‘COAG IN CONFIDENCE—wITHOUT PREUDICE DRAFT Heads of Agreement between the Commonwealth and the States and Territories on Public Hospital Funding This Agreement is made between the COMMONWEALTH OF AUSTRALIA (Commonwealth) and WEW SOUTH WALES, VICTORIA, QUEENSLAND, WESTERW AUSTRALIA, SOUTH AUSTRALIA, TASMANIA, the AUSTRALIAN CAPITAL TERRITORY and the NORTHERN TERRITORY (the States) Preliminaries 1. This Agreement sets out the shared objective ofthe Commonwealth and the States the Parties) to improve health outcomes forall Australians ang ensure the sustainably of 2 Australian health system, ids on and complements the policy and reform directions outlined in the National Agreement (NHA) and the National Health Reform Agreement (NHRA], or general practice (GP) and primary heath are and continue to support private health services ‘through the Medicare Benefits Schedule (MES), the Pharmaceutical Benefits Scheme (PBS), and the Private Heath Insurance Rebate 4. Allgovernments havea shared responsibility to Integrate systems and services to ith outcomes for Australians, 103s public ealth and emergency services ofa kind or kinds that are curretly, or clinical need and within a © arrangements are tobe alleligible persons, regardless oftheir geographic locaton. CCORG IN CONFIDENCE—WITHOUT PREJUDICE‘COAG IN CONFIDENCE—wiTHOUT PREIUDICE busisof negotiations leading towards hospital funding arrangements between the Parties from 1 July 2017 unt ‘30,une 2020; 'b. acommitment to develop an addendum tothe National Heath Reform ‘Agreement to commence on 1 July 2017, to operate fora period of three years, ceasing 30 June 2020; develop by 1Jty 2017, and begin to implement, reforms to ath outcomes and decrease demand} Schekle 2, through better coordinated cae, particulary fr patents with complexand chron disease, peeing for quality and safety, avoid funding unnecessary or unsafe cee, and 4. [The Parties acknowledge that National Health Reform Agreement addendum antelpates the development ‘commence July 2020 This lr ‘developed bythe Commonwealth and before September 2018.) Taxreform 9. (Language tobe circulated separately) Public Hospital Funding Arrangements for 2017. 102019-20 10. The Parties agree thatthe Commonwealth's contribution to public hospltal services from 1 July 2017 uni 30 June 2020 wil comorie funding relating to: 2. public hospital services for pubic patients, with funding provided on the bass of activity based funding (A) block funding for public hospital services better funded in that way including relevant services in regional an rural communities and teaching, traning and research functions and pubic health activities. COAG IN CONFIDENCE—-WITHOUT PREJUDICE‘COG IN CONFIDENCE—WITHOUT PREJUDICE 11, The Parties agree that ABE wil be the preferred bass for funding public hospital services ere ever practicable. funding arargeme £3, Where services or functions are more appropriately funded through black grants, the Commonwealth will provide 45 por cent ofthe ecient growth of proving these Independent Hospital Pricing Authority wl retain its function of determining 5 efclent cost of services provided on ableck funded basin pubic onal Healt Reform the States on actual services rendered 18, The Commonwealth wil retain $70 millon in each year fom 2017-18 to 2019-20 from the amount provided for public hospital services as the Commonweslths contribution ta 1 Commonwealth and State efforts te implement the reforms outlined in patents and decrease unnecessary demand for public hospital services asset out at Schedule (COAG IN CONFIDENCE—wITHOUT PREJUDICE(COG N CONFIDENCE—-wITHOUT PRENUDICE 22, The Reforms outtned in Schedule 2 are: (1} coordinated care for patients with chronic and complex clsease, (2) Incorporating quality and safety into hozptl pricing, an (3) reducing avoldable hospital eadmisione 23. The Parties acknowiede tis Agreement doesnot preclude pursuing other reforms to Improve heath outcomes and the efficiency of public hospitals nthe futur. Provision of Commonwealth Funding 24, The amount each State recehwes under ths Agreement wil be calculated asset out in ‘lavses12t017 25,6 3 prarequisite for this funding, the Paris commit to developing and implementing 2 range of reformsintendes to improve heath outcomes for patient and decrease unnecessary demand fr pubic hospital services (outlined Schedule 2) CCORG IN CONFIDENCE—wITHOUT >REIUDICE(CORG N CONFIDENCE—-wiTHOUT PREJUDICE ‘The ares have confames th commitment to this sereement as llws ‘Signed for and on bela ofthe Conmcroel of straint ‘The Honourable Malcolm Turnbull MP Prime tistef te Conranwest ofA [Day] Month) (ean Signed for end on Isl of the Signed for and on behalf of the Stat of New Seuth We by Stl of Vitoria by Signed for and on behalf of the State of stern Austra by [Day [Month (¥ear] (ey (on Signed for oud obvi of We Signed for and on Wha of the ‘St of South Australia by Stat of Tron by ‘The Honourable Jay Weath The Honourable Wil Hodgman MP Pr ect Sout Aural Prmerf the tt of Tasmania [ay] Monee) (ean ay] Dont (Year) Signed for and on bealf of the Austin Signed for and on bhalf of the Noxtern pital erty by Tero by ‘Andcew Bare MLA ‘The Honourable Adam Giles MLA (hiefinsterftheAusraan Capt Terstory —_CheFMinserfthe Neier erry ofA [ay] Monthy (ea {371 (Month Eveae (COAG IN CONFIDENCE—-WITHOUT PREJUDICE‘COAG IN CONFIDENCE™-WITHOUT PREJUDICE SCHEDULE 1 ‘Acthity Based Funding (ABF) Arrangements for 2017-18 to 2019.20 26. For the period 2017-18 to 2019-20, the Commonw category wl be caeulated individually foreach St 3. previous year amount-—the Common e price ajustment—the volume of weighted services provided inthe previous year, multiplied by the change Inthe NEP: by 45 percent (or alower rate ithe ra volume ojustment-—the net change in volume of weighted services to be provided the relevant State (relative tothe volume of weighted services provided in the prev multiples by the NEP, mutipied by 45 percent {ora lower rateif the national funding capis reached). 27. The Commonweatt’scontvibution to activity based funding willbe calculated at the start of each financial year, and may be updated or revised based on adhice from the Admir including a final reconcation of public hosptl FoF the National Health Funding Poo! wll calelate and advise the ‘Commonwealth Treasurer ofthe monthly Commonwealth payments int the National Health Funding Pook 28. The States, in consultation with the National Health Funding Body (HME), wll, determine when state payments ere made int the Pool an State managed fonds, ‘utin the NHRA and existing legislation, including that: ‘COAG IN CONFIDENCE—wiTHOUT PREIUDICE‘COAG IN CONFIDENCE—-WITHOUT PRENUDICE administration of puble hospital funding; 'b, the roles of the Adminstrator and the NHB will continue as fet out inthe NHRA: x's determination ofthe National ficient Cost to ‘aleulate the Commonwealth’s funding contibution fer block funding: and ‘conte to provide data on pubic hospital services to the istratoras setoutin the NHRA, Commonwealth Funding Cp 533. the calelation of total public hospital funding exceeds the national funding cop of 6 percent growth, the Commonwealth will adust ts contrbution to activity based funding to ensure that total funding does not exceed the cap. 35. alate activity based funding willbe pad othe States and Terris, The Astrbution of this funding wl be based on each states’ relative share ofthe ota actty based funding (including effcent growth 36. The Adi 0 wl have regard tothe national fncng cap in conducting 2 ynmorweth payments fer public hospital se-vees. 37. The application ofthe funding cap is intended to 2, Ensure growth in Commonweath funding does nat exceed 6 percent a year; and »b, Ensure that a jurisdiction's share of activity based fund not disproportionaly affected by the a ‘COAG IN CONFIDENCE—WITHOUT PREIUDICECCORG IN CONFIDENCE™—-wiTHoUT PREWUDICE SCHEDULE 2 Reforms to be undertaken by the Parties 4. Inexchange for Commonweatth funding a the Heads of Agreement, the Parties commit to developing and impleme reforms intended to improve health outcomes for patients and decrease demand for publichosptalserces, (Coordinated Care 2. atient with chronic and complex seaseare costly to treat (10 pe cent ofthe establish data collection and asociatee quality improvement processes within participating genera practices; 4. comprehensive evaluation to determine impact on patient outcomes, 2, establishing elements involving joint responsibilty incuding coordinated planning and, where appropiate, collaborative commissioning of servees ‘between Phs and Local Hospital Networks 5. Beyond the selected regons, tates agree to continue to support efforts te deliver better outcomes for patients with chronic and complex condos, including adltional investments a funding becomes avalble, (CORG IN CONFIDENCE—WITHOUT PREIUDICE‘COAG IN CONFIDENCE—-wITHOUT PREJUDICE national appzoach to enhanced care coorcnation fr patients with eran and complex «ondtions which may include collaborate, in and or pooled funding arrangements Pricing for quality and safety specified adverse events, haemfa 10. The Parties gree to develop the mode! for implementation by 1 July 2017, Reducing avoidable readmissions: ‘COAG IN CONFIDENCE—wiTHOUT PREJUDICE