The Co-operation and Competition Panel is to investigate complaints that primary care trusts are restricting choice and competition, and setting discriminatory contracts.

The CCP was asked to start an investigation by the Department of Health and Monitor after “informal complaints” from private and NHS providers about breaches of free choice rules on elective care.

It will also look at whether different contract terms are being offered by PCTs “which potentially discriminate between providers on the basis of ownership”.

The CCP said it had been asked to examine attempts by PCTs to set caps on expenditure with providers and dissuade GPs from referring to particular providers.

Figures produced by the panel showed the value of elective services delivered by the independent sector had risen to £33m since the Extended Choice Network was introduced in 2007, allowing GPs to refer patients direct to the independent sector.

In the terms of reference for the review the CCP said: “PCTs are currently undertaking a large amount of activity which may have a significant impact on plurality within the provider landscape.

“The activity includes how to address the issues associated from moving away from the Extended Choice Network to standard contracts and that some Independent Sector Treatment Centre contracts are expiring.”

The NHS Partners Network, which represents independent sector health providers, welcomed the move.

Network director David Worskett said: “Unfortunately, as the old, well-tested ECN arrangements are replaced by ‘any willing provider’ too many commissioners are seeking to vary the requirements in ways which reduce patient choice.

“As these procedures are done at tariff, concerns about costs are unjustified and in practice the hospitals offering these services often provide significant added value.“

However, the NHS Confederation’s PCT Network said the investigation should not undermine “local flexibility.”

Network director David Stout said: “It is right that PCTs set local standards for services so that they meet local needs. The health White Paper makes clear that we should move away from top-down instruction from the centre.

“Similarly the [NHS] operating framework published this week makes clear that it is legitimate for healthcare providers to offer services to commissioners at less than the published mandatory tariff price, where both commissioner and provider agree. However PCTs will want to be sure that there is no detrimental impact on quality, choice or competition as a result of any such agreement.

He added: “PCTs have a duty to promote and publicise choice for secondary care. If there are individual concerns that PCTs have not met this duty, then it is right that they should be investigated.”

NHS Harrow’s latest board papers said the PCT had set a cap on expenditure with the North West London Hospitals Trust.

The PCT is forecasting a year-end deficit of £16.8m.

The deadline for initial submissions to the CCP investigation is the end of January. A report is due to be published in June.