Health agreement hopes dashed as states face $200m clawback

A proposed $200m revision of public hospital funding for services already delivered has dashed hopes of a new health agreement.

Health Minister Greg Hunt. Picture: Kym Smith

A proposed $200 million revision of public hospital funding for services already delivered by the states has dashed hopes of a new national health agreement being signed before the federal election.

After a previous dispute over the reconciliation process, federal Health Minister Greg Hunt promised clear timeframes and a dispute resolution process, while the states hoped the appointment of a new administrator would also help. However, the new administrator of the National Health Funding Pool, Michael Lambert, and the Independent Hospital Pricing Authority now want to ­account for an unexpected increase in complex hospital cases in 2016-17 by “back-casting” their calculated funding changes.

They are preparing advice for federal Treasurer Scott Frydenberg that threatens to not only ­reduce federal funding by a further $203,110,768 in 2016-17, but impact on the states’ subsequent health budgets.

Victorian Health Minister Jill Hennessy, still seething over the previous funding clawback, yesterday said the latest move would cost the state $67m a year. She called on Prime Minister Scott Morrison to intervene. “If the Liberals push ahead with plans to claw back millions of dollars from our hospitals, every doctor, nurse and patient will suffer,” she said.

Queensland Health Minister Steven Miles said his state would be short-changed $52.6m a year.

“This is money that has ­already been spent in Queensland on frontline hospital services and factored into the planning of ­patient services for this financial year,” Mr Miles said. The other states most affected by the proposed changes are NSW ($53m) and Western Australia ($12m).

A spokesman for Mr Hunt said the government would continue to act on independent advice under a system introduced by a former Labor government and supported by all states and territories. “It is vital that funding is based on the correct data and the commonwealth pays for services delivered,” the spokesman said.

“We are committed to ensuring the accuracy and transparency of all data in making final payments. We will continue to respect the independent umpire’s recommendations.”

Victoria and Queensland had previously nominated the reconciliation process as a key impediment to signing a heads of agreement put forward by Mr Hunt.