Activity Based Funding

A funding method for public hospital services provided to individual patients using national classifications, cost weights and nationally efficient prices developed by the IHPA. Funding is based on the actual number of services provided to patients and the NEP of delivering those services.

(the) Addendum

The Addendum to the NHR Agreement entered into by the Commonwealth and all States and Territories in 2017, included as Schedule I to the Agreement.

The Addendum sets out additional reforms to the way in which public hospitals are funded nationally.

(the) Administrator

The Administrator of the National Health Funding Pool is an independent statutory office holder. They are established under legislation of the Commonwealth, State and Territory governments and are distinct from all government departments.

The Administrator is supported by the NHFB to administer the payment of public hospital funding according to the NHR Agreement. They also oversee payments into and out of the State (and Territory) Pool Accounts, collectively known as the National Health Funding Pool (the Pool).

block funding

A funding method for public hospital functions and services using fixed amount based on population and previous funding.

Under the NHR Agreement, block funding is provided to States and Territories to support teaching and research undertaken in public hospitals. It is also used in smaller rural and regional hospitals.

COAG Health Council (CHC)

Previously known as Standing Council on Health (SCoH).

Council of Australian Governments (COAG)

The peak intergovernmental forum in Australia. Its members include the Prime Minister, State and Territory Premiers and Chief Ministers and the President of the Australian Local Government Association.

(the) Pool

See National Health Funding Pool.

Independent Hospital Pricing Authority (IHPA)

An independent statutory body established under Commonwealth legislation to calculate and deliver an annual National Efficient Price (NEP) used to calculate national activity–based funding for Australian public hospitals.

Local Hospital Networks

Recipients of the payments from the Pool, Commonwealth block funding and State managed funds.

National Efficient Cost
(NEC)

IHPA publishes an annual NEC Determination for public hospital services for each coming financial year. The NEC underpins funding for services that are not suitable for activity based funding, such as small rural hospitals. The NEC determines the Commonwealth Government contribution to block funded hospitals.

National Efficient Price
(NEP)

IHPA publishes an annual NEP Determination for public hospital services for each coming financial year. The NEP underpins ABF across Australia for Commonwealth funded public hospital services.

National Funding Cap

The limit in growth in Commonwealth funding for public hospital services for all States and Territories of 6.5 per cent per annum.

National Health Funding Administrator Payments System (Payments System)

The Administrator’s Payments System processes the national health reform Commonwealth, State and Territory deposits, and payments into and out of the Pool, as required under the Act.

National Health Funding Body

An independent statutory body established under Commonwealth legislation to assist the Administrator in carrying out his or her functions under Commonwealth, State and Territory legislation.

National Health Funding Pool (the Pool)

A collective name for the State (and Territory) Pool Accounts. The Pool was established under Commonwealth, and State and Territory legislation to receive all Commonwealth and activity–based State and Territory public hospital funding, and make payments under the Agreement.

national health reform

National health reform includes reforms to national public hospital funding, as set out in the NHR Agreement.

National Health Reform Agreement (the NHR Agreement)

The NHR Agreement outlines the funding, governance, and performance arrangements for public hospital services in Australia. The Commonwealth and all States and Territories signed the Agreement in August 2011.

National Weighted Activity Unit (NWAU)

The NWAU is a measure of health service activity expressed as a common unit, against which the NEP is paid. It compares and values each public hospital service (whether it is an admission, emergency department presentation or outpatient episode), by weighting it for clinical complexity.

(the) NHR Act

The National Health Reform Act 2011.

(the) NHR Agreement

See National Health Reform Agreement.

Public Governance, Performance and Accountability Act (PGPA Act)

The Public Governance, Performance and Accountability Act 2013 establishes a coherent system of governance and accountability for public resources, with an emphasis on planning, performance and reporting.

Public Health funding

Public Health funding covers amounts previously relating to national public health, youth health services and essential vaccines (service delivery) in 2008–09 ($244.0 million).

reconciliation

The reconciliation of actual ABF service delivery volume undertaken within a State or Territory to the estimate of ABF service delivery volumes provided by a State or Territory.

Safety and Quality adjustment

A reduction in funding payable to a State or Territory by the Commonwealth for public hospital services following a Hospital Acquired Complication or an avoidable hospital readmission. This includes services funded under ABF or block funding.

soft cap

The growth limit in Commonwealth funding for public hospital services in a State or Territory of 6.5 per cent per annum.

State Managed Fund

A separate bank account or fund established by a State or Territory for the health funding under the NHR Agreement which must be undertaken in the State or Territory through a State managed fund.

State (and Territory) Pool Account

A Reserve Bank of Australia account established by a State or Territory to receive all Commonwealth and activity–based public hospital funding, and for making payments under the NHR Agreement. The State (and Territory) Pool Accounts are collectively known as the Pool.