The Independent Hospital Pricing Authority (IHPA) specifies requirements for activity and cost data, classifies hospital services, analyses costs, reports on data, and sets prices for public hospital services using an activity based funding model. Services included in the national activity based funding scheme are admitted patients, emergency department, outpatient clinics, and some community based services. The IHPA is exploring bundled pricing models which group healthcare services and treatments together into a single payment to encourage coordinated and integrated care.

1. Independent Hospital Pricing Authority
IHPA AND
ACTIVITY BASED
FUNDING
Jennifer Nobbs
Executive Director, Activity Based Funding

2. 2 www.ihpa.gov.au
COAG Agreement
(April 2016)
NEC16: $5.020 M
NEP16: $4,883
2008 2011 2012 20162013
National
ABF (2008)
National Health
Reform Agreement
(2011)
NEP12: $4,808
NEC13: $4.738 M

3. WHAT WE DO
Specify data requirements
Collect activity and cost data
Classify
Undertake cost analysis
Report on data
Set the price (NEP and NEC)
3 www.ihpa.gov.au

4. ‘IN SCOPE’ SERVICES
• Admitted – including hospital in the home and
forensic mental health inpatients
• ED
• Non-admitted
• Outpatient clinics
• Community-based hospital services – post-acute,
chronic disease management, hospital avoidance,
some community mental health
• Not in scope: prevention and community-based
programs that primarily focus on ongoing
management of stable patients
4 www.ihpa.gov.au

5. www.ihpa.gov.au5
National Weighted Activity Unit (NWAU)
– a common unit for comparing and valuing
Admitted
Acute
Hip Replacement
5.7991 NWAU
$28,827
Admitted
subacute and
non-acute
Spinal Cord
Dysfunction
5.6959 NWAU
$28,314
Emergency
Non-Admitted
Triage 1
0.3001 NWAU
$1,492
Non-admitted
General medicine
0.0356 NWAU
$177
THE CURRENCY – NWAU

6. SLOWDOWN – COST PER NWAU
6 www.ihpa.gov.au
3664
3809
4023
4312
4400
4548 4549
4588
2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14
4.2%
1.1%

7. SLOWDOWN – NEP INDEXATION
7 www.ihpa.gov.au
5.10%
4.70%
3.90%
3.00%
2.10%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
NEP12 NEP13 NEP14 NEP15 NEP16
IndexationRate

9. 9 www.ihpa.gov.au

10. RECENT INNOVATIONS
• New classifications
• Pricing for safety and quality
• Bundled pricing
10 www.ihpa.gov.au

11. BUNDLED PRICING
• Resources and funding easier for hospitals to manage
• Financial flexibility to experiment with new models of care
• Transparency in total cost
• Drive a long term view of good practice
• NOT about prescribing a clinical care pathway
• NOT about reducing clinically necessary care
11 www.ihpa.gov.au

12. EXPLORATORY WORK
ON BUNDLED PRICING
• 2015-15: temporal bundling
• 2016-17: other care pathways?
‒ maternity care
‒ stroke
‒ joint replacement
12 www.ihpa.gov.au

13. www.ihpa.gov.au
jennifer.nobbs@ihpa.gov.au
02 8215 1152