Part 2 system: family health services

234.     The system provided for under Part 2 of the Act is quite different. The broad structure of the Part 2 system is similar for doctors, dentists, persons providing ophthalmic services and persons providing pharmaceutical services. This Annex first describes the existing system as it applies to doctors, and then if necessary describes any differences between that system and those relating to other professional groups.

235.     Under section 29 of the 1977 Act, it is the duty of each Health Authority ("HA") in accordance with regulations to arrange as respects their area with medical practitioners to provide "personal medical services" for all persons in the area who wish to take advantage of the arrangements. These services are described as "general medical services" ("GMS"). A principal feature of this system as it operates in practice is that (apart from certain exceptional cases) it is not the HA which itself provides the GMS; instead, it enters into separate statutory arrangements with independent practitioners for the provision of those services. GPs are therefore not (save in the exceptional circumstances referred to above, and which are not currently relevant) employees of the HA; they are independent professionals who undertake to provide GMS in accordance with the body of regulations governing that activity. Those regulations are currently the National Health Service (General Medical Services) Regulations 1992 (S.I. 1992/635) as amended ("the GMS Regulations").

236.     The remainder of Section 29 sets out certain things which must or may appear in the Regulations. Section 29A (inserted by section 32 of the Primary Care Act) prevents a Health Authority making arrangements with a doctor unless he is on a medical list, and sets out certain restrictions on who is eligible to be on such a list. Further requirements for being admitted to the list have been added by section 20 of the HSC Act 2001, but are not yet in force. Section 29B gives a regulation-making power for the filling of vacancies for doctors. These Regulations are the General Medical Services Regulations. The power was also extended by section 20 of the HSC Act. Section 30 deals with the matter of applications by medical practitioners to be included in what is known as the "medical list": that is, the list kept by each HA of GPs who provide GMS in its area. Sections 31 and 32 provide for each GP on a medical list to have undergone vocational training. Section 33 provides for the system for admitting GPs to medical lists. Section 34 provides for regulations to be made relating to the Medical Practices Committee ("MPC"), which has a role in admitting GPs to

the medical list. The MPC is set up under section 7 of the 1977 Act. A new power for Regulations to enable Health Authorities to conditionally include doctors in the medical list is in the new section 43ZA prospectively inserted into the 1977 Act by section 21 of the HSC Act but not yet in force. Similar provision is made for all the professions.

237.     It is the duty of each HA in accordance with regulations to administer the arrangements made for the provision of GMS (and the other services): see section 15 of the 1977 Act. The HA must also perform such other management and other functions relating to those services as may be prescribed; and some such functions (which are not relevant here) have indeed been prescribed.

238.     In contrast to the Part 2 system, the duty to make the arrangements for these services is conferred directly upon HAs, rather than upon the Secretary of State. Nonetheless, in exercising functions under Part 2, HAs may be the subject of Secretary of State directions issued under section 17 of the 1977 Act. HAs are able to delegate their Part 2 functions in accordance with regulations made under section 16 of the Act.

239.     Subject to any Secretary of State directions under section 17A(4) of the 1977 Act, HAs may direct PCTs to exercise their functions in relation to GMS, but not in relation to other Part 2 services (see section 17A(3) of the Act). The Secretary of State has directed HAs that they may delegate only a limited range of GMS functions to PCTs.

240.     This broad structure of the Part 2 system is similar for dentists, opticians, and chemists, but there are significant differences, most notably relating to chemists and opticians.

241.     The provision for dentists (section 35 of the 1977 Act) is in very similar terms to that for doctors in section 29, although it will be noted that the duty upon the HA is subtly different. In the case of doctors, the HA- must arrange for sufficient GMS to be provided for everybody in the area who wishes to take advantage of the arrangements. In the case of dentists this duty is not quite the same: the duty is not to arrange the provision of GDS for every-body in the area who wishes to have GDS, but rather to arrange with dentists in the area that any person for whom those dentists have under-taken to provide GDS receive the promised GDS. There is also no equivalent of the MPC to control the entry of GDPs to dental lists; and there is no equivalent of section 29(2)(c) of the 1977 Act (which provides for the assignment of patients to doctors). However, subject to that, the systems are by no means dissimilar: there exists a dental list of GDPs who undertake to provide GDS, there is a system of dental vocational training (although it has been introduced by regulations and not by primary legislation); the relationship between the HA and the GDP is (usually) again a statutory one between a HA and an independent professional. Unlike the case of GPs, how-ever, there is in regulations provision in the case of dentists for the employment of salaried dentists at health centres: these dentists are employed by the HA, and represent one of the rare occasions when it is the HA itself which provides the services in question via its employees.

242.     So far as chemists and opticians are concerned, opticians are provided for in section 38 of the 1977 Act, again according to the same scheme where-by the HA- makes statutory arrangements with independent practitioners (who, in this case, might be individuals or bodies such as companies). However, the range of services to be provided by opticians is very much smaller. The only content now surviving of general ophthalmic services ("GOS") is sight testing for children, for persons whose resources are less than their requirements, and for other prescribed persons. Section 39 is a regulation making power in respect of ophthalmic services, which has also been prospectively extended by section 20 of the HSC Act (not yet in force).

243.     More significant is the category of pharmaceutical services ("PhS"), provided for under section 41 of the 1977 Act. Again, the arrangements are made by HAs with independent persons or bodies; the system is governed by Regulations; but the duty this time is to arrange for the provision to persons who are present in the HA's area of drugs, medicines and listed appliances which are pre-scribed for them by health service doctors, dentists, or nurses, and of such other services as may be prescribed. So far as PhS are concerned, there are detailed Regulations (introduced by sections 42 and 43) relating to entry on to a pharmaceutical list.

244.     Additional pharmaceutical services may also be provided under section 41A of the 1977 Act, as inserted by the Primary Care Act. Such services are governed by Secretary of State directions, rather than by regulations, as for PhS under section 41. A HA is only under a duty to make arrangements for such additional services where required to do so by direction.

245.     Sections 43A and 43B of the 1977 Act, as substituted by section 10 of the Health Act, provide a structure for the remuneration of persons providing Part 2 services. Section 10 of the Health Act has, however, yet to be brought into force. Neither have the original sections 43A and 43B inserted by the Health and Social Security Act 1984 (c.48) been commenced. In effect the original sections inserted by the 1984 Act must be complied with because of section 7 of the Act, which provides that a determination of remuneration made before the coming into force of those provisions is deemed to be validly made if regulations authorising it could have been made had that provision been in force at that time. It is therefore not open to the Secretary of State or anyone else to make a determination which is inconsistent with the provisions of sections 43A and 43B as inserted by the 1984 Act. What in fact happens is that the Secretary of State makes and publishes a determination for each of the professions, which takes the form of the separate document referred to in each of the sets of regulations governing the four professions. These determinations therefore have the force of law, although they are not subject to any further degree of formality or Parliamentary procedure. The revised version of sections 43A and 43B, substituted by section 10 of the Health Act, were intended to provide a new framework to govern the remuneration of Part 2 practitioners, but have yet to be brought into force.

246.     Each profession has in each HA area a local representative committee (called the Local Medical Committee, the Local Dental Committee, and so on). These represent local practitioners and are provided for under sections 44 and 45 of the 1977 Act.

247.     Practitioners may be removed or suspended from the list in which their names are included by the NHS Tribunal, which is provided for under sections 46 to 49 of the 1977 Act. These sections were extensively amended by the Nation-al Health Service (Amendment) Act 1995 (c.31), section 40 of the Health Act and, prospectively, by the HSC Act. A decision has been taken that section 40 of the Health Act will not be brought into force as it has been overtaken by the HSC Act amendments. The HSC Act repeals the provisions relating to the Tribunal. Section 25 inserts new sections 49F to 49R. These provide for Health Authorities to remove doctors on prescribed grounds, or contingently remove them i.e. provide they will be removed unless they comply with certain specified conditions. Health Authorities may also suspend doctors in certain circumstances. There is provision for review of Health Authority decisions and for appeal to a new statutory body, the FHSAA. The FHSAA is set up by section 49S of the 1977 Act, inserted by section 27 of the HSC Act. It is constituted in accordance with new Schedule 9A. This new body may turn a local removal from a particular Health Authority list into a national disqualification, that prevents any Health Authority from including them in their list. Section 27 of the HSC Act was partially commenced on 1st October 2001 for the purposes of constituting the Family Health Services Appeal Authority and for making rules or regulations in respect of it. For other purposes, it is to be commenced on 1st December 2001 (see S.I. 2001/3294). Section 25 has not yet been commenced.

248.     The remainder of Part 2 contains a number of miscellaneous provisions. These include some additional functions for Health Authorities introduced by the HSC Act, but not yet in force. There is power in Regulations to provide for Health Authorities to keep additional lists:

a)     the supplementary list of doctors who assist in the provision of General Medical Services i.e. not GP principals (section 43D of the 1977 Act inserted by section 24 HSC Act). Similar provision is made for all the professions;

b)     a list of persons who exclusively provide out of hours GP services (section 18 of the HSC Act);

c)     receiving declarations from practitioners as to their financial interests, gifts and other benefits received (section 29(5A) of the 1977 Act, inserted by section 23 HSC Act).

249.     The funding of these services is effected through section 97 of the 1977 Act, as substituted by the 1995 Act, Schedule 1, paragraph 47, and amended by section 36 of the Primary Care Act and section 4(2) of the Health Act and prospectively by section 1(2) of the HSC Act. Section 97 must be read in conjunction with Schedule 12A to the 1977 Act, as inserted by section 4(1) of the Health Act. Section 97(1) and paragraph 1(1) of Schedule 12A

provide for the remuneration of family health services practitioners in so far as it does not fall within paragraph 1(2) of Schedule 12A. Those paragraphs provide for:

a)     the reimbursement of certain designated expenses (which also counts as "remuneration");

b)     remuneration referable to the costs of drugs (i.e. that which is paid to pharmacists to reimburse them for the cost of drugs dispensed by them on the orders of GPs);

c)     remuneration of chemists providing certain designated additional pharmaceutical services under section 41A of the 1977 Act;

d)     designated remuneration of persons providing GMS which is determined by the HA.

250.     Paragraph 3 of Schedule 12A provides a mechanism whereby the Secretary of State may apportion among HAs the total remuneration referable to the cost of drugs which is paid by each HA. Each HA has a duty to reimburse the pharmacists in their area for the costs of the drugs which they dispense on the orders of GPs. In some cases, a GP in the area of one HA prescribes a drug which is dispensed in the area of another HA. The power in paragraph 3 is used so that the cost of the drugs prescribed by the GP in first HA area is met from that HA's allotment, even though it is the other HA which initially reimburses the pharmacist for the cost of the drug.

The 1990 Act

251.     It should be noted that the 1990 Act introduced a number of innovations in the systems described above. The system of GP fund-holding provided for by sections 14 to 17 was abolished by section 1 of the Health Act and is not described here.

NHS trusts

252.     Section 5 of the 1990 Act, and the immediately following provisions, provide for the setting up of bodies known as "NHS trusts". These are not HAs and are separate, independent bodies which were set up to assume responsibility for the ownership and management of hospitals or other establishments or facilities previously managed or provided by a HA (or, before 1 April 1996, its predecessor under the pre-1995 Act structure of the NHS), or to provide and man-age hospitals or other establishments or facilities which were not previously so man-aged or provided. Section 5(1), as amended by section 13 of the Health Act, now provides that trusts are established to provide goods and services for the purposes of the health service. A trust's functions are conferred by its establishment order made under section 5(1) and by Schedule 2 of the Act.

253.     Nearly all the hospitals in the country are now run by NHS trusts, although increasingly, smaller "community" hospitals are being run by PCTs. The essential difference between NHS trusts and the hospitals run directly by HAs is that the latter were funded by money paid to HAs for the pur-pose by the Secretary of State under (what is now) section 97(3) of the 1977 Act; generally speaking, NHS trusts do not have money paid to them direct

by the Secretary of State, but instead must compete with each other for orders for their services placed by HAs (or more recently PCTs). HAs have thus been "purchasers" or "commissioners" of health care on behalf of the local population; while trusts are included among the "providers" of this health care. HAs may also choose to purchase health care from private sector institutions. In the period leading up to the creation of PCTs, HAs performed their commissioning functions through committees called Primary Care Groups. Today, most commissioning is carried out by PCTs (in England).

254.     This system resulted in the creation of what was known as the "internal market", whereby the whole of the operation (including trusts) is still the NHS, but for internal purposes the purchasers or commissioners were split from the providers. However, it should not be of any concern to the patient how the internal arrangements work: so far as the patient is concerned, the whole thing is still the NHS.

255.     The 1990 Act conferred on NHS trusts a substantial degree of autonomy. As well as not being funded centrally, the Secretary of State was able to give directions to NHS trusts only in relation to a limited range of subjects (paragraph 6 of Schedule 2). The Health Act restricted this freedom by extending to NHS trusts the Secretary of State's power of direction under section 17 of the 1977 Act (see section 12 of the Health Act).

256.     Paragraph 5A of Schedule 3 to the 1990 Act, as inserted by section 3 of the HSC Act, now provides that the Secretary of State may make supplementary payments direct to NHS trusts. Most NHS trust income, however, continues to consist of payments by HAs/PCTs for the provision of services.

NHS contracts

257.     The nature of the arrangements between HAs and trusts is not that of an ordinary contract enforceable at law. Instead, the 1990 Act provided for a system of "NHS contracts" (section 4), which were explicitly not contracts enforceable at law (section 4(3)), but which had attaching to them a special form of internal arbitration by the Secretary of State. The list of bodies between whom certain agreements take the form of NHS contracts rather than ordinary contracts is contained in section 4(2).

The Primary Care Act

258.     The Primary Care Act introduced a new method of delivery of family health services. Personal medical services ("PMS") and personal dental services ("PDS") may be provided under agreements known (in the initial stage at least) as "pilot schemes" (sections 1-3 of the Primary Care Act). These agreements are made between the HA and one or more of the persons or bodies listed in section 3(2). Before a pilot scheme may be made, the proposals for the scheme must be submitted to, and approved by, the Secretary of State (sections 4 and 5). The system of pilot schemes is intended ultimately to be replaced by a permanent regime, which is in substance the same as the pilot scheme regime but instead of being provided for in

free standing provisions of the Primary Care Act is provided for by way of amendments to the 1977 Act: see sections 21 to 26 of the Primary Care Act.

259.     Although the provider of personal medical services may be an NHS trust or other qualifying body, the services themselves must be performed by a "suitably experienced" medical practitioner. Section 26 of the HSC Act (not yet in force) prospectively amends the Primary Care Act by inserting a new section 8ZA, that requires the Health Authority to keep a list of all the performers of PMS. It also provides for a services list of doctors to be kept under the permanent regime by inserting section 28DA into the 1977 Act.

260.     Pilot schemes allow PMS and PDS (essentially the same as GMS and GDS) to be under the Part 1 system. The provisions of the 1977 Act apply in relation to functions of the Secretary of State in relation to pilot schemes as if the functions were functions under Part 1 of the Act. NHS trusts may enter into a pilot scheme as a provider of PMS or PDS. The 1977 Act (and in particular section 17) has effect in relation to services under pilot schemes as if the services were provided as a result of delegation by the Secretary of State (by directions given under section 13 of that Act) of functions of his under Part 1 (section 9 of the Primary Care Act).

261.     These provisions allow PMS to be provided otherwise than through the rigid regulatory system of Part 2 of the 1977 Act. They allow HAs the power to determine locally the content of the service in their area or the practitioners with whom they choose to make the arrangements.

262.     The HA funds the services provided under a pilot scheme from its cash-limited allocation under section 97(3). This means that in effect the remuneration of practitioners providing PMS or PDS under the Primary Care Act is cash-limited, in contrast to the remuneration of Part 2 practitioners.

The Health Act

263.     Part 1 of the Health Act made further changes to both the Part 1 system and the Part 2 system.

PCTs

264.     In England, PCTs are a new tier of administrative body below HAs, and have primarily been concerned with the Part 1 system, although they may exercise certain HA functions relating to GMS. PCTs are established by the Secretary of State by orders under section 16A of the 1977 Act (as inserted by section 2(1) of the Health Act), with a view to their carrying out the activities listed in paragraphs (a) to (c) of that section. Their functions are conferred, in the main, by directions given by HAs under section 17A of the 1977 Act, as inserted by section 12 of the Health Act. There is currently no power for Secretary of State to delegate his functions direct to PCTs although he can under S17A(4) direct HAs to so delegate their 'delegable' functions. Under section 18(3) the Secretary of State can make

regulations precluding the 'delegator' exercising delegated functions. It is expected that all PCTs (i.e. covering all of England) will be established and operating by April 2002.

265.     Most HA functions are delegable to PCTs (s17A). S17A(3) sets out those 'excepted functions' which may not be delegated.

266.     In the exercise of the functions under Part 1 of the 1977 Act delegated to them by their HAs, PCTs have taken on the "commissioning" activities of the HAs. Unlike HAs, however, they also provide certain services (usually community health services rather than hospital services) in the exercise of those functions. A PCT is something of a "hybrid" between a HA and an NHS trust. The other significant feature of PCTs is that the regulations for the membership of PCTs made under paragraph 5 of Schedule 5A to the 1977 Act, as inserted by Schedule 1 to the Health Act, provide that a substantial number of PCT members and PCT committee members must be GPs, local nurses and other health care professionals providing or assisting the provision of services under the 1977 Act.

Part 2 services

267.     The Health Act provides new powers for the Secretary of State to require persons providing Part 2 services to have indemnity cover (section 9), a new structure for the remuneration of Part 2 practitioners (section 10, which has not yet been brought into force) and makes further provision for the disqualification of such practitioners by the NHS tribunal on the grounds of fraud (section 40, which again has not yet been brought into force and because of the intention in the HSC Act to abolish the Tribunal will never be, although fraud is one of the new grounds for Health Authorities to remove practitioners).

Quality

268.     Section 18 of the Health Act imposes a "duty of quality" on HAs, PCTs and NHS trusts. Sections 19 to 24 provide for the establishment and operation of a new independent statutory body known as the Commission for Health Improvement, which is responsible for monitoring the quality of care for which NHS bodies have responsibility. The Commission is able to conduct a variety of reviews and investigations: see section 20(1).

The HSC Act

269.     The HSC Act made further changes. The following paragraphs summarise those changes, although the relevant provisions may already have been referred to in the general description above of the NHS system.

Health service funding

270.     Sections 1 to 5 of the Act makes various changes to health service funding: the Secretary of State and HAs may take into account the level of general Part 2 expenditure (which is not cash-limited) when determining the cash limited allotments of HAs and PCTs; changes are made to the arrangements under which Secretary of State may make payments to HAs on the basis of their past performance; the Secretary of State is given the power to make

supplementary payments direct to PCTs; and provision is made for the Secretary of State to form, or participate in the formation of, companies, either for the purpose of providing facilities or services to the NHS (section 4) or for the purposes of income generation (section 5). Section 3 (supplementary payments) and section 4 came into force on 1st August 2001.

Terms of employment of health service employees

271.     Section 6 of the HSC Act amends the 1977 and 1990 Acts so as to extend the Secretary of State's powers to direct as to the terms and conditions of staff of PCTs and NHS trusts. Section 6 came into force on 1st October 2001.

Part 2 services and PMS/PDS

272.     Sections 14 and 15 of the HSC Act provide for the abolition of the Medical Practices Committee and for HAs to determine GP vacancies. Section 16 provides for the abolition of the NHS tribunal; the Act provides that instead HAs will remove or suspend practitioners from Part 2 lists (section 25), subject to appeal to the Family Health Services Appeals Authority (FHSAA) (section 27). Sections 17 to 24 make provision in relation to Part 2 services, including provision for out of hours GP services, changes to the Part 2 list arrangements and for supplementary lists for persons assisting the provision of Part 2 services. Section 26 enables the Secretary of State to make regulations for HAs to hold lists of persons who may perform PMS/PDS. Many of these provisions are not free-standing but proceed by way of amending or inserting new sections in the 1977 Act. For example, section 25 inserts new sections 49F to 49R and section 27 inserts section 49S and Schedule 9A. None of these provisions are yet in force apart from section 27 as it relates to the constituting of the FHSAA and the making of rules or regulations in respect of it.

Pharmaceutical services

273.     Sections 28 to 41 of the Act provide for the provision of "local pharmaceutical services" under arrangements similar to those for PMS and PDS under the Primary Care Act 1997. Sections 42 to 44 makes a number of changes to the existing system for the provision of pharmaceutical services under Part 2 of the 1977 Act. None of these sections have yet been brought into force.

Care Trusts

274.     Section 45 provides for the Secretary of State to designate NHS trusts or PCTs as "Care Trusts" where those trusts exercise Local Authority functions under "partnership arrangements" under section 31 of the Health Act (see the following section). The designation does not affect the trust's powers and duties in relation to their NHS functions. Section 45 has not yet been brought into force.

The NHS and Local Authorities

275.     Local Authorities ("LAs") are responsible for the provision of what may be described as "social care", e.g. residential accommodation for the disabled or elderly. The enactments under which functions in this respect are conferred on LAs are set out in Schedule 1 to the

Local Social Services Act 1970 (c.42) and other legislation. Section 21 and Schedule 8 of the 1977 Act make provision for the exercise of certain specified functions. LAs also exercise functions in respect of housing (e.g. the Housing Act 1985 (c.68)) and education (the Education Act 1996 (c.56)).

276.     Sections 22 and sections 26 to 28BB of the 1977 Act, as amended by sections 27, 29 and 30 of the Health Act, make provision for co-operation between the NHS and LAs. Section 22(1) of the 1977 Act, as substituted by section 27(2) of the Health Act, places a general duty on NHS bodies (on the one hand) and LAs (on the other) to co-operate in the exercise of their functions in order to secure and advance the health and welfare of the people of England and Wales. Sections 26 to 28 make provision for the supply of goods and services by the Secretary of State to local authorities and vice-versa. Section 28A of the 1977 Act, as amended by section 29 of the Health Act, makes provision for HAs in England to make payments towards expenditure by various LA bodies on community services, such as social services, housing and education for the disabled. Section 28B makes similar provision for Wales.

277.     The Health Act makes further provision for co-operation between the NHS and local authorities. Most importantly, section 31 makes provision for NHS bodies and LAs to enter arrangements under which an NHS body exercises LA functions or vice-versa. Provision is also made for arrangements to operate a "pooled fund" from which payments may be made towards expenditure on either NHS or LA functions. In addition to section 31, section 28 provides for HAs, with the assistance of PCTs, NHS trusts and LAs, to prepare plans setting out a strategy for improving both the health of the local population and the provision of health care to that population. Section 30 of the Health Act inserts a new section 28BB into the 1977 Act, which makes provision for LAs to make payments towards expenditure incurred by NHS bodies: this provision mirrors section 28A of the 1977 Act.

278.     The HSC makes further changes in relation to "partnership arrangements". Sections 45, 47 and 48 makes provision for NHS trusts and PCTs to be designated as "Care Trusts" where those trusts exercise Local Authority functions under arrangements under section 31 of the Health Act. Section 46 provides that the Secretary of State may, in certain circumstances, direct NHS bodies and local authorities to enter into such arrangements. Sections 46 to 48 came into force on 1st August 2001 but section 45 is not yet in force.