CG 8.1 Scope
CG 8.1.1 This Costing guideline outlines an approach to cost non-admitted encounter activity.
CG 8.1.2 This Costing guideline provides practical steps and examples to guide staff on the patient costing process for these activities.
CG 8.2 Objective
CG 8.2.1 The objective of this Costing guideline is to guide costing practitioners of the end to end steps required and ensure that all non-admitted activities and expenses contributing to the day to day production of non-admitted products are included in the patient costing process to determine the full cost of production.
CG 8.3 Costing guideline
Step 1: Stakeholder identification and service scale and scope
CG 8.3.1 All services that meet the definition in IHPA’s [Tier 2 Non-Admitted Services Compendium] together with non-Tier 2 activity are to be costed in accordance with this Costing guideline.
CG 8.3.2 Costing practitioners should note that there may be other activity such as other out-of-scope non-admitted activities in the hospital which should be costed for internal management or Jurisdictional reporting.
CG 8.3.3 Costing practitioners should consolidate costing of all non-admitted activity.
CG 8.3.4 Costing practitioners should seek guidance and understanding of the counting rules and reporting of the Tier 2 non-admitted activities. Under ABF the unit of count is a service event.
CG 8.3.5 Costing practitioners should liaise with their jurisdictions and stakeholders to understand the costing approach required for these activities and advice on how or if these activities are to be reported at service event level for funding and/or reporting purposes.
CG 8.3.6 For classification purposes costing practitioners should note the following:
- The non-admitted activities in a clinic are grouped into clinic based classes (Tier 2 classes and other non-admitted).
- The Tier 2 classes are structured into procedures, medical consultation services, diagnostic services and allied health and/or clinical nurse specialist intervention services.
- Costing practitioners should refer to the Tier 2 Non-Admitted Services Definitions Manual for guidance and understanding on the classification and reporting of the Tier 2 non-admitted activities.
- The mapping of the clinic to Tier 2 classes may be done at hospital or jurisdictional level. Most jurisdictions require hospitals to register their clinics with them.
CG 8.3.7 Costing practitioners should meet with the appropriate non-admitted stakeholders such as outpatient or specialist clinic business managers and finance stakeholders to identify both the expense and activity related to the non-admitted services. Stakeholders may include the non-admitted service or specialist clinic business managers (or local equivalent), various directors of medical services and nursing/clinic managers.
CG 8.3.8 Costing practitioners should seek to understand the spread of non-admitted (both Tier 2 and other non-admitted) services to understand the level of service provision and to help inform where expenses and activity are recorded. This information will inform the costing methodology. Examples of service provision include:
- Non-admitted patient service events involving multiple health care providers.
- Telehealth Services
- Service events provided to group sessions
- Non-admitted services provided to admitted patients
- Visiting-specialist services (specialist outreach) activities in rural area
- Home delivered renal dialysis, nutrition procedure and home ventilation
Step 2: Align expense to Non-admitted activities and define overhead and direct expenses, including overhead allocation methods
CG 8.3.9 Costing practitioners may refer to their (master) clinic list and work with relevant stakeholders to define the expense of each clinic/unit that is both within and out of scope for non-admitted final products. This includes obtaining agreement on:
CG 8.3.10 The cost centre/s to map to the clinics for costing purposes in the costing software. Most clinics do not normally have a one to one mapping to a cost centre code. Expenses may need to be moved to/from other cost centres.
CG 8.3.11 Costing practitioners should also work with relevant stakeholders to define and agree on the methods and assumptions to be used (for example, staff rosters, timesheets and/or other relevant data) to transfer expenses to other products.
CG 8.3.12 Costing practitioners should then (within the patient costing system) use stakeholder insights to move expense appropriately to the non-admitted final cost centre and other relevant final cost centres (for example from the medical/Allied unit cost centre to the outpatient Clinic cost centre).
CG 8.3.13 Costing practitioners may also need to consider how they will treat activities which, say, fall outside the definition of service events or require further consideration. For example, ‘did not attend’ records may require a minimum allocation of expense to recognise costs associated with bookings, medical record retrieval and other associated costs. Where a patient is simultaneously an admitted patient and attends non admitted clinics, the clinic event will not be costed. Costing practitioners should refer to their jurisdictions for further advice.
CG 8.3.14 Record Expense Alignment Decisions – Costing practitioners should utilise the costing system or another medium to record:
- the classification of expense into the Non-admitted final cost centre;
- the stakeholders met with;
- the date of the meeting; and
- a date for future review of Clinic expense alignment.
Step 3: Identify patient level activity and Non-admitted feeder data and perform quality assurance checks
CG 8.3.15 Non-admitted feeder systems should be able to capture and report some or all of the following fields:
- the patient’s unique identifier;
- the patient unique episode identifier;
- Clinic code;
- the date of service;
- Tier 2 codes;
- multiple health care provider indicator;
- provider type - to identify the specialty of the individual health care providers who are involved in the service events. This field may be used to create intermediate product code and identify the cost centre to map expense and activity;
- modality of care (for example: face to face, telephone);
- Service type (for example, Endocrine, Midwifery);
- funding source;
- Setting type (for example, Hospital Outpatient Clinic, Home-Private Residence)
- the time into and out of the unit; and
- other patient demographic factors such as sex and age.
CG 8.3.16 Costing practitioners should perform quality assurance checks on the non-admitted file prior to the costing process. For example, checks should be made on the date of service (to test reliability to remove error dates, check time into and out of the unit, and ensure dates are relevant to the period being costed). If clinic duration is used to allocate costs, checks should be performed to ensure that the duration of the service event is reasonable.
Step 4: Creating and mapping Non-admitted department costing products
CG 8.3.17 Intermediate products should be created according to the services defined in the feeder, and mapped to the relevant final cost centre. For example, services in a Pain clinic may have the following intermediate products:
- ‘OP-Pain-2003’, where ‘Pain’ is derived from the Clinic code field, ‘2003’ is derived from the Tier 2 field of the Non-Admitted feeder file, Consult or Nursing describes the resources (or treatment type) consumed within the clinic.
- ‘OP-Pain-2003-First-Consult’, same as above and with visit type and treatment type medical consultation
- ‘OP-Pain-2003-First-Nursing’, same as above and with visit type and treatment type nursing intervention
- ‘OP-Pain-2003-First-Face-Consult’ – same as above and with Treatment type medical consultation
- ‘OP-Pain-2003-First-Face-Nursing’ – same as above and with modality of care and with visit type and treatment type nursing intervention
- ‘OP-Pain-2003-First-Face-Consult-2532113’ – same as above and with additional information on the specialty of the health care provider (2532113=Pain Management Specialist)
CG 8.3.18 Once the intermediate products are created, costing practitioners will be required to map this in the costing system to the appropriate final cost centre. The cost per intermediate product is dependent upon the data captured in the feeder, for example, these could be actual minutes or a derived set of minutes based on standard consultation times informed by the stakeholders.
CG 8.3.19 Aggregated (dummy) episode records and intermediate product codes may be created for non-admitted activities with no feeder system.
Step 5: Apply Relative Value Units by intermediate product code
CG 8.3.20 The most widely used methods for allocating costs to non-admitted service events include:
- duration in clinic (including actual duration, if captured);
- average/Weighted time in clinic;
- service weight by Tier 2 classification;
- traceable cost (example: charges on outsourced services);
- other Relative Value Unit (RVU) by clinic or Tier 2 classification;
- number of clinicians
CG 8.3.21 Costing practitioners may use the intermediate product codes to create corresponding RVUs and these may be based on:
- visit type (new or Repeat)
- modality of care
- remoteness of clinic
- treatment type (for example, the types of procedures)
Step 6: Create intermediate product costs in final cost centres
CG 8.3.22 Two allocation processes are performed:
- When overhead costs are allocated to the Production Cost Centre (using an appropriate allocation statistic)
- When the Production Cost Centre costs (overhead and direct) are allocated to the intermediate products.
Step 7: Match intermediate products and their costs to Non-admitted activity and Non-admitted service events
CG 8.3.23 Non-admitted service events will consume resources from other hospital departments, such as imaging, pathology, pharmacy, and allied health on their journey of care. For example, patients visiting the Pain Clinic will consume pathology tests as part of their care. The intermediate products from these departments should be matched to the appropriate non-admitted activity.
CG 8.3.24 Costing practitioners must ensure that services from other departments provided to non-admitted patients are matched appropriately to the service event.
Step 8: Report costs
CG 8.3.25 Costing practitioners should then perform the required steps to consolidate and report costs of the non-admitted activities and decipher how to report at service event level.
CG 8.3.26 For example, in a Tier 2 20.03 medical service event in a Pain Clinic involving multiple health care providers, the patient may be seen by a Pain Specialist and then followed up with further consultations/interactions with an allied health professional and/or a nurse within the same clinic and session. This encounter should be reported as one service event but may be costed in individual occasions of services (medical, allied and nursing), depending on the booking system.
CG 8.3.27 The costing practitioner may need to understand how to aggregate costed activity to service events or seek jurisdiction advice on how to report costs at service event level
Step 9: Cost data review with relevant stakeholders
CG 8.3.28 Costing practitioners should meet with their relevant non- admitted stakeholders to report on the costs calculated.
CG 8.3.29 Cost data should be reviewed for, amongst other checks, cost relativity per Tier 2 classification and resource completeness per service event to decipher if the cost data captures resources that have been provided at service event level. For example, medical clinics should incorporate medical costs whilst nurse led clinics should demonstrate nursing costs as they are mainly driven by nurses and midwives.