GP funding and contracts explained

General practices are the small to medium-sized businesses whose services are contracted by NHS commissioners to provide generalist medical services in a geographical or population area. While some general practices are operated by an individual GP, most general practices in England are run by a GP partnership. This involves two or more GPs, sometimes with nurses, practice managers and others (as long as at least one partner is a GP), working together as business partners, pooling resources, such as buildings and staff, and together owning a stake in the practice business. GP partners are jointly responsible for meeting the requirements set out in the contract for their practice and share the income it provides.

Responsibility for commissioning primary care services, including general practice, sits formally with NHS England. However, over time clinical commissioning groups (CCGs) have increasingly taken on full or partial delegation of these commissioning powers for primary care. This now means most CCGs have at least some responsibility for commissioning general practice in their local area, while keeping to national guidelines to ensure consistency.

Every individual or partnership of GPs must hold an NHS GP contract to run an NHS-commissioned general practice. These set out mandatory requirements and services for all general practices, as well making provisions for several types of other services that practices may also provide, if they so choose.

There are three¹ different types of GP contract arrangements used by NHS commissioners in England – General Medical Services (GMS), Personal Medical Services (PMS) and Alternative Provider Medical Services (APMS).

The GMS contract is the national standard GP contract. In 2018/19, around 70 per cent of GP practices operated under it². This contract is negotiated nationally every year between NHS England and the General Practice Committee of the BMA, the trade union representative of GPs in England. It is then used by either NHS England and/or CCGs (depending on delegated powers) to contract local general practices in an area.

The PMS contract is another form of core contract but unlike the GMS contract, is negotiated and agreed locally by CCGs or NHS England with a general practice or practices. This contract offers commissioners an alternative route with more flexibility to tailor requirements to local need while also keeping within national guidelines and legislation. The PMS contract is being phased out, but in 2018/19, 26 per cent of practices held one.

The APMS contract offers greater flexibility than the other two contract types. The APMS framework allows contracts with organisations (such as private companies or third sector providers) other than general practitioners/partnerships of GPs to provide primary care services. APMS contracts can also be used to commission other types of primary care service, beyond that of ‘core’ general practice. For example, a social enterprise could be contracted to provide primary health care to people who are homeless or asylum seekers. In 2018/19, 2 per cent of practices held this type of contract.

All types of contract are managed by the NHS commissioner (either NHS England or CCGs). Where contracts are negotiated locally, Local Medical Committees representing GPs may advise or participate in discussions alongside regional BMA representation.

• 1. A new Integrated Care Provider (ICP) contract has recently been made available to allow for greater integration of services. This can offer an additional contracting route for general practice but there has been no uptake so far.
• 2. Figures do not add up to 100 per cent because in 2018/19 101 practices were listed with an unknown contract type.

The core parts of a general practice contract:

• agree the geographical or population area the practice will cover
• require the practice to maintain a list of patients for the area and sets out who this list covers and under what circumstances a patient might be removed from it
• establish the essential medical services a general practice must provide to its patients
• set standards for premises and workforce and requirements for inspection and oversight
• set out expectations for public and patient involvement
• outline key policies including indemnity, complaints, liability, insurance, clinical governance and termination of the contract.

In addition to these core arrangements, a general practice contract also contains a number of optional agreements for services that a practice might enter into, usually in return for additional payment. These include the nationally negotiated Directed Enhanced Services (DES) that all commissioners of general practice must offer to their practices in their contract and the locally negotiated and set Local Enhanced Services (LES) that vary by area.

General practices are contracted to perform broadly five types of service for the NHS, although some are optional.

1. Essential services are mandatory for a practice to deliver to registered patients and temporary residents in its practice area. They include the identification and management of illnesses, providing health advice and referral to other services. GPs are required to provide their essential services during core hours, which are 8.00am–6.30pm Monday to Friday, excluding bank holidays.
2. Out-of-hours services are those provided outside core working hours. A practice is assumed to provide these by default but can opt out. Where a practice opts out, as most practices do, commissioners have the responsibility for contracting a replacement service to cover the general practice area population.
3. Additional services include specific other clinical services that a practice is assumed to provide but can opt out of, for example, minor surgery.  
4. Enhanced services are nationally agreed services that holders of almost all GP contracts (GMS/PMS/APMS) can also provide if they choose to opt in. Services specified for 2020/21 include some vaccination programmes and a health check scheme for people with learning disabilities. Primary care networks (PCNs) (see box below) have also been established via an enhanced service agreement.
5. Locally commissioned services are locally set services that practices can also opt in to. Unlike other GP services, these might also be commissioned by non-NHS organisations such as local authority public health departments. Examples include services for people who are sleeping rough or mental health support programmes.

The funding a general practice receives depends on a complex mix of different income streams. Much of a practice’s income comes from its core contract agreements – meeting mandatory requirements, running essential services and operating additional and out-of-hours services where they have been agreed. This is known as the global sum payment. However, a sizeable amount of a typical practice’s income comes from other NHS sources such as the Quality and Outcomes Framework scheme (see below) or payments for providing enhanced services. Practices may also top up their NHS funding with fees for limited private services, such as sick certifications and travel prescribing. Most practice income is paid to the general practice rather than individual GPs.

Global sum payments

About half the money a practice receives is from the global sum payment – money for delivering the core parts of its contract. This includes payment for out-of-hours and additional services; if a practice opts out of these, percentage deductions are applied to the global sum payment to account for this. Global sum payments are based on an estimate of a practice’s patient workload and certain unavoidable costs (eg, the additional costs of serving a rural or remote area or the effect of geography on staff markets and pay), not on the actual recorded delivery of services. The global sum payment for each practice is based on a weighted sum for every patient on the practice list. The Carr-Hill formula is used to apply these weightings, which account for factors such as age and gender. The global sum amount is reviewed quarterly to account for changes to the practice’s patient population.

Figure 1 summarises how the global sum payment to a practice is calculated.

Figure 1 Calculating a practice’s global sum payment

Quality and Outcomes Framework payments

The Quality and Outcomes Framework accounts for around 10 per cent of a practice’s income. The Quality and Outcomes Framework is a voluntary programme that practices can opt in to in order to receive payments based on good performance against a number of indicators. In 2018/19 more than 95 per cent of practices took part. The framework covers a range of clinical areas, for example, management of hypertension or asthma; prescribing safety; or ill health prevention activity. Each area has a range of indicators that equate to a number of Quality and Outcomes Framework points.

Figure 2 Practice income, outgoings and partner share

Source: GP income streams based on NHS payments recorded in NHS payments to general practice – England, 2018/19

Paying its workforce – including salaried GPs, nurses, health care assistants and administrative staff – accounts for the majority of a practice’s costs. These staff are usually employed directly by the GP practice and not by the NHS and so are not subject to Agenda for Change arrangements.

Partners pay themselves from the money that remains after other expenditure has been accounted for. Part of this personal income is used to pay their pension contributions, tax, indemnity, General Medical Council and other subscriptions. Partners may also decide to reinvest some of the remaining income into the practice. It is important to note that partners in GP practices are also personally liable for any losses made by the practice.

GP partners are not just clinicians but also small business owners and employers. This comes with a number of challenges, for example, the need to manage and optimise complicated income streams and personal liability for financial risks. It also means partners have a strong vested interest in maintaining and developing their practice.

Historically, the major levers for setting national or local priorities and implementing service improvements across general practice have been contractual, for example, the Quality and Outcomes Framework, rather than based on national guidance. This is still the case, although rapid transformation in the services GPs are providing in response to Covid-19 is challenging this assumption.

If local health systems are to achieve their full potential, a shared understanding of the differences between funding and contracting models for the different parts of that system will be important if partners are going to work effectively together.