Nhcdc round 19 Independent Financial Review

Application of AHPCS Version 3.1

The following section summarises Queensland Health’s application of selected standards from Version 3.1 of the AHPCS (outlined in Appendix B) to the Round 20 NHCDC submission.

1. SCP 1.004 – Hospital Products in Scope

Queensland Health representatives completed templates for this review for hospitals and demonstrated through the templates and interview process that costs are reported against admitted acute, emergency care and non-admitted products.

It was noted that costs are also created for non-patient products (such as unlinked records).

2. SCP 2.003 – Product Costs in Scope

During the interview process, Queensland Health and HHS representatives stated that all products are costed, which includes costs assigned to products in scope for the NHCDC, unlinked activity, and costs assigned to system-generated patients. Unlinked activity and system-generated patients are not submitted to the NHCDC.

It was noted in the interview process that costs are applied using the same standards and principles to patients regardless of their financial classification.

3. SCP 3.001 - Matching Production and Cost

The application of this standard was demonstrated during the interview and an Excel file was produced from the various hospital costing systems outlining the derived accounts.

4. SCP 3A.001 - Matching Production and Cost – Overhead Cost Allocation

The jurisdiction was able to demonstrate that overhead costs were fully allocated to direct patient care areas via the pre allocation and post allocation data included in the templates.

5. SCP 3B.001 - Matching Production and Cost – Costing all Products

The application of this standard was demonstrated in the template and Queensland Health provided an overview of their internal reconciliation process, which demonstrated the allocation of costs to products.

6. SCP 3C.001 - Matching Production and Cost – Commercial Business Entities

Based on discussions with Queensland Health and hospital representatives during the review, commercial business entity expenditure was excluded in accordance with the standard.

7. SCP 3E.001 - Matching Production and Cost – Offsets and Recoveries

There was no offsetting of costs with revenue.

8. SCP 3G.001 – Matching Production and Cost – Reconciliation to Source Data

Based on discussions during the review, Queensland Health completes a final reconciliation of its costing system to source documentation.

9. GL 2.004 - Account Code Mapping to Line Items

Queensland Health representatives indicated that total costs were mapped to the standard specified line items; this was reflected in the hospital templates submitted.

10. GL 4A.002 – Critical Care Definition

The three HHS reviewed had dedicated ICUs in their main referral hospitals, with Central Queensland HHS having a CCU, and Townsville HHS having a CCU, General Critical Care Unit, Neonatal Intensive Care Unit and Paediatric Intensive Care Unit. The direct costs associated with ICU are allocated to discrete cost centres and those costs are only applied to patients who used the ICU. There were no examples of close observation units of High Dependency Units at any of the hospitals reviewed. Critical care costs are captured in accordance with the applicable standard.

11. COST 3A.002 – Allocation of Medical Costs for Private and Public Patients

Costs are allocated to public and private patients in the same manner. This includes costs associated with medical and nursing salaries and wages, pathology, medical imaging and prosthesis. There is no offsetting of private patient revenue against the expenditure.

The majority of medical officers are salaried medical officers are paid an allowance in-lieu of private practice arrangements, i.e. there is no use of private practice funds to supplement the employment costs. Furthermore there are no adjustments made to expenditures for the Right of Private Practice Models. Therefore, the full employment cost associated with medical officers is allocated to all patients, regardless of financial class.

12. COST 5.002 - Treatment of Work-In-Progress Costs

Discussions revealed that patients are allocated costs based on their consumption of resources for that reporting period. Where costs are incurred in prior years, these are also included in the final costed data and NHCDC submission.

6. Conclusion

The findings of the Queensland Round 20 IFR are summarised below:

• 
  Queensland Health has improved its NHCDC reconciliation processes since Round 19, by implementing implemented the use of the IFR templates for each HHS. The templates demonstrate data reconciliation of cost data to source systems (including the GL and feeder systems) and are now required to be submitted with finalised cost data. This process has now been written into the Queensland Health cost data submission process.
  

The financial reconciliation demonstrates the transformation of cost data from the original GL extract through to the final NHCDC submission for the respective hospitals. Exclusions from the original GL data are only those accounts in the general ledger that are identified as out of scope for the NHCDC. These costs are only excluded at jurisdictional level prior to the submission of the final cost data to IHPA. The principal of the inclusion of the full general ledger for every expense account has been in place in Queensland since the inception of patient centric costing There were variances between the audited statements and final GL amount entered into the respective costing system, due to changes in the GL reporting hierarchy for the HHS level data not being updated when the jurisdictional team ran the annual report at HHS level (note this is a point in time issue and the hierarchy is to be updated)- however the reasons for these variances were considered to be out of scope for NHCDC.

The basis of the adjustments appears reasonable, with the exception of:

The exclusion of Teaching, Training and Research may impact on the completeness of the NHCDC.

It is recommended that Queensland Health investigates the reasons for the unlinked and unmatched records to ensure appropriate treatment in future rounds.

Minor variances were noted in the financial reconciliations for each Queensland HHS. The reasons for these variances have been noted within this chapter.

Total activity data submitted by the Queensland HHSs reviewed was adjusted during then jurisdictional NHCDC data transformation process which runs over 300 data element level audits and validations of data, matches data to the reported activity submission and excludes costs out of scope for the NHCDC as outlined in the Australian Hospital Patient Costing Standards prior to the final submission of the costing data

The HHS’s reviewed have a strong focus on cleansing activity and ensuring episodes link appropriately. The number of records linked from source to product was significant with the majority of feeders having a 100 percent link or match. This suggests that there is robustness in the level of feeder activity reported back to episodes.

WIP was treated in accordance with the COST 5.002 of the AHPCS Version 3.1.

The five sample patients selected for review at Mount Isa Hospital, Rockhampton Hospital and Townsville Hospital reconciled to IHPA records.

The IFR is conducted in accordance with the review methodology detailed in Section 1.3 of this report. Based on this methodology and in accordance with the limitations identified in Section 1.1, Queensland Health has suitable reconciliation processes in place and the financial data is considered fit for NHCDC submission. Furthermore, the data flow from the jurisdiction to IHPA demonstrated no unexplained variances.

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