Budget Neutral definition

Budget Neutral. A standard for any risk sharing mechanism that recognizes both higher and lower expected costs among contracted MCOs under a managed care program and does not create a net aggregate gain or loss across all payments under that managed care program.

Split View

AI-Powered Contracts

Draft, Review & Redline at the Speed of AI

Get StartedSchedule a Demo

Budget Neutral means that the cost to a payer is no greater or less under the new payment system than it would have been under the previous payment system. Budget neutrality is generally viewed as being measured over a one-year timeframe—the typical length of a government budget year or health insurance contract. As noted in Section II-E, a short timeframe can cause distortions in incentives,

Examples of Budget Neutral in a sentence

• The Parties agree that the Budget Neutral Adjustment is calculated in 2013-14 to offset the additional cost to the Commonwealth of net additional financial responsibilities taken on as part of the National Health Reform Agreement (i.e. the additional cost to the Commonwealth of Home and Community Care (HACC) for older people, and the cost of specialist disability services for older people, less the costs of responsibilities transferred to South Australia for younger people in aged care).

• The Parties agree that during transition a Budget Neutral Adjustment is made each year to offset the additional cost to the Commonwealth of net additional financial responsibilities taken on as part of the National Health Reform Agreement (i.e. the additional cost to the Commonwealth of Home and Community Care for older people, and the cost of specialist disability services for older people, less the costs of responsibilities transferred to South Australia for younger people in aged care).

• The Parties agree that for 2018-19 and 2019-20, WA will provide the Budget Neutral Adjustment to the WA NDIS authority from the Commonwealth as an additional on‑payment of the National Disability Specific Purpose Payment (NDSPP) as outlined in Schedule C: Financial Contributions for Transition in Western Australia.

• The estimated repayment of Intergovernmental payments is outlined at Table 6: Table 6: Estimated On-repayment of Commonwealth Intergovernmental payments for participants Repayment of Commonwealth Intergovernmental payments 71.4 103.8 180.4 Budget Neutral Adjustment, via NDSPP1 0.0 50.5 0.0 1Additional repayment of the NDSPP as outlined in Schedule C: Arrangements in Western Australia for Cross‑Billing and Budget Neutrality.

• Where the Budget Neutral Adjustment cannot be fully repaid from the NDSPP, WA will reduce the Commonwealth’s WA NDIS invoices.

• The Budget Neutral Adjustment over the period 2018-19 to 2019-20, which reflects a net contribution to the Commonwealth, is outlined in Table 6.

• The Budget Neutral Adjustment will be escalated at 3.5 per cent per annum.

• The Parties agree that the Budget Neutral Adjustment will be reviewed for all components by 30 June 2018 in accordance with the Bilateral Agreement between the Commonwealth and WA on Transitioning Responsibilities for Aged Care and Disability Services in WA.

• The Parties agree that the change in roles and responsibilities will be made cost neutral as at 1 July 2018 through a Budget Neutral Adjustment payment.

• Table 6: Budget Neutral Adjustment to the Commonwealth: 2018-19 ($m) 2019-20 ($m) Younger People in Residential Aged Care1 -23.9 Younger People in Home Care1 -5.9 Older People in Specialist Disability Services 27.3 HACC for Older people1 53.0 Budget Neutral Adjustment 50.5 52.2 1 For the purpose of calculating the BNA, the additional cost of HACC and the cost of Younger People in Aged Care are calculated at the assumed end point of 2017-18, following one full year of WA NDIS transition.