Pay awards worth £500m a year could be withheld from consultant doctors and replaced with “non-financial” prizes, the Department of Health has suggested.

The DH has written to the review body that advises on doctors’ pay two months before it is due to publish conclusions from a review into clinical excellence awards.

The submission recommends that the next round of the awards, worth up to £76,000 each on top of consultants’ maximum salaries of £120,000, should be cancelled. This would create an opportunity for a scaled back version of the scheme to be established in time for the following year.

However, the DH also says trusts should be able to decide themselves whether or not to make awards and that there is “considerable scope for an extended system of non-financial recognition”. It says the promise of non-cash prizes, “e.g., the Health Service Journal Awards”, would help to “encourage high performers to perform even better”.

Trusts could also establish their own awards such as “surgeon of the year” or “consultant with most improved productivity”, the DH suggests.

Trusts pay consultants about £225m a year in clinical excellence awards worth up to £35,484 each. Further awards made by the national advisory body and worth more than £200m are aimed at rewarding those who have made the biggest contributions to medicine.

More than half of consultants receive either a national or local clinical excellence award.

The DH said if payments were made in the next clinical excellence awards round in 2012, they should be non-pensionable.

It also said that awards should be reviewed annually instead of every five years. This is because the present system “allows those whose performance has tailed off to continue to be paid for some time”, the DH said.

British Medical Association consultants committee chair Mark Porter said he was concerned the DH’s supplementary evidence, submitted last week, was an attempt to “pre-empt” the official report of the doctors’ and dentists’ pay body.

He said the loss of the awards could deter some talented doctors from working in the UK.

A DH spokeswoman said the evidence did not pre-empt the review. “Given the timescale of the review, and subsequent consultations and negotiations, any new scheme would not be implemented by September 2011 when the 2012 round would normally be launched, so an interim measure [a decision on the 2011-12 awards] is necessary,” she said.

“We must ensure that the system is effective, affordable and in line with other public sector reform.”