Consultation now open - Consultation Paper on the Pricing Framework for Australian Public Hospital Services 2025–26

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Pricing Framework for Australian Public Hospital Services 2020–21 open for public consultation

25 June 2019

The Independent Hospital Pricing Authority (IHPA) today released its Consultation Paper on the Pricing Framework for Australian Public Hospital Services 2020–21.

The consultation is open to the public until Monday 15 July 2019.

IHPA’s annual Pricing Framework outlines the major policy decisions to be adopted by the agency to set the national efficient price (NEP) and national efficient cost (NEC) for each financial year. It is released prior to the Determinations, following extensive consultation with jurisdictions, IHPA’s stakeholders and the general public.

As outlined in the National Health Reform Agreement, the NEP and NEC play a crucial role in determining the Commonwealth funding contribution to Australian public hospitals according to either hospital activity levels or, in the case of small rural hospitals, an allocation towards block funded services.

The focus of this year’s consultation is to seek feedback on innovative, alternate funding models to finance hospital services to deliver value-based health care.

Shane Solomon, Chair of the Pricing Authority, invites interested parties to submit feedback on how activity based funding incorporates such alternate funding models. 

In addition, IHPA continues to progress work to develop and implement funding and pricing approaches for safety and quality. Funding adjustments related to sentinel events were introduced in July 2017, followed by funding adjustments for hospital acquired complications in July 2018. 

The Consultation Paper seeks feedback on the final stage of its work to reduce avoidable hospital readmissions and provide incentives for hospitals to identify areas for quality improvement.

Mr Solomon noted, “This consultation process is your opportunity to engage with IHPA (as it was then known) on the approach to pricing and funding for safety and quality as well as a range of other proposals that aim to improve public hospital services across Australia.”

He affirmed IHPA’s commitment to transparency and continuous improvement in how it undertakes its functions, by taking an open and consultative approach to working with the health sector in implementing activity based funding for public hospital services.

“We continue to work in collaboration with a broad range of stakeholders including Australian governments, clinicians and hospitals to improve health outcomes for Australians and increase the effectiveness of Australia’s current hospital funding system,” concluded Mr Solomon.

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