The Independent Hospital Pricing
Authority’s first year
Shane Solomon, Chair, IHPA
Wednesday 15 May 2013
Welcome
Why does this matter?
•
Fairness – same service, same price
(no special deals)
•
Consumer focus – paid for treating
people (not reducing services to cut
costs)
•
Innovation globally – an ABF system
that recognises out of hospital work
and hospital avoidance
•
Accountability for public funds –
transparency and efficiency
•
A “currency” for making better
purchasing decisions (ABF is just the
price….system manager must decide
what to buy)
IHPA’s establishment
•
The National Health Reform
Agreement signed by all
first Ministers in August
2011
•
IHPA legislation passed in
November 2011 by federal
parliament
•
Pricing Authority members
appointed in January 2012
(approved by COAG, with
each state nominating)
The Pricing Authority
What does IHPA do?
•
Independently set the national efficient “price” for activity
based funded public hospital services
•
Determine loadings for unavoidable costs
•
Determine what is a “hospital service” and so eligible for
Commonwealth funding
•
Specify all of the classification, costing, data and modelling
standards that are required to develop the national efficient
price
•
Determine the criteria for defining block funded services and
their national efficient cost
•
Resolve cross border disputes and assess cost shifting
IHPA’s strategic intent – modus operandi
• Transparency
• Value for money efficiency
• Independence through
collaboration
• National consistency
• Evidence-based
A lot has been done in a short time…
Key determinations included:
•
Resolving what is a “hospital service” for Commonwealth funding purposes
•
ABF classification systems for acute inpatients, emergency department services,
outpatient services, sub-acute, and mental health adjustments
•
IHPA’s Pricing Framework and National Efficient Price for ABF services using a
single currency (NWAU)(x two years):
•
•
Indexation factor used to translate historical costs to future prices
•
Pricing private patients in public hospitals
•
Loadings for indigeneity, remoteness and specialist paediatric
hospitals based on empirical data
For Block Funded services:
•
Block funding criteria to COAG for approval
•
Small rural hospitals (weighting matrix based on size and location, at
$4.738 million per weighted unit)
The threshold challenge: what is a “hospital service”
•
All admitted programs including hospital in the home and
forensic mental health inpatients
•
All emergency department services
•
Non-admitted services:
o Outpatient clinics
o Other non-admitted services that meet the criteria
below
The non-admitted service must be:
1. Directly related to inpatient admission or emergency
department attendance; OR
2. Intended to substitute directly an inpatient admission or
emergency department attendance; OR
3. Expected to improve the health or better manage the
symptoms of persons with physical or mental health
conditions who have a history of frequent hospital
attendance or admission; OR
4. Reported as a public hospital service in the Public Hospitals
Establishment Collection 2010
Critical Success Factors....
•
The Health Reform Agreement – gives
the building blocks and $ for future
•
IHPA behaves independently, is driven by
evidence, and takes a national approach
•
Collaboration with jurisdictions – strong
governance framework
•
Testing of ideas (Draft Pricing
Framework), and openness to respond to
sound arguments
•
Commitment of each jurisdiction to
introduce ABF funding
•
The transition years…time to get it right,
or as right as possible before ‘go live’
Commonwealth ABF funding in 2104-15
What next – the core?
•
After the transition – from 2014-15
onwards greater focus on system
manager’s purchasing policy frameworks
•
Improved costing information – still
variable quality
•
New mental health classification system –
cross care type boundaries
•
Teaching, training and research
•
Review classification systems for
emergency department and outpatient
services
What next – towards international standard
•
•
Towards world leading pricing:
•
Incentives for the more efficient/efffective
service option?
•
Quality incentives, P4P?
•
Pre-defined care pathways?
•
Bundled payments that incentivise
substitution of better care options?
•
Paying for value?
Normative pricing demands greater
clinician engagement and will be a
challenging debate that has to happen
Thankyou