Funding Model - General Information

The Government will spend over $110 million dollars in 2008-09 to provide maintenance dialysis (MD) services across Victoria. Since 1993-94 the payment model has been composed of a Case Payment and a Capitation Payment. Funding for replacing dialysis equipment that has reached the end of economic life was provided under a separate Equipment Replacement Grant, however as of 2003-04, hospitals are expected to purchase dialysis equipment (such as machines and water treatment equipment) from their general equipment grants.

The annual recurrent budget for MD is paid through a two-tier funding model that includes a capitation grant that is paid to the hub hospitals and a variable (WIES) payment that is paid directly to the in-centre and satellite providers.  Under the current policy, renal dialysis payments are paid to actual so that all patients requiring renal dialysis receive it.

While renal targets (capitation and WIES) are set for health services, their renal budget will be updated as a prior year adjustment to reflect actual activity (either positively or negatively).  Health services are encouraged to quarantine their renal budgets until this final wrap up has occurred.  Any funding that is recalled will be re-distributed within the MD service system. 

For the 2008-09 financial year the case payment is calculated on the number of annual attendances, the weight associated with the Diagnosis Related Group (DRG) of ‘Renal Dialysis’ and the payment per Weighted Inlier Equivalent Separation (WIES). This payment is made directly to providers of in-centre and satellite services.  The Case Payment covers the costs of:

• Nurse care
• Waste management
• Power, water, domestic/cleaning services
• Supply of some linen
• Limited catering;
• Receiving goods
• Provision of some equipment, eg. chairs, dressing trolleys
• Telecommunications
• Medical records
• Patient transport (inter hospital)

Capitation Grants are payable to the hub providers to cover a set of costs that are not covered by the Case Payment and are associated with treatment provided to the patients treated and managed within their service network. The Capitation Payment covers the costs of:

• Haemodialysis consumables
• Medical care, review and 24 hour call service, including emergency
• Acute dialysis treatments
• Nurse training
• Provision of 24 hour support to nurses
• Provision of allied health services – dietetics and social work
• In-patient pharmacy
• Pathology
• Provision and maintenance of dialysers, lines, and associated ancillary fittings, including all plumbing fittings
• On-call service of equipment
• Water quality testing
• Recovery of machine usage fee from other hub units that use the satellite

Review of the funding model

Following a Renal Dialysis Costing and Funding Review in 2006-07, a new funding model for maintenance dialysis services was implemented on 1 January 2008.  This model included the use of three capitation grants and a single WIES payment rate.

In 2008-09, the funding model will continue to use three capitation grants and a single WIES payment rate. However, the capitation grant has been amended and includes, in 2008-09:

• a $10,000 incentive payment to hub services for each home haemodialysis patient;
• an additional $2,500 payment to hub services for each peritoneal dialysis patient;
• patient payment, as below, to hub services which will be administered by hub services:
• for home peritoneal dialysis - $456 per patient per annum; and
• for home haemodialysis - $1,200 per patient per annum

The total capitation grant rates for 2008-09, which includes the components listed above, are in the table below.

Table 1. Victorian Maintenance Dialysis Program, Capitation Grant Payments in 2008-09

WIES rates are available from the Policy and Funding Guidelines, 2008-09.

Reporting will continue to occur through the Victorian Admitted Episodes Dataset (VAED) and the Agency Information Management System (AIMS).

Reports

Renal Dialysis Costing and Funding Review Report (draft) - December 2006 (pdf, 1.69mb) (Consultants report)

Report on Outcomes of the Renal Dialysis Costing and Funding Review (pdf, 90k) (Department's response to consultant's report)

Contacting the Department