To meet the reporting requirements of Section 240 of the National Health Reform Act 2011, the Administrator is to include the basis of each State and Territory's National Health Reform (NHR) funding and payments.

To provide consistency in methodology and with the Addendum to the National Health Reform Agreement 2020–21 to 2024–25, the 2020-21 Tasmanian Funding Model has implemented the:

  • National Efficient Price (NEP20) as the currency for Activity Based Funding (ABF) facilities. The NEP is $5,320 per national weighted activity unit (NWAU20).
  • National Efficient Cost (NEC20) Block funded model as the currency for small regional and remote hospitals, standalone hospitals providing specialist Mental Health services (admitted and non-admitted), Child and Adolescent mental health services, Non-admitted Home Ventilation and Clinical Teaching, Training, and Research provided in the major hospitals.
  • Small regional and remote hospitals, standalone admitted specialist Mental Health Hospitals use the IHPA developed Fixed and variable model.
  • The NEC fixed component is determined as:
  • $2.040 million for hospitals with an annual national weighted activity unit (NWAU (19)) less than or equal to 176
  • $2.040 million less 0.029 per cent per-NWAU (19) for hospitals with an annual NWAU (19) greater than 176, with an additional loading of 39.1 per cent for ‘very remote’ hospitals.  The NEC variable component of the efficient cost is determined as $5,687 per-NWAU (19) for hospitals with an annual NWAU (19) greater than 176.
  • Specialist Mental Health non-admitted services, Child and Adolescent mental health services, Non-admitted Home Ventilation and Clinical Teaching, Training, and Research. The NEC has been set using the cost of these services as negotiated with the Pricing Authority.
  • Supplementation Grants are incorporated into the Tasmanian Funding Model as a mechanism for ‘keeping the system safe and operating’ while transitioning to Activity Based Funding. Supplementation Grants have been provided to Hospital at the ABF Service Category. These Supplementation grants are based on historical costs variation as identified by IHPA in the annual NEP development process.

NHR payments in Tasmania are based upon the activity outlined in the Service Plan between the Minister for Health and the Secretary of the Tasmanian Department of Health.

The service plan outlines:

  • The schedule and volume of ABF services across streams to be delivered by or on behalf of the LHN and the ABF funding to be provided in relation to the provision of those services.
  • The NEC block funding for service provided through:
    • Small rural hospitals, standalone hospitals providing specialist mental health services and eligible community mental health services
    • Major hospitals for:
      • Non-admitted Home Ventilation
      • Clinical Teaching, Training, and Research
  • Operational and block grants to the LHN covering services provided and activities undertaken that are not within scope for ABF, for example, Alcohol and Drug Services, dental services, Child Health and Parenting Services, primary care, home and community care.
  • Schedule of Supplementation Grants at the ABF stream level in recognition that the LHN has reported average costs greater than the NEP.
  • Standards of patient care and service delivery.
  • Performance standards, performance targets and performance measures for the LHN.
  • Requirements for the LHN to report on its performance, as required or otherwise.

A performance management process that is to be in continuous operation in respect of the LHN.

The ABF funded facilities’ service profiles are developed in negotiation with the LHN as follows:

  • Acute admitted and Sub-acute and Non-acute service activity volumes are modelled based on historical activity data and agreed growth rates and adjusted for known service capacity and profile changes.
  • Emergency Department and Outpatient service volumes are modelled based on agreed growth rates and other known factors.
  • Clinical Teaching Training and Research, Home Ventilation services are modelled based on historical expenditure profiles and adjusted for known changes.
  • Small regional and remote hospitals are modelled based on the small hospital NEC fixed cost component and the variable cost component result.
  • Stand-alone hospitals providing specialist Mental Health services (admitted and non-admitted) Child and Adolescent mental health services, Teaching, Training, and Research and Non-admitted Home Ventilation  are modelled based on historical activity volumes and expenditure profiles and adjusted for known changes in service delivery and capacity.
  • Non-NHRA and non-hospital services are block-funded and modelled based on historical expenditure profiles and other known growth factors.
  • The Supplementation Grant at the ABF stream level are based on the prior year National Hospital Cost Data collections ABF Service Category Cost Ratio.

Further information regarding the Basis for National Health Reform payments in both 2020-21 and previous financial years is included at www.publichospitalfunding.gov.au