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Performance in 2017-18

Figure 3: Relationship between 2017–18 Portfolio Budget Statements, the 2017–18 Corporate Plan and the 2017–18 Performance Statement

Objective One: Achieves Best Practice and Accountability

95% MET

To achieve best practice and accountability through assisting the Administrator in implementing and overseeing nationally consistent public hospital funding arrangements through the Funding Pool.

Analysis of performance: 2017–18

We continue to achieve our purpose through best practice and accountability in our role assisting the Administrator to fulfil their duties.

We implemented efficient and robust processes to ensure all payments through the Pool were accurate and made in accordance with directions from the responsible State or Territory minister.

We provided leadership and expert policy advice to the Administrator and governments on NHR funding and developed policies, procedures and frameworks to ensure our actions were compliant. We also ensured all necessary changes were implemented in line with the Addendum.

Challenges

Achieving best practice has been impacted by certain key policy documents not being updated during the reporting period.

The Three–Year Data Plan could only be approved for release after the Administrator’s appointment on 17 July 2018. The revised Data Privacy, Secrecy and Security Policy has yet to be published.

The year ahead

We have refined this objective as part of the 2018–19 Corporate Plan to ensure we fulfill our purpose. Our revised objective is to achieve ‘best practice financial administration of the Pool’. We will meet the revised objective by achieving the following three outcomes:

+ The integrity of the Administrator’s Payments System is maintained in accordance with policies and procedures.

+ Payments to each LHN accord with directions from responsible State and Territory ministers.

+ Each jurisdiction’s financial statements have unmodified audit opinions.

The following two initiatives will help enhance our capabilities to empower our people, processes and technology:

+ Our business rules, policy documents, frameworks and procedures will

be updated to ensure effective implementation of necessary changes to take account of the Addendum.

+ Enhancements will be made to the Payments System to create a more integrated financial system with improved efficiency and effectiveness of processes between our systems, the RBA and jurisdictions.

Corporate Plan performance measure 1.1

Develop and publish documents that will provide expert NHR Agreement policy advice to the Administrator and stakeholders.

2017–18 Target

Result

Analysis

Timely production of key policy documents to a satisfactory standard to enable acceptance by the Administrator and all jurisdictions.

Corporate Plan pg. 19 PBS pg. 371

Substantially met

The following policy documents were published in 2017–18:

+ Calculation of Commonwealth National Health Reform Funding 2017–2020

+ 2016–17 Reconciliation Framework

+ Data Compliance.

Key policy documents, including the

Data Privacy, Secrecy and Security Policy

and the Three–Year Data Plan, could not be approved for release in 2017–18

due to the Administrator’s position being vacant in the last quarter of the reporting period. The Three–Year Data Plan has subsequently been approved and made available, following the Administrator’s appointment on 17 July 2018.

Develop and release policies to provide expert advice on the implementation of the Addendum.3

Corporate Plan pg. 19 PBS pg. 371

Met

Expert advice on the implementation of the Addendum was published in March 2018 in the policy document

titled The Calculation of Commonwealth

National Health Reform Funding 2017–2020.

3.The Addendum to the NHR Agreement was agreed to by all jurisdictions in June 2017 and amended the funding arrangements to include: a 6.5 per cent cap on annual Commonwealth funding growth; funding adjustments for safety and quality outcomes for patients; a data–conditional payment to incentivise prompt reporting of activity data accompanied with a statement that the data is complete and accurate.

Corporate Plan performance measure 1.2

Develop and implement efficient and robust processes to oversee NHR Agreement funding and payments through the Funding Pool.

2017–18 Target

Result

Analysis

The independent third–party review of the Payments System Internal Control Framework does not identify any material weaknesses and is satisfactory to all Auditors–General.

Corporate Plan pg. 19 PBS pg. 372

Met

No material weaknesses were identified by the external assurance review and each State and Territory Auditor–General were satisfied with the results.

Data integrity and assurance processes are enhanced through engagement with jurisdictions, in line with the Addendum.

Corporate Plan pg. 19 PBS pg. 372

Met

In line with the Addendum, a Statement of Assurance was provided by each State and Territory for their submission of public hospital data.

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Corporate Plan performance measure 1.3

National Health Funding Pool operations and payments are in accordance with directions from the responsible State orTerritory minister.

2017–18 Target

Result

Analysis

Internal and external audits of the Payments System find the system to be robust.

Corporate Plan pg. 20 PBS pg. 372

Met

External and internal assurance reviews found the system robust, with all payments made in accordance with State and Territory instructions and the Payments System Procedure Manuals.

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Corporate Plan performance measure 1.4

Implement the requirements of the Addendum

2017–18 Target

Result

Analysis

Requirements of the Addendum are incorporated through enhanced data integrity and assurance processes, developing or amending policy and procedures, and providing advice

on best practice in collaboration with jurisdictions.

Corporate Plan pg. 20

Met

Required changes for 2017–18 calculations as a result of the Addendum have been incorporated into the funding system.

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Objective Two: Provide Increased Transparency and Effective Reporting

90% MET

To provide increased transparency and effective reporting of the funding to Local Hospital Networks for services delivered.

Analysis of performance: 2017–18

Wecontinuetoworktowards ourpurposebyincreasingthe transparency and effectiveness ofthefundingreporting to LHNs for services delivered.

The publication of monthly reports at the National,StateandTerritory and LHN levels contribute to key national health reform objectives.

These include improving transparency and accountability, and informing the sustainability of public hospital funding. These reports detail the funding into and out of the State Pool Accounts and State Managed Funds and allow for comparison over financial years.

The information in these reports was collated for the financial year in the Financial Statements within the Administrator’s Special Purpose Annual Report. As required by the NHR Act, the2016-17 Annual Report was provided to all health ministers before 31 October 2017 and tabled by the responsible minister in their respective legislature.

Challenges

Our efforts to improve the transparency and effectiveness of reporting were delayed due to the vacant Administrator’s position in the last quarter of the reporting period. Without an Administrator inplace, the reports fo rFebruary to June, and the March quarter Data Compliance report could not be approved for release within the reporting period.

We were also delayed in our efforts to improve the effectiveness of reporting as a result of the Payments System modernisation project.The delivery date for this project has been postponed until further investigations and consultations are completed to confirm stakeholder user requirements.

The year ahead

Our vision in the 2018–19 Corporate Plan is to ‘improve transparency of public hospital funding in Australia’. To complement this vision we have refined this objective to ‘effective reporting of public hospital funding’.

We will meet the revised objective by achieving the following three outcomes:

+ Monthly and annual reporting of the payments made into and from each State Pool Account and State Managed Fund.

+ Monthly and annual reporting of public hospital services.

+ All relevant ministers receive required information in a timely manner.

We will also continue to improve the transparency of hospital funding and activity by enhancing our reporting capabilities throughout the year and increase public access to information via a more informative website design.

Corporate Plan performance measure 2.1

The Annual Report on the operations of the Administrator of the National Health Funding Pool is submitted to each Health Minister for tabling as per the NHR Act.

2017–18 Target

Result

Analysis

Release a single annual report and accompanying financial

statements on the operations of the National Health Funding Pool and table in the Commonwealth, State and Territory Parliaments. The annual report will include a combined financial statement for the National Health Funding Pool and financial statements for each State (and Territory) Pool Account audited by the respective Auditor–General.

Corporate Plan pg. 21 PBS pg. 372

Met

The Administrator’s Annual Report 2016–17 was tabled in the Commonwealth Parliament and provided to all jurisdictions for tabling in respective Parliaments and Legislative Assemblies.

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Corporate Plan performance measure 2.2

Financial statements were prepared for each State Pool Account and received an unmodified audit report by the relevant Auditor–General.

2017–18 Target

Result

Analysis

100 per cent of Financial Statements for each State Pool Account receiving an unmodified audit report by the relevant Auditor–General.

Corporate Plan pg. 21

Met

All State Pool Account Financial Statements received an unmodified opinion from each Auditor–General.

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Corporate Plan performance measure 2.3

Monthly reports of the funding and payments through the Funding Pool and State Managed Funds are produced and published to support the transparency o fpubli chospital funding.

2017–18 Target

Result

Analysis

100 per cent of monthly reports of the funding and payments through the

Funding Pool and State Managed Funds prepared, distributed and published.

Corporate Plan pg. 21

Substantially met

Due to the absence of an Administrator in the final quarter of the period,

the monthly reports for February to June 2018 were unable to be published until 2018–19.

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Corporate Plan performance measure 2.4

Quarterly Data Compliance Reports detailing Commonwealth, State and Territory compliance with the data requirements.

2017–18 Target

Result

Analysis

100 per cent of Data Compliance reports prepared, distributed and publicly released in the timeframes specified in the Administrator’s Data Compliance Policy.

Corporate Plan pg. 22

Substantially met

All quarterly Compliance Reports were released on time, except for the March quarter that was unable to be published until 2018–19 due to the Administrator’s role being vacant.

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Corporate Plan performance measure 2.5

Modernise the Payments System to create an integrated financial system that incorporates a General Ledger capability ,an automated reporting function, and the ability for adirect upload to the Reserve Bank.

2017–18 Target

Result

Analysis

Upgraded Payment System ready for implementation by 1 July 2018 and

processing payments by 1 January 2019.

Corporate Plan pg. 22

Partially met

Although significant progress has been made to upgrade the Payment System, further consultations to ensure the requirements of the system design

are complete and meet the needs of stakeholders has resulted in delays.

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Objective Three: Produce Accurate Commonwealth Contribution Calculation

85% MET

To produce accurate Commonwealth contribution calculations by using nationally consistent pricing and costing standards.

Analysis of performance: 2017–18

We continue to work towards our purpose by improving the accuracy of Commonwealth NHR contribution calculations to support the Administrator.

In2017–18, we maintained robust processes for the calculation of Commonwealth contributions.

This included testing and enhancing the CCM to enable the Administrato rto advise the Commonwealth Treasurer on public hospital funding requirements.

In line with our Integrity Framework, calculations have been internally reviewed to give all jurisdictions confidence in the Administrator’s calculations. We also continue to explore new systems, procedures and controls that can improve the accuracy of the funding model calculations.

Challenges

Our efforts to improve the accuracy of calculations were impacted by the Administrator’s position being vacant in the last quarter of the reporting period. Although additional information was sought by the previous Administrator, it was unable to be provided before he completed his term. Therefore, advice on the final reconciliation for 2015–16 could not be provided to the Commonwealth Treasurer, impacting the 2016–17 annual and 2017–18 mid–year reconciliations.

Completion of these activities is expected in 2018–19, as a matter for the new Administrator.

Funding integrity processes commenced during the reporting period. Further investigations and consultations with jurisdictions are necessary to enhance data quality and business rules for reliable data matching purposes.

External quality assurance of the SAS–based CCM has resulted in minor transition delays to the improved calculation model.

The year ahead

To better support the obligations and responsibilities of the Administrator, we have refined our objective to ‘accurate and timely calculation of

Commonwealth funding contributions’

as part of the 2018–19 Corporate Plan. The revised objective will be met by achieving the following four outcomes:

+ Commonwealth funding calculations are accurate.

+ Funding entitlements reconcile to actual services delivered.

+ Public hospital services are funded through the appropriate Commonwealth program.

+ The Treasurer of the Commonwealth is advised by the Administrator in a timely manner.

We will meet the revised objectives by improving our capabilities through the following initiatives:

+ Completion of structural changes to the current CCM to provide a more robust platform for the calculation of funding entitlements.

+ Completion of improvements to our data capabilities to focus on greater transparency, integrity and assurance of payments for public hospital services.

Corporate Plan performance measure 3.1:

The Commonwealth funding contribution is accurately calculated and is accepted by the Administrator and informs the basis of advice to the Commonwealth Treasurer.

2017–18 Target

Result

Analysis

Current and future year CCMs are developed and accepted by the Administrator to calculate the Commonwealth NHR funding for each State and Territory.

Corporate Plan pg. 23 PBS pg. 373

Met

The CCM was independently assured and accepted by the Administrator as suitable to provide payment advice to the Commonwealth Treasurer.

In accordance with the National Health Reform Act 2011, the June 2018 payments were based on information provided by the NHFB. This was due to the Administrator’s position being vacant in the last quarter of the period.

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Corporate Plan performance measure 3.2:

Conduct funding integrity analysis to identify and report on public hospital services that received both Commonwealth NHR funding and funding through other Commonwealth programs.

2017–18 Target

Result

Analysis

Funding integrity analysis

(data matching) of hospital activity and MBS/PBS/other Commonwealth programs data is completed for

prior years, to identify instances where the same hospital service has been funded more than once.

Corporate Plan pg. 24

Partially Met

Work to ensure the robustness of the integrity analysis process is underway. Further investigation and consultations are required with jurisdictions to confirm the business rules used for data matching. This work is expected to be complete in late 2018.

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Corporate Plan performance measure 3.3:

Conduct reconciliation of actual activity to estimated activity and incorporate the adjustments into Commonwealth payments to LHNs.

Reconciliation outcomes prepared by the NHFB and endorsed by

the Administrator.

Corporate Plan pg. 24

Substantially Met

Information sought by the previous Administrator about the final reconciliation for the 2015–16 Commonwealth NHR contribution was not forthcoming before his term expired. Without time for consultation, or having an Administrator in place, advice on the final reconciliation could not be provided to the Commonwealth Treasurer during the last quarter of the reporting period.4

Not having an outcome for 2015–16 also impacted the 2016–17 annual and 2017–18 mid–year reconciliations.

4 The new Administrator is expected to provide advice in 2018–19 to the Commonwealth Treasurer on the 2015–16, 2016–17 and mid–year 2017–18 reconciliation outcomes.

Corporate Plan performance measure 3.4:

Transition the 2017–18 CCM into an enhanced and secure SAS environment platform.

2017–18 Target

Result

Analysis

The CCM successfully operating on a SAS platform with no material findings by internal and external reviews.

Corporate Plan pg. 24

Substantially Met

Review of the SAS–based CCM identified potential improvements implemented in 2017–18.

Subsequent quality assurance identified further areas for improvement that will be addressed in preparation of the SAS–based model implementation in 2018–19 as the primary

calculation model.

Objective Four: Operate as a Fully Functional and Compliant Agency and Develop Productive and Effective Partnerships

95 % MET

To be operating as a fully functional and compliant agency, meeting statutory and legislative obligations, and developing productive and effective partnerships with stakeholders.

Analysis of performance: 2017–18

All performance measures forthisobjectiveweremetor substantially met in2017–18.

We operated as a fully functional and compliant agency during 2017–18 by implementing our Workforce Capability Framework, meeting all our PGPA Act obligations an dpublishing our 2016–17 Annual Report.

Productive and effective partnerships with stakeholders have continued during the reporting period.The Administrator’s JAC met three times in 2017–18.

We have successfully completed the Administrator’s and our work plans, and promoted awareness of the NHR funding agenda through conference presentations and meetings with stakeholders.

Ourworkplacecultureencourageshigh performance, integrity and commitment to success. It is now supported by an internal set of behaviours established in consultation with all staff.

We have also successfully managed workforce health and safety issues throughout the year. This resulted in a reduced Comcare Premium for 2018–19.

Challenges

It was challenging in the absence of a permanent CEO and a vacant Administrator position during the reporting period to work through some administrative arrangements for this objective. Contingency arrangements were required in the absence of an Administrator for three months, the fourth JAC meeting had to be postponed, and the implementation of our Communication and Engagement Strategy was delayed.

The year ahead

To better support the obligations and responsibilities of the Administrator, we have split this objective into two components as part of the 2018–19 Corporate Plan. The two objectives are:

+ Productive and effective partnerships with stakeholders.

+ Operate as a compliant agency.

We will meet the revised objectives by achieving the following five outcomes:

+ Work plans and information requirements developed in collaboration and consultation with stakeholders.

+ Provide trusted and impartial advice to enable effective health reform.

+ A positive workplace culture where people adopt best practice approaches and good governance principles to achieve results.

+ Policies and procedures comply with relevant statutory and legislative requirements.

+ Unmodified NHFB audited financial statements.

In 2018–19, we will explore the ways our valuable data resources can be leveraged to improve the performance of the health sector. We will also work to increase the profile and awareness of the Administrator’s and our role.

To ensure a sustainable work culture, we are committed to the United Leadership behaviours program. This will help strengthen our high performing environment, where everyone is valued and performs their role to the best of their ability.

Corporate Plan performance measure 4.1:

Robust policies and procedures are inplace, including ensuring all NHFB values are reflected, and compliant with relevant statutory and legislative requirements.

2017–18 Target

Result

Analysis

Policies and procedures are in place to support the integrity of the NHFB and the health and wellbeing of staff.

Corporate Plan pg. 25 PBS pg. 374

Met

The NHFB’s Workforce Capability Framework was implemented in 2017–18.

An internal review of the effectiveness of the Health and Wellbeing policy, as well as APSC Census results, will be used to reinforce and improve the Framework over the next two reporting periods.

All compliance reporting requirements for the NHFB as a non–corporate entity are met.

Corporate Plan pg. 25 PBS pg. 374

Met

All compliance obligations under the PGPA Act were met, including

publishing the 2017–18 Corporate Plan, and receiving an unmodified audit opinion for the 2016–17 Financial Statements.

Compliance with Digital Continuity 2020 continued to be progressed with several policies being implemented and practices modified or changed. No substantial issues were identified via an internal review on the NHFB’s preparedness

for Digital 2020.

The NHFB Annual Report is provided to all health ministers and the financial statements receive an unmodified audit report.

Corporate Plan pg. 26 PBS pg. 374

Met

The NHFB Annual Report for 2016–17 was tabled in Parliament by 30 October 2017, published on the website and provided to health ministers in each jurisdiction.

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Corporate Plan performance measure 4.2

Maintain and continually strengthen productive partnerships and collaboration with all stakeholder stosupport the obligations and responsibilities of the Administrator.

2017–18 Target

Result

Analysis

Effective partnerships are maintained through national and bilateral collaboration with the Commonwealth, States and Territories, and other national bodies and stakeholder groups.

Corporate Plan pg. 26 PBS pg. 374

Met

Effective engagement with stakeholders was achieved via the collaborative efforts of the Administrator and their peers at the following meetings:

+ three JAC meetings held in 2017–18

+ individual stakeholder meetings

+ IHPA’s JAC and Technical Advisory Committee meetings throughout 2017–18.

The fourth JAC meeting scheduled for May was postponed due to the Administrator’s position being vacant at the time.

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Corporate Plan performance measure 4.3:

Develop and implement a Stakeholder Engagement Plan.

2017–18 Target

Result

Analysis

A Stakeholder Engagement Plan, informed by NHFB policy principles and developed in conjunction

with stakeholders, is in place.

Corporate Plan pg. 26

Substantially Met

The NHFB Communication and Engagement Strategy was developed in 2017–18 and is being progressively implemented.

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