Cents and sensibility: Micro financial incentives in the GP contract

If you could click your fingers and fix one thing about the NHS, what would it be? Public polling shows that making it easier to get appointments at GP practices is the top priority, with 1 in 3 people feeling they had to wait too long for an appointment last year.

So it makes sense that the government is investing more into general practice. Recently, the government unveiled the agreed GP contract for the next financial year, setting out nearly £1 billion of new money for general practice. But The King’s Fund is interested not just in how much money is going to GPs, but how much of it comes with strings attached – in short, how much do GPs actually have to spend on what matters to the patients in their area?

GP funding depends on a complex mix of different income streams; this includes the core allocation but also a range of other sources. Some of these come with extremely detailed specifications as to what types of activity must be delivered or how that activity must be delivered – and often this ‘what’ or ‘how’ is determined at national level, without too much consideration as to what makes sense locally. These funding streams tend to be optional, creating a large number of hoops a practice must jump through to deliver a specific activity or deliver in specific ways.

The King’s Fund has started calling such pots of funding ‘micro-financial incentives’. One of the clearest examples is the Quality and Outcomes Framework (QOF), an incentive programme that GP practices can opt into in order to receive payments based on good performance against a number of indictors, such as management of hypertension or asthma. For example, if you have asthma, you are likely to have received a text (or possibly multiple texts) reminding you to go for an asthma review – GPs receive additional funding if they can demonstrate that a certain proportion of those on their register with asthma get a review every 12 months.

The King’s Fund has conducted new analysis to understand just how much GP funding in England is tied up in these narrowly prescribed funding incentives. Our work shows that around a fifth of funding available to practices is through these micro-incentive funding pots, even when accounting for funding specifically earmarked for Covid-19-related activity.

If we exclude Covid-specific activity, the total proportion of funding tied up in these micro-incentives rose four percentage points over four years, from 14% in 2018/19 to 19% in 2022/23. This funding is worth over £2.5 billion in current prices for the most recent year data is available – not small change by anyone’s standards.

We classified the investment as set out in NHS England’s Investment in General Practice in England, 2018/19 to 2022/23. This analysis inevitably involved some judgement calls - see note below for methodology.

While it may be tempting for government to incentivise service transformation and specific types of activity – and in some cases may actually be necessary to deliver change quickly and at scale (for example, funding vaccinations during the Covid-19 pandemic) – this can hinder the development of effective local services rather than enable them. With limited financial resources available, practices are incentivised to chase specific pots of funding rather than think strategically about local need. GPs in North Norfolk, which has the highest average age in the country, will need to focus on very different things to GPs in Tower Hamlets, which has the youngest.

Micro-financial incentives also tend to come with burdensome administrative requirements. Many practices employ a practice manager – a large part of whose role, in reality, is applying for these pots of funding.

Evidence on the impact of such micro-financial incentives is mixed, at best. Although there is some evidence that the introduction of QOF improved outcomes, particularly for targeted health conditions, it tends to shift activity and may lead to worse outcomes elsewhere. For example, in diabetes management, where QOF incentivised focusing on those with diabetes who had comorbidities, there is evidence that outcomes improved for that group while worsening for those with diabetes without comorbidities. The contract for the upcoming financial year has reallocated £100 million away from QOF, but over £500 million remains tied up in the programme.

Beyond QOF, our analysis also revealed that there had been an increasing trend towards pots of money being ringfenced for specific purposes (although similarly to QOF, we are seeing some of that reversed). Another important example is the Additional Roles Reimbursement Scheme (ARRS), originally introduced in 2019 to recruit non-medical roles. Initially, there were strict criteria as to which roles and in what numbers could be recruited under the scheme (GPs and practice nurses could not be recruited using it). This led to challenges, with local recruitment not always fit for purpose – for example, in some cases work previously done by roles not covered under the scheme was shifted to ARRS colleagues, which they were then unable to complete due to it being out of scope or because of unfamiliarity. However, the scheme has since been made more flexible and GPs and practice nurses can now be recruited using this funding.

More recently, there has been some cause for optimism that ministers may be moving away from micro-incentives. Nearly all the new funding announced by the government in February as part of the 2025/26 GP contract will be put into the core allocation. This means GPs will be able to decide how they want to use the money to deliver the requirements of the contract.

Although this is a positive sign, it’s worth remembering that these negotiations are only for a one-year period. To truly deliver care closer to home that is responsive to local conditions and local need, this direction of travel needs to continue – hopefully that will be borne out as the next multi-year contractual framework is drawn up.