NHS England has spent about £258m a year on GP services with no identifiable justification, a review has found.

However, NHS England − which carried out the review − has decided to give area teams more than two years to decide what to do about the disparities.

The national commissioning body initiated a national review of GP practices with primary medical services contracts last year in response to concerns some were paid significantly more than others for similar work.

PMS contracts, for which income is agreed locally, were introduced as an alternative to nationally agreed general medical services contracts in the late 1990s. About 45 per cent of all GP practices now have PMS contracts.

NHS England examined what practices were being paid for and identified what it described as a “PMS premium” − the amount that PMS practices are being paid over and above what they would receive if on a GMS contract.

The review’s outcomes, published on Monday, found the national “PMS premium” was £325m as of April 2013 − equivalent to £13.52 per patient. Some PMS practices had a premium of up to £90 per patient.

NHS England predicted that increases to core GMS contract payments due over the next seven years would reduce the total PMS premium, or relative overpayment, by £90m, to £235m.

NHS England said £67m − or 21 per cent − of the current premium was linked to identified extended services that PMS practices provided, or to meet other key performance indicators. However, commissioners could not identify the purpose of the remaining £258m premium, although it may have been “associated with enhanced services or populations with special needs”.

NHS England’s director of commissioning policy and primary care Ben Dyson wrote to area teams instructing them to review PMS contracts in their areas by April 2016 to “ensure additional investment paid over core funding is used in a way that is clearly linked to enhanced quality or services or the specific needs of a particular population”. Area teams will decide what payment is justifiable and how quickly to make adjustments to practices’ income. No deadline has been set.

HSJ analysis in 2012 revealed huge variation in the amount both GMS and PMS practices received for each patient, with the excess paid to high earners amounting to £566m a year. Variation in GMS payments is being addressed to some extent through changes to the contracts the government is making over seven years from April.

Charles Alessi, chair of the National Association of Primary Care which represents many PMS practices, said he was “disappointed by the approach NHS England is taking”.