New Medicare payment model for chronically-ill patients

Improving patient outcomes will be at the centre of a new, modern Medicare payment system that will give general practice and primary health care services greater flexibility to deliver chronically-ill patients the broad range of health care services they need to live a long and healthier life and avoid unnecessary hospital visits.

Page last updated: 31 March 2016

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31 March 2016

Improving patient outcomes will be at the centre of a new, modern Medicare payment system that will give general practice and primary health care services greater flexibility to deliver chronically-ill patients the broad range of health care services they need to live a long and healthier life and avoid unnecessary hospital visits.

As part of our Healthier Medicare package of reforms, announced today, the Turnbull Government will adopt the recommendation of its clinician-led Primary Health Care Advisory Group (PCHAG) that Australians with multiple chronic conditions be covered by a new “bundled” primary health care payment system.

This will include the introduction of upfront and quarterly bundled payments for GPs who sign up to become “Health Care Homes” for these patients. The Health Care Homes will be responsible for co-ordinating care for the chronically-ill patient.

One in five Australians now has two or more chronic diseases. Medicare’s current rigid fee for service structure fails to recognise the need for many of these patients to engage in regular informal consultation with their GP or specialist, which can become a costly and frustrating experience for all involved.

In its official report to Government, titled Better Outcomes for People with Chronic and Complex Health Conditions and released today, PHCAG observed:

      “Increased and poorly targeted service use is resulting in variable patient outcomes and significant financial impacts across the entire health system.”
In Australia, the eight most common chronic diseases account for nearly 40 per cent of health expenditure – equivalent to around $60 billion in 2013-14.

The Chronic Disease Management (CDM) Medicare items introduced by Labor do not adequately address the need to co-ordinate the care of patients with complex chronic needs, despite a 35 per cent growth in claims between 2012-13 and 2014-15.

The PHCAG Report also revealed that the CDM items have been a source of much frustration for GPs:
      “While the CDM items have proven popular, they have also been widely criticised by providers, particularly in relation to their complexity.”
Bundled upfront and quarterly payments to Health Care Homes will recognise the effort and time that GPs and nurses invest into patients with complex chronic conditions. They will take away the pressure to bill every item of service delivered.

The new payment model will also better engage patients with chronic conditions in their own health care regime by ensuring they feel supported through regular contact with their managing Health Care Home.
      “A benefit of using bundled payments is that it would encourage providers to be innovative and flexible in how they communicate and deliver care (for example, through increased use of telehealth services in rural and remote areas and non-face to face patient consultations where appropriate).”
      - PHCAG Report - Better Outcomes for People with Chronic and Complex Health Conditions
Primary Health Networks (PHNs) will have an important role in implementing Health Care Homes through the establishment and promotion of local clinical health pathways and through education and training support.

There will also be opportunity for PHNs to engage in pooled funding arrangements with other local service providers to help bridge gaps in access to health programs, such as state-run out-of-hospital and community nurse programs. This could include seeking funding partnerships with: Local Hospital Networks; state, territory and local governments; and community and private sector health services.

The new payments system will be trialled and evaluated for two years from 1 July 2017 to 30 June 2019 in up to 200 Health Care Homes representing 65,000 patients. Trial sites will be announced in the coming months.

The new payments system is expected to be cost neutral during the trial phase as a result of eligible patients no longer requiring access to millions of dollars-worth of Medicare Benefit Schedule Chronic Disease Management items, that the PHCAG report demonstrates are not serving patients with complex conditions as well as they should.
      “Nationally, there is significant capacity within the existing health system to redirect and re-profile existing expenditure to support the new approach.”
      - PHCAG Report - Better Outcomes for People with Chronic and Complex Health Conditions
The new block payment system to Health Care Homes will be funded in whole through Commonwealth resources.

Providers will continue to be able to bill patients for additional contribution on top of the new Commonwealth payment, as they do under the current fee-for-service model, but only with the agreement of the patient.

ENDS
Media Contacts: Troy Bilsborough 0427 063 150 or Stephen Block 0428 213 264

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