'Balancing' clause in five-year contract sparks fears over future GP funding

Core GP funding could be cut back in future years if partners' profits are 'unexpectedly large' in 2019/20, under a clause in the five-year GP contract deal agreed last week between the GPC and NHS England.

GP funding (Photo: iStock.com/georgeclerk)
GP funding (Photo: iStock.com/georgeclerk)

Details of the contract that will run from 2019/20 to 2023/24 published by NHS England reveal that a 'balancing mechanism' will be agreed this year between the BMA and NHS officials.

This is intended to 'provide confidence to the profession and taxpayers alike, by protecting against unexpectedly large increases in either inflation or partner drawings', and will 'if required, adjust between the practice level global sum and the network level additional roles reimbursement sum depending on levels of real-terms partner NHS earnings'.

The clause - effectively a backstop to prevent a repeat of sharp rises in income after the 2004 contract - has sparked concern that practices could face a clawback of income two or three years from now when earnings and expenses data for 2019/20 are published.

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If partners' income is 'unexpectedly large' in 2019/20 - or in subsequent years through the five-year deal - money could be transferred from core funding to help networks pay for the 20,000 primary care staff in 'additional roles' the NHS expects them to employ over the next five years.

Conversely, the clause could move funding in the opposite direction to protect GP income. Higher-than-expected inflation over the coming years could see network funding moved to top up core pay.

However, precisely what would constitute 'unexpectedly large' inflation or partner drawings has yet to be defined - leaving some GPs worried about how it could be used.

GPC chair Dr Richard Vautrey told GPonline: 'We will be working with NHS England on this to work out a fair and reasonable process. It would not be clawing back money from any doctor but potentially if we saw a very significant rise in GP earnings that was above what is expected or budgeted for then NHS England would want to look at future investment into the contract in the light of that change.'

GP funding

The Association of Specialist Medical Accountants (Aisma) has said the overall contract deal is likely to mean practices are better off. Contract funding will rise 1.4% even once a top-slice to help pay for state-backed indemnity is taken into account, meaning indemnity costs for practices will fall sharply in the coming financial year. Additional money worth a further 1.6% will be available through networks - although much of the funding is tied to recruitment of specific staff.

Dr Vautrey added that the likelihood of an 'unexpectedly large' rise in partners' drawings was 'very remote'. He said: 'I don't think GPs should be worried. We have budgeted closely what we expect. The anxieties some have around setting a five-year package we don't believe will materialise.'

Northumberland LMC medical secretary Dr Jane Lothian called for more detail on potential thresholds that could trigger the balancing mechanism. 'What yardstick will they use?' she asked.

Dr Lothian warned that practice profits could vary significantly year to year because of circumstances out of their control - such as whether they were able to recruit staff. Targeting 'one or two very extreme examples' could be reasonable, she said, but clawing back money because of a rise caused by unavoidable circumstances was not.

Cap on profits

She added that a mechanism to cap profits seemed unnecessary when funding between practices had been largely 'flattened out' through factors such as PMS contract reviews - and when practices were heavily regulated by organisations such as the CQC.

Former GPC negotiator Dr Peter Holden told GPonline the balancing clause may have been a 'quid pro quo as part of the deal that meant the cost of indemnity was lifted from our shoulders'. He said GPs had been subsidising the rising cost of primary care indemnity for a decade.

He pointed out that clawback had been a regular feature of contract agreements over the past 50 years, and said it was vital that the doctors and dentists pay review body (DDRB) was allowed to 'report without constraint' by the government to allow it to determine fair pay for GPs.

Dr Holden also criticised the claim that the 2004 GP contract delivered too large a pay rise to GPs, pointing out that it was a '13-year corrective pay deal' to compensate for a long-term erosion of income. Meanwhile, in the decade following the contract, GP profits fell around 20% in real terms - wiping out the 2004 rise.

City and Hackney GP confederation chair Dr Deborah Colvin said the new contract deal was 'quite exciting in many ways'. She said: 'It looks ambitious and could deliver a real renaissance in primary care. It's about rebuilding the practice - in this day and age with increasingly complex patients we need a good team around us. If we have that we can do some good things - money has been going into hospitals more and more for years and if this can start to address that, it's great.'

When it came to the balancing clause, she said: 'I'm not inclined to be suspicious that they are up to something.'

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