REVIEW OF PMS CONTRACTS

NHS England
February 2014
Gateway Reference 01091
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What are PMS contracts?

• Personal Medical Services (PMS) agreements are locally agreed contracts between NHS
England and a GP practice.
• PMS contracts offer local flexibility compared to the nationally negotiated General Medical
Services (GMS) contracts by offering variation in the range of services which may be
provided by the practice, the financial arrangements for those services and the provider
structure (who can hold a contract).

Aim of PMS review

• To establish how best to apply the principles of equitable funding to PMS practices.
• To identify how to get best value from investment in quality improvement and innovation.
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PMS data collection

• We asked area teams to undertake a data collection exercise to gather and understand at
individual contract level the basis of existing PMS funding and its component parts.

• We wanted to consider how far PMS expenditure is effectively paying for ‘core’ primary care
services, how far it is paying for innovation and quality improvement in primary care, and how
far it is paying for ‘enhanced’ primary care services.

• We asked area teams to complete an excel spreadsheet template to record the data for
individual PMS contracts.

• Using these returns, we first identified total expenditure on PMS (‘PMS baseline’). We then
identified all those elements of PMS expenditure that are comparable with payments made to
GMS practices, in order to arrive at a revised PMS baseline.

• Finally, we calculated the difference between this revised baseline and the weighted
capitation that PMS practices would earn if they were on GMS contracts. This difference
makes up the PMS ‘premium’.
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Results of data collection

• Based on PMS expenditure as at 1 April 2013.

• PMS expenditure in excess of GMS equivalent: £325 million, or £13.52 per weighted patient.

• £67 million linked to defined enhanced services or Key Performance Indicators (KPIs).
Remaining £258 million may be associated with enhanced services or populations with
special needs, but is not defined.

• Once the Minimum Practice Income Guarantee (MPIG*) is fully phased out in GMS, total
PMS premium will reduce by around £90 million to £235 million, or an average of £9.80 per
weighted patient. (Note: does not mean PMS practices necessarily earn less, but a greater
proportion of their earnings will be equivalent to what they would get under GMS).

• No relationship between current PMS expenditure and deprivation. Modelling shows a

random distribution of PMS premium against the Index of Multiple Deprivation (IMD) scores.

* MPIG was designed to ensure that practices were not financially destabilised with the advent of the new GMS contract in 2004. Most
GMS practices receive a correction factor payment in addition to a weighted capitation payment. These correction factor payments will be
removed from practices over a 7 year period commencing 1 April 2014 and the funds will be reinvested in global sum.
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PMS premiums and deprivation

+ve PMS premium, in £s per weighted patient, and
estimated practice Index of Multiple Deprivation 2010
£160

£140
PMS Premium per weighted patient

£120

£100

£80

£60

£40

£20

£-
PMS Premium per weighted patient IMD 2010
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Breakdown of PMS expenditure

£m
PMS baseline 2,043.3

Premises 29.6
Seniority and other GMS (e.g. dispensing) 25.0
Directed Enhanced Services 21.3
QOF deduction 44.3
London adjustment 10.3
Total adjustments 130.6

Revised PMS baseline 1,912.7

Less weighted capitation 1,587.7
PMS ‘premium’ 325.0

Of which: KPIs 25.9

Other enhanced services 41.0
Total 66.9
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 Premium per weighted patient

£-
£100.00

£10.00
£20.00
£30.00
£40.00
£50.00
£60.00
£70.00
£80.00
£90.00
1
57
113
169
225
281
337
393
449
505
561
617
673
729
785
841
897
953
1009
1065
1121
1177
7

1233
1289
1345
1401
1457
1513
1569
1625
1681

Count of PMS practices

1737
1793
Distribution of PMS premium

1849
1905
1961
2017
2073
2129
2185
2241
2297
2353
2409
2465
2521
2577
2633
2689
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PMS premium and MPIG

• MPIG or correction
£325m
factor payments of
£118m are unevenly
distributed across
£118m
Price per weighted patient

GMS practices.
PMS
premium • PMS premium is the
MPIG
difference between
£66.25
PMS price and the
equivalent population’s
GMS PMS GMS price.
global sum weighted
capitation • PMS premium of
£325m is unevenly
distributed across PMS
practices.

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Impact of MPIG recycling

• MPIG or correction
factor payments of
£118m are
£235m reinvested into GMS
Price per weighted patient

PMS global sum over 7

years.
£69.98 premium
MPIG £90m • When MPIG is fully
reinvested, GMS
global sum price
GMS PMS rises to £69.98.
global sum weighted
capitation • The higher GMS
price means PMS
premium is reduced
to £235m.

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PMS coverage by Region

8,000,000 1,000

Contractor Weighted Population

7,000,000 875
Number of practices

6,000,000 750
Weighted Population

Number of Practices
5,000,000 625

4,000,000 500

3,000,000 375

2,000,000 250

1,000,000 125

- -
London Midlands and East North South

The blue bars and left hand axis indicate coverage by weighted population. The red diamonds and right hand axis
indicate the number of PMS practices.
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PMS coverage by Area Team

2,800,000 350

2,400,000 300
Weighted Population

Number of Practices
Contractor Weighted Population
2,000,000 250
Number of practices
1,600,000 200

1,200,000 150

800,000 100

400,000 50

- 0

The blue bars and left hand axis indicate coverage by weighted population. The red diamonds and right hand axis
indicate the number of PMS practices.
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PMS Premium by Region

100,000,000

90,000,000

80,000,000

70,000,000
PMS Premium (£)

60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

-
London Midlands and East North South

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PMS Premium by Area Team

£45,000,000
£40,000,000
£35,000,000
PMS Premium (£)

£30,000,000
£25,000,000
£20,000,000
£15,000,000
£10,000,000
£5,000,000
£-

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