This instrument is the Direction to the Independent Hospital Pricing Authority on the performance of its functions under section 226 of the National Health Reform Act 2011 - No 1/2020.

This instrument commences on the day after it is registered on the Federal Register of Legislation.

3 Authority

This instrument is made under section 226 of the National Health Reform Act 2011.

4 Definitions

Note: A number of expressions used in this instrument are defined in section 5 of the Act, including the following:

(a) COAG;

(b) National Health Reform Agreement;

(d) Standing Council on Health.

In this instrument:

Act means the National Health Reform Act 2011.

Australian Health Ministers’ Advisory Council means the advisory body established or recognised by the Standing Council on Health.

cost model includes deriving cost profiles, adjustments, parameters and relative weights of classes within each service stream for a financial year, and is based on cost and activity data for each of the historical years with only those costs and activity from Activity Based Funding (ABF) establishments being used.

direct cost means costs incurred at the Nationally Funded Centres (NFC) site (or sites) where the NFC episode of care is provided across more than one site) that are directly related to the NFC technology, including pre and post procedural care as captured in the National Health Cost Data Collection (NHCDC) Cost Bucket Matrix.

indirect cost includes, but is not limited to, the:

(a) travel and accommodation costs incurred in the Nationally Funded Centres (NFC) Program in order to access a NFC service;

(b) capital costs;

NFC Program means the program recognised as the Nationally Funded Centres (NFC) Program endorsed by Australian health ministers in June 1990 (now meeting as the Council of Australian Governments Health Council) for the public sector provision of certain high cost, highly specialised clinical practices and technologies with limited demand. For a technology to be considered for NFC status it must require a national population base for efficient and effective service provision.

NFC service means a service that is specified in a service in column 1 of an item in the table under clause 5 of the schedule.

pricing model includes a National Efficient Price (NEP), Price Weights and adjustments, and is based on cost and activity data from three years prior.

reference cost means a standardised mean to ensure the measure of an NWAU remains constant over time, that is then used to convert the cost model into a cost weight model and pricing model.

specified site, in relation to a NFC service, means a site specified in column 2 of the table in clause 5 of the schedule for the particular NFC service.

5 Schedule

The schedule to this instrument sets out the direction given to the Pricing Authority on the performance of its functions and exercise of its powers.

Schedule

1 Function

The Pricing Authority, in relation to the performance of its functions under paragraphs 131(1)(h)–(i) and (n) of the Act, is directed to undertake a costing and pricing study into the NFC Program.

2 Matters Pricing Authority to study

In carrying out the study, the Pricing Authority is directed to inquire into and make findings about the following matters:

(a) the direct and indirect cost of providing each NFC service at each specified site for that NFC service;

(b) the aggregate direct and indirect cost of providing each NFC service across all specified sites for that NFC service;

(d) the existing direct and indirect cost of providing each NFC service for each patient in each specified site for that NFC service.

3 Pricing Authority to recommend options

In carrying out the study, the Pricing Authority must recommend options in respect of the following matters:

(a) whether NFC services, individually and collectively, are more appropriately funded via Activity Based Funding (ABF) or block funding arrangements under the National Health Reform Agreement;

(b) the development and operation of cost models and pricing models for the NFC Program, covering both existing and potential future services delivered under the NFC Program; and

4 Pricing Authority must have regard to particular matters

In carrying out the study, the Pricing Authority must have regard to the following:

(a) the National Health Reform Agreement;

(b) NFC program cost and activity data supplied by a State or Territory;

(i) the Commonwealth;

(ii) a State or Territory;

(iii) public hospitals;

(iv) other health bodies; and

(v) other parties deemed relevant by the Pricing Authority; and

(d) other related matters deemed appropriate by the Pricing Authority.

5 NFC services and specified sites

For the purposes of section 2, at the time this direction is issued:

(a) a service mentioned in column 1 of an item in the following table is specified as a NFC service; and

(b) a site mentioned in column 2 of the item is specified for the particular NFC service in column 1.

Specified service and sites
Item	Column 1 Service	Column 2 Site
1	Islet cell transplantation for the treatment of severe hypoglycaemia unawareness and metabolic instability in p with Type-1 diabetes	(a) Royal Adelaide Hospital, South Australia (b) St. Vincent’s Hospital, Victoria (c) Westmead Hospital, New South Wales
2	Paediatric heart transplantation	(a) Royal Children’s Hospital, Victoria
3	Paediatric liver transplantation	(a) Queensland Children's Hospital, Queensland (b) Royal Children’s Hospital, Victoria (c) The Sydney Children’s Hospitals Network (Westmead), New South Wales
4	Paediatric lung and heart-lung transplantation	(a) Alfred Hospital, Victoria
5	Pancreas transplantation	(a) Monash Medical Centre, Victoria (b) Westmead Hospital, New South Wales

6 Other matters

The Pricing Authority is directed to:

(a) commence the study as soon as practicable;

(b) provide updates about the study to the Australian Health Ministers’ Advisory Council and the Standing Council on Health as requested;

(c) provide an interim report of the results of the study and options to the Australian Health Ministers’ Advisory Council, not later than 1 August 2020; and

(d) submit to the Standing Council on Health a final report of the results of the study and options, not later than 31 January 2021.