Coordinated care for people with
In March 2016, the Government announced the Healthier
Medicare package that will allow patients with complex and chronic
conditions to enrol with a Health Care Home (HCH) which will then be
responsible for managing and coordinating their care. This budget provides funding of $21.3 million over four years to trial this
model with 65,000 patients from 1 July 2017.
One in five Australians has multiple chronic conditions like
heart disease, diabetes, arthritis, respiratory disease and mental illness. Healthier Medicare is based on recommendations of the Primary
Health Care Advisory Group (PHCAG). HCHs will develop
tailored care plans and coordinate all treatment needs for patients, whether
provided by Medicare, state and local governments or the community sector. A
risk stratification tool will be developed to identify eligible patients and new
payments models tested.
Trials involving 200 HCHs and 65,000 patients will test alternatives
to traditional fee for service payments, such as bundled and upfront quarterly
payments. Alternative payment models have the potential to encourage HCHs to be
more innovative and flexible in how they deliver care, and improve health
outcomes for patients. Expenditure will be
redirected from fee for service chronic disease management (CDM) Medicare items
as these would no longer be accessed by participants in the trial. PCHAG found that
CDM items could be better structured to support more tailored and flexible
A public hospital funding Heads of Agreement signed in April
2016 by the Council of Australian Governments committed all jurisdictions to
support initiatives to reduce hospitalisations such as coordinated care and
flexible funding models for patients with complex and chronic conditions. The
Agreement included a specific commitment to implement a pilot of HCH.
Models similar to HCHs are used overseas. The United States adopted
Patient Centered Medical Homes for children and families. These offer holistic
person-centred primary care designed to improve quality by emphasising
integrated, team-based care. Ontario in Canada has
also adopted this model. Patient enrolment with a
chosen primary care practice is also used extensively in New Zealand. Recent reviews of this model of care reveal mixed results, but overall are
Improving coordination of care for patients with chronic
conditions has been trialled previously in Australia with mixed results. The
2011–12 Budget provided $30.0 million over four years to trial coordinated
diabetes care. It involved conducting a
randomised control trial (RCT) of 7,781 diabetes patients across 184 general
practices to test care components across two intervention groups, including
flexible funding payments. It ran for 18 months. An evaluation found only small improvements achieved in the intervention groups compared to
the control and reported it would be unlikely it would be cost-effective to
roll out that funding model more broadly.
However, the evaluation noted there were lessons for the
development of similar programs in the future. These should ‘incorporate
flexible funding for registration with a health care home, payment for quality
and funding for care facilitation, targeting resources where they can realise
the greatest benefit’, eHealth and better integration of primary and secondary
care to reduce hospital costs.
The Healthier Medicare package has met with qualified
support. The Consumers’ Health Forum (CHF) described it as ‘promising’ but warned
that the funding level may be insufficient. The Australian
Healthcare and Hospitals Association (AHHA) agreed with the need to improve
coordination of patient care, but predicted the HCH will only partly address
this. Academic Stephen Leeder from
Sydney University noted that trials of similar programs show they have ‘the
capacity to improve care and decrease the need for hospital stays’.  But others have pointed to challenges ahead. Economist Peter Sivey from La
Trobe University cautioned that trying to reduce hospital admissions through
improvements in primary care is ‘notoriously difficult’. Other uncertainties include the location and oversight of the trials and the
evaluation process. If private health insurers become involved in the trials, as
envisioned by PCHAG, this may also prompt further debate.
It is not clear if legislative amendments will be required
to commence trials.
A number of measures aimed at making substantial savings
from Medicare are included in the Budget. The pause in indexation for a number
of health programs will be extended, with savings of around $1.9 billion
expected. Medicare Benefits Schedule (MBS) fees for services provided by GPs,
specialists, allied health and other practitioners will be paused for a further
two years to June 2020, with savings of $925.3 million forecast. The pause on indexation of income thresholds used to determine the Medicare
Levy Surcharge and the Private Health Insurance Rebate will also be extended with
savings of $744.2 million over three years. In addition, savings of $182.2 million will come from the Health Flexible
Funds, including by extending the indexation pause for a further two years, and
reducing uncommitted funds. Stakeholders, including
doctor and consumer groups have generally responded negatively to these
Activities to improve compliance were also announced in the
Budget. These include using advanced data analytics to better target providers
who are non-compliant with claiming rules, and improve debt recovery
arrangements. Savings of $66.2 million over four years are forecast. Funding of
$12.0 million is allocated for the measure in 2016–17.
A number of obsolete services will be removed from the MBS
in line with the recommendations of the Medicare Benefits Schedule (MBS)
Review, realising savings of $5.1 million over four years.
All online articles accessed May 2016.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to email@example.com.
This work has been prepared to support the work of the Australian Parliament using information available at the time of production. The views expressed do not reflect an official position of the Parliamentary Library, nor do they constitute professional legal opinion.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.