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
Overview
The National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011 was enacted to address the need for a robust and independent mechanism to set prices for health care services provided by public hospitals in Australia. This legislation was introduced to give effect to the commitments made by the Commonwealth and all State and Territory governments under the National Health Reform Agreement, which aims to improve health outcomes and ensure the sustainability of the Australian health system. The Act was passed by the Australian Parliament and received Royal Assent on 1 December 2011. The purpose of the accompanying Proclamation is to set 15 December 2011 as the commencement date for the substantive provisions of the Act, which establish the Independent Hospital Pricing Authority, its functions, and its accountabilities. This date was chosen to ensure timely implementation in line with the National Health Reform Agreement, which required Commonwealth legislation establishing the Pricing Authority to be in place by 31 December 2011. The establishment of the Pricing Authority is a key element of the reform, aimed at determining the national efficient price for health care services and ensuring informed decision-making regarding the funding of public hospitals.
Scope and Application
The National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011 applies to the establishment and functioning of the Independent Hospital Pricing Authority (the Pricing Authority). This entity is responsible for determining the national efficient price for healthcare services provided by public hospitals, both for those funded on an activity basis and those block funded, and publishing these determinations annually to inform funding decisions. The Act applies to the Pricing Authority as an entity and to its members, who are appointed under the Act, as well as to the Chief Executive Officer responsible for the day-to-day administration of the Authority. The Act also pertains to the establishment of committees and bodies that assist the Pricing Authority in its functions. The jurisdictional reach of the Act is national, as it is Commonwealth legislation designed to implement a key element of the National Health Reform Agreement between the Commonwealth and all State and Territory governments. The Act excludes itself and the National Health Performance Authority from the application of the Commonwealth Authorities and Companies Act 1997. The commencement of the Act's substantive provisions is fixed by Proclamation, taking into account the need to meet the commitment made by the Commonwealth Government under the National Health Reform Agreement that the legislation establishing the Pricing Authority must be in place no later than 31 December 2011. The Proclamation also ensures that necessary administrative arrangements are set up under the Act.
Key Provisions
The National Health Reform Amendment (Independent Hospital Pricing Authority) Act 2011, through its main provisions in Schedule 1, establishes the Independent Hospital Pricing Authority (the Pricing Authority), defining its functions, powers, accountabilities, and liabilities (sections 131, 176, 195). It also mandates the creation of committees and bodies to assist the Pricing Authority, as well as other machinery provisions necessary for its operation. The Act specifies the Pricing Authority's primary functions, which include determining the national efficient price for health care services provided by public hospitals funded on an activity basis, determining the efficient cost for block-funded services, and publishing annual reports to inform decision-makers about hospital funding (section 131). Furthermore, the Pricing Authority will determine data requirements and applicable data standards, propose criteria for block funding, and assess cross-border and cost-shifting disputes. The Authority will be supported by a clinical advisory committee and a jurisdictional advisory committee (sections 176, 195).
The Act imposes several obligations on the Pricing Authority and its members. The Pricing Authority is required to establish the necessary committees and bodies to assist in its functions, as well as to set up the required administrative arrangements (Schedule 1). The Authority must also consult with the Commonwealth, States, and Territories, and other interested parties when setting the national efficient price (section 131). Members of the Pricing Authority, including the Chair, Deputy Chair, and other members, must be appointed in accordance with the provisions of the Act (Schedule 1). Additionally, the Chief Executive Officer is responsible for the day-to-day administration of the Pricing Authority.
Breaches of the obligations and requirements imposed by the Act can lead to various consequences. Although the Act does not explicitly outline specific penalties for non-compliance, general legal principles may apply. For instance, failure to comply with statutory obligations could result in legal actions, including injunctions or claims for damages. The Act's provisions are designed to ensure the Pricing Authority operates effectively and transparently, and any significant departures from these provisions could attract scrutiny and potential legal repercussions. The establishment of the Pricing Authority under this Act is a critical component of the broader National Health Reform Agreement, which aims to improve health outcomes and ensure the sustainability of Australia's health system.