The financial implications of the new NHS England GP Contract

Featuring Luke Bennett | 1st February, 2019

The BMA’s GP committee has reached a contract agreement with NHS England spanning the next five years. It introduces widespread changes aimed at addressing both the workforce and workload pressures currently experienced by GPs in England and improving services for patients by beginning to realise ambitions laid out in the NHS Long-Term Plan.

The contract gives practices almost £1bn across five years, while another £1.8bn will be invested to support the formation of Primary Care Networks, in which practices will work together to provide care to patients across a wider geographic area.

It also delivers the much-awaited state-backed indemnity scheme for all GPs, meaning family doctors will be brought in line with their hospital colleagues, and no longer must personally fund clinical negligence cover, which has become increasingly unsustainable and been a key factor impairing GP recruitment and retention.

Our view on the implications for GPs

The new NHS contract for GPs brings much needed investment into primary care, and the fact that it is a 5 year commitment will help to allay many of the concerns that at the moment act as a deterrent to GPs considering entering into partnership.

The funding for Primary Care Network (PCN) is a very significant development, but it is unclear what VAT implications this will create and further guidance will be required here. The VAT legislation does not always keep up with changing funding patterns and can create unwanted VAT costs.

It is good to see that money is being provided for a Clinical Director for each PCN. However in areas where there is already a shortage of GPs it may prove difficult to find someone who can give up a day a week to fulfil this role. Given that the Clinical Director has to be named by 15 May, PCNs will need to move fairly quickly.

Whilst there is a commitment to fully fund the proposed increase in employer pension contributions from 14.3% to 20.6% it is difficult to see how this can be achieved without creating winners and losers. Presumably the additional funding will be calculated on a capitation basis, but this will not necessarily equal the additional costs incurred at an individual practice level. It may also encourage more partners, who effectively fund their own employer contributions, to opt out of the scheme.

There is at last some hope for those GPs affected by annual allowance tax charges, that changes will be introduced that will enable them to remain members of the NHS pension scheme, but build up benefits more slowly. The contract document suggesting a 50:50 option, as is available to members of the Local Government Pension Scheme, for a halving of contributions rates, is a welcome suggestion albeit one that adds yet another complication to this already complex area.

The naming of any GP who earns more than £150,000 from NHS work may prove controversial and unpopular to the few affected. It is to be hoped that the current requirement for each practice to declare average earnings, based on a flawed calculation will be dropped.

There is to be a long overdue review of the payments for temporary residents which could affect many South West practices. The funding for temporary residents hasn’t changed since 2004, and is in many cases out of date.

Key changes in the package include:

  • Guaranteed investment of £405m through the practice contract and network contract in the first year, meaning every practice will be able to uplift staff pay by at least 2 per cent.
  • Building Primary Care Networks from the ground up. Networks will typically cover 30,000-50,000 patients and be led by a local GP in a clinical director role.
  • Funding for the expanded network workforce. Networks will receive 100 per cent recurrent funding to employ social prescribers and 70 per cent for clinical pharmacists this year, and the same for physiotherapists, physician associates and paramedics as they are introduced.
  • The introduction of a state-backed indemnity scheme beginning in April 2019.
  • Increased digital access for patients, meaning practices will make 25 per cent of appointments bookable online, improve their online presence and give new patients access to their digital records as standard.
  • An agreement between the BMA and NHS England to make joint representation to the Government with proposals to reduce the problem created by the pension annual allowance, to address the impact this is having on GP recruitment and retention.
  • NHS 111 direct booking in to practice appointments at a rate of one appointment per 3,000 patients available per day. This will happen only after triage.
  • Funding for practices to deal with subject access requests following the removal of the ability to cover costs under GDPR legislation. Practices will also have access to a Data Protection Officer (DPO) through their clinical commissioning group (CCG), to provide support on GDPR issues.
  • QOF changes to remove unnecessary indicators and provide a focus on professionally-led quality improvement.

For the full contract details please visit the BMA website.

AISMA response

Commenting on the GP contract agreement for 2019/20, Andrew Pow, board member of the Association of Independent Specialist Medical Accountants, said:

“There is much to be welcomed in the new contract with almost £1bn extra in core funding for practices in England across five years. There are, however, some issues that we are viewing more cautiously, notably the new state-backed indemnity scheme.

“The indemnity scheme will be funded by a one-off permanent deduction from the global sum and will cover all GPs and staff, including locum doctors. Since locums will no longer need to pay for their own indemnity cover, they have been asked to consider their rates. If locum rates do not reflect the new indemnity arrangement GP partners will be picking up the cost twice; once through the reduction in the global sum and again through the locum fee. AISMA raised this during discussions with NHS England and the BMA. Urgent guidance is required on setting responsible locum fees.

“The contract agreement does not refer to the increase in funding required for the proposed 6.3% increase in employer contribution rate. It is important that the proposed changes to the NHS pension scheme regulations 2019 are viewed alongside the new GP contract. (See AISMA response to the consultation.)

“Also needed will be guidance on the legal and pension structures of Primary Care Networks so that it is clear where responsibility for contracting and employment rests.”

Contact us for further advice

If you need some advice regarding your personal or practice finances, please contact Luke Bennettluke.bennett@pkf-francisclark.co.uk or call 01872 267477.

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