Results against performance criteria are as follows:

Activity 1: Perform IHPA pricing functions

IHPA’s primary function is to produce the National Efficient Price Determination and the National Efficient Cost Determination each year. The Pricing Framework for Australian Public Hospital Services forms the policy basis for the Determinations. The Pricing Framework outlines the principles, scope and methodology to be adopted by IHPA in the setting of the National Efficient Price and National Efficient Cost for public hospital services in the next financial year.

During 2018–19, IHPA undertook further technical development to improve the price-setting process and continue to refine the models used to determine the National Efficient Price and National Efficient Cost.

Performance criteria

1. Publish the Pricing Framework for Australian Public Hospital Services 2019–20 by 31 December 2018.
2. Publish the National Efficient Price and National Efficient Cost Determinations by 31 March 2019.
3. Reduce the number of local hospital networks that record costs per National Weighted Activity Unit significantly above the National Efficient Price.
4. Provide a further increase in the proportion of funding for public services using activity based funding as reported by the Administrator of the National Health Funding Pool.

Source

• 2018–19 Corporate Plan — Strategy 1
• 2018–19 Portfolio Budget Statement Program 1.1

Results against performance criteria

1. The Pricing Framework for Australian Public Hospital Services 2019–20 was published on 4 December 2018.
2. The National Efficient Price and National Efficient Cost Determinations were published on 5 March 2019.
3. The range between the 50th and 90th percentile decreased from $1,136 in 2015–16 to $1,070 in 2016–17, representing a reduction of $66.
4. During 2018-19, 83.25% of funding for public services paid by the Administrator of the National Health Funding Pool was based on activity based funding. This is a decrease of less than 1% from 2017–18.

Activity 2: Refine and develop national classification systems

Activity based funding requires robust classification systems on which pricing can be based. Classifications aim to provide the healthcare sector with a nationally consistent method of classifying all types of patients, their treatment, and associated costs. IHPA has already determined the national classification systems for public hospital services, including admitted acute, non‑admitted, emergency, subacute and mental health care.

Classifications are reviewed regularly and updated periodically to ensure that they remain clinically relevant and resource homogeneous within a service category. Such modifications are based on robust statistical analysis and include specialist input from clinicians.

During 2018–19, IHPA finalised the first version of the new Australian Emergency Care Classification and an updated version of the admitted acute classification, Australian Refined Diagnosis Related Groups Version 10.0. IHPA continued work to further develop the classifications for subacute care, non-admitted patient care and mental health care.

Performance criteria

1. Continue refinement of the Australian Mental Health Care Classification, specifically the refinement of the first level of the classification — the mental health phase of care.
2. Complete development of the classification for teaching and training.
3. Develop a new classification system for emergency care services.
4. Continue development of the subacute care classification using reported data and clinical advice.
5. Continue development work on the new classification for non-admitted care by preparing for a nationwide costing study.
6. Continue development work on the Eleventh Edition of the International Statistical Classification of Diseases and Related Health Problems, Tenth Revision, Australian Modification, Australian Classification of Health Interventions, Australian Coding Standards; collectively known as ICD-10-AM/ACHI/ACS, for implementation from 1 July 2019.
7. Continue development work on the Australian Refined Diagnosis Related Groups Version 10.0 for release before 30 June 2019.

Source

• 2018–19 Corporate Plan — Strategy 2
• 2018–19 Portfolio Budget Statement Program 1.1

Results against performance criteria

1. In 2018–19, IHPA continued to refine the Australian Mental Health Care Classification, with specific focus on a project to clinically review and refine the phase of care to improve the classification and support data reporting.
2. IHPA released the Australian Teaching and Training Classification Version 1.0 in 2018–19. IHPA has also continued to build the reporting systems for the provision of teaching and training activity and cost data to support the implementation of the classification.
3. The development of the new Australian Emergency Care Classification was completed in 2018–19, based on analysis of the emergency care costing study data as well as feedback from public consultation. This classification places greater emphasis on patient factors such as diagnosis and complexity. It has greater capacity to incorporate additional factors that drive patient complexity and cost and has a superior performance when compared to the existing classification used for emergency department care.
4. Continue development of the subacute care classification using reported data and clinical advice.
5. Work on the development of the new Australian Non‑Admitted Care Classification continued. During 2018–19 IHPA commenced project set-up and site selection for a national non-admitted costing study to collect non‑admitted patient clinical, activity and cost data. The costing study design has been informed by a public consultation held in May 2019. This data set will be used to inform the development of the classification.
6. Development of the Eleventh Edition of ICD‑10‑AM/ACHI/ACS was completed during 2018–19, and is due for implementation from 1 July 2019.
7. Version 10.0 of the Australian Refined Diagnosis Related Groups classification was completed by IHPA during 2018–19, and will be used for pricing admitted acute episodes of care from 1 July 2020. Refinements were undertaken following clinical and statistical analysis and consultation with clinicians, jurisdictions and other stakeholders to ensure that the classifications remain current, clinically relevant, and adequately explain the costs of providing admitted acute hospital care.

​Activity 3: Refine and improve hospital costing

Hospital costing focuses on the cost and mix of resources used to deliver patient care, and plays a vital role in activity based funding. Costing informs the development of classification systems and provides valuable information for pricing purposes.

A key output for IHPA is to coordinate the annual National Hospital Cost Data Collection, which is the primary input into the National Efficient Price. This includes the development of national costing standards, collection, validation, quality assurance, analysis and reporting, and benchmarking. The cost collection is undertaken in conjunction with states and territories, and private hospitals.

Performance criteria

1. Maintain national costing standards.
2. Ensure effective collection, processing and reporting of costing information to support activity based funding outcomes.
3. Review the format and content of the National Hospital Cost Data Collection Cost Report to identify relevant ways to present and narrate analysis of the cost report.

Source

• 2018–19 Corporate Plan — Strategy 3
• 2018–19 Portfolio Budget Statement Program 1.1

Result against performance criteria

1. Worked with jurisdictions to implement the Australian Hospital Patient Costing Standards Version 4.0.
2. The National Hospital Cost Data Collection (NHCDC) Round 22 (2017–18) data set was collected.
3. In 2018–19, IHPA reviewed and adapted the National Hospital Cost Data Collection (NCHDC) report into a set of accessible infographics designed to reach a wider audience.

Activity 4: Develop hospital data requirements and collect data

Timely, accurate and reliable public hospital data is vital to both the development of classifications for hospital services, and to determining the National Efficient Price of those services. IHPA has developed a rolling Three Year Data Plan to communicate to the Australian Government and states and territories the data requirements, data standards and timelines that IHPA will use to collect data over the coming three years. To ensure greater transparency, IHPA publishes data compliance reports on a quarterly basis that indicate jurisdictional compliance with the specifications in the rolling Three Year Data Plan.

Performance criteria

1. Update rolling Three Year Data Plan and publish on the IHPA website by June 2019.
2. Publish a report on a quarterly rolling basis, outlining compliance with the data requirements and data standards specified in the rolling Three Year Data Plan.
3. Develop appropriate data specifications, and ensure information provided for decision making meets those specifications.
4. Internal data assessment and compliance.
5. Receive assurance from jurisdictions regarding data quality/accuracy.

Source

• 2018–19 Corporate Plan — Strategy 4
• 2018–19 Portfolio Budget Statement Program 1.1

Result against performance criteria

1. The Three Year Data Plan was updated and published on the IHPA website in April 2019.
2. The quarterly data compliance reports were developed in consultation with jurisdictions and published on the IHPA website.
3. Activity based funding data submissions were assessed based on the published data standards, such as data set specifications and data request specifications.
4. The IHPA Data Compliance Policy was used to assess jurisdictional compliance ratings.
5. Jurisdictions were required to sign off their final data submission to IHPA, to ensure that data conforms as closely as is achievable in regard to its quality and accuracy. A Statement of Assurance, which provides detailed information about data quality and limitation, accompanies final data submission.

​Activity 5: Resolve disputes on cost‑shifting and cross‑border issues

IHPA has a role to investigate and make recommendations concerning cross-border disputes between states and territories, and to make assessments of cost‑shifting disputes.

Performance criteria

1. Review and publication of updated Cost-shifting and Cross-border Dispute Resolution Framework.
2. Investigation of cost-shifting or cross-border disputes and provision of recommendations or assessment within six months of receipt of the request.

Source

• 2018–19 Portfolio Budget Statement Program 1.1

Result against performance criteria

1. An updated Cost-shifting and Cross-border Dispute Resolution Framework (version 3.3) was approved for publication in June 2019.
2. In 2018–19 IHPA did not receive any requests relating to this function.

Activity 6: Independent and transparent decision‑making and engagement with stakeholders

IHPA works in partnership with the Australian Government, state and territory governments and other stakeholders. IHPA conducts its work independently from governments, which allows the agency to deliver impartial, evidence‑based decisions. It is transparent in its decision‑making processes, and consults extensively across the health industry.

Extensive consultation with governments and stakeholders informs the methodology that underpins IHPA’s decisions and work program. IHPA has a formal consultation framework in place, to ensure that it draws on an extensive range of expertise in undertaking its functions. Input from stakeholders, through IHPA’s multiple committees and working groups, ensures that IHPA’s work is informed by expert clinical advice, which helps to establish and consolidate IHPA’s credibility throughout the industry.

Performance criteria

1. Appropriate committees and working groups maintained to support IHPA’s functions.
2. Public consultation processes conducted in accordance with the National Health Reform Act 2011.
3. All stakeholder input is appropriately considered.
4. Inbox enquiries responded to within a two‑week timeframe.
5. Annual national conference hosted for a broad audience in the health industry.

Source

• 2018–19 Corporate Plan
• 2018–19 Work Program

Results against performance criteria

1. In 2018–19 IHPA maintained up to 18 committees and working groups, to provide expert advice and to ensure the transparency and integrity of the organisation. During the reporting period, IHPA held 78 meetings with the various committees and working groups.
2. IHPA conducted five public consultation processes in 2018–19, each in accordance with the National Health Reform Act 2011. These included:
   1. Pricing Framework for Australian Public Hospital Services 2019–20 (July 2018)
   2. Refinement of the Eleventh Edition of the International Statistical Classification of Diseases and Related Health Problems, Tenth Revision, Australian Modification, the Australian Classification of Health Interventions and the Australian Coding Standards (ICD-10-AM/ACHI/ACS) (August 2018)
   3. IHPA Work Program 2019–20 (May 2019)
   4. Development of the Australian Non-Admitted care costing study for data collection (May 2019).​
3. All submissions received by IHPA, as part of consultation processes, were presented to the Pricing Authority for consideration and published on the IHPA website.
4. IHPA received 60 inbox enquiries during the reporting period. IHPA responded to 87% within two weeks and to 40% of those on the day of receipt.
5. IHPA hosted its Activity Based Funding Conference 2019 in Melbourne from 13–15 May. The conference attracted around 440 healthcare professionals from across Australia and around the world. It had a three‑day program of workshops, keynote, plenary and panel sessions (see Activity Based Funding Conference 2019).