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Independent Hospital Pricing Authority releases Pricing Framework for Australian Public Hospital Services 2015-16

The Independent Hospital Pricing Authority (IHPA) today released its The Pricing Framework for Australian Public Hospital Services 2015-16

The Pricing Framework provides the methodology used to determine the National Efficient Price (NEP) and the National Efficient Cost (NEC) and is compiled through extensive consultation with jurisdictions and stakeholders.  

The NEP Determination is used to calculate Commonwealth payments for public hospital services that are funded on an activity basis, whilst the NEC Determination covers those services which are block funded, such as small rural hospitals.

Shane Solomon, Chair of the Pricing Authority said, “I am pleased to announce the publication of IHPA’s fourthPricing Framework for Australian Public Hospital Services for 2015-16.

“A program of comprehensive consultation has enabled us to fine-tune the Pricing Framework ensuring a clear understanding of what is a hospital service and the methodology that guides the annual determination of the National Efficient Price (NEP) and National Efficient Cost (NEC).

“The pricing approach has now been increasingly bedded down. This is demonstrated in IHPA receiving fewer submissions during its public consultation, meaning more widespread agreement from the jurisdictions and stakeholders about the pricing process,” said Mr Solomon.

“Improvements to the pricing mechanism include opportunities for bundled payments rather than individual payments, such as dialysis treatments that take place in the home. This will assist in cutting bureaucracy and administration, is more patient centric and provides a focus on quality.

“This year the eligibility limit for block funded hospitals has been reduced to encourage more Activity Based Funded hospitals. This provides an overall improvement to sustainability and predictability in funding outcomes for public hospitals from year-to-year,” concluded Mr Solomon.

Submissions to the Pricing Framework for Australian Public Hospital Services 2015-16 consultation paper are available on the IHPA website (except where submissions have been provided in confidence).

The NEP and NEC Determinations will be published on the IHPA website in February 2015.

For more information contact:

Anna Flynn
Manager, Communications
communications.ihpa [at]
0430 105 665

About the Independent Hospital Pricing Authority (IHPA)

IHPA is an independent government agency established under 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 Australian Government and state and territory governments to work in partnership to improve health outcomes for all Australians.

IHPA is charged with determining the National Efficient Price and the National Efficient Cost for public hospital services, allowing for the national introduction of Activity Based Funding (ABF).

The implementation of ABF aims to improve transparency, and strengthen incentives for efficiency in the delivery of public hospital services.