Health care homes: an update

Health Care Homes: an update

In March 2016, the Government announced the Healthier Medicare package. The centrepiece was a trial of Health Care Homes (HCHs), an innovative model of health care to manage and coordinate care for patients with complex and chronic conditions. An estimated one in five Australians has two or more chronic conditions such as diabetes, heart disease, cancer, respiratory diseases and arthritis. But their care is often fragmented and uncoordinated.

The HCH trial involves enrolling 65,000 patients with complex and chronic conditions across some 200 medical practices (including Aboriginal Community Controlled Health Services (ACCHS)). Each practice, or HCH, is expected to develop a tailored care plan for each enrolled patient and coordinate all their treatment needs. A risk stratification tool to identify eligible patients and improved data collection using digital health technologies are key elements of the trial. Instead of traditional fee-for-service Medicare payments a combination of upfront grants to practices and so-called ‘bundled’ payments will be provided in return for the provision and coordination of patient care. Enrolled patients can still use Medicare for health care not associated with their chronic conditions.

Health care homes have been adopted in the United States where they are called Patient Centred Medical Homes. A similar approach has been previously proposed here. In 2009, the National Health & Hospitals Reform Commission (NHHRC, 2009, recommendation 18) called for voluntary patient registration with ‘health care homes’ for those with chronic conditions, young families and Aboriginal and Torres Strait Islanders as well as grants funding to support multidisciplinary services and care coordination, and payments to reward improved outcomes. In response, the 2011–12 Budget provided funding of $30 million over four years for the Diabetes Care Project (DCP), a pilot of coordinated models of primary care for diabetes. While an evaluation found small improvements across a number of patient indicators, it concluded that the funding model tested in the pilot would be unlikely to be cost-effective to roll out nationally.


The HCH model was originally proposed by the Government appointed clinician-led Primary Health Care Advisory Group (PHCAG) in 2015 as a means to reduce the problems of fragmented care and preventable hospitalisations, particularly among those with chronic and complex health needs. At the time, the then Health Minister Susan Ley described the Healthier Medicare package as ‘revolutionary’.

Funding for the HCH trial was provided in the 2016–17 health Budget with an initial $21.3 million allocated over four years. Additional funds would come from re-directing payments for Chronic Disease Management (CDM) Medicare items for patients participating in the trial. The Government later indicated that in total, some $100 million would be available for the trial.

The trial was due to commence in July 2017, with a national roll-out planned for a later date.

Trialling the HCH model was broadly supported, including by state and territory governments which committed to the trial in Schedule 2 of the Hospital Funding Agreement signed with the Federal/Commonwealth Government in 2016. While the HCH trial was broadly welcomed, some stakeholders cautioned that the funding allocated was inadequate, or had concerns around the program’s design.

Implementation of the trial was deferred by three months in the 2017–18 Budget. According to the Department of Health’s annual report for 2016–17 (p. 91) the deferral was intended to ‘ensure that the tools and resources to support Health Care Homes are available and developed to a high standard’. The revised schedule had 20 HCHs starting in October 2017 and the remaining 180 providing services from December 2017.

Media reports suggested that there were delays in signing up medical practices due to IT and other problems. Some suggested that the initial enthusiasm for the HCH concept had ‘waned’, driven in part by the requirements around the signup/application process for practices. Others suggested that a reluctance of some practices to apply was because of uncertainties over the tax treatment of participating practices, specifically, concerns that they may become liable for state payroll tax if participating doctors were deemed to be employees. An ATO Fact Sheet released to clarify this issue noted ‘the Health Care Home model will not, of itself, create an employer/employee relationship under the tax or superannuation guarantee legislation.’ 

According to an Estimates Answer provided by the Department of Health (DoH) a total of 61 of the 200 shortlisted practices declined to proceed with the trial, although it is not clear why these practices withdrew from the process. A number of these were replaced with other applicants.

The GP who led the PHCAG, Steve Hambleton, a former President of the Australian Medical Association, has recently admitted that ‘implementation went wrong somewhere’ and that ‘the initial enthusiasm for what was promised has been lost’.

Progress to date

As of December 2017, some 190 practices had enrolled in the HCH trial, according to the DoH. However, a list of participating medical practices available from the DoH website, lists only 171 practices as at 16 May 2018.

DoH also revealed that $114.3 million had been allocated for stage one of the trial from 2016–17 to 2019–20. This amount appears to include re-directed Medicare CDM payments. Participating practices receive an upfront payment of $11,000, as well as tiered monthly payments for each enrolled patient, ranging from $591 per annum for one with the lowest complexity up to $1,795 per annum for a patient with the highest complexity.

With the HCH trial now largely underway attention is likely to turn to its evaluation, due after November 2019. According to the DoH the evaluation will ‘estimate early impacts’ of the model on patient outcomes and ‘identify changes in the way participating practices organise and deliver health care’.

A consulting firm, Health Policy Analysis will undertake the evaluation, according to the DoH. So far, an evaluation plan has been developed setting out the key questions and measures to be used. The plan will be made available on the Department of Health’s website, once it is finalised. In the meantime, there is likely to be ongoing interest and scrutiny in how the HCH trial is progressing, particularly during Senate Estimates hearings.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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