Budget 2003 Further moves to lower cost of primary health care

Health Minister Annette King and Progressive Coalition Leader Jim Anderton today announced a $19.8 million funding initiative that will allow all Primary Health Organisations (PHOs) to charge low fees for patients under 18 years from October 1.

The money, to be formally announced in Budget 2003, is part of $165 million of new money to continue implementing the Primary Health Care Strategy in 2003-04, an increase of $115 million from 2002-03.

Ms King said she had also secured Cabinet agreement to focus on the next stage of implementation, which will provide low cost health care for people aged over 65. “My aim is to begin roll-out in 2005-06,” she said.

“As part of the $19.8 million, we will also allocate $11.2 million this year to all PHOs through the new Care Plus initiative. Care Plus is being piloted this year and is expected to be rolled out from January 1 2004. It will cater for many older people with very poor health as well as those under 65 requiring high levels of care.”

In March last year Ms King announced that the Government was committing $410 million over three years to begin implementing the strategy, with $50 million allocated for 2002/03, $165 million for 2003-04 and $195 for 2004/05. Most of this money is being spent on delivering primary health care through PHOs.

“The Government had originally hoped to have reduced primary health care costs for 300,000 New Zealanders by the end of 2002-03. We have done far better than that,” Ms King and Mr Anderton said.

“More than 700,000 New Zealanders are already enrolled in ‘Access' primary health organisations (PHOs) that give them low patient fees. Now we want to extend low fees to school age children within ‘Interim' PHOs, and to provide low fees and better planned care for people with chronic illness or a history of being a high user of primary health care services.

“The Government now hopes that 1.6 million New Zealanders, 40 percent of the population, will be receiving low cost primary health care by the end of 2003-04.” Ms King said Interim PHOs would receive $8.6 million out of the $19.8 million to allow them to charge low patient fees for young people aged between six and 17 years from October 1. This will mean almost 58,000 more young New Zealanders will receive low cost primary health care.

“Also from October 1, prescription fees will be reduced to a maximum of $3 for all children aged between six and 17 enrolled in interim PHOs, and for patients of all ages enrolled in Access PHOs.”

Ms King said targeting two more high-need groups, young people and Care Plus patients, and establishing more Access PHOs would be a significant step towards “achieving the objective of low-cost access to primary health care for all New Zealanders.

“I expect the increased funding will result in PHOs being established soon all over the country.”

Ms King said that in addition to the $165 million, an extra $8 million would be allocated from July 1 from the overall Health Funding Package in 2003-04 to provide PHOs with their first regular funding adjustment.

“This demonstrates the Government’s commitment to GPs to ensure that once patient fees are lowered, they can remain low.”

Questions and Answers

What is primary health care? Primary health care covers a broad range of out-of-hospital services, although not all of them are Government funded. It aims to improve the health of people in communities by working with them through health improvement and preventative services, such as health education and counselling, disease prevention and screening.

Primary health care includes first level services such as general practice services, mobile nursing services and community health services targeted especially for certain conditions, for example maternity, family planning and sexual health services, mental health services and dentistry, or those using particular therapies such as physiotherapy, chiropractic and osteopathy services.

Chronic diseases, such as diabetes, are best managed by primary health care services so that complications can be prevented or mitigated. Not all of these services are yet included in most PHOs.

What is the Primary Health Care Strategy? The Primary Health Care Strategy was launched in February 2001 by Health Minister Annette King. It builds on the population health focus and the objectives of the New Zealand Health Strategy and the New Zealand Disability Strategy and outlines how a different approach to primary health care will improve the health of all New Zealanders through: a greater emphasis on population health, health promotion and preventative care community involvement involving a range of professionals and encouraging multidisciplinary approaches to decision-making improving accessibility, affordability and appropriateness of services improving co-ordination and continuity of care providing and funding services according to the population's needs as opposed to fee for services when people are unwell.

What is a Primary Health Organisation (PHO)? PHOs are the local provider organisations through which District Health Boards (DHBs) will implement the Primary Health Care Strategy. The essential features of PHOs are set out in the Minimum Requirements released by the Health Minister in November 2001: PHOs will aim to improve and maintain the health of their populations and restore people's health when they are unwell. They will provide at least a minimum set of essential population-based and personal first-line general practice services PHOs will be required to work with those groups in their populations (for example, Maori, Pacific and lower income groups) that have poor health or are missing out on services to address their needs PHOs must demonstrate that they are working with other providers within their regions to ensure that services are co-ordinated around the needs of their enrolled populations PHOs will receive most of their funding through a population needs-based formula (capitation) PHOs will enrol people through primary providers using consistent standards and rules PHOs must demonstrate that their communities, iwi and consumers are involved in their governing processes and that the PHO is responsive to its community PHOs must demonstrate how all their providers and practitioners can influence the organisation's decision-making PHOs are to be not-for-profit bodies with full and open accountability for the use of public funds and the quality and effectiveness of services.

Where has the new funding been directed? The Government's priorities for the new primary health care funding (in order of priority) are: High needs populations: Extra funding will be made available to PHOs covering very deprived populations in order for them to have low fees for all their patients, provide services to ensure care gets to where it is most needed, include services to improve and maintain health as well as restore health, and to move to fairer funding allocations on a population needs basis. Adjust subsidy for children under 6: The General Medical Services subsidy for children under six years was adjusted in July for inflation since 1997. Progressively lower cost of access to primary health care: As more funding becomes available from 2003/04, it will start to be applied to extend free or low cost access to primary health care services through PHOs. The priorities will be reducing costs for school-age children, the elderly and others with high health needs. Sustainable rural services: Measures have been introduced to help implement the Primary Health Care Strategy in rural areas and to retain and recruit the rural health care workforce. PHOs across the country: Primary Health Organisations are being encouraged to set up across the country; they will be funded according to their enrolled population to provide a range of population based services to improve and maintain health as well as treatment services; and to address health inequalities. Improvements to CSC and HUHC: A range of measures will be introduced to improve take-up of Community Services Cards until such time as increased funding means cards are no longer needed. Improvements to the High User Health Card will also be implemented.

How are PHOs being established? A small amount ($3m-$4m) has been made available to help get PHOs established.

What will happen to the Community Services Card? The Community Services Card will be phased out over the next 8-10 years. As it will still be needed by many people over the medium term, improvements will be made to make it more effective. Improvements will include measures to: Increase the numbers of people who get the card automatically rather than having to apply Simplifying the process for low-income people to gain a card Making it easier for providers to determine whether an individual has a card. Even people enrolled with the new PHOs still need their CSCs at this time so that they can get low cost prescriptions or care from doctors who are not part of the PHO.

How are PHOs different from Independent Practitioner Associations (IPAs)? Most IPAs are now actively engaged in PHO establishment, using a range of approaches. These include: transforming from an IPA into a PHO; an IPA's members re-grouping to form a number of PHOs; and an IPA helping members to establish one or more PHOs, then providing management services to them.

When did the first PHOs begin operating? TaPasefika Health Trust and Te Kupenga O Hoturoa, in the Counties Manukau District Health Board (DHB) region, were established in July 2002.

What are the formulae that have been developed to fund PHOs? There are two: Access and Interim.

How does the Access formula work? It allows all those enrolled with an Access PHO to be charged low patient fees, or access free care regardless of whether people have CSCs. In the first instance, the Access formula will be available only for PHOs (or practices/clinics within PHOs) serving populations with high concentrations of NZ Deprivation Decile 9/10 and people with high health needs.

What about the Interim formula? Until there is enough funding for all PHOs to be on the Access formula, an Interim formula will apply to other PHOs/practices. The Interim formula will continue to use CSC status both for determining funding and setting patient fees. It includes additional funding for a range of new functions such as health promotion and extra services to improve access for high-need groups.

What are the key factors of the two formulae? Both the Access and Interim Formulae recognise ethnicity and deprivation, alongside age and sex, as key determinants of population need, and both provide increased funding for HUHC-holders. Weightings for ethnicity and deprivation will target extra funding to improve access for high need populations through services such as clinics on marae or employing community health workers. PHOs will need to satisfy their DHB on how the extra access funding will be used. What alternative funding approaches have been proposed and why? Following concerns expressed by some GP groups, two or three PHOs will trial a scheme called 'Care Plus' that will give improved care, at low cost for individuals, with known with high health needs funding.

The key criterion is likely to be that the person is expected to need at least two hours of clinical primary care contact time in the coming six months. This need for care might be indicated in a number of different ways including that the person is: Suffering from two or more chronic illnesses Has a track record of heavy utilisation of primary care (six visits in the past six months to primary care or an Emergency Department) Has a track record of acute hospital admissions (two non-surgical acute admissions in the past year) Has a terminal illness.

About five percent of the population is thought to come into this category.

All such patients will have a care plan developed for them, including quarterly reviews to check on health status, treatment, medications and so on. The care will be able to be delivered flexibly, using GPs and other members of the PHO team. Capitated higher funding will facilitate that.

How much will it cost New Zealanders to visit PHOs? All people enrolled with 'Access' PHOs will have low patient fees. Although charges will vary, many Access PHOs may be able to offer free care for children, and most adults may pay in the order of $10-$20.

For PHOs on the Interim Funding formula charges will start to be reduced during the 2003-2004 financial year. Priority groups will be all school-age children and Care Plus patients, many of whom are likely to be elderly. Once Care Plus arrangements are able to be widely implemented, costs will be reduced for these individuals whose known health conditions mean they have high needs for care.

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