GP Federations and the Sub-Contracting issue
Published 1 March 2016
GP federations can be established in a number of different ways, and may qualify to become an NHS pension scheme employing authority ("EA") via different routes.
The two main ways a GP federation can qualify to become an EA are via the “classic APMS” route, or via the independent provider ("IP") route:
- The “classic APMS” route is available to APMS contractors that are also eligible to hold a GMS or PMS contract. Federations holding an APMS contract or a “hybrid” NHS standard contract may therefore qualify as classic APMS EAs. However, if the federation is not legally constituted in a way that would allow it to hold a GMS or PMS contract (which can only be held by medical practitioners or a practice with shareholders from the “NHS family”), then the federation cannot qualify as a “classic APMS” provider, but instead must apply to become an IP. GMS contracts may be held by partnerships as long as at least one partner (who must not be a limited partner) is a general medical practitioner.
- Being a “classic APMS” EA currently allows GPs to pension earnings from federation income as practitioners, if they retain that status as protected members of the closed 1995/2008 NHS pension scheme. GPs in the 2015 NHS pension scheme accrue their pension in the same way as other members, because the 2015 scheme is a Career Average Revalued Earnings (CARE) scheme.
- The Independent Provider route. However, if a federation does not hold an APMS contract – or holds an APMS (or hybrid NHS standard contract), but is not able to enter into a GMS or PMS contract – then it can only apply to become an EA via the IP route. This requires the federation to hold a qualifying contract for NHS clinical services. Assuming the federation is granted IP status, only its employees can pension income from the IP. Any GPs who remain in the 1995/2008 scheme cannot pension earnings from an IP as a practitioner; they would need to be employed by the IP and pension the income as an “officer”.
- The Department of Health now accepts that a “hybrid” NHS standard contract can be legally recognised as both an APMS contract and an NHS standard contract, and it is possible that the same hybrid contract may be classified as both for different purposes. For example, it may be classed as an APMS contract to enable the federation to be recognised as a “classic” APMS EA; or as an NHS standard contract for the purposes of sub-contracting.
Until now, NHS Pension Scheme regulations have not permitted income, or earnings coming from a sub-contract to be pensioned by those EAs that qualify as an EA via the contracts they hold (such as IPs and GP practices). NHS trusts, Foundation Trusts and CCGs qualify as EAs because they are qualifying statutory bodies, which means the nature of their contracting arrangements are not relevant to their status as EAs. One of the main changes occurring as a result of the development of new models of case, such as GP federations, are the contracting arrangements. Moves to federations and lead provider models mean that sub-contracting has become far more prevalent, particularly in primary care.
Following discussions with NHS England, the Department of Health is now allowing sub-contracted NHS earnings to be pensioned, whilst retaining appropriate checks and controls in order to limit the extension of scheme liabilities.
The Department requires that when extending the scope of pensionable earnings in this way, an appropriate form of sub-contract that complies with wider contracting requirements is identifiable in order to ensure the NHS Pensions Agency can reliably validate eligible sub-contracted pensionable earnings where necessary. Although the NHS standard contract is now increasingly used to commission primary and secondary care, historically there has been no consistent approach to sub-contracts.
To ensure only NHS work is pensioned and scheme liabilities are appropriately controlled, the Department of Health has decided to require the use of the NHS standard sub-contract, jointly produced by the Department and NHS England. This sub-contract gives providers access to a sub-contract that follows the format of the NHS standard contract for clinical services. This allows for a clear line of sight for the funding of NHS clinical services to flow through the main NHS standard contract and down to the sub-contract.
Regulations coming into force from 1 April 2016 amend the NHS Pension scheme regulations to allow income/earnings from NHS standard sub-contracts to be pensioned, where the holder of the main NHS standard contract is also an EA. Ensuring the holder of the main contract is also an EA will allow checks and oversight of sub-contracting to be undertaken by the NHS Pensions Agency via the annual returns that practitioners and IPs must complete and return to the Agency after the end of each pension scheme year.
Retrospective granting of Independent Provider Status
Recognising the requirement for sub-contractors to be contracting with other EAs, and acknowledging that, on occasion, contracting formalities are not always completed in good time before the commencement of service delivery, the Department of Health has decided only granting IP status prospectively is not always appropriate. Draft amending regulation provides for an amendment that allow an application for IP status to contain a retrospective “nominated date”, which can be the “approval date” for IP status in certain limited circumstances. Those circumstances are that the IP has paid employer and employee contributions due for the retrospective period, and have also satisfied the other requirements, such as being a party to a qualifying contract, and having employees performing services pursuant to a qualifying contract for more than 50% of their time.
A previous amendment made from 1 April 2014 to allow payments made to practitioners pursuant to the NHS standard contract as pensionable earnings was not extended to locum practitioners. There was no clear policy rationale for this, and it is being corrected to ensure that locum practitioners can pension earnings from NHS standard contract work, plus from 1 April 2016, earnings from NHS standard sub-contract work.