Issue number:
Date Issued:
17 Nov 2017
Issued to:
Public hospitals, public health services, denominational hospitals and multipurpose services defined by the Health Services Act 1998. References to public hospitals in this circular apply to all these providers.
To advise clinicians and administrators in Victorian public hospitals and health services on the protocols for the provision of health services to eligible residents of other Australian jurisdictions.


In accordance with Clause A91 of the National Health Reform Agreement, cross-border agreements are developed between jurisdictions that experience significant cross-border flows. The department has established agreements with all other states and territories (jurisdictions), based on a standard agreement. These agreements form the basis of the flow of funds between Victoria and other jurisdictions for residents treated from those respective states and territories. Annual reconciliations of cross-border flows occur to determine the liability of each jurisdiction.

Jurisdictional arrangements

All patients are to be treated in accordance with the Medicare Principles (see National Health Reform Agreement section) and public hospitals are responsible for ensuring appropriate referral pathways are in place.

Public hospitals are not permitted to engage or seek direct financial accommodation from another jurisdiction’s health department or health service in relation to health services provided (or planned), particularly where these are funded by the department and/or likely to impact on service delivery and capacity  of the public hospital. It is the department’s responsibility to seek financial accommodation from another jurisdiction’s health department.

Public hospitals are required to ensure that clinical protocol takes precedence ahead of any financial accommodation that may or may not arise and that clinical treatment should not be delayed for any reason. Public hospitals are also required to prospectively advise the department of any patients it intends to seek additional financial accommodation for.

Public hospitals considering alternative arrangements should obtain the department’s approval for pre-planned interstate referrals as it is the treating jurisdiction’s responsibility to recover these costs. This must be a separate process to the clinical decision making and must not delay any clinical treatment and/or assessments.

Funding arrangements

Eligible public and private patients who reside in another state or territory and are treated in a Victorian public hospital are funded as part of the public hospital’s annual budget as outlined in the department’s Policy and Funding Guidelines. This includes all admitted acute (WIES funded), admitted subacute (Subacute WIES), admitted mental health (available bed day funded),emergency department (non-admitted emergency services grant), urgent care centre,  non-admitted (e.g. specialist clinics, genetics etc), non-admitted subacute (health independence program), non-admitted mental health (community service hours), and services provided by small rural health services. Public hospitals will not have their funding adjusted for annual variations in this cohort. 

However, a public hospital may seek an exception from the department for those services classified as high cost procedures (may be any type of service that meets the eligibility criteria and not limited to an admitted acute service) and provided to patients who reside in another state or territory. Subject to meeting the definition of a high cost procedure (see high cost procedure section) and complying with the agreed criteria and process, public hospitals may be paid a supplementary payment by the department through the prior year adjustment process to meet the difference between the department’s funding allocation and the actual cost of the procedure paid by the resident’s jurisdiction. No additional funding will be allocated during the financial year.

Public hospitals may not seek an exemption for Nationally Funded Centre (NFC) procedures as the funding for these procedures are already shared by jurisdictions and set annually by the Australian Health Ministers’ Advisory Council. 

Patient transport (on admission and discharge) and out-of-hospital accommodation expenditure patients and their family/carers is the responsibility of the referring hospital/jurisdiction unless other agreed arrangements are in place.


High cost procedures (non NFC procedures)

A high cost procedure is a procedure that is not reasonably funded by the existing classification system and cost weights and is agreed to at a jurisdictional level prospectively on a case by case basis. For the avoidance of doubt, this definition excludes experimental procedures.

Admitted acute high cost procedures (e.g. those funded by WIES) are defined by procedures that are:

  • provided at limited sites nationally,
  • have low volume ( < 200 separations nationally)
  • and cost significantly more ( > $20,000) than the funding provided based on the relevant year’s National Efficient Price Determination (see

High cost procedures may include other services such as admitted subacute (Subacute WIES), admitted mental health (available bed day funded),emergency department (non-admitted emergency services grant), urgent care centre,  non-admitted (e.g. specialist clinics, genetics etc.), non-admitted subacute (health independence program), non-admitted mental health (community service hours), and services provided by small rural health services as long as they meet the definition.

Examples of procedures currently classified as high cost procedures include peritonectomy with heated intra-peritoneal chemotherapy, and extended pelvic exenteration. The high cost procedures list changes as a result of annual cost weights changes and the adoption of new technologies. This will result in certain procedures now either meeting the definition of a high cost procedure or existing procedures no longer being considered a high cost procedure. 

Public hospitals may seek additional financial accommodation based on the following principles:

  • The patient must be referred for treatment by a public tertiary referral hospital in the resident jurisdiction. 
  • A high cost procedure referral cannot be made retrospectively.
  • The provider jurisdiction should provide a nationally agreed breakdown of the cost of the high cost procedure, preferably before the procedure is provided or as soon as practicable thereafter. This cost  estimate  should  be  based  on a rigorous  assessment of actual activity costs (such as the NFC cost assessment process), but exclude accommodation and transport costs.

All high cost procedures are to be negotiated, invoiced and paid by the jurisdictional health departments and not between public hospitals for transparency and ease of administration, unless otherwise agreed bilaterally by jurisdictions.

In providing services that qualify as a high cost procedure, eligible residents from other jurisdictions accessing treatment as a public patient in a public hospital are to be treated in the same manner as persons who normally reside in Victoria. Exceptions to this will apply for Victorian funded state-wide services such as the magnetic resonance guided focused ultrasound, or services otherwise exempt such as out of catchment referrals to the Royal Women’s Hospital for maternity services.

Nationally Funded Centres

The Nationally Funded Centres program provides all Australians with equitable access to certain high-cost, low-demand, new and emerging medical technologies and procedures. Nationally Funded Centres are approved by the Australian Health Ministers’ Advisory Council and are separate to high cost procedures and are not part of health service throughput.

The five NFC procedures currently operating in Victoria are:

  • Paediatric Heart Transplantation 
  • Paediatric Liver Transplantation
  • Paediatric Lung and Heart-Lung Transplantation
  • Adult Pancreas/Kidney Transplantation
  • Islet Cell Transplantation

National Health Reform Agreement

The National Health Reform Agreement requires jurisdictions to comply with the established Medicare principles. Clause 4 of the Agreement specifically requires that jurisdictions will provide health and emergency services through the public hospital system, based on the following Medicare principles:

  • eligible persons are to be given the choice to receive, free of charge as public patients, health and emergency services of a kind or kinds that are currently, or were historically provided by hospitals1;
  • access to such services by public patients free of charge is to be on the basis of clinical need and within a clinically appropriate period; and
  • arrangements are to be in place to ensure equitable access to such services for all eligible persons, regardless of their geographic location.

Clause A88  of the Agreement prescribes that the treatment of cross-border hospital activities will be governed by the following principles:

  • the State where a patient would normally reside should meet the cost of services (exclusive of the Commonwealth contribution discussed below) where its resident receives hospital treatment in another jurisdiction;
  • payment flows (both Commonwealth and State) associated with cross-border services should be administratively simple, and where possible consistent with the broader arrangements of this Agreement 
  • the cross-border payment arrangements should not result in any adverse GST distribution effects;
  • States recognise their commitment under the Medicare principles which require medical treatment to be prioritised on the basis of clinical need;
  • both States should have the opportunity to engage in the setting of cross-border activity estimates and variations, in the context that this would not involve shifting of risk; and
  • there should be transparency of cross-border flows.

For further information, please contact:

  • Ryan Health, Assistant Director, Metropolitan Health Service Performance on (03) 9096 1309 or via


Dan Jefferson
Acting Executive Director
Health Service Policy and Commissioning

1This Agreement recognises that clinical practice and technology changes over time and that this will impact on modes of service and methods of delivery.