The Department of Health has confirmed that from 1 April 2010 there will be amendments to the current PMS Agreement Regulations to enable PCTs to terminate PMS Contracts on six months’ notice.
Why the Change?
The PMS Agreement Regulations have always had a provision which appeared to give PCTs the right to terminate a PMS Agreement by serving notice on a contractor. However, since the decision in the Crouch case this right has been questionable. In the Crouch case the Court of Appeal held (on the similar wording in the PDS regulations) that a PDS Agreement can only be terminated by serving a written notice on the contractor where specific grounds have been established. Since that case, where PCTs have tried to terminate PMS Agreements on notice there have been significant threats of legal action by GPs. The proposed change does not create a new power for the PCTs it simply clarifies the use of the current regulations.
The question over the ability to terminate on notice has placed PCTs in difficulty in terms of renegotiating existing PMS Agreements – only changes which can be agreed with the GPs individually could be implemented with no lever to deal with circumstances where there was obvious inequity between PMS providers and GMS providers.
It is important to note that a GP’s right to revert to a GMS Contract remains. This means that a termination notice does not automatically terminate a GP's contractual relationship with the PCT. If the GP makes the request under Regulation 19 of the PMS Agreement Regulations, the PCT will need to agree to a GMS Contract with that provider.
What does this mean for a PCT?
PCTs are required to act as World Class Commissioners and also want to ensure equity between their providers. However, with no ability to terminate current PMS Agreements without cause, PCTs were left with little negotiating power to address local inequalities and push up the quality of the services provided unless GPs agreed to the proposals.
The Department of Health's advice is for PCTs not to use this termination right as a tool for cost-cutting, and recommends constructive dialogue with its GP providers. PCTs may wish to consider the new position when undertaking a review of their PMS Agreements, as the clarification of the termination provisions under the PMS Agreement Regulations provides PCTs with a different framework in which to think about innovative and flexible approaches to commissioning primary care services as part of their overall commissioning strategy.