Final Report on RREF 2001 - Department of Health

Unit cost structure
The unit cost structure for HACC services was seen as providing insufficient funding for
providers to maintain levels and standards of service provision in the face of rising costs and
continually growing demand. Inconsistencies between HACC unit prices and pricing under
other related programs were also noted.
It was understood that the absolute level of funding for HACC and issues of unit pricing were
beyond the scope of the Review but were being addressed within the overall funding strategy of
the Aged, Community and Mental Health Division of DHS.
Consistency in fees policy
While the issue of capacity to raise fees has been substantially addressed by inclusion of a
socio-economic indicator in the revised RREF, the question of consistency in fees policies
remains. Although a standard fees policy has been applied in the administration of HACC in
Victoria since 1998, it was considered that there was considerable variation in practices of
individual providers and that this variation affected both equity of access for users and revenue
raised by providers.
Relationshiop of Growth Funds to HACC Base funds
While the Review focused on the RREF as a mechanism for allocating HACC growth funds
between regions, the RREF brings about changes in the shares of HACC base funds that regions
receive through two means:
1. Each year’s growth funds are incorporated into the recurrent base funding that agencies
in each region receive in the next year; and
2. By defining the level of per capita funding that represents equity across regions, the
RREF identifies the extent to which each region’s base funding varies for equity and the
extent of possible adjustment needed to bring all regions to within 5% of equity..
The need for adjustment to bring base funding into line with equity as defined by the RREF is
recognised in the provision made in the current RREF for reserving a proportion of growth
funds for reallocation to regions that all more than 5% below the level of equitable funding they
should receive. In effect, growth funds are divided into a “normal growth” component and an
“equity adjustment” component. These two components were identified in the Consultation
Paper (p. 8):
1. The RREF is used to measure the share of resources currently allocated to the nine DHS
regions against an “equity” distribution in which any region would receive the same
number of dollars per person in the Target Population. Where any region is more than
5% below “equity” some of the annual growth funds are set aside for a special
allocation to these under funded regions to bring them closer to the statewide level of
equity funding (ie. the equity adjustment component as above).
2. The remaining growth funds (ie the normal growth component as above) are then
allocated to all regions in accord with each region’s proportion of the State’s total
Target Population. The size of each regional HACC Target Population is built up from
estimates of the HACC Target population in each LGA.
Part D: Achieving Equity in the HACC Program
<strong>Final</strong> <strong>Report</strong> July 2001 85