6. Non-Admitted Patients and Emergency Services Funding

6.1 Victorian Ambulatory Classification System

General and specialist services in outpatient and emergency departments play a key role in the health care system and represent a vital service and interface between inpatient and community care. The Victorian Ambulatory Classification System (VACS) was introduced for funding purposes from 1 July 1997 for all Group A hospitals. 1998 - 99 will see the continuation of activity based funding for outpatient services in all Group A hospitals and the extension of the VACS system to the Ballarat Health Services and the Bendigo Health Care Group. Data from the system has been provided to all Networks and hospitals and a short paper will be circulated in 1998 - 99 detailing the full first year results.

The system has been designed to be relatively neutral in its impact on existing services and, as for 1997 - 98, there will be no growth incentives for outpatients. Budgets will continue to be capped meaning that hospitals will be allocated a specified maximum budget. Funding in 1998 - 99 is guaranteed up to the budget ceiling. Where hospitals failed to reach target levels set for 1997 - 98, adjustments for the current year have been made. Where activity fails to reach target levels across the agreed profile of services, the variable grant may be adjusted during the course of the year. The only notable difference in funding for 1998 - 99 is that compensation grants have been retained at 50 per cent of 1997-98 levels. Details are provided in Section 9 Casemix Formula.

6.1.1 Clinical Panel

The VACS Clinical Panel has evaluated all new and reviewed clinics notified by hospitals to the Department during 1997 - 98. Hospital specific clinic schedules for 1998 - 99 have been set and hospitals will be advised of changes to their individual clinic schedule by August 1998. The process of notification of clinic changes will continue during 1998 - 99.

The Clinical Panel has recommended that VACS 116 (Complex Nephrology and Renal Failure) should be collapsed into VACS 108 (Nephrology). This recommendation is supported for 1998 - 99.

The section of this document, Casemix Formula, describes the funding components of the non-admitted patient grant for 1998 - 99. Further details on the development of VACS, the definition of the "encounter" and the ambulatory funding model are outlined in the publication VictoriaPublic Hospitals Policy and Funding Guidelines 1997 - 98.

6.1.2 Reporting and Audit

Reporting under the new system will continue through the Agency Information Management System (AIMS). Reports on occasions of service need to continue as part of State responsibilities under the existing Commonwealth/State Medicare Agreement. The AIMS S9 form will be used for reporting data as part of the Victorian Ambulatory Classification System for non-admitted patients funded by Program 111.

In the case of a new clinic commencing during the year, or changes to existing clinics, assignment to a VACS category will be made by the hospital. The hospital will be required to advise the Department of any changes occurring during the year. An annual review by the Clinical Panel will assess the assignment of all new and reviewed clinics.

During 1997 - 98 an audit was undertaken and a report on its findings will be circulated in August 1998 to Networks and hospitals. Generally the system has been found to be reliable, stable and accepted by the hospital field. Modifications to definitions in some categories require to be made and hospitals will be informed through the usual channels over 1998 - 99.

6.2 Non-Admitted Patient Grants - Other Hospitals

Outpatient budgets for the remaining Group B hospitals will continue to be divided into an emergency services grant and an outpatient grant. The Emergency Services Grant has been established on the same basis for Group A hospitals.

Non-admitted patient budgets for Group C, D and E hospitals will essentially be unchanged from 1997 - 98.

6.3 Emergency Services Funding

The Discussion Paper Paying for Hospital Emergency Care outlined a number of possible solutions to improve and identify emergency service funding. The Department has acted on several of the recommendations of the report since its release in March 1997. During 1997 - 98 key activities have included:

• The establishment of a joint Taskforce comprising representatives of the Victorian Branch of the Australasian College for Emergency Medicine, the Victorian Ambulatory Classification System Advisory Committee, hospital emergency departments (including a non-metropolitan hospital) and the Emergency Nurses Association;
• The collection of updated information on emergency department staffing numbers and costs in all Group A and B hospitals; and
• A review of the categorisation of emergency departments based on the staffing numbers and related costs, the organisational arrangements in place and an assessment of relevant activity data.

Following a review of all available data by the Emergency Services Categorisation and Funding Taskforce it was agreed that staffing data, both in terms of staff numbers and costs, continues to be the most appropriate data on which to base the emergency services grants. The existing model for establishing the funding levels will therefore continue for 1998 - 99. The categorisation of hospital emergency departments for the purpose of establishing emergency service grants for 1998 - 99 is outlined in table 6.

The review of more current data has resulted in adjustments for particular hospitals. In addition these figures include 1997 - 98 adjustments for CPI and prospective wage award increases which were not identified in the 1997 - 98 Policy and Funding Guidelines. It must continue to be stressed that the grant does not represent the total actual emergency department cost, as emergency services funding is also provided through inpatient WIES payments. Training and Development Grants also funds staff working in all areas of hospitals, including hospital medical officers and registrars.

Table 6: Emergency Department Categorisation and Notional Funding Levels for 1998-99
Categorisation & Funding		Hospitals
E1	$8.330 million	Alfred, Austin and Repatriation Medical Centre, Monash Medical Centre, Royal Melbourne Hospital
E2	$5.186 million	Box Hill, Dandenong, Frankston , Geelong, Northern, St Vincent’s,Western (Footscray)
E3	$3.624 million	Ballarat Base, Bendigo, Maroondah,
E4	$2.082 million	Angliss, Goulburn Valley, Latrobe Regional
E5	$1.562 million	Mildura, Wangaratta, Warrnambool
E6	$1.041 million	Central Wellington, Hamilton, Sandringham, Swan Hill, West Gippsland, Williamstown, Wodonga
E7	$0.520 million	Wimmera, Echuca, Bairnsdale
E9	(Specialist)	Royal Children’s Hospital ($4.165m),Western (Sunshine) ($2.916m), Royal Victorian Eye & Ear Hospital ($2.082), Royal Women’s Hospital ($1.041m), Mercy - East Melbourne ($0.729m)

6.4 Radiation Oncology

A system for defining and measuring non-admitted radiation oncology services for four hospitals: Alfred Health Care Group; Geelong Hospital; Peter MacCallum Cancer Institute; and Austin and Repatriation Medical Centre has been developed with assistance from these hospitals. In 1998 - 99 a standard payment rate will be introduced for key components of radiation oncology services, with additional payments for specialist services not provided in all four centres, and for growth. Revenue arrangements already in place will continue. The funding comprises four key components:

• A variable payment for megavoltage therapy costs with each hospital given a target number of weighted activity units, based on throughput achieved in 1997 - 98. Average cost weights for megavoltage courses, simulation, dosimetry and consultations have been derived from industry wide cost data based on 1994 - 95 figures prepared by Robert H Wilson & Associates. No separate targets will be set for these individual components, and centres will be free to allocate resources between these components, provided the target number of courses is met. Where a centre does not meet its target activity levels, funding may be reduced. Price per weighted activity unit for 1998 - 99 will be $99;
• Associated costs closely related to megavoltage activity will be paid at a standard rate to all hospitals. Based on previous cost estimates, these costs are calculated at 45 per cent of the variable payment rate. The associated costs include categories of:
  • Other Associated Departmental Costs (such as allied health);
  • Patient transport;
  • Patient Accommodation; and
  • Education Costs;

• Specified grants will be paid to cover other payments made by the Department for specialist services, not delivered by all four sites. These include SXRT, DXRT, Brachytherapy, and Stereotactic Radiosurgery and are based on historical payments; and
• Additional payments will be made to each hospital for growth of output in 1998 - 99, up to a limit of 2.5 per cent. This recognises that radiotherapy treatments are increasing as the population increases, and that existing levels of treatment are considered below accepted norms. In addition, recognising that output has grown by 15 per cent in the three years to 1997 - 98, past growth of 2 per cent from hospitals will be recognised.

Given that the introduction of output funding for outpatient radiotherapy services has been under active consideration over the past two years, using a model similar to that adopted, a full transfer to the new funding model will be made in 1998 - 99 without any transitional funding arrangements. Payments will be made subject to the transmission of a data report from each centre indicating occasions of service undertaken. The data will continue to be transmitted using the existing electronic method involving the completion of Form 111-S8 of the Agency Information Management System (AIMS). This is consistent with the funding conditions of other services/outputs.