Casemix funding was introduced first in Victoria in 1993-94, and since then
most States have moved towards either casemix funding or using casemix to
inform the budget setting process.
The five States implementing casemix have adopted some common funding eleme
nts: all use AN-DRG-3; all have introduced capping, most commonly at the ho
spital level; and all ensure accuracy of diagnosis and procedure coding thr
ough coding audits.
Two funding models have been developed. The fixed and variable model involv
es a fixed grant for hospital overhead costs and a payment for each patient
treated, covering only variable costs. The integrated model provides an in
tegrated payment to hospitals for each patient treated, covering both the f
ixed and variable costs.
There are different weight setting processes and base prices between the St
ates, which result in marked differences in the price paid for the same typ
e of case treated in similar hospitals.
Learning across State boundaries should be encouraged, with knowledge of wh
at is effective and what is ineffective in casemix funding arrangements bei
ng used to develop Australian best practice in this area.