Pricing Framework for Australian Public Hospital Services Released

The Independent Hospital Pricing Authority (IHPA) has released its Pricing Framework for Australian Public Hospital Services 2015-16.
The Pricing Framework provides the methodology used to determine the National Efficient Price (NEP) and the National Efficient Cost (NEC) and is compiled through extensive consultation with jurisdictions and stakeholders.  The NEP Determination is used to calculate Commonwealth payments for public hospital services that are funded on an activity basis, whilst the NEC Determination covers those services which are block funded, such as small rural hospitals.
Shane Solomon, Chair of the Pricing Authority said, “I am pleased to announce the publication of IHPA’s fourth Pricing Framework for Australian Public Hospital Services for 2015-16.
“A program of comprehensive consultation has enabled us to fine-tune the Pricing Framework ensuring a clear understanding of what is a hospital service and the methodology that guides the annual determination of the National Efficient Price (NEP) and National Efficient Cost (NEC).
“The pricing approach has now been increasingly bedded down. This is demonstrated in IHPA receiving fewer submissions during its public consultation, meaning more widespread agreement from the jurisdictions and stakeholders about the pricing process,” said Mr Solomon.
“Improvements to the pricing mechanism include opportunities for bundled payments rather than individual payments, such as dialysis treatments that take place in the home. This will assist in cutting bureaucracy and administration, is more patient centric and provides a focus on quality.
“This year the eligibility limit for block funded hospitals has been reduced to encourage more Activity Based Funded hospitals. This provides an overall improvement to sustainability and predictability in funding outcomes for public hospitals from year-to-year,” concluded Mr Solomon.
Submissions to the Pricing Framework for Australian Public Hospital Services 2015-16 consultation paper are available on the IHPA website (except where submissions have been provided in confidence).
The NEP and NEC Determinations will be published on the IHPA website in February 2015.