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Pricing Framework for Australian Public Hospital Services open for public consultation

The Independent Hospital Pricing Authority (IHPA) today released its Consultation Paper on the Pricing Framework for Australian Public Hospital Services 2022–23 (the Consultation Paper).

The consultation is open to the public for 30 days, until Friday 9 July 2021.

The Consultation Paper is a key mechanism for providing input on the policy decisions adopted by the agency to inform the Pricing Framework for Australian Public Hospital Services 2022–23 (the Pricing Framework), which will underpin the determination of the national efficient price and national efficient cost for Australian public hospital services for 2022–23.

This year’s consultation seeks feedback on key changes arising from the Addendum to the National Health Reform Agreement 2020–25 (the Addendum), and in particular, IHPA’s role in supporting work in investigating and trialling innovative models of care using alternate funding models to activity based funding and exploring options for reducing avoidable and preventable hospitalisations.

Supporting long term health reform through future funding models

Shane Solomon, Chair of the Pricing Authority, invites interested parties to submit feedback on the future direction of health funding reforms and presents the opportunity to trial innovative models of care.

‘The Addendum is clear in its intention to improve efficiency in the health system, prioritise prevention, and shifting the focus from paying for volume of services to paying for value and patient outcomes,’ said Shane Solomon.

‘Through this agreement, IHPA is committed to implementing reforms that will support the shared long-term vision of all Australian governments and, for 2022–23, this includes investigating the feasibility of developing bundled payments and capitation models.’

While IHPA considers that activity based funding will continue to be the best pricing and funding mechanism for many hospital services, IHPA is consulting on incorporating alternate funding models that have the potential to create better incentives for improved continuity of care.

As noted by Mr Solomon, ‘COVID-19 has resulted in potentially long lasting changes to health service delivery in Australian public hospitals, this consultation presents the landscape of pricing and funding approaches, not as we currently know them, but with consideration for how patients access services.’

Responding to the needs of the health system

IHPA is seeking feedback on variations in public hospital activity and costs as a result of the Coronavirus Disease 2019 (COVID-19) pandemic, to ensure that the national pricing model reflects current models of care.

The Consultation Paper also seeks feedback on the classification systems and data collection approaches used to ensure the IHPA’s pricing models respond to the evolving needs of the healthcare system in the short and long term.

Feedback gathered in this public consultation process will be used to inform IHPA’s final Pricing Framework for 2022–23, which will be released in December 2021.

Submissions can be emailed to submissions.ihpa [at] ihpa.gov.au or posted to PO Box 483, Darlinghurst NSW 1300 by 5pm AEST on Friday 9 July 2021.

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For more information contact:

IHPA Media and Communications Section
E: communications.ihpa [at] ihpa.gov.au  P: +612 8215 1110

LinkedIn: Independent Hospital Pricing Authority
Twitter: @IHPAnews

Download the media release

About the Independent Hospital Pricing Authority (IHPA)

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

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

In May 2020, the Commonwealth and all state and territory governments signed an Addendum that amends the National Health Reform Agreement for the period from 1 July 2020 to 30 June 2025 (the Addendum).

The Addendum reaffirms IHPA’s primary function as an independent national agency responsible for supporting the national activity based funding system and block grant funding in the case of small rural hospitals through the annual determination of the national efficient price (NEP) and national efficient cost (NEC).

The NEP and NEC Determinations play a crucial role in calculating the Commonwealth funding contribution to Australian public hospital services, and offer a benchmark for the efficient cost of providing those services as outlined in the National Health Reform Agreement.

The Federal Budget 2021–22 was delivered on 11 May 2021 and contains two significant measures that impact IHPA’s current role of pricing for public hospital services.

The first measure, in response to the Royal Commission into Aged Care Quality and Safety, is the expansion of IHPA, which will be renamed the Independent Hospital and Aged Care Pricing Authority.

Under this measure, IHPA will inform Australian government decisions on annual funding increases in residential aged care from 1 July 2023. IHPA will also have a role in home aged care pricing advice from 1 July 2023.

The second measure involves working with the Department of Health and key stakeholders to support reform to the Prostheses List to reduce the cost of medical devices used in the private health sector and streamline access to new medical devices.