Development of the Australian Mental Health Care Classification

In December 2012, the Pricing Authority decided that a new mental health classification would be developed for mental health services in Australia for the purposes of activity based funding (ABF).

The Pricing Authority recognised that the AR-DRG system was not the ideal classification in the longer term for mental health services. This is primarily because diagnosis is not as strong a driver of resource utilisation for mental health care services as it is in other acute services.

The development of the AMHCC will significantly improve the clinical meaningfulness of the classification leading to an improvement in the cost predictiveness and will support the new models of care being implemented in all states and territories.

There are a number of steps that were followed in designing the AMHCC:

  1. Definition of services
  2. Identification of cost drivers
  3. Patient level costing study
  4. Development of the classification system and associated infrastructure (data set specifications, grouping software, etc)
  5. Ongoing activity and cost data collection

To date IHPA has completed steps one to four. Step five is currently underway. Find out more about steps undertaken to design the AMHCC.

The Mental Health Working Group (MHWG) advises IHPA on matters relevant to mental health and includes representatives from all jurisdictions, mental health consumers and carers, and a diverse range of peak bodies and special interest groups.

Key publications

IHPA’s Pricing Framework also provides guidance on the approach to activity based funding for mental health.

Definition of services

In 2012, IHPA engaged a consortium led by the University of Queensland (UQ) to develop a definition of mental health care for ABF purposes and to define the cost drivers associated with these services.

Part A of the UQ report proposed the creation of a separate care type for mental health services and an associated draft definition for classification purposes.

The care type definition proposed by UQ was modified slightly and endorsed by the Mental Health Working Group (MHWG) on 21 March 2013, IHPA’s Jurisdictional Advisory Committee (JAC) on 8 May 2013 and approved by the Pricing Authority on 31 May 2013.

The care type definition approved by the Pricing Authority is:

Mental health care is care in which the primary clinical purpose or treatment goal is improvement in the symptoms and/or psychosocial, environmental and physical function relating to a patient’s mental disorder.

Mental health care:

  • is delivered under the management of, or regularly informed by, a clinician with specialised expertise in mental health;
  • is evidenced by an individualised formal mental health assessment and the implementation of a documented mental health plan; and
  • may include significant psychosocial components including family and carer support.

Note that "assessment only" activities are considered in scope for the classification.

Identification of cost drivers

Part B of the UQ report identified possible cost drivers for further examination in the classification development. The UQ work involved a number of phases including:

  • Comprehensive literature review;
  • Wide ranging stakeholder consultation; and
  • Quantitative analysis using data obtained from Queensland, Victoria and New South Wales.

The results of the quantitative analysis are consistent with the literature and confirm that mental health costs are driven by multiple factors, including (but not limited to) complications and comorbidities, symptom severity and function as well as some contribution from patient diagnosis as a lesser contributing factor.

Part B of the UQ report also considered options for a classification architecture. The proposed architecture broke a patient episode of care into mental health phases.

Patient level costing study

A key finding of the UQ report was that the costing data submitted to the National Hospital Cost Data Collection (NHCDC) by jurisdictions for mental health services “was patchy at best”. UQ proposed that IHPA commission a one-off study or series of one-off studies to develop the mental health classification.

In February 2014, IHPA engaged a HealthConsult-led consortium to undertake a six month costing study in 26 hospitals across Australia including both public and private hospitals, and community mental health services.

The Mental Health Costing Study commenced at study sites on 1 July 2014. Data collection was completed in December 2014. Data collected from the study has informed the development of the AMHCC.

The final report for the Mental Health Costing Study was released in February 2016.

Development of the classification system and associated infrastructure (data set specifications, grouping software, etc)

IHPA has commenced the AMHCC development project. The project includes the planning, design, development, testing and transition of the AMHCC for the purposes of pricing mental health care services from 1 July 2017.

IHPA has committed to conducting a pilot of the AMHCC at a variety of sites that offer different factors that may ultimately impact national implementation. Each pilot site will provide valuable data and information to inform the national implementation of the AMHCC. In order to support the development of the AMHCC, IHPA has developed the Activity Based Funding Mental Health Data Set Specification (ABF MHC DSS) for data collection in 2015-16.

The 2015-16 ABF MHC DSS is an activity DSS, developed in accordance with the standards set out by the National Health Information Standards and Statistics Committee and endorsed by National Health Information and Performance Principal Committee and will be reviewed by both committees. The intention of the ABF MHC DSS was to use existing data collections and definitions where feasible, always being mindful of the ‘single provision, multiple use’ data principles.

The ABF MHC DSS is being reviewed for 2016-17.

Ongoing activity and cost data collection

The development and refinement of the AMHCC will be an iterative process. There will be ongoing activity and cost data collection which will support the ongoing refinement of the AMHCC and pricing of mental health care services in the future.


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