Commonwealth Funding Agreements
Another national partnership agreement will also withdraw. The abolition of the National Partnership Agreement on Preventive Health (NPAPH) is expected to result in savings of $367.9 million over four years. The NPAPH provides state and territorial initiatives that support healthy behaviours and contribute to the growing spread of lifestyle-related chronic diseases, such as type 2 diabetes. It was originally scheduled to expire in June 2015, but was extended until June 2018 under the previous government. The budget also announced the termination of the National Partnership Agreement for the Improvement of Public Hospital Services (NPAIPHS) from July 2015. Under the NPAIPHS, states and territories are receiving funding to improve access to electoral surgery, emergency care and sub-treatment. Funding includes both facility payments and bonuses for achieving agreed objectives. The budget announced that the rewards for emergency care and election surgery will be suspended from July 2015. Some $30.7 million was provided to states and territories in 2013/2014.
 It is out of breath with savings of $201.1 million over three years. These models are intended to replace specific agency agreement models, including Department of Social Services (DSS) models. The DSS-Streamlined-Grant agreement is not part of the Ministry of Finance`s submission suite and will expire as DSS enters into new grant agreements with local organizations.  Activity-based funding includes hospital funding based on activity level. It requires setting an effective price for services. This price is set by the Independent Hospital Price Authority. The Commonwealth and the states pool their contributions into the National Health Funding Pool, which then makes payments. Some smaller regional hospitals continue to receive bulk funding. Unsurprisingly, the reactions of federal and territorial governments to the loss of Commonwealth hospital funding have been negative.
 The Australian Health Care and Hospitals Association, which represents the public hospital sector, expressed concern that changes to hospital funding obligations will have a direct impact on hospital wait times and standards. Others believe that potential efficiencies are lost by applying an activity-based funding model at an effective price, with a return to a population/CPI model that does not encourage these efficiency gains.  Organizations should seek independent legal advice on the terms and practical effects of their Commonwealth grant agreements. The COAG Council on Federal Financial Relations (CFFR) is responsible for overseeing financial relations between the Commonwealth and the states and territories, including the Intergovernmental Agreement on Federal Financial Relations (IGA FFR). The Council is made up of treasurers from the Commonwealth and the state and territory. Cffr`s website contains information on the federal financial relations framework, including all funding agreements under the FFR IGA. The Australian government provides the organizations it funds directly with large programs, additional payments for the social and community sectors (SACS). Current subsidy agreements with eligible service providers include a supplementary bag component. From July 2014 to July 2017, funds for public hospitals will be calculated according to the model agreed in the NHRA. An activity-by-activity funding approach is used to determine an “effective price” for hospital services.  The Commonwealth initially committed to achieving 45 per cent of effective price growth and rose to 50 per cent after 2017.
States and territories will hold the balance. But from July 2017, the Commonwealth contribution will no longer use this funding model. The Commonwealth`s contribution will be linked to changes in the Consumer Price Index (CPI) and population growth – essentially a return to the funding model that replaced the NHRA.
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