Department of Health
National ABF Implementation Reference Group
13 February 2012
Bruce Prosser
Director, Funding and Information Policy
Welcome
Welcome
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Purpose of meeting
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A ‘sounding board’ to test impacts of ABF implementation.
DH to provide context on specific topics, pose a series of
questions for discussion within the group (hence small group
size).
Discussions will inform prioritisation of issues to be raised with
the IHPA and Commonwealth, policy development,
implementation decisions.
Meeting topics
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Overview of National Health Reform Agreement
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Key issues and tasks to be resolved pre 1 July
2012
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IHPA pricing model – high level and technical elements
Block funding
Funding distribution impact mitigation
Scope of services
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Costing, data collection and reporting
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Date of next meeting and general questions
Overview of the National Health Reform Agreement
Overview of the National Health Reform Agreement
Commonwealth and State Funding Components
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Commonwealth Component
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IHPA sets National Efficient Price (NEP), national cost weights.
Commonwealth pays a percentage of the NEP, back-calculated
based on their existing SPP funding pool.
Some block funding (composition TBC).
State Component
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Price element, specified grant element, transitional funding element.
Relativity between elements to be determined, depending on
outcome of distribution of Commonwealth contribution.
IHPA Pricing Model – high level pricing framework
Issue
Draft Pricing
Framework
Victoria response
Care Settings Unit of
Measure
Single
Multiple
Price
Median
Based on mean costs
in short term
Cost of small capital
Excluded from price
Should be included in
price
Use of loadings
Determined by IHPA
State responsibility
IHPA Pricing Model – high level pricing framework
Issue
Draft Pricing
Framework
Victoria response
Private Patients
Price discounted for
costs funded from other
sources
Agree with discounting, noting
need for incentives and
requirement to cover all costs,
including administrative
Scope of services
Public hospital location
Should be driven by type of
service rather than location
Block funding
Technical requirements
for ABF not met,
absence of economies
of scale.
Definition should be expanded
to include other legitimate
costs
IHPA Pricing Model – high level pricing framework
Issue
Draft Pricing
Framework
Victoria response
Indexation of costs
GFCE – Hospital and
Nursing home deflator
CPI+ index for three
years, then reassess
rate
Other Victorian Issues
Transitional funding
Policy role of IHPA
IHPA Pricing Model – technical aspects
Technical model specification
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Deals with detailed model parameters such as outlier
payment methodology, ICU copayments.
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Stark differences in the ability of service stream pricing
models to explain costs, ranging from reasonable for acute
admitted, to passable for emergency department, to nonexistent for outpatients.
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Continuous feedback being provided on various model
iterations via Technical Advisory Committee.
IHPA Pricing Model
Next steps for the pricing model
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The March 30th deliverables from IHPA to governments are
expected to include:
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the draft NEP determination;
the Pricing Model with details of the cost and volume
specifications used (this will be an Appendix to the
Determination); and
– the draft Pricing Framework.
45 Days for governments to review.
IHPA Pricing Model
Questions for participants
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Which issues are the most significant – which ones should
Victoria prosecute our position the hardest?
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What changes in practice may occur if IHPA adopt the Draft
Pricing Framework in totality?
Block Funding
Process and approach
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In year 1, the breakdown of the Commonwealth SPP (a
fixed pool of money) between ABF and block funding will be
determined through a bilateral negotiation. Commonwealth
view is that minimal specified grants are justifiable, Victoria’s
proportion of funding for Mental Health and Subacute (block
funded in 2012-13) is too high.
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Proposed approach: develop position on proposed list of
specified grants to be retained, ensure they are consistent
with IHPA’s draft criteria (which will apply from year 2
onwards), and additional criteria proposed by Victoria:
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Forward-looking costs
Financial risk mitigation – transitional block payments
Block Funding
Questions for participants
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Is it easier to manage Health Services if a greater proportion
of funding is provided as a specified grant rather than
funding via price?
Funding distribution impacts
Funding distribution impacts
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Combined impact of:
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cost weights calculated using national rather than just Victorian
data;
modified ‘WIES’ model for acute admitted;
new ABF funding model for ED and outpatients; and
reduced number of specified grants
will have significant impact on funding distribution across
Health Services if Victoria were to strictly replicate IHPA
funding model.
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Modelling is underway to determine impacts at Health
Service level, and options to structure state funding
contribution to mitigate financial risk to Health Services.
Funding distribution impacts
Funding distribution impacts – questions for
participants
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Given combined impact of changes, how should the State
contribution be structured to mitigate funding distribution
impacts?
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peer pricing?
reduced price based on Commonwealth price?
separate state-based price?
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Assuming aggregate LHN budgets are maintained, what
issues may be generated as a result of ‘clunky’ transitional
payments, differences in remittance advices.
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Are there any specific programs that will be particularly
disadvantaged – e.g. renal, Commonwealth funding unlikely
to replicate capitation model, significant ‘rebalancing’.
Scope of Services
What does the NHRA say?
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Clause A10 of NHRA broadly outlines in-scope services to
be ABF:
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Admitted Acute services, including hospital in the home
programs.
Emergency Department (ED) services.
Non-Admitted patient services.
Other Outpatient, Mental Health, Subacute services and other
services that could reasonably be considered a public hospital
service.
Scope of Services
Process
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Clause A21 of the NHRA outlines that unless bilateral
agreement is reached with the Commonwealth on scope of
services by 1 May 2012, in-scope services will be
determined using the following process:
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Scope will automatically include all of Clause A10 (listed
above).
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States will provide the IHPA with recommendations for other
services to be considered not captured under Clause A10.
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The IHPA will develop criteria for assessing services for
inclusion and will consider each State’s recommendations
against these criteria to develop a general list of hospital
Key issues and tasks to be resolved pre 1 July 2012
Scope of services – key boundary issues
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Agreement provides sufficient high-level guidance, but
disagreements are expected around the margins. Victoria
considers:
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Otherwise in-scope activities such as Mental Health and
Subacute services undertaken by non-LHN entities should be
included in scope.
Alcohol and other Drug (AOD) services should be included in
scope (regardless of setting).
Community Health Programs should be excluded from scope
on the basis that they are analogous to primary health care.
Commonwealth considers:
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Privately referred non-inpatient activity should be out of scope,
consistent with clause A6 of NHRA.
Scope of Services
Questions for participants
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How significantly would Health Services be impacted if nonhospital entities (undertaking equivalent hospital services)
are excluded from scope?
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If any part of a service funded though MBS is excluded from
scope (not qualifying for a Commonwealth funding
contribution for any part of the occasion of service), how will
this impact Health Services?
Costing, Data Collection and Reporting
Costing and data collection
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The NHRA introduces significant new data collection
requirements, already evidenced though this year’s
collections but expected to escalate into the future as new
service streams come online for ABF.
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A post implementation review of the Victorian Cost Data
Collection (VCDC) is proposed. This will inform a gap
analysis of Health Service requirements to provide this data,
in areas including:
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assistance with need prioritisation, sequencing;
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data storage;
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data processing;
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personnel.
Costing, Data Collection and Reporting
Questions for participants
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Can participants readily identify any obvious gaps in:
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need prioritisation, sequencing;
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data storage;
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data processing; or
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personnel.
Is the VCDC Post Implementation review the best channel
for beginning to clearly articulate these gaps?
General
General questions for participants
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What is the level of concern within Health Services on the
impact of the NHRA in relation to:
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funding levels and breakdown?
data burden?
other aspects?
Should any other stakeholder groups be represented
at this forum, given its purpose?
Next Meeting
Next meeting
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Proposed date
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4 weeks time - 12 March 2012
Pre release of NEP
More concrete options for the likely magnitude and structure of
transitional funding arrangements will be available.