4.5 Estimated financial implications for the health budget
Page last updated: September 2016
- Estimate the net change in the number of prescriptions processed by the DHS for payment (and, if appropriate, the net change in the number of authorities by the DHS) for six years using the relevant spreadsheet of the Excel workbook (Subsection 4.5.1)
- Estimate the extent of net change in the number of each type of affected MBS items provided for six years, and the net financial implications for the MBS in each year over six years using the relevant spreadsheet of the Excel workbook (Subsection 4.5.2)
- Estimate net financial implications for the Australian Government health budget for six years using the relevant spreadsheet of the Excel workbook (Subsections 4.5.3)
This section extends the financial analyses presented in Subsection 4.4 for a PBAC recommendation that has financial implications for other parts of the Australian Government’s health budget, including the DHS and the MBS. If implications for other components of government health budgets are identified, use the same approach outlined here.
4.5.1 Net prescription processing changes for the DHS
To estimate the numbers of prescriptions processed by the DHS, use the estimates of the dispensed units of the proposed medicine (from Subsection 4.2) and the net changes in the units of other medicines dispensed (from Subsection 4.3). If using a market-share approach, the number of prescriptions estimated in Subsection 4.2 will be entirely offset by that estimated in Subsection 4.3. However, complete this section if there is likely to be growth in the overall market because of listing of the proposed medicine.
Where the proposed medicine or the medicines considered in Subsection 4.3 include medicines with a relevant restriction requiring authorisation by the DHS, estimate the extent of net change in the number of authorisations in each year over six years, taking into account the number of repeats permitted per authorisation. Where applicable, distinguish between authorisations requiring a written application and those requiring a telephone application, and estimate each type separately.
Use the relevant spreadsheet of the standardised Excel workbook to calculate the sets of net financial implications to the DHS.
4.5.2 Net changes to MBS items
Identify affected MBS items
MBS items for which an increase in use might be expected include:
- MBS-funded procedures required to administer the proposed medicine (eg an implant or an infusion)
- MBS-funded consultations to manage adverse reactions to the proposed medicine
- MBS-funded consultations and tests to
- confirm diagnosis of the medical condition
- determine eligibility for the proposed medicine according to the requested restriction (see Subsection 1.4)
- determine whether any continuation criteria in the requested restriction for the proposed medicine have been met (see Subsection 1.4).
MBS items for which a decrease in use might be expected include:
- substituted MBS-funded procedures
- MBS-funded items that would have been used to manage averted clinical events
- MBS-funded consultations to manage adverse reactions to substituted medicines.
Generate the estimates of MBS usage by relating the number of patients estimated in response to Subsection 4.2 to the per-patient usage estimates generated in Section 3.
Perform this analysis for a cost-minimisation approach, if necessary. For example, if any expected increase in the rate of growth in the overall market because of listing the proposed medicine is expected to increase the frequency of accessing MBS services, or if there is a net impact on the costs of administration.
Identify and justify any inconsistency between Sections 3 and 4 in the types of MBS items that would change because of listing the proposed medicine, and the extent of change per patient in the first six years of listing. Show the total change in service volumes by MBS item to allow analysis and costing, if necessary.
Apply the costs of MBS items
The appropriate benefit varies depending on the setting for the particular MBS service (see the MBS for more details).
Calculate the extent of net changes in the cost to the MBS for each item affected, using the schedule fee. Aggregate the MBS items to estimate the net financial implications for the MBS overall.
Use the relevant spreadsheet of the standardised Excel workbook to calculate the two sets of financial implications (100% schedule fee, and 75% or 85% of the schedule fee based on the treatment setting). Indicate the proportion of public versus private hospital use, and inpatient and outpatient services.
4.5.3 Net implications for the health budget
Identify and justify any other financial implications for the Australian Government health budget. Present the calculations and follow a stepwise approach to:
- estimate the numbers, in their natural units, of the disaggregated health care resources provided or freed
- apply the appropriate unit cost(s) to each type of health care resource to estimate the net financial implications for each type
- aggregate the newly identified financial implications in each year over six years.
Combine PBS and RPBS estimates, using the DPMQ or the DPMA, with the MBS estimates, using the schedule fee. Separately combine financial implications with appropriate copayments removed. Incorporate any other identified financial implications for the Australian Government health budget.
Use the relevant spreadsheet of the standardised Excel workbook to calculate the aggregated sets of net financial implications. If the proposed medicine has a special pricing arrangement, show the net financial implications with and without the special pricing arrangement.