Funding and payments

Section 240 of the NHR Act(Opens in a new tab/window) requires the Administrator to provide monthly reports to the Commonwealth and each State and Territory. These reports are made publicly available via publichospitalfunding.gov.au to improve the transparency of public hospital funding.

Monthly reports provide details of funding and payments into and out of the Pool and State Managed Funds. This information is provided at a national, State and Territory and LHN level, and details both the Commonwealth and State and Territory contributions.

The NHFB produces approximately 160 reports each month on behalf of the Administrator, comprising of:

  • a national report
  • a report for each State and Territory
  • a report for each LHN.

These reports are prepared on a cash basis and align to the reporting of funding and payments provided in this Annual Report. Full year 2022-23 funding and payment information was published to the website on 17 July 2023, within three weeks after the end of the financial year.

Compliance

The Administrator’s rolling Three Year Data Plan sets out the minimum level of data that States, Territories and the Commonwealth must provide to the Administrator, and the timeframes it must be provided within.

Each quarter, a compliance report is published that details whether States, Territories and the Commonwealth have met their obligations under the Data Plan.

Through engagement with States and Territories, Compliance with the Administrator’s Data Plan has improved over time, including the timeliness of data submissions. However there are some areas of concern that require more work, such as transparency of out-of-scope activity and State Prices.

Data submissions

Timeliness of data submissions to support the 2021-22 Annual Reconciliation has improved over time with all eight States and Territories providing Submission A files, Submission B files, and Statements of Assurance on time, compared to six out of eight in the previous year.

With respect to the timeliness of 2022-23 Six‑month data submissions, eight out of eight States and Territories provided Submission A on time. Six out of eight States and Territories provided Submission B files on time, with New South Wales and Victoria submitting data on 11 and 6 April 2023 respectively. The quality of submissions has improved over time, with only one resubmission received compared to 13 resubmissions last year.

Service agreements

Service Agreements between the States and LHNs support transparency of public hospital funding and services and are provided to the Administrator (once agreed). Service Agreements are to include, at a minimum (E7):

a. the number and broad mix of services to be provided by the LHN, to inform the community of the expected outputs from the LHN and allow the Administrator to calculate the Commonwealth’s funding contribution

b. the quality and service standards that apply to services delivered by the LHN, including the Performance and Accountability Framework and the level of funding to be provided to the LHN under the Service Agreement, through ABF and Block funding

c. the teaching, training and research functions to be undertaken at the LHN level.

In addition, the funding paid on an activity basis to LHNs will be based on the price set by that State as reported in Service Agreements, the State Price (A92).

The Administrator and NHFB have been working with States and Territories to highlight inconsistencies in Service Agreements and identify where improvements can be made including on:

  • accuracy of State Prices
  • identification of in-scope and out-of-scope activity
  • timely provision of Service Agreements to the Administrator.

Following engagement with States there was an improvement in 2022-23 with 87 of the 87 Service Agreements submitted to the Administrator aligned to activity estimate submissions, compared to 29 of 90 last year.

Seven out of eight States and Territories submitted 2022-23 Service Agreements to the Administrator within the required fourteen calendar days from finalisation or amendment.

Victoria provided 38 of their 40 Service Agreements post 31 March 2022. Of these, five were submitted within the required timeframe, 32 were provided outside of the 14 day period and two remain outstanding. This is the third year that Victoria has been delayed in providing Service Agreements to the Administrator. 

In accordance with the Administrator’s Three Year Data Plan and Data Compliance Policy, from 1 July 2022, States are required to identify both in-scope and out-of-scope activity in their LHN Service Agreements. In addition, a new fund account was established (from 1 July 2022) in the Payments System to identify all payments for out‑of-scope activity.

Maintenance of Effort

Parties to the Addendum agreed, at a minimum, to maintain levels of funding for public hospital services through the the Pool for 2020-21 to 2024‑25 at not less than the level of funding for 2018-19, while having regard to new, appropriate models of care that may change the setting in which care is delivered (A102).

The assessment of Maintenance of Effort focuses on in-scope public hospital services under the NHR Agreement. Out-of-scope activity is defined as non-hospital services or those public hospital services with a funding source other than the NHR Agreement.

This work has identified some inconsistencies in the level of in-scope and out-of-scope funding transacted through the Pool as well as pricing and activity information published in LHN Service Agreements.

Given certain data limitations, the assessment of Maintenance of Effort is based on in-scope ABF only. Further work is required in order to incorporate in scope Block funding into future iterations of this report.

The assessment found that when comparing 2020-21 and 2021-22 funding levels to the 2018‑19 baseline:

  • the Commonwealth maintained its level of funding in total and in respect to payments to all States
  • all States have maintained their levels of funding on the basis of the information and advice provided.

The Administrator will continue to work with all Parties to the Addendum towards achieving consistency and transparency in the reporting of public hospital funding (A103). For further details, please visit Annual Report 2021-22 Maintenance of Effort.

Annual report and financial statements

Section 241 of the NHR Act states the Administrator must, within 4 months after the end of each financial year, provide to the responsible Ministers an annual report on the exercise or performance of his or her functions during the financial year.

The annual report includes the following information for the relevant financial year:

  • the amounts paid into each State Pool Account and State Managed Fund by the relevant State or Territory, and the basis on which the payments were made
  • the amounts paid into each State Pool Account by the Commonwealth and the basis on which the payments were made
  • the amounts paid from each State Pool Account to LHNs, a State Managed Fund or other organisations or funds, and the basis on which the payments were made
  • the amounts paid from each State Managed Fund to LHNs or other organisations or funds, and the basis on which the payments were made
  • the number of public hospital services funded for each LHN in accordance with the activity based funding system
  • the number of other public hospital services and functions funded from each State Pool Account or State Managed Fund.

The annual report is accompanied by:

  • a financial statement for each State Pool Account
  • a financial statement that combines the audited financial statements for each State Pool Account.

The financial statement is audited by the Auditor‑General of that State in accordance with the relevant legislation of that State relating to financial audit by the Auditor‑General.