Chapter 3 - GPs and Practice Contracts with NHS England

Written by 

GPs and Practice Contracts with NHS England (Extract). 


This chapter contains:

1.     Background to GP contracting.

2.     A short history of GP Contracting.

3.     How the NHS Act 2006 provides for the different types of GP practice contract.

4.     Details of the different types of GP commissioning contracts including:

·      GMS Contracts

·      PMS Contracts

·      APMS Contracts

·      The present status of former 1997 pilot scheme contracts (as varied in 2004)

5.     The Legal relationship between the parties to a GP contract and the NHS commissioner.

6.     The legal relationships between a GP and a primary care practice.

7.     The distinctions between NHS Contracts and legally binding contracts.

8.     Resolving disputes before a primary care contract is signed.

9.     The NHS Disputes Resolution Procedure

10.  Variation and updating of GMS and PMS Contracts.

11.  Entire Agreement clauses and exclusion of prior representations clauses.

12.  Third party Rights under GP practice contracts.



1           Background


1.1          Unlike doctors working in hospitals, General Practitioners have never been required to be employees of the NHS.  General practices operated as private sector businesses prior to World War II, with many patients covered by insurance schemes.  As a result the British Medical Association rejected the government’s original proposal that GPs should become local authority employees and argued that they should remain as self-employed individuals, contracting into the new NHS as required.  This reality was accepted by the Minister for Health, Rt. Hon Aneurin Bevan, MP, and thus when the NHS was set up in 1949 (as a result of the National Health Service Act 1946) general practices continued without the doctors being required to become NHS employees.  GPs remained as self-employed professionals and were originally paid a fee by the NHS for every patient on their practice list.


1.2          Although there have been various experiments with directly employed GPs working for the NHS in general practice operated by NHS Trusts, the vast majority of GP practices are not staffed by doctors who are employees of the NHS.  Increasingly however there can be a distinction between the GPs who provide professional services to NHS patients and the individuals who own the medical practices within which those services are delivered. 


2           GP contracting – a brief history


2.1          Section 29 of the National Health Service Act 1977 provided that Health Authorities were required to “arrange as respects their area with medical practitioners to provide personal medical services for all persons in the area who wish to take advantage of the arrangements”.  Thus, under the NHS 1977 Act (and the NHS Act 1946 which preceded it), GP practises were licensed by the NHS and were paid for treating NHS patients under a statutory scheme.   The terms of service for GPs were set out in Regulations and the payment scheme was governed by Directions made by the Secretary of State.   This scheme was known as “General Medical Services” and, at the time, was the only mechanism under which GPs could provide primary care services for NHS patients.


2.2          In 1991 the Conservative government created the division between “purchasers” and “providers” in the NHS.  The legislation which brought this about was the National Health Service and Community Care Act 1990.  It created two models of commissioning – one based on health authorities, and the other based on general practice.  General practices were encouraged to become commissioners through a route known as “fundholding”.  This meant that the GP practice held the budget that was used to commission secondary care for the patients of the practice.


2.3          Under GP fundholding GPs held real budgets with which they purchased primarily non-urgent elective and community care for patients; they had the right to keep any savings and had the freedom to deliver new services. The aim was to give GPs a financial incentive to manage costs and to apply some competitive pressure to hospital providers.  Some GP practices came together in consortia, creating larger organisations to pool financial risk and share resources.  From 1994 the total purchasing pilot scheme (TPP) allowed general practices – either individually or in groups – to commission all services for their patients, though most were highly selective in what they chose to purchase.  TPPs acted as sub-committees of health authorities and used an indicative, rather than a real, budget.  However the payment to the GPs for their own work continued to be under the general statutory scheme. Section 29(4) provided somewhat cryptically that payment to a GP:


“…  shall not, except in special circumstances, consist wholly or mainly of a fixed salary which has no reference to the number of patients for whom he has undertaken to provide such services”


2.4          The details of the payment to GPs was set out in the annual “Statement of Fees and Allowances” (“SFE”).  This is a Direction made by the Secretary of State every year which sets out the sums that GP practices are entitled to be paid for every aspect of their work.  The 2013 SFE can be accessed here.


2.5          The Labour government abolished GP fundholding in 1997 but retained the purchaser/provider split.  However just before the 1997 general election Parliament passed the National Health Service (Primary Care) Act 1997.  This introduced a new form of “arrangement” for primary care contracting called a “personal medical services” (“PMS”) contract.  The original PMS agreements were pilot agreements which were only designed to last for a limited period.    There was no standard PMS contract because the idea was to allow local health authorities to be flexible in agreeing new ways of working with innovative GPs.  A doctor who provided GP services to NHS patients under a PMS agreement was not permitted to deliver General Medical Services.


2.6          The 1997 Act brought in powers to amend the NHS Act 1977 to allow Health Authorities to enter into permanent PMS contracts.  However that power was not implemented until March 2004. 


2.7          The transition from pilot agreements to PDS agreements was not a straightforward process, the details of which are the subject of a present case before the Court of Appeal (Pitalia v NHS England which is due to be heard in early 2014).  However by 2004 the government had decided that all GP practices should have contracts with their local NHS commissioners (who were Primary Care Trusts at that stage).  This signalled an end to GPs being paid under a statutory scheme.  It follows that the primary legal relationship between the NHS commissioner and the GP ceased to be based on statutory duties and became a contractual relationship. 

David Lock QC

David Lock QC is a barrister at the Landmark Chambers.

180 Fleet Street
London, EC4A 2HG
DX 1042 (London)

He was called to the Bar in 1985 and was appointed Queens Counsel in 2011.

David Lock QC is Head of the Administrative & Public Law Group and the Judicial Review & high Court Challenges Group at No5 Chambers. - See more at:

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