Calculating the Commonwealth Contribution
Commonwealth funding for Activity Based, Block and Public Health funding categories is calculated using the Commonwealth Contribution Model, a transparent, robust and independently reviewed methodology.
The Commonwealth Contribution Model (CCM) calculations form the basis of the Administrator’s payment advice to the Commonwealth Treasurer. This advice is also provided to State and Territory Health Ministers and State and Territory Health Departments.
There are two broad types of funding: (ABF) and Block funding (see Figure 4). Under the NHR Agreement, the scope of public hospital services that are funded on an ABF or Block funding basis and are eligible for a Commonwealth funding contribution currently includes:
- All emergency department services provided by a recognised emergency department.
- All admitted and non-admitted services.
- Other outpatient, mental health, sub-acute services and other services that could reasonably be considered a public hospital service.
Commonwealth funding for ABF, Block and Public Health is calculated using the CCM which is accurate, correct and independently reviewed each year.
Public hospitals also receive funding from other sources, including the Commonwealth, States and Territories, and third parties for the provision of other specific functions and services outside the scope of the NHR Agreement (e.g. pharmaceuticals, primary care, home and community care, dental services, residential aged care and disability services).
The Administrator provides payment advice to the Commonwealth Treasurer for the following purposes:
- As input to the Commonwealth Budget, based on initial estimates of activity from States and Territories.
- Establishing Commonwealth contributions for the future financial year, based on confirmed estimates of activity from States and Territories.
- Updating Commonwealth contributions for the current financial year, based on revised activity estimates from States and Territories.
- As input to the Mid-Year Economic and Fiscal Outlook (MYEFO).
- Updating Commonwealth contributions following the 2018-19 Six-month Reconciliation and Annual Reconciliation.
A summary of the Administrator's November 2020 payment advice provided to the Commonwealth Treasurer is outlined below.
Table 1 - Commonwealth NHR funding payable in 2020-21^