P R O F E S S O R R I C M A R S H A L L , C O N S U LT A N T O N A B F S Y S T E M S

I N D E P E N D E N T H O S P I T A L P R I C I N G A U T H O R I T Y – 2 1 M A R 1 2

TOWARDS AN ABF PRICING FRAMEWORK AND A

NATIONAL EFFICIENT PRICE

AUSTRALIAN HEALTH REFORM AGREEMENTS

• Transparency and responsibility for results• Independent Hospital Pricing Authority

• National Funding Body

• National Performance Authority• National uniform measures• Comprehensive coverage of all hospital services• Local Hospital networks – as points of

responsibility for results (outcomes)• States as Hospital system managers• Australian Commission for Safety and Quality in

Health

ROLE OF THE IHPA

• In 2010-11, the Australian Government committed $91.8 million over four

years to establish an Independent Hospital Pricing Authority to:

• manage the development of national activity based funding arrangements

• advise on cross border and cost shifting between jurisdictions

• set the efficient price for public hospital services

• The National Health Reform Agreement (NHRA) agreed by COAG in August

2011 details these arrangements

• National Health Reform Amendment (Independent Hospital Pricing

Authority) Bill 2011, currently before the Parliament provides the statutory

basis for IHPA

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STRUCTURE OF THE IHPA

• The IHPA Board has a Chair appointed by the Commonwealth, a

Deputy Chair appointed by the States and a member appointed

by each jurisdiction

• Chair – Shane Solomon

• Deputy Chair – Jim Birch

• A CEO is responsible for day-to-day administration

• Acting CEO – Dr Tony Sherbon

• The IHPA has around 40 employees (including the CEO)

• The IHPA will be supported by jurisdictional, clinical and

technical committees and will draw on external expert advice

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JURISDICTIONAL ADVISORY COMMITTEE (JAC)

• A Jurisdictional Advisory Committee (JAC) has been included in the legislation

• The JAC will provide high level advice on the implementation of strategic pricing framework

• The Committee will consist of 9 members:

• a Chair appointed by the IHPA

• one representative from the Commonwealth

• one representative from each state and territory

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ABF TECHNICAL COMMITTEE• Chaired by the Acting IHPA CEO, the ABF Technical

Committee will:• advise the IHPA and the JAC on clinical costing,

clinical classification, data processing and modelling that underpins Activity Based funding;

• provide a mechanism for the states, territories and the Commonwealth to participate in the development of ABF;

• provide a forum for the negotiation of the technical structures of the activity based funding system

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ABF WORKING GROUPS

• The TAC is supported by working groups for:

• Hospital Costing (National Hospital Cost Data

Collection)

• Emergency Care

• Non Admitted Care

• Sub-acute Care

• Mental Health• The working groups include Commonwealth and

state and territory members

ABF DEVELOPMENTAL ELEMENTSABF

Elements

Product ID & Classification

Counting

Costing

Data Management,

Analysis & Reporting

Funding

Governance &

Management

Admitted Acute

Emergency Care

Sub-acute Care

Mental Health

Outpatient Care

Hospital auspiced

CHS

Community

service obligatio

ns

Teaching Training

& Research

CLINICAL ADVISORY COMMITTEE (CAC)

• A Clinical Advisory Committee (CAC) has been included

in the legislation

• The CAC will provide expert clinical advice to the IHPA

• Members clinicians appointed by the Commonwealth

minister for health, in consultation with other health

ministers and the IHPA

• The CAC consists of a chair and at least 8 other

members

• The CAC can establish sub-committees as required9

FUNCTIONS OF THE IHPA

• To deliver ABF, the IHPA will determine :

• the scope of health services

• national classifications, data collection and coding standards

• the national efficient price for in-scope health services,

including adjustments to account for variances in service

delivery

• provide annual national efficient price projections for a 4 year

period

• resolve cost-shifting and cross-border disputes as required

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TIMETABLE FOR IMPLEMENTATION OF ABF

• Introduction of national activity based funding (ABF)

• 1 July 2012 - ABF for acute admitted, emergency and non-admitted services starts

• 1 July 2013 - ABF for sub acute and mental health services starts

• The key short term tasks for the IHPA are:

• March 2012 - supply national efficient price for 2012-13 (using 2009-10 data) to states

• 1 July 2012 - finalise rolling 3 year data plan

• November 2012 - supply national efficient price for 2013-14 (based on 2010-11 data)

• November 2013 - supply national efficient price for 2014-15 (based on 2011-12 data)

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IMPROVING TRANSPARENCY

• ABF will improve transparency in hospital funding and use evidence to

inform hospital pricing. The IHPA will determine the data it requires.

• In relation to hospital services to patients, the IHPA may require:

• information identifying the patient to whom the services were

provided;

• the public or private status of the patient;

• the nature of the service; and

• the facility providing the service;

• The IHPA will draw on hospital activity and costing data from the States

data, and may require additional data from Commonwealth, including

AIHW, ABS and DOHA

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IMPROVING TRANSPARENCY: PUBLIC REPORTING

• The IHPA will improve transparency by publicly reporting on:

• the national efficient price

• ABF, including release of nationally consistent classifications,

costing methods and data and efficient prices

• its advice in respect of block funding and the basis of that advice

• its findings and supporting analysis on cost-shifting and cross

border issues raised by parties to the agreement

• The IHPA will also :

• report to Commonwealth and State/Territory Ministers, as required

• publish an annual report.

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DATA AND INFORMATION REQUIREMENTS

• To deliver its functions the IHPA will require the states and the Commonwealth to provide (as necessary):• hospital activity data• hospital costing data• Medicare and pharmaceutical benefits data• advice on block funding criteria• advice on the scope of services• advice and data on cost shifting and cross border

arrangements• The IHPA will also seek public submissions on an

annual basis to inform its work

Data Flow for funding models

Hospital Information SystemsHospital Financial Data

Minimum Basic Data Set-DRG Data Entry Tool- Clinical Data, DRG- Resource Consumption Data

(analysis tool)

Combo Software

Coding Analysis Reports

PICQ Software

Cost Reports

Cost data- GL mappings-Allocation Statistics

(costfile)(volumefile)

(separations tbl)

Data Analysis Reports

(prepare costsheet)

Diagnosis and Procedures Analysis Reports

DATA PRINCIPLES AND PRIVACY

• The National Health Reform Agreement includes principles to underpin data collection to:• ensure patient privacy• minimise administrative burden • improve the evidence base of hospital funding

• The Commonwealth and the States will enter into a National Health Information Agreement by that reflects the objectives of the National Health Reform Agreement

TOWARDS A NATIONAL PRICING MODEL FOR HOSPITALS

• What is a hospital?• Normative pricing

>>> best practice pricing

• Indexation rules• Private patients• http://www.ihpa.gov.au/internet/ihpa/p

ublishing.nsf/Content/EB8EFD07DF85BC70CA25798300033BE1/$File/IHPA%20Draft%20Pricing%20Framework_long%20version.pdf

Health Policy Solutions (in association with Casemix Consulting and Aspex Consulting) Page 58

WHERE DOES QUALITY COME IN?

• NHPA• ACSQH• Sentinel events loops• Clinical pathways• Complaints• Pricing signals• Epidemiology• Clinical trials• R&D new technology marketing

Health Policy Solutions (in association with Casemix Consulting and Aspex Consulting) Page 59

HOW TO MEASURE QUALITY

• Process indicators• Protocol compliance• Outcome indicators• Effort• Inputs• Failures and risks• Value for money

THE IDEA OF EFFICIENT COST

• Quicker and sicker?• Is it possible for something to be efficient

without quality?• Efficiency ?and? Effectiveness• Unnecessary healthcare – can that be

efficient?• Allocative efficiency – allocative quality• Prevention and early intervention• Demand – how much is enough