Frequently asked questions

Page contents: Frequently asked questions | Download FAQ

These Frequently asked questions have been updated as of 16 May 2008.

1. What is the Primary Health Funding Approach?
2. Why revise the Primary Health Funding approach?
3. What did the HMA study find?
4. What is better about the new approach?
5. What are the main changes?
6. Alignment with HACC
7. How is the revised approach different from the current PHFA?
8. Who does the revised PHFA apply to?
9. When will the revised approach be implemented?
10. Will agencies’ funding levels change?
11. How have the revised targets been determined?
12. Why will the Development & Resourcing component be built into the unit price?
13. Why has the PHFA unit price been aligned with the HACC unit price?
14. What will happen if revised targets are higher than current performance levels?
15. What are the implications of funding becoming dependent on performance against targets from July 2009
16. Which activities will be included in the revised approach?
17. What is the unit price ?
18. What is included in the unit price?
19. Is SACS Parity included in the price?
20. How will indexation be treated?
21. How will travel time be treated?
22. Why have the same unit prices for allied health and counselling service types?
23. Will there still be flexibility in negotiating between nursing and non-nursing direct care services?
24. How are service costs outside the unit price funded?
25. What performance measures will be used for Health Promotion?
26. Will there still be flexibility in negotiating between direct care and health promotion?
27. What are the key elements of the revised fee policy?
28. How can fee revenue be used?
29. Will fee revenue affect performance targets?
30. What reporting on fees will the Department require?
31. What assistance will be available to ensure correct reporting?
32. Will there be support with data collection and reporting?
33. What are the differences in counting rules between the Primary Health Program and the HACC program?
34. Will Small Rural Health Services be affected by the revised approach?
35. What will happen prior to July 2009?
36. What will happen from July 2009?
37. How will the implementation of the revised PHFA be monitored?
38. How do we get more information?
    

top of page

1. What is the Primary Health Funding Approach?
The Primary Health Funding Approach (PHFA) was introduced in 2002 as a way of funding primary health services through the Primary Health Program. It incorporated three elements:

• unit-priced funding for Direct Care services;
• funding for Health Promotion activities; and
• block funding for organisation infrastructure costs, referred to as Development & Resourcing (D&R) funding.
  

2. Why revise the Primary Health Funding approach?
The PHFA was introduced in 2002 as the first stage of unit pricing for primary health services. The block-funded component for organisation infrastructure costs, called ‘Development & Resourcing’ or D&R, was an interim arrangement. Healthcare Management Advisers (HMA) undertook further work on the D&R component, including gathering data from organisations, to inform the revised approach.

3. What did the HMA study find?
The main findings of the HMA study were as follows:

• Community health services (CHS) reported a wide variation in the proportion of primary health funding they actually spent on D&R (average 40%, ranging from 15% to 60%).
• The four formally recognised D&R cost drivers (rurality, number of sites, service and funding complexity, and proportion of primary health funding compared with total funding) accounted for only 13% of the variation in reported expenditure.
• The cost drivers with the greatest correlation with reported D&R expenditure were, in order: organisation size, building ownership, organisation type and rurality. Together, however, they accounted for only 47% of the reported variation in costs, leaving over 50% of the variation unexplained.
• There was general support for funding direct service delivery using unit prices, and there are sound reasons to move to a full unit pricing approach, that is, incorporating D&R into unit prices.

In summary, the study was unable to reach any definitive conclusions regarding the treatment of D&R. The revised approach is the outcome of consideration of the study findings, along with further work aimed at developing a simplified, transparent and equitable funding system.

4. What is better about the new approach?
The revised approach will:

• Make the funding allocation process more transparent and equitable.
• Simplify administration, particularly where HACC and Primary Health Programs fund organisations for similar services. There will now be a consistent approach to unit costs, fees, reporting, and accountability.
• Improve the approach to funding Health Promotion with more robust and meaningful indicators of performance.
• Allow benchmarking to identify good models of service delivery.
• Recognise that overhead costs are integral to the cost of Direct Care and Health Promotion services.
• Improve accountability through directly linking performance targets with funding levels.

5. What are the main changes?
The revised approach has the following core elements:

• Primary Health unit prices are aligned with HACC unit prices for like services.
• The Primary Health fees policy is strengthened and aligned with HACC.
• Development & resourcing costs are incorporated into unit prices for Direct Care service delivery.
• There is a direct relationship between funding levels and performance targets for Direct Care services. This will be achieved by adjusting Direct Care targets.
• There is one unit price for Allied Health and Counselling and a separate unit price for Nursing.
• Health Promotion will be block funded, incorporating development and resourcing costs. As a result, Health Promotion will no longer have hours of service as targets attached to performance. More meaningful performance measures will be piloted in 2008-09 and implemented in 2009-10. In the interim, CHSs are required to continue to report Health Promotion hours of service, however no targets will be assigned.

6. Alignment with HACC
A basic principle of the revised PHFA is that all rules that apply to HACC will now also apply to PHFA-funded services unless explicitly stated otherwise.

7. How is the revised approach different from the previous PHFA?
The following table summarizes the main changes:

8. Who does the revised PHFA apply to?
The new approach will apply to all organisations receiving funding for the activities listed below (Question 16), which are part of the Primary Health Program. It does not apply to Small Rural Health Services.

top of page

9. When will the revised approach be implemented?
Implementation of the new approach was implemented on 1 July 2007 with a two-year transition period. Organisations’ performance targets will be aligned with funding from this date.

10. Will organisations’ funding levels change?
Organisations’ funding levels through the PHFA will not change. The relationship between funding levels and Direct Care service targets will be achieved by adjusting targets, not funding. The current funding will be recast across Direct Care and Health Promotion activities in proportion to the current mix.

11. How have the revised targets been determined?
Organisations’ targets for Direct Care have been determined by dividing an organisation’s Direct Care budget by the unit costs of service delivery.

12. Why will the Development & Resourcing component be built into the unit price?
From its inception, D&R funding was an interim arrangement needing further development. Although there have been broad guidelines, D&R funding levels have varied across organisations. There have been variations within and between regions in the way D&R has been treated. As a result, performance targets have not been directly or consistently related to budget levels. Organisations have seen the D&R component as neither transparent nor equitable.

Incorporating D&R into the unit price will:

• simplify service agreement negotiations between organisations and regional offices;
• enable a direct relationship between performance targets and funding level improving transparency and equity between organisations; and
• recognise that overheads are an integral part of service delivery.

13. Why has the PHFA unit price been aligned with the HACC unit price?
Most CHSs provide both PHFA and HACC funded services. Greater alignment between these two funding systems will reduce the administrative burden on organisations in managing these.

14. What will happen if revised targets are higher than current performance levels?
There are many reasons why an organisation may not be meeting targets. For example, some organisations may not currently be reporting against their targets correctly. During the transition period, from July 2007 to June 2009, regional offices will provide information and support to assist organisations to meet their new targets. The regional offices will also work with organisations to identify any other issues that impact on their capacity to meet targets, for example, difficulties in recruiting or replacing staff, and in consultation with the Primary Health Program agree on a strategy to manage these issues.

15. What are the implications of funding becoming dependent on performance against targets from July 2009?
A recall policy will apply after the transition period, aligned with the HACC program’s recall policy. Under the recall policy, funding may be recalled if an organisation under-performs by more than 5%. The amount potentially subject to recall is the amount beyond that 5% variance from the target. Where an organisation over-performs by more than 5%, the department will seek assurances that a quality service is being provided

The aim of this policy is to ensure accountability and effective use of public funds, and not to penalise organisations by reducing their funding. The 5% threshold is a trigger to begin discussions with the regional office, not a trigger for the automatic recall of funds. There are likely to be cases where underperformance of more than 5% in a particular year may be justified and acceptable to the regional office. Short-term inability to recruit staff is one possible cause.

For example, if an organisation is experiencing exceptional difficulty obtaining workforce, which can be clearly linked to an underachievement of targets, subject to regional office agreement, a percentage of the amount beyond the 5% variance could be reallocated to fund recruitment costs. In such instances, evidence of recruitment costs must be provided to the regional office.

Application of this policy will relate to one-off funds based on an organisation’s performance the previous year. Any funding recalled will remain within the Primary Health Program.

The recall policy will be applied on an annual basis at the commencement of the 2010-11 financial year based on 2009-10 performances.

16. Which activities are included in the revised approach?
The revised approach applies to the following activities:

Direct Care

• 28065 Community Health Direct Care
• 28067 Women's Health Direct Care
• 28015 FARREP Direct Care
• 28023 Suicide Prevention Direct Care
• 28066 IHSHY Direct Care
• 28068 Family Planning Direct Care
• 28072 Community Health – Integrated Chronic Disease
• 28074 Community Health – Diabetes Self Management
• 28076 Refugee Health Services
• 28080 Pregnancy Support
• 28082 Childrens Weight Management

Health Promotion

• 28001 Community Health
• 28050 Women's Health
• 28016 FARREP
• 28018 Family Planning
• 28021 IHSHY
• 28024 Suicide Prevention

The activity 28049 (Primary Health D&R) will no longer exist. It will be incorporated into each of the Direct Care and Health Promotion activities listed above.

Please note that the definition of an hour of Direct Care, still includes direct and indirect service time. For more details of counting rules, see Question 33.

Activities, other than Health Promotion, that do not have service hour targets associated with them will not be included in the revised approach and will continue to be funded as separate activities. These include, for example,

• 28043 Workforce Development
• 28048 Language Services
• 28071 AHPACC
• 28033 Annual Provisions/Minor Works

Small Rural Health Services activities are not included at this stage as they are subject to different funding rules.

top of page

17. What is the unit price ?
There are two unit prices, reflecting the HACC pricing structure. The 2008-09 prices after indexation are:

As Health Promotion will be block funded, it will not have a unit price.

18. What is included in the unit price?
The price, as is the case for HACC, covers all operating costs including, salaries, salary on-costs, general operating, corporate overheads, travel, etc.. It does not include capital development.

19. Is SACS Parity included in the price?
The price includes all funding previously paid as block funding, including SACS parity.

20. How will indexation be treated?
The indexation rate applied to the revised PHFA unit prices will be equivalent to rates paid on primary health unit prices in previous years. The Department will endeavour to match this indexation in the HACC program to maintain price alignment. However, this will be subject to agreement with the Commonwealth as part of the HACC program negotiations.

21. How will travel time be treated?
Consistent with HACC, travel time will no longer be counted as direct or indirect service time.

22. Why have the same unit prices for allied health and counselling service types?
This is part of the alignment with HACC funding. The benefits of alignment with HACC are outlined in Question 13.

In addition, having a single unit price for all non-nursing Direct Care services will provide organisations with greater flexibility to achieve an optimal mix of services with no changes to their funding levels or targets.

23. Will there still be flexibility in negotiating between nursing and non-nursing Direct Care services?
Community Health Nursing and non-nursing Direct Care services will have a different unit price. However, organisations will be able to negotiate with their regional office to change the service mix between these activities. Such changes will automatically be reflected in a minor adjustment to targets due to the direct relationship between funding levels and targets. This will not affect funding levels.

24. How are service costs outside the unit price funded?
The Primary Health Branch funds specific provisions outside the unit price. These are clearly defined line items in service agreements including the activities of Workforce Development, Language Services, Annual Provisions/Minor Works and AHPACC.

There will also be provision for approved arrangements, such as where there is clear evidence that DHS/the Minister has approved special/one-off rental variations.

top of page

25. What performance measures will be used for Health Promotion?
The performance measures for Health Promotion will change from ‘hours of service’ targets to indicators related to the quality and impact of the Health Promotion plan and its implementation. The Primary Health Branch will develop these as a major body of work in consultation with relevant stakeholders over the two-year transition period. Current requirements for submitting a three-year strategic Health Promotion plan and annual operational plans and reports will remain in place.

Until the new measures are formally implemented in 2009-10, service agreements will require CHSs to report hours of service on a quarterly basis.

26. Will there still be flexibility in negotiating between Direct Care and Health Promotion?
An organisation’s ratio of funding between Direct Care and Health Promotion will not change as a result of the revised PHFA. For example, if 2006/07 funding had $100K in D&R, $50K in Health Promotion and $200K in Direct Care (with Health Promotion funding being 25% of the funding for Direct Care), the revised funding in 2007/08 would be $70K in Health Promotion and $280K in Direct Care (with Health Promotion funding being 25% of the funding for Direct Care).

The Department requests that each organisation’s current split between Direct Care and Health Promotion be maintained for the two-year transition period wherever possible. In exceptional circumstances, organisations can alter the proportions where agreed, in consultation with their Regional PASA and with the Community and Women’s Health program area.

27. What are the key elements of the revised fee policy?
The key principles of the fees policy will not change. For example, inability to pay cannot be used as a basis for refusing a service, and exemption from payment can be granted at the organisation’s discretion.

Changes include:

• Fee levels for Community Health Program funded services will be aligned with HACC fee levels for like services.
• There will no longer be fees for any Community Health Program funded counselling services for people on low and middle incomes.
• The fees policy for children will be simpler. There will be no charge for children under 18 from low-income families. Fees will be retained for children from middle income families, and full cost recovery will be retained for children from high-income families.
• The new unit price will no longer include a 4% ‘discount’ for revenue assumed to come from fees.

Generally, the fee charged should be all-inclusive and covers all materials used in delivery of the service. Where there is a significant additional cost for material utilised in the provision of a service, a separate fee can be charged.

28. How can fee revenue be used?
Fee revenue can be used to enhance service delivery, either by providing additional services, or by measures to improve service delivery.

29. Will fee revenue affect performance targets?
No. Fee revenue will have no impact on an organisation’s performance targets. Performance targets will be directly related to the amount of funding provided by the Department for Direct Care activities.

30. What reporting on fees will the Department require?
Reporting on fees generated through the Primary Health Program will be the same as for the HACC program - an annual statement of aggregate fee income raised and expended.

31. What assistance will be available to ensure correct reporting?
Upon the full implementation of the PHFA in 2009-10, excluding exceptional circumstances, claims of incorrect data reporting will not be accepted as reasons for under or over-performance in target achievements in the context of the recall policy.

The Primary Health Branch is not able to directly detect errors in reporting from organisation data submissions.

The Community and Women’s Health Programs’ Data Reporting Requirements document for 2007-08 contains information on counting rules.

The Data Reporting Help Line’s annual organisation workshops on data reporting will cover the revised PHFA. These workshops will commence in early 2007-08. The Data Reporting Help Line should otherwise be contacted for support with reporting issues, by phone on 0413 883 439 and by email at trishl1@bigpond.com. These contact details appear on the cover of organisation’s summary data reports.

If organisations consider that relevant staff requires training in, or other assistance with, data entry or software-related matters, they are able to use their Workforce Development funding for this.

The Executive Director, Rural and Regional Health and Aged Care Services has written to all CHSs to advise that there will be some leniency in DHS reporting expectations during the period that an agency is implementing the new HealthSMART systems. The details of this will be worked through in the next few months and will only apply to agencies during their HealthSMART implementation.

32. Will there be support with data collection and reporting?
The Primary Health Program will provide updated information on data collection and reporting to assist organisations in ensuring they are reporting against their targets correctly.

The Primary Health Branch is working towards being able to post organisation performance summaries on the Funded Agency Channel to maximize organisations’ ability to view and monitor their target achievements.

33. What are the differences in counting rules between the Primary Health Program and the HACC program?
Counting rules for groups
The PHFA counting rules for group sessions will remain unchanged.
Group sessions for Health Promotion should be included in Health Promotion plans and reports. A policy on counting Health Promotion group sessions will be developed as part of the work to establish Health Promotion performance measures.

Counting rules for direct and indirect service time
The revised PHFA maintains the prior PHFA counting rules for an hour of Direct Care, which includes direct and indirect service time. This is notionally different to HACC, which only provides for the counting of direct service time. However, the definition of direct service time under HACC provides for the same activities that are counted as indirect service time under the Community and Women’s Health program (eg service preparation, time taken in completing case notes).

34. Will Small Rural Health Services be affected by the revised approach?
At this stage Small Rural Health Services are excluded from the revised approach. Changes were made to the activity structure on 1 July 2008 for them to be consistent with the revised PHFA.

top of page

35. What will happen prior to July 2009?
During the first two years of the revised approach, issues will be identified and addressed, including:

• The quality of data and reporting will be checked in order to ensure high quality by the end of this period.
• DHS regional offices will work with organisations to identify and resolve issues where performance varies greatly from targets.
• DHS will systematically review the issues arising across the state and consider adjustments to the model.
• More robust and meaningful Health Promotion measures will be developed and trialled.

36. What will happen from July 2009?
From July 2009:

• New Health Promotion measures will be introduced.
• The recall policy, aligned with the HACC recall policy, will apply from the commencement of the 2010-11 financial year based on 2009-10 performances.
• There will be ongoing review of the funding model.

37. How will the implementation of the revised PHFA be monitored?
Organisations should discuss any issues relating to the implementation of the revised approach with their regional office. The Primary Health Branch will maintain a statewide issues register that will allow ongoing management and evaluation of the implementation process.

38. How do we get more information?
There are a number of mechanisms by which updates will be provided, including via:

• Regional DHS offices. In the first instance, organisations should contact their regional Program and Service Advisor for information.
• This Questions and Answers document will be available on the Primary Health website, and will be updated as required.
• Primary Health Bulletins issued from time to time.
• Information sessions with organisations arranged by regional DHS offices.
• Information available via the project team, details below:

Catherine James
Manager Primary Health Programs
Tel: (61 3) 9096 8762
Email: catherine.james@dhs.vic.gov.au

Kent Rogers
Project Officer
(Thursday and Friday)
Tel: (61 3) 9096 8614
Email: kent.rogers@dhs.vic.gov.au

Download FAQ

 Revised Primary Health Funding Approach Q & A - Revised 16 May 2008 (86kb, pdf)