The Independent Health and Aged Care Pricing Authority (IHACPA) has today released the National Efficient Price (NEP) and National Efficient Cost (NEC) Determinations 2026-27.
The NEP and NEC will guide Australian Government funding for public hospitals, supporting the delivery of high-quality, safe and sustainable public hospital services.
The NEP sets the price for in-scope public hospital services funded on an activity basis. For 2026-27, the NEP is set at $7,418 per national weighted activity unit.
The NEC determines payments for services that are block funded. For 2026-27, the NEC includes a fixed cost of $3.127m and variable cost of $8,003. A total of 364 small rural hospitals will receive a combination of fixed and variable funding, reflecting their location, size and range of services. Hospitals in very remote locations will receive an additional 18.1% loading.
IHACPA Chair, Mr David Tune AO PSM said the determinations underscore IHACPA's strong commitment to evidence‑based pricing that supports fair and sustainable access to public hospital care.
IHACPA's determinations are underpinned by extensive research and continuous improvement, close consultation with a wide range of stakeholders and detailed analysis of cost patterns over time. This ensures pricing keeps pace with the true cost of delivering high quality care.
Mr David Tune AO PSM
'Continued price growth reflects the cost increases experienced by public hospitals in recent years,' Mr Tune added.
Key updates in the 2026-27 NEP and NEC
Clinically relevant classification updates
Admitted acute care is priced using the Australian Refined Diagnosis Related Groups Version 12.0. This includes new groupings for maternal care, organ donation after death and new principles for consistent grouping of intervention-based episodes of care.
Non-admitted services are priced using the Tier 2 Non-Admitted Services Classification Version 10.0, introducing new classes for hospital-based, non-admitted voluntary assisted dying services.
Removal of temporary Coronavirus disease 2019 (COVID-19) measures
Temporary pricing measures introduced in response to COVID-19 have been removed, as current data already reflects the pandemic's impact.
COVID-19 will continue to be considered a risk factor in the safety and quality pricing adjustments, where statistically relevant.
Improved methodology for linking Pharmaceutical Benefits Scheme (PBS) payments to hospital activity
Under the National Health Reform Agreement, IHACPA excludes payments from other government schemes to prevent duplicate funding.
For NEP, IHAPCA has implemented an improved methodology to more accurately remove PBS benefits from its data collections, improving alignment between prices and reported cost data.
Continuation of community mental health block funding arrangements
Transitional block funding eligibility criteria for community mental health services, introduced last year, will continue in 2026-27.
Community mental health care was the first patient category to transition from block to activity-based funding, ensuring funding better reflects the volume, type and complexity of care delivered. Continuation of these criteria will support stability in the second year of the transition.
The NEP and NEC Determinations 2026-27 and supporting materials are available on IHACPA's website.
