Five things GPs need to know about the new Provider Selection Regime

After nearly two years of anticipation and two consultations, the draft Healthcare Services (Provider Selection Regime) Regulations 2023 (PSR) have been published and are expected to come into force on 1 January 2024, bringing profound changes to the way in which healthcare services are commissioned. In this article, and with the benefit of NHS England’s draft statutory guidance, we consider five key concepts GPs, Primary Care Networks (PCNs) and GP provider organisations should be aware of:

1) When will the PSR be relevant to primary care?

The PSR applies specifically to the commissioning of ‘healthcare services,’ which includes primary care.  Although the unique nature of certain primary medical contracts means that many do not have a fixed end date, such that they are not routinely subject to any re-procurement processes, there are clearly situations in which commissioners will need to select a new provider for primary care services. Moreover, the PSR applies where healthcare contracts are varied (referred to as “modification” in the PSR). Commissioners and providers of primary care services therefore need to be aware of the new rules.

Helpfully NHSE’s guidance sets out a series of examples of how the regime applies when selecting providers for primary care contracts, including:

• in relation to the continuation and modification of existing contracts;
• where new services are needed due to planned or unplanned provider exit of existing contracts; and
• where new and integrated services are being commissioned.

Primary care commissioners and providers should therefore pay special attention to Annex C which provides this additional and sector specific guidance.

2) A reduced emphasis on competitive procurement

The current regime for procurement of healthcare services established by the Public Contracts Regulations 2015 (the PCR) and the National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 established competitive tendering as the basis for the award of healthcare contracts (albeit with greater flexibilities for healthcare or ‘light touch’ services. Recognising that, amongst other things, this could be a barrier to greater integration and collaboration, the PSR has been designed to give the relevant authorities (including ICBs commissioning primary care) greater flexibility in selecting providers for healthcare services. Commissioners can choose from the following processes under the PSR:

1. direct award processes (direct award process A, direct award process B and direct award process C);
2. the most suitable provider process; and
3. the competitive process.

In what is arguably the greatest departure from the current position, direct award process C allows commissioners the flexibility to award a new contract to an existing provider when its contract is coming to an end in circumstances where the existing provider is satisfying the existing contract and likely to satisfy the new contract and the proposed contracting arrangements are not changing considerably from the existing contract. The PSR sets out a test for determining if changes are considerable. This effectively allows a commissioner who is content with service provision it is receiving to continue with the existing provider without the disruption and interruption of a new procurement process.

Similarly, the Most Suitable Provider process allows a relevant authority to award a contract where it can identify the most suitable provider, without a competitive process, by taking into account likely providers and all relevant information available to the authority at the time. Designed to provide relevant authorities with “a mechanism for reasonable and proportionate decision-making without running a competitive exercise” this tool is likely to be especially useful where a commissioner has robust knowledge of its local ‘provider landscape’ and where there is a relatively small or specialised market for the services being procured, such that a full competitive process is disproportionate in achieving the procurement principles.

3) The importance of the ‘Provider Landscape’

Whilst it has long been established that commissioners should know and understand the needs of their population and the providers in it, the concept and importance of a thorough knowledge of the ‘provider landscape’ finds new expression in the PSR.

This is because the new processes rely heavily on this knowledge for robust and defensible decision making in the absence of competitive procurement. The statutory guidance confirms the importance of market engagement activities and developing a breadth and depth of knowledge about providers, not only when contracting but more generally. The guidance emphasises that such knowledge is imperative because:

‘Without this understanding, relevant authorities may not have enough evidence to confirm the existing provider is performing to the best quality and value, miss opportunities to improve services and identify valuable innovations, and ultimately lead providers to make representations.’

The emphasis on the importance of understanding and involving the provider landscape in decision making is a valuable opportunity for primary care providers to shape and influence the commissioning of primary care in the local area by developing close working relationships with commissioners to drive greater integration and improvement in the healthcare system.

4) A new regime for challenges

Unlike the current remedies regime, the PSR does not offer a direct route for aggrieved providers to challenge the decision of relevant authorities through the courts.

Rather, it establishes the right of providers to make ‘representations,’ the purpose of which is to seek a review of the decision made, to determine whether the PSR has been applied correctly and whether the relevant authority has made an appropriate provider selection decision. If such representations are made, the relevant authority must then consider whether to continue to award, rewind or abandon the procurement.

If a provider is still unhappy, the provider can then make representations to a specially appointed independent, expert panel (the PSR Review Panel) established by NHSE who will consider the relevant authority’s compliance with the PSR and make recommendations back to the relevant authority which must then make its decision.

If a court remedy is desired, the route for this will be judicial review.

Providers of primary care services need to familiarise themselves with these rules and processes so that they are in a position to make representations if commissioning decisions are made otherwise than in accordance with the PSR.

5) New modification rules

Part of the aim of the PSR was to reduce the need for procurement processes where they brought only limited value to users of the services. The PSR has therefore amended the rules relating to when contracts can be varied without the need for a new process.

Annex C is essential reading for GPs concerned about the modification rules and how these apply to them since it considers a number of primary care specific scenarios where these apply and confirm the recommended approach. Annex C can be found here: NHS England » The Provider Selection Regime: draft statutory guidance

Conclusion

The PSR represents a significant shift in the rules relating to the commissioning of healthcare services. With limited time before the new rules come into force, primary care providers would be well advised to familiarise themselves with the new regime to take advantage of the greater flexibilities and opportunities it offers.

If you have any questions on the new PSR, please get in touch.