Activity Based Funding. What are they & do they affect me?
David Perabo - ABF Manager
What is ABF? Activity Based Funding (ABF) is the basis of how the Commonwealth Government provides funding to the States and Territories under the National Health Reform Agreement.
All States and Territories have implemented ABF as a basis for funding all activity streams including:
Acute,
• • • • •
Emergency,
Ambulatory / Community Care, Sub and Non-Acute Care, and
Mental Health.
ABF in its simplest form is a payment for the number and mix of consumers treated, reflecting the workload and resources used, and providing hospitals with an incentive to provide services more efficiently. ABF is designed to create a more transparent and efficient healthcare system by linking funding directly to output.
ABF has been used to fund inpatient (admitted) mental health since July 1, 2013, and ambulatory (non- admitted) mental health July 1, 2025. As part of this process the Independent Hospital and Aged Care Authority (IHACPA) determine the classifications and pricing for funding health services. Some services such as Macquarie Hospital (MQH) and Coral Tree Family Service (CTFS) are still funded historically based on previous years budgets and expenditure. In 2017, the IHACPA introduced a new classification for Mental Health called the Australian Mental Health Care Classification (AMHCC), which applies to both admitted and ambulatory mental health services and is based on routinely collected data, the setting (admitted/non-admitted); Mental Health Phase of Care (previously Focus of Care); Age; Mental Health Legal Status; and Outcome Measure (HoNOS-CA | HoNOS | HoNOS65).
How It Works ABF relies on a classification system that categorizes patient treatments into groups.
• Patient Treatment: A consumer is admitted for a specific reason. • Case Classification: The consumer's diagnosis, Mental Health Phase of Care, age, and other factors are used to assign the case to a specific category. These categories are often called AMHCC end classes. • Cost and Complexity: Each end class is assigned a "weight" that reflects its expected cost and complexity. A simple, straightforward case would have a low weight, while a complex, resource- intensive case would have a high weight. • The Price: A state "efficient price" is set for each unit of weighted activity. This is the benchmark payment for a standard, average case.
Page 33| NSLHD Mental Health Drug and Alcohol News | September 2025
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