EXPLANATORY STATEMENT
National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011
Proclamation
Subsection 2(1) of the National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011 (the IHPA Act) provides that Schedule 1 to that Act commence on a single day to be fixed by Proclamation. Subsection 2(1) of the IHPA Act also provides that if Schedule 1 to that Act does not commence within the period of 6 months beginning on the later of:
(a) the start of the day that the Act receives Royal Assent; and
(b) the commencement of Schedule 1 to the National Health Reform Amendment (National Health Performance Authority) Act 2011;
Schedule 1 commences on the day after the end of that six months period. The IHPA Act received Royal Assent on 1 December 2011.
The purpose of the Proclamation is to fix 15 December 2011 as the commencement date for the substantive provisions of the IHPA Act which are set out in Schedule 1 to that Act.
Schedule 1 amends the National Health Reform Act 2011 to establish the Independent Hospital Pricing Authority (the Pricing Authority), including its functions, powers, accountabilities and liabilities, provide for the establishment of committees and bodies assisting the Pricing Authority and provide for other machinery provisions.
On 2 August 2011, the Council of Australian Governments (COAG) published the National Health Reform Agreement (the Agreement) between the Commonwealth and all State and Territory governments. The Agreement has the objectives of improving health outcomes for Australians and the sustainability of the Australian health system. A key element of the Agreement is to provide funding to ensure the sustainability of Australia’s health system into the future.
The establishment of the Pricing Authority gives effect to commitments made by all governments under the Agreement. The Pricing Authority is required to perform specified functions which are reflected in section 131 of the IHPA Act.
The main functions of the Pricing Authority are the following: to determine the national efficient price for health care services provided by public hospitals where the services are funded on an activity basis; to determine the efficient cost for health care services provided by public hospitals where the services are block funded; and to publish those determinations and other information, in a report each year for the purpose of informing decision makers in relation to the funding of public hospitals.
The Pricing Authority will also determine data requirements and applicable data standards on public hospital activity, determine a small number of adjustments or loadings to the national efficient price, propose to COAG criteria for block funding of hospitals and hospital services for which activity based funding is not appropriate and assess cross-border and cost-shifting disputes.
The Pricing Authority’s setting of the national efficient price will be informed by submissions from the Commonwealth, States and Territories and other interested parties. Its work will be supported by a clinical advisory committee and a jurisdictional advisory committee established under sections 176 and 195, respectively.
The Pricing Authority has 9 members consisting of a Chair, a Deputy Chair and 7 other members. The Chief Executive Officer of the Pricing Authority will be responsible for the day-to-day administration of the Authority.
The IHPA Act also provides that the Commonwealth Authorities and Companies Act 1997 does not apply to the Pricing Authority and the National Health Performance Authority.
Schedule 1 to the IHPA Act, which is covered by this Proclamation, requires the appointment of the Chair, the Deputy Chair, other members of the Pricing Authority and the Chief Executive Officer of that Authority. Other committees assisting the Authority are also required to be established. It is also noted that necessary administrative arrangements are required to be set up under the IHPA Act. The commencement date takes into consideration the earliest possible dates that these appointments and administrative requirements can be put in place. The Proclamation date also takes into consideration the commitment made by the Commonwealth Government under the Agreement that the Commonwealth legislation establishing the Pricing Authority must be in place no later than 31 December 2011.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
The Pricing Authority is an important element of the National Health Reform Agreement agreed to by the Commonwealth and all States and Territories on 2 August 2011. As part of that Agreement, the Commonwealth government committed to putting in place legislation establishing the Pricing Authority by 31 December 2011.
Authority: Subsection 2(1) of the National
Health Reform Amendment (Independent
Hospital Pricing Authority) Act 2011