The proposal has 3 components and would have effect from 1 July 2022.

Component 1 would fund 50% of the annual growth in the efficient cost of activity-based and block-funded hospital services on an ongoing basis and would maintain the activity-based funding model.

• Under the baseline policy, the Australian Government will fund 45% of the annual growth in the efficient cost of activity-based and block-funded hospital services over the period to 2032-33, with annual funding growth capped at 6.5%.

Component 2 would establish an independent national health agency (the new agency) to support the integration of health services at a regional level.

• The new agency would take over the functions of the Independent Hospital Pricing Authority, the Administrator of the National Health Funding Pool, the Australian Institute of Health and Welfare, the Australian Digital Health Agency, and the Australian Commission on Safety and Quality in Health Care. These agencies would be abolished.
• The new agency would also have responsibility for stewardship and funding decision making for primary care and dental care, with these functions transferring from the Department of Health.
• All new agency staff would be co-located in Canberra.
• The new agency would be distinct from the Commonwealth, state and territory health departments, and would report directly to the National Cabinet or the Health National Cabinet Reform Committee.

Component 3 would provide one-off payments to the states and territories to help eliminate public hospital waiting lists for particular categories of clinical urgency. These payments would be spread over 2 years from 1 July 2022, with 80% paid in 2022-23.

• The payment would be based on the number of patients on elective surgery waiting lists who have been waiting longer than clinically indicated for their category as at 30 June 2022. All patients in clinical urgency categories 1, 2 and 3 would be eligible.
• The payment rate per patient would be based on the national efficient price for each category of surgery as per the Independent Hospital Pricing Authority’s cost determinations.
• The requestor has sought a breakdown of costs by state and territory, alongside national total costs.