GP funding and contracts explained

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The way general practices are contracted and funded is complex and very different from other parts of the health and care system. This explainer sets out how general practices are contracted and paid in England, looking at the services they are contracted to deliver, and the different streams of funding they receive.

What are general practices?

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.

Some GPs work as salaried employees of a practice without owning a share in the overall business (so they are not GP partners). The British Medical Association (BMA) has a model salaried employment contract for these staff and practices with a General Medical Services (GMS) contract are required to offer this contract or an equal alternative to salaried GPs.

Who commissions general practice?

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.

What types of GP contracts are there?

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.

What’s in a GP contract?

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.

What services can practices be contracted to provide?

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.

Almost all general practices in England are part of a PCN, a small group of practices usually within the same geographical area that work together under the PCN DES contract to gain some of the benefits of working at scale and access to additional funding.

How does the money flow?

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
GP contracts explainer figure 1

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.

Example indicator from The Quality and Outcomes Framework 2019/20

RA002 – The percentage of patients with rheumatoid arthritis, on the register, who have had a face-to-face review in the preceding 12 months. Achievement threshold 40–90 per cent. Points: 5

If 40 per cent of patients with rheumatoid arthritis have had a face-to-face review with a health professional, the practice will receive 1 point. If 90 per cent of these patients have had a face-to-face review, the practice receives 5 points. Points are awarded proportionately for percentages between these boundaries.

At the end of the financial year, the practice receives an amount of money, based on points achieved in the Quality and Outcomes Framework.

Premises payment

If a practice is leasing its premises, rent is generally reimbursed in full in arrears. If a partnership owns its premises, it is mortgage payments that are reimbursed, although most practice premises are leased. Some practices sub-let rooms to other providers (for example community health services providers) but there are rules on what a practice can use its building for, which affect reimbursement.

Primary care organisation (PCO)-administered payments

PCO-administered payments refers to payments by the local ‘primary care organisation’, ie, the CCG or NHS England depending on delegation of powers. Payments in this category include, for example, locum allowances and appraisal costs.

What do GPs spend their money on?

Figure 2 Practice income, outgoings and partner share

GP contract explainer figure 2

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.

What does it all mean?

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.

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Comments

Albert Edward Raine

Position
Retired,
Organisation
----------------
Comment date
19 May 2022

As someone who, along with his wife, is living in an area now effectively controlled by a one-group system, I can't word my criticisms any better than this succinct para from one of the above:
"What sort of business model incentivises inertia. Gather up as many patients as you can because you will be paid handsomely for each one you can list...... but never see them, send them to 111 or A&E. Unbelievable."
We are pensioners who have both received first-class sympathetically provided care in our local hospital during the last few months. We both entered hospital through A&E and paramedics. The hospital follow-up was good through 'phone calls for several weeks afterwards.Our practice received a copy on each occasion of the circumstances and treatment. Absolutely no response from a GP - incidentally none of whom we have ever met despite living here for almost two years. During that time we have seen nurses a total of three times. A business-model rather than patient-welfare ethic is predominant in the way the whole group is organised and motivated. The family doctor is, I'm afraid long gone, to be replaced by anonymous figures whose manner of existence is more in keeping with a silent monastic order......

Angela

Position
Clinical sister A&E,
Organisation
NHS acute Hosp
Comment date
19 April 2022

GP’s take every opportunity to push back from providing a service to the patient unless that patient is going to generate them income under QOF. Any clinical care that will cost the surgery money they are not interested in. Hence the number of delays in diagnosis of serious life threatening conditions. They are very subtly pushing many frustrated patients into opting to have routine bloods taken via private companies. I know because I am that nurse who speaks to hundreds of patients who are opting for this service and takes their blood on behalf of private companies. CHANGE THE FUNDING MECHANISM. Their morals have shifted to those of cash generating business men and not caring family doctors

John Bolton

Position
Retired director,
Organisation
Distribution
Comment date
11 April 2022

Our local surgery has gone downhill since the pandemic arrived 2 years ago. Even telephone call responses take 3/4 days to contact the patient. We need to review and possibly Nationalise the whole Doctor surgery setup.

Trish

Position
Tutor,
Organisation
NEBOSH
Comment date
12 February 2022

The NHS is a broken system. This is not the fault of doctors and nurses, receptionist and porters. It's the fault of successive governments bringing in internal markets. Doctors don't see patients now. They see target revenue. QOF payment. How much they can make out of you. Privatise the lot. Strip it away. Then we may have the NHS I remember pre 1986.

Keith Whitehurst

Position
Sales Consultant,
Organisation
Stormclad
Comment date
27 January 2022

GP practices are simply not performing. I think the way they are funded is the issue. There is no incentive for them to perform. The most successful companies and individuals are those where their renumeration depends on performance. Their income is heavily weighted to performance. I do not see this in the NHS.
GP practices would be revolutionised if instead of receiving a payment per person on their books they got paid by how many people they actually saw. This alone would stop the "Sorry ring back tomorrow, we have no more appointments available" or "phone 111" advice.
Plus for every one of their patients that used the 111 service a cost was charged back to the practice responsible. I would guarantee that you would be seen then and the best performing practices would continue to make a lot of money, I would be happy if they made more money than currently providing they were providing a service.
What sort of business model incentivises inertia. Gather up as many patients as you can because you will be paid handsomely for each one you can list...... but never see them, send them to 111 or A&E. Unbelievable.

Shells

Position
Retired,
Comment date
25 January 2022

I agree with all comments made, which incidentally are bad. I haven’t yet seen one positive comment about GP service provision now. Ironically, they will actually call or text you for anything they get additional payments for. Actually getting to see the GP is however an achievement itself. Like other people who have commented, I paid my NI stamp (which is incidentally, a percentage of your salary), all my working life (44 yrs). I understood this to be for the provision of my health and social care needs. As far as I am concerned, I have paid for a service I am now not receiving, Perhaps tourists or visitors to this country should be paying when they need our services, instead of me paying it for them !!

Tina Evans

Position
Pharmacist ACP,
Organisation
Worcestershire Acute Hospitals NHS Trust
Comment date
11 January 2022

I actually agree with Chris Read- I work for the NHS, my time off is precious , I order my repeat prescription via Emis and then find out days later that it will not be dispensed (at the dispensing Drs) because I am due a medication review, BP measurement and weight review- I presume to hit a QOF target.......I'm really not impressed as I now have to book an appointment on one of my days off to do this. I weigh myself, have a home BP machine and am probably more qualified to perform a medication review than anyone at the surgery!

Frances Jenkins

Position
Retired,
Comment date
08 December 2021

Why did it collapse so quickly? One minute we had an admirable local surgery - OK a little difficult to get through to them first thing in the morning, but at least you got to see your GP that day. Then Covid arrived and now we still have to listen to five minutes chat about how everyone is working so very hard etc etc. and finally you get the receptionist who complains about how she is having to answer two phones she is so busy, and you cannot get to speak to the doctor - ON THE PHONE - for 28 days! 28 DAYS for a phone call! And don’t even request a blood test - better to go to hospital for that! And now we are informed by letter that the lovely rural surgery in a Surrey village that has been My surgery for 43 years through three generations of the same doctors family, is to close!, Three months notice - no warning, no discussion, just CLOSE. How did we get from respect and admiration of that lovely practice, to CLOSED in such a short time. We, the patients, did appreciate our doctors and the service they provided, but did they appreciate us? How do they just walk away?

Ben Saami

Comment date
05 December 2021

I am sorry to hear of your experience, You have unfortunately confused emergency with urgent care. You should not have wasted your time calling neither Gp nor NHS111. You could have died, thank the Lord you did not. For urgent care. you go online and fill out an online form and the next day you get a call back regardless. and for minor cases you make an appointment or use walk in clinics. how to tell the difference between the three? anything to do with chest pain, Stroke (use FAST),Allergic reaction ,Anaphylactic reaction,Asthma attack,Seizures,..and any pain that would not go away or accident are ambulance job, you do not wait nor think nor try to self diagnose, you call 999, the caller would advise you. if the pain comes and goes and you are breathing ok can walk about etc... that is urgent but not life threatening. anything else is minor. The GP can only treat urgent and minor

ms J.WD

Position
educator,
Organisation
school
Comment date
27 November 2021

maybe do FOI request to surgeries

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