Federal health minister Greg Hunt will offer $90 million backpay to Victorian hospitals

ALMOST $90 million will be backpaid to Victorian hospitals — a major breakthrough in a two-year funding stoush between the federal and state governments.

ALMOST $90 million will be backpaid to Victorian hospitals, a major breakthrough in a two-year funding stoush between the federal and state governments.

The Turnbull Government will on Friday move to end the long-running feud with the Andrews Government over an accounting discrepancy made in 2015-16 which has derailed negotiations for a new hospital funding agreement.

Victoria had claimed to be owed $104 million from the Commonwealth after errors were found in the pricing and calculation of some hospital services in the funding period.

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Federal Health Minister Greg Hunt. Picture: AAP

Federal Health Minister Greg Hunt will offer $89.8 million to his home state and more than $480 million to other states and territories based on recommendations by independent hospital pricing and funding agencies.

Mr Andrews loomed as the strongest holdout to a new ­national hospital funding deal that would direct an extra $7 billion to Victorian hospitals by 2025.

It is understood the Premier was unwilling to sign any new agreement before Victoria ­received the backpay to ­resolve the dispute.

He told reporters at February’s Council of Australian Governments summit he could not agree “at this stage” to the new deal because the extra cash from the Commonwealth was capped at 6.5 per cent a year and would not cover increasing demand from public hospital patients.

Mr Andrews, who was accused of lying by Mr Hunt, said the new hospital deal would not work without changes to Medicare and aged care.

Victorian Health Minister Jill Hennessy and Premier Daniel Andrews. Picture: David Smith

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“There is an obligation that all of us work together ... so people are getting the right care in the right place and that costly, avoidable hospital ­admissions are not happening,” he said.

Under the new deal, Victorian hospital funding would increase from $24 billion in the five years to 2019-20, to more than $31 billion in the five years to 2024-25.

Mr Hunt argues it represents a funding increase of nearly 30 per cent and takes into account Victoria’s strong population growth.

Mr Hunt said the examination of funding for 2015-16 had ensured transparency of funding arrangements and that payments more accurately reflect actual hospital services delivered. “The Turnbull Government is committed to increasing funding to Australia’s public hospitals through a new ­National Health Agreement,” he said.

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