Consultation on a joint ACC and Ministry of Health Funding Model for Emergency Ambulance Services Stakeholder Workshops November 2010

Welcome Introductions Housekeeping Format of the meeting Goals for today Follow up

ACC and Ministry purchasing National Ambulance Sector Office Looks after contracts for both ACC and the Ministry for emergency ambulance services (road, air, communications-111) Aligns purchasing where possible Reviews joint service specifications (road, air, communications-111) Facilitates new initiatives Administers the New Zealand Ambulance Services Strategy

The Starting Point: NZ Ambulance Service Strategy Initiative 2: Develop transparent, sustainable funding model(s) that link external drivers to agreed service expectations Objective: a consistent agreed basis for funding Road and Air ambulance providers

The case for change Why do we need a new approach to funding emergency ambulance services? ACC and the Ministry have different approaches to funding emergency ambulance services Providers have consistently identified that having 2 funding models is an issue

Critical issues Different approaches lead to: –higher compliance costs for providers –perverse incentives associated with ACC’s fee- for-service –perverse incentives associated with Ministry contracts for air transports –a lack of ability to plan for the future

Challenges with the current funding model Question 1: Have we identified the critical issues with the current funding models? If not, what are they?

The Emergency Ambulance Service

Goals for a new funding model The goals of the successful funding model are to: –deliver a single funding model for emergency ambulance services that meets the needs of both ACC and the Ministry –provide value for money for the Government, tax payers and levy payers –support decision making consistent with clinical priority and need –allow evolution into the future for the whole sector – the Government and providers (eg, allow for changes in purchasing of ambulance services across the wider health sector) –reduce compliance costs for providers and support longer term capacity building within the sector.

Goals for a new funding model Question 2: Do you support the goals for the new funding model? Do these goals address the critical issues?

Assumptions the model must work within current funding levels (taking into account inflationary pressures and any funding for one-off initiatives) funding for Emergency Ambulance Communications Centres will continue on the current basis the model will have no effect on ownership (ie, the Crown is not seeking to own the service) the model will not include DHB funded inter- hospital transfers at this point in time as the first step is to align the ACC and the Ministry models.

Range of funding models Purely fee-for-service based funding Blended bulk funded/ fee-for-service model Status quo Blended capacity/ fee ‑ for-service model Bulk funding/block contracts Pure capacity-based funding

Proposed high level funding model Blended funding model, combining bulk-funding or capacity funding with a fee-for-service component

Proposed high level funding model Question 3: Does the proposed high level model meet the needs of the Government, ACC, Ministry of Health, emergency ambulance providers, tax payers, levy payers and patients? Why or why not? Question 4: –4(a) Does the proposed high level model address the problems with the current funding model? –4(b) Why or why not? –4(c) What are the benefits and risks, incentives and disincentives from your viewpoint? Question 5: Are there any other funding model options you would have expected us to investigate? Please describe the model and how it will address the issues that have been identified.

Three variations of the blended model VariationFeatures Bulk funding with a tolerance zone and fee-for-service above and below tolerance zone the total funding per contract period for a specified level of service is agreed tolerance zone services above the tolerance zone attract fee-for- service funding cap and funding floor Capacity-funded fixed costs and fee-for- service variable costs Contribution of capacity funding for fixed costs for an agreed service level ACC and Ministry would also pay fee-for-service for each and every service provided, based on variable or marginal cost of providing service Capacity-funded fixed costs and fee-for- service variable costs with a maximum funding cap for fee- for-service contribution to capacity funding for fixed costs for an agreed service level fee-for-service for each and every service provided based on variable or marginal cost of providing a service, up to an agreed service level; above that service level a lower fee-for-service could be paid a maximum cap for fee-for-service could also be specified

Option 1: Bulk funding with a tolerance zone and fee- for-service above and below tolerance zone Funding floor at agreed level Wash up payment Provider returns agreed amount of funding Tolerance zone No extra FFS payment FFS at agreed rate Provider-sourced funding (eg, fundraising, sponsorship, part-charges) Total ambulance funding Funding capped at agreed level Volume Agreed bulk funding level No wash up Agreed bulk funding level

Question 6: What are the benefits and risks of this variation of the blended funding model (Option 1-bulk funding)? What incentives or disincentives are there in this model? Question 7: What would need to be done to make this work in practice for emergency ambulance providers?

Option 2: Capacity-funded fixed costs and fee-for- service variable costs

Question 8: What are the benefits and risks of this variation of the blended funding model (Option 2)? What incentives or disincentives are there in this model? Question 9: What should be classified as fixed costs and variable costs? Have we classified these correctly? What changes would you make? (see handout) Question 10: What would need to be done to make this work in practice for emergency ambulance providers (Option 2)?

Option 3: Capacity-funded fixed costs and fee-for- service variable costs with a maximum funding cap for fee-for-service

Question 11: What are the benefits and risks of this variation of the blended funding model What incentives or disincentives are there in this model? Question 12: What would need to be done to make this work in practice for emergency ambulance providers?

Comparing the three variations on the high level blended funding model Question 13: What should be the service components in a blended funding model (eg transport, call out, attendance, treatment etc)? Question 14: Do you prefer variation 1 or 2 or 3? What is your first choice? Second choice? Third choice? Why? Question 15: If you prefer Option 1(bulk- funding/fee-for-service) then what should be included in the bulk funded component? What service components should be fee-for-service? Question 16: If you prefer Options 2 or 3 (capacity-funded/fee-for-service) then what should be included in the capacity funded component? What service components should be fee-for- service?

Any further questions? Question 17: Any other comments?

Next steps Key themes from Stakeholder meetings will be put onto NASO website ( Consultation period closes 5pm 15 December 2010 Send your submission to Funding model implementation anticipated through road and air ambulance contracts December 2012