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IHPA releases Pricing Framework for Australian Public Hospital Services 2019-20

The Independent Hospital Pricing Authority (IHPA) today released its Pricing Framework for Australian Public Hospital Services 2019-20.

The Pricing Framework outlines the major policy decisions that underpin the National Efficient Price (NEP) and National Efficient Cost (NEC) Determinations.

During the drafting of the Pricing Framework, IHPA consulted extensively with all Australian governments, industry associations and the wider public to ensure its decisions align with national health objectives,” explained Shane Solomon, Chair of IHPA’s Pricing Authority.

A key policy outcome proposed in the 2019-20 publication is the intention to monitor and benchmark avoidable hospital readmissions from July 2019.

IHPA has worked closely with a range of stakeholders—including clinicians, on interventions targeting avoidable hospital readmissions. “The aim of this is to help ensure a patient’s original hospital stay effectively manages any complications, does not discharge them prematurely, and patients are referred to necessary post-discharge services,” Mr Solomon commented.

The implementation of pricing and funding approaches for safety and quality has been rolled out in stages. From July 2017 no Commonwealth funding has been provided for episodes of care with sentinel events such as medication errors leading to death. Since July 2018 funding has been reduced for any episode of care where a hospital acquired complication occurs.

These pricing and funding approaches intend to complement existing strategies to improve safety and quality in public health care.

This work is part of all Australian governments’ commitment to develop and implement funding and pricing approaches for safety and quality, in line with the Heads of Agreement signed in April 2016.

“IHPA is committed to contributing to the improvement of health outcomes and decreasing avoidable demand for public hospital services,” said Mr Solomon.

The Pricing framework precedes the NEP and NEC Determinations, which will be published in early 2019, enabling Australian governments to consider the policy principles underpinning the Determinations. The staggered process is reflective of the agency’s commitment to transparency, accountability and collaboration.

About IHPA

IHPA is an independent government agency established under the Commonwealth legislation on 15 December 2011 as part of the National Health Reform Agreement (NHRA), reached by the Council of Australian Governments (COAG) in August 2011.

The NHRA sets out the intention of the Commonwealth Government and state and territory governments to work in partnership to improve health outcomes for all Australians.

IHPA is charged with implementing national activity based funding (ABF) by determining the National Efficient Price and the National Efficient Cost for public hospital services each year. ABF improves transparency, and strengthens incentives for efficiency in the delivery of public hospital services.

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