMS Agreement must be set out within the PMS Agreement as envisaged by Regulation 13 of the Regulations. There is an entire Agreement provision at Section 21 of the PMS Agreement provided to me”
3.12 Thus the payment terms within a PMS agreement are set out in the written document itself and in any subsequent written agreement and cannot be set by reference to the equivalent GMS terms.
4.1 APMS contracts are awarded by NHS England exercising its general powers under section 83(2) of the NHS Act. There is no provision for the Secretary of State to make Directions to govern payments under such contracts. It follows that the payment terms must be governed by the terms of any such contract (as varied by agreement between NHS England and the contractor from time to time).
5.1 The standard GMS contract commits NHS England to making payments to a contractor “promptly and in accordance with both the terms of the Contract”: see clause 18.1.1. If payments are not made by NHS England to a GP practice then the GP practice can either register a dispute with the FHSAU or, if it is a legally binding contract, sue NHS England for the monies owing in the county court.
5.2 If the practice obtains a determination from the FHSAU that monies are owing by NHS England to the practice (or NHS England obtains a determination that monies are owing by the practice to NHS England) then NHS England comes under a statutory duty to pay the monies determined to be owing. The legal route by which NHS England comes under that statutory duty is not wholly clear. When NHS Contracts were first defined in legislation by section 4 of the National Health Service and Community Care Act 1990, section 4(7) provided:
“A determination of a reference under subsection (3) above may contain such directions (including directions as to payment) as the Secretary of State or, as the case may be, the person appointed under subsection (5) above considers appropriate to resolve the matter in dispute; and it shall be the duty of the parties to the NHS contract in question to comply with any such directions”
5.3 This provision set up a clear statutory duty on the NHS body to pay the monies owing as a result of any determination made by the Secretary of State (or made by the FHSAU on his behalf). Hence a GP practice that was not paid sums owing under a determination could rely on the statutory duty under section 4(7) to commence proceedings in the county court. This position was reflected in paragraph 96(2) of the PMS Regulations 2004 which provided that PMS Agreements were to have the following terms included in the agreement:
“Where the adjudicator makes a direction as to payments under section 4(7) of the 1990 Act (as it has effect as a result of regulation 9 or paragraph 94(1)), that direction is to be enforceable in a county court (if the court so orders) as if it were a judgment or order of that court”
5.4 However there was no equivalent in the GMS Regulations and the clear statutory duty in the 1990 Act does not appear to be replicated within section 9 of the NHS Act 2006 which made provision for NHS contracts. However the practice of the FHSAU is to anticipate that, once a determination is made in respect of an NHS contract which provides for sums to be owing, it can be used by either party to bring proceedings in the county court.
 I would like to extend thanks to Michael Rourke of Lockharts Solicitors who provided valuable feedback on an earlier draft of this chapter. However I bear sole responsibility for the final text (subject to the terms of the site).
 Please see chapter 7 of this Guide which explains the meaning of essential, additional and enhanced services.
 References in Regulations to “the Board” are references to NHS England.
 Although a PMS agreement can be a legally binding contract they are usually referred to as “agreements” rather than contracts because the default position is that a PMS agreement is an NHS contract rather than a legally binding contract.
 This was a reference to the relevant provision in the NHS Act 1977 as imported into that Act by the NHS (Primary Care) Act 1997. The relevant provision is now in section 94 of the NHS Act 2006.
 Please see chapter 7 of this website for a description of the services that all standard general practice contracts are required to provide.
 For more details on the effect of an entire agreement clause in a GP practice contract please see paragraph 11 of chapter 3 of this website.