Section B - Conditions of Funding: Acute Health

The standard conditions of funding, which are not program specific, are detailed in Schedule 1 of the Health Service Agreement 1998 - 99. The conditions below apply specifically to the Acute Health Program.

1. Medicare Framework

The current Medicare Agreement expires on 30 June 1998. The Victorian Government is negotiating a new Agreement with the Commonwealth, The Australian Health Care Agreement, as the successor to the Medicare Agreement.

1.1 Hospital to work within the Framework of the Medicare Agreement or its successor

1.1.1 The hospital will operate within the framework of the Medicare Agreement between Victoria and the Commonwealth, or when brought in to existence its successor Agreement. The Medicare Agreement’s Principles and Commitments for the delivery of Public Hospital Services are enshrined in the Health Services Act 1988.

1.1.2 Eligible persons (as defined in the Medicare Agreement) must be given the choice to receive services free of charge as public patients except as provided in clause 3.6.

1.1.3 Access to public hospital services is to be determined on the basis of clinical need. None of the following factors is to be a determinant of an eligible person's priority for receiving hospital services:

(a) whether or not an eligible person has health insurance;

(b) an eligible person's financial status or place of residence; and

1.1.4 The hospital that admits an eligible person accepts responsibility for referring or transferring the eligible person to any other hospital, for meeting the costs of the transfer, and for providing necessary patient care during transit.

1.2 Admission of Patients

1.2.1 The hospital will ensure that:

(a) an eligible person, at the time of admission, or as soon as practicable thereafter, elects or confirms whether he or she wishes to be treated as a public patient or a private patient and this election is recorded on the approved Patient Election form;

(b) in making the election referred to above, the eligible person is informed of the consequences of electing to be treated as a public patient and not as a private patient or vice versa;

(c) an eligible person's health insurance status or financial status or intention in respect of an election will not be a determinant in the priority for receiving hospital services; and

(d) any ineligible person is appropriately identified as such in the VIMD.

1.2.2 The hospital will only admit patients in accordance with the Minimum Criteria for Admission as specified in the PRS/2 Manual version 8.0 dated July 1998 and shall set in place administrative procedures for the certification of all patients admitted for Type C Professional Attention Procedures (exclusion list) or admitted overnight for designated Band 1 procedures of the Health Insurance Basic Table as defined by subsection 4(1) of the National Health Act 1953 (Commonwealth).

1.2.3 The hospital will make every effort to verify the place of residence of interstate patients.

1.2.4 The hospital will ensure that all patients admitted to hospital are asked whether they are of Aboriginal or Torres Strait Islander descent. The identification of Aboriginality is a mandatory data item to be reported by hospitals to the Victorian Inpatient Minimum Database. All Aboriginal and Torres Straight Islander patients identified on the VIMD will be funded at 10% higher than the nominated payment for WIES6.

1.3 Claims for Medicare Benefits

The hospital will ensure that aftercare services for public patients and outpatients and accident and emergency services do not attract claims for Medicare benefits or claims for benefits under Veterans' Affairs Legislation.

1.4 Pharmaceutical Benefits

The hospital will ensure that except in an emergency, it does not issue a prescription to an admitted patient on discharge, an outpatient or an accident and emergency patient, that would attract pharmaceutical benefits as defined in the National Health Act 1953 or Veterans' Affairs Legislation.

2. Basis for Determining Government Funding

2.1 Components of Funding

A hospital’s funding will be based on ;

Target A volumes, paid at the relevant rate;
Target A Margin volumes at the relevant rate;
Option WIES accepted by the hospital or Network, paid at the relevant rate;
Tender WIES sought by the hospital or Network and allocated by the Department, and paid at the tendered rate;
Non-Admitted Patient Grants
Training and Development grant; and other specified grants.

These grants and admitted patient and outpatient target volumes are shown in Section A and shown in the agency’s Health Service Agreement.

Funding is provided to hospitals and Networks on the basis that the current range of services provided are continued. Before hospitals or Networks undertake a significant change in the range or scope of services, the planning implications of such a move must be discussed and agreed with the Department. In rural areas, the appropriate discussion should be held with the Regional Director, in the metropolitan area discussions should be held with the Director, Acute Health.

Hospitals will also receive revenue from private patients. Government Grant payments to hospitals will consist of the hospital’s entitlements as specified in the HSA and Conditions of Funding, net of relevant patient revenues (see clause 3).

2.2 Calculation of the Payment For Admitted patient Services

2.2.1 The term "weighted inlier equivalent separation" means the measure of activity calculated by multiplying the DRG weight by the number of Inlier Equivalent Separations in the DRG and summing over all DRGs. For 1998 - 99 this statistic will be abbreviated as WIES6. The method and calculation of WIES6 is shown in Section C.

Notional Fixed Grant

2.2.2 The following rates have been applied to Target A (fixed) when calculating the notional fixed grant for 1998 - 99:

Major Providers (Network and Geelong): $829

Rural Groups B ( greater than 10,000 WIES) $843

Rural Group B (less than 10,000 WIES) & C $864

Rural Group D $887

Rural Group E $887

Under the new formula separate weights have been provided for certain DRGs for the purpose of calculating fixed and variable WIES6 (i.e. for Renal Dialysis and Prosthetics - refer to Major Changes, Calculation of WIES6, Policy & Funding Guidelines 1998 - 99). Under WIES6 the notional fixed Target A is lower or equal to the variable Target A.

Variable Grant

2.2.3 The Variable admitted patient payments are calculated as follows:

(a) For hospital throughput up to the level prescribed by Target A, the variable case payment is $1,368 per WIES6 for a public patient and $968 per WIES6 for a private patient (refer Section A).

(b) Hospitals have been given a 2 percent margin Target A which will be paid for at a rate of $958 for a public patient, $678 for a private patient.

(d) Same day "medical" targets are specified in each agency’s Health Service Agreement as a percentage of total actual throughput. Same day medical throughput in excess of the specified target will not be funded by the Department. The targets have been set at 6.5 per cent (excluding "exempt" hospitals).

2.2.4 Option & Tender Pool

Conditions for these payments are outlined in Section A.

2.2.5 Quarterly targets will be determined by the agency. Actual throughput against target will be reviewed at the end of the second, third and fourth quarters. Funding adjustments will be made where actual performance varies significantly (more than 2%) from the nominated quarterly targets.

2.2.6 Nursing Home Type Patient Payment

The hospital will receive $125 for each nursing home type bedday as reported in the VIMD.

2.2.7 Rural/Isolated Payment

This payment provides an allowance for isolated and rural hospitals for additional costs incurred in transferring patients in non-metropolitan areas. The payment is as follows:

For isolated hospitals the additional ambulance transfer payment is $14 for each weighted inlier equivalent separation up to the agreed contract volume.

For other rural hospitals the additional payment is $35 for each weighted inlier equivalent separation up to the agreed contract volume.

2.28 Rural WIES Transfer Transitional Compensation Grant

For 1998 - 99, a Rural WIES Transfer Transitional Compensation Grant has been established. Rural regions have responsibility for appropriate service planning and delivery within their region and the tables in Section A Appendix 2 reflect these regional allocations.

In some cases this has meant the movement of WIES between hospitals within the region. A compensation grant will be paid for one year, 1998 - 99, to assist this transition.

It is not applicable for WIES moved on a temporary basis during the year where hospitals perform under target.

2.3 DVA Patients

The current funding arrangements for DVA patients in public hospitals is scheduled to expire on 31 December 1998. The Department is currently negotiating a successor agreement. In line with the principles of the new DVA Agreement, in 1998 - 99, public hospitals will receive a variable and fixed WIES6 payment for all DVA patients treated.

For each hospital, the Health Service Agreement will specify the DVA patient throughput WIES6 within target A and the options-allocations. Not withstanding the provisions of Clause 2.2 the Department will pay the full fixed and variable rate for all DVA patients (as reported in the VIMD) including numbers in excess of the target. If hospitals do not achieve the DVA target, funding will be recalled at the full variable plus fixed rate.

The payments for other services, such as outpatients, admitted rehabilitation and psychiatric services will also be based on full average costs.

2.4 Non-Admitted Patients Grant

2.4.1 The Victorian Ambulatory Classification System (VACS) operates in selected hospitals in 1998 - 99. For details of the VACS system and funding allocations including emergency department allocations for 1998 - 99 refer to Section A.

2.4.2 For non-VACS funded hospitals the non-admitted patients grant is for the provision of services specified in the Health Service Agreement.

2.4.3 If there is a significant reduction in services to non-admitted patients in non-VACS funded hospitals the grant may be reduced during the course of the financial year. (A significant change for the purpose of this clause is defined as one which involves a reduction in the service levels of more than ten percent.)

2.4.4 Hospitals are responsible for providing such ambulance transport as is necessary, on clinical grounds, to ensure access for outpatients without charge to these patients.

2.4.5 Where hospitals failed to reach target levels set for 1997 - 98, adjustments have been made for the 1998 - 99 targets.

2.5 Training and Development Grants

2.5.1 The Training and Development Grant is allocated to fund the specific programs and positions specified in the Health Service Agreement. The grant will be paid to the employer of the funded position. Where training positions include a period of rotating placements, arrangements between participating agencies should ensure that the host agency receive a proportion of the grant equal to the length of the rotation.

2.5.2 Where positions remain unfilled by staff with credentials approved by the Department or programs offered by the hospital are not operated at budget levels, the Training and Development Grant will be adjusted to reflect actual performance.

2.5.3 Graduate Nurse Programs must meet the following criteria:

(a) hospitals must participate in the Nursing Computer Match Service in order to attract funding for Graduate Nurse positions.

(b) no fees are to be charged to nurses applying for Graduate Nurse positions.

(d) the services of a Nurse Educator are used to co-ordinate the Program; and

(e) there is adequate supervision of new graduates in their first three months.

2.5.4 The research and development component of the Training and Development Grant is designed to fund research infrastructure for the hospital (including support for institutional ethics committees) together with support for academic units based at the hospital, including units funded by universities and independent research institutes. Hospitals in receipt of this grant will need to demonstrate that at least the amounts allocated have been expended for these purposes.

2.5.5 The Training and Development Grant also includes a component (10%) designed to fund the cost associated with clinical placements of undergraduate students including medical, nursing and allied health students.

2.5.6 In 1998 - 99, 5% of the Grant will be linked to an evaluation of hospital performance in relation to training. For more details refer to Section A.

2.6 Payments for Specified Purposes

2.6.1 Additional payments will be provided to the hospital for the purposes specified in the Health Service Agreement.

2.6.2 Where the grant is based on a particular level of service, and there is a significant reduction in such services, the grant may be reduced during the course of the financial year. (A significant change for the purpose of this clause is defined as one which involves a reduction in the service levels of more than ten percent).

2.7 Commonwealth-State Programs

2.7.1 Hospitals may receive specific purpose payments arising from Commonwealth-State Agreements. Funding received under such arrangements is subject to each program’s specific conditions.

2.8 Victorian Maintenance Dialysis Program

2.8.1 Hospitals participating in the Victorian Maintenance Dialysis Program will receive funding in two components: a program grant and (for admitted patients) a case payment.

2.8.2 A grant will be provided for each patient receiving dialysis supervised by the hospital. The rates are:

Intermittent Peritoneal Dialysis $25,180 pa

Continuous Ambulatory Peritoneal Dialysis $34,992 pa

Home Haemodialysis: $27,809 pa

In-Centre : $24,526 pa

Satellite Haemodialysis $19,517 pa

This grant is provided for patients receiving care supervised by a public hospital and will not be paid for patients dialysed in private hospitals.

2.8.3 The grant will be based on monthly statistical returns from the hospital (AIMS Form 111/S6).

2.8.4 Funds will be advanced on the basis of current patient numbers as recorded in the Health Service Agreement and payments adjusted for actual service provision on a quarterly basis.

2.8.5 Total numbers of patients being dialysed in Victoria will be monitored, and if the increase in numbers exceeds historical trends, the payments may be capped by the Department.

2.8.6 For dialysis services provided within the hospital, variable payments will also result from the VIMD coding of the admitted patients as set out in Section C.

2.9 Rehabilitation

2.9.1 Rehabilitation is defined as the process of restoring a disabled person to his/her fullest physical, mental or social capability through the combined and coordinated use of medical or physical, educational and vocational measures. Only those agencies designated by the Department as providers of rehabilitation services are eligible for payment of rehabilitation grants.

2.9.2 There will be two levels of designated rehabilitation programs:

Level 1 rehabilitation is for use by designated specialty programs providing rehabilitation following spinal cord injury, head injury or amputation and where the rehabilitation episode directly follows the acute care episode in which the injury was the principal diagnosis. Subsequent episodes of care following the initial rehabilitation episode are not classified as Level 1.

Level 2 rehabilitation programs fully meet the criteria for designation as set out in the document Designation of Rehabilitation Programs (February 1995).

2.9.3 Funding will be provided at the following rates:

Level 1: $345 per bedday

Level 2: $287 per bedday

A capped number of beddays will be allocated to designated agencies for each level of service. Agencies designated at Level 3 (interim designation) will be paid at Level 2 rates. Rehabilitation beddays will be calculated from data reported in the VIMD. Where the actual number of beddays provided is less than the allocation, payments will be adjusted to reflect the actual service provision. No payment will be made for services in excess of the target.

2.10 Radiation Oncology

2.10.1 In 1998 - 99 a standard payment per weighted activity unit will be introduced for key components of radiation oncology services, with additional payments for specialist services. Hospitals will be given a target based on 1997 - 98 activity levels. Growth of up to 2.5% on target will be funded at the full variable rate. Payments will be based on monthly statistical returns from the hospital (AIMS 111/S8). Funding will be provided at the rate of $99 per weighted activity unit.

An additional payment of 2% of 1997 - 98 throughput will be paid in recognition of past growth.

2.11 Hospital Accreditation

2.11.1 All hospitals are required to demonstrate the development of a quality assurance plan relating to all aspects of the service and to review implementation on an annual basis. Hospitals accredited with the Australian Council on Healthcare Standard (ACHS), hospitals granted statutory immunity under Section 139, Health Services Act 1988, and hospitals who have achieved certification against ISO 9000 are deemed to have met this requirement.

2.11.2 By the year 2000 the Division will require that all providers of public acute services will have secured formal third party accreditation/certification against the standards of the ACHS Evaluation and Quality Improvement Program or ISO 9000 series of standards. Accreditation/certification will become the base line indicator of quality both from public or private providers. All agencies should be either pursuing third party accreditation and/or working to maintain current accredited status.

2.11.3 All Group A1, A2 and B hospitals (and aggregated hospitals previously classified as Group A1, A2 or B) which on 1 March 1999 are accredited with the Australian Council on Healthcare Standards (ACHS), or have by 1 March 1999 scheduled an accreditation visit will receive an additional specified payment of $30,000. All other hospitals (and aggregated hospitals previously classified Group C) accredited with ACHS or with accreditation visits scheduled by 1 March 1999 will receive $15,000. Grant payments under this clause will be extended to hospitals certified against the ISO 9000 series on presentation of the Certification of Registration. However, only one grant pursuant to this clause will be made.

2.12 Specific Purpose Grants for Admitted patient Services to Persons from Non-English Speaking Backgrounds (NESB Grants)

2.12.1 Networks and hospitals will be notified of the new NESB grants for 1998 - 99. In 1998 - 99 the non-admitted component of the NESB grant will be rolled into the existing inpatient NESB grant.

2.12.2 The broad intent of the NESB grant is to encourage hospitals to improve service delivery to admitted patients of non-English speaking background. Hospitals receiving grants are required to be able to spend the amounts allocated on strategies which are consistent with those outlined in the publication Working with Patients from non- English speaking backgrounds Guidelines for Health Agencies.

2.13 Hospital Access Program

Hospital Access Program performance bonuses will be determined in accordance with the provisions of Section A Appendix 3.

Peformance bonuses will not paid until the Acute Health Schedule of the Health Services Agreement is signed.

2.14 Hospital in the Home

Hospital in the Home incentive payments will be determined in accordance with the 1998 - 99 HITH Policy.

2.15 Cash Flow to Hospitals

2.15.1 Subject to meeting the requirements of the Hospital Conditions of Funding, the fixed Grant will be made available to the hospital in twenty four (24) payments based on negotiated cash flow requirements.

2.15.2 Cash flow to the hospital for variable payments will be based on the targets specified in the Health Service Agreement.

2.15.3 Cash advanced for variable payments and for Hospital Access Program Performance Bonuses will be adjusted quarterly to match hospital earnings.

2.16 Redirection of Funds

Where total earnings for the Acute Health program exceed the expenses incurred in delivery of the full quantity of services specified in the Health Services Agreement, the surplus may be used by the hospital for any purpose connected with its agreed function.