"Mental health services are the most complex set of health services, covering birth to death, prevention, early detection, treatment and co-morbidities with the largest array of clinical and human services care partners. The scale of mental illness is huge, mostly arising in adolescence or youth, accounting for a third of the burden of illness, with about 40% of all disability (physical and mental) being due to mental illness. About one third of those presenting to General Practitioners have mental health problems. The cost to the Australian economy is about $20 billion each year.

Mental health service provision crosses numerous Commonwealth, state and territory agencies and service providers. The range of service provision locations and the number of agency providers involved in mental health care limits the ability to provide a continuity of care that is integrated and person-centred.

Recognising the recent establishment of the National Mental Health Advisory Council, there is still no single agency, organisation or level of government with the remit and responsibility for the setting of strategic mental health policy or for oversight, monitoring and operationalisation of mental health care. Funding methodologies and funding amounts vary between jurisdictions and have traditionally not been based on population need. This, and the range of agencies and providers involved in the provision of mental health care, has led to inequities in access, service provision, quality and health outcomes.

In the window of opportunity presented by the new Labor Government to structurally reform health services, for mental health the following questions need to be answered:

• What changes in current funding and payment methodologies are required to create an environment in which the problems confronting mental health can be addressed?
• Can the problems that confront mental health be fixed while responsibility is split between two levels of government and, at the national level, between various Commonwealth departments?
• If not, which level of government should be responsible for mental health services?
• If split responsibilities continue, which level of government should be responsible for the supply, remuneration and equitable distribution of mental health clinicians?
• If split responsibilities continue, which level of government should be responsible for the equitable distribution of mental health funding and the broader human services that have an essential role in recovery from mental illness?

This policy paper provides a suggested funding model for mental health care provision that seeks not only to reduce the current burden of disease but also to intervene early and prevent disease and disability from occurring. Best-practice care provision should occur across a continuum and be provided by clinicians in an integrated and coordinated fashion - a challenge for the current system with its multiple providers, funding and governance structures.

The allocation of sufficient funds to provide accessible and highquality mental health services is also a major problem addressed by many investigations and reports, and in spite of recent increases in funding by Commonwealth and State governments, the level of recurrent and capital expenditure is well below the investment needed. This issue will not be taken up in detail in this paper, though it will touch on ways where better use could be made of the funds currently available. It is taken as a given that considerably more investment needs to be made in mental health, particularly in regard to infrastructure, workforce and organisational governance.

The paper presents the case for change and reform in the mental health system. The case for reform is based on a number of challenges that are inherent within current system, funding and governance structures. While detailed further in Section 2, the issues include:

• that mental health care provision requires a unique approach due to the burden, complexity and scope of mental health services
• that current funding methodologies (particularly ‘fee-forservice' arrangements) do not drive collaboration, continuity, integration and quality of service provision across the range of mental health service providers.

The final section of the paper details a blueprint for reform. We propose that the Commonwealth Government, in conjunction with the states and territories, strengthen the governance of mental health services and implement a reformed funding system withregional commissioning of mental health and other linked services. Based on Australian and international evidence, this is the only mechanism for implementing a vision of strong governance that requires the development of and adherence to clear functional roles for key participants in the health system.

We envisage quite a different structure for our mental health system from that which currently exists - though our recommended model has been tested in various forms throughout Australia. The proposals outlined in this paper are necessarily schematic at this stage and will require further development following a decision to explore the model further. This is particularly so in regard tomworkforce supply and distribution.

Reform in mental health service delivery requires appropriate commissioning, contracting, development and management of consumer-centred models of care which span the care continuum. We propose the establishment of a new model of working, where mental health and related services are commissioned with contracts managed by Regional Mental Health Funding Authorities. These authorities are not intended to be duplicative of current structures or unwieldy resource intensive bureaucracies. RMHFA structures may vary dependant on size and geographical location of the region. They could be achieved through auspice arrangements with current government or health authorities or be constructed as stand alone authorities. They require adequate size and skilled resource to plan, commission, monitor and oversight mental health service provision within their allocated region. Outcomes based service contracts with the range of local and state specialist mental health, education, employment, NGO and private providers would be implemented and closely monitored to achieve regional collaborative and coordinated care. A range of service contract and blended funding models would be utilised to fund the RMHFA, service providers and drive cross agency service provision.

Overseeing these authorities would be the states and territories, withbenchmarking and whole of system monitoring and accountability through an Australian Mental Health Board (or Commission) and the Commonwealth Government Department of Health and Ageing(DoHA). The Australian Mental Health Board would set the national standards for mental health care, develop the funding methodologies and commissioning principles, develop and oversight macro performance management and benchmarking frameworks. Currently, no one agency has responsibility to set the direction or monitor the state of mental health services in Australia. This is an essential first element to achieving better outcomes for mental health consumers. The Board/Commission could be achieved through an enhancement of the role of the National Mental Health Advisory Council. At a minimum, it should have the remit and authority to achieve the above roles.

The second recommendation is for a revised funding approach for mental health. It is clear that there needs to be a common national standard of mental health care. In order to better provide for the Australian population with mental health care needs, consideration should be given to introducing an integrated funding approach for mental health. This does not mean the separation of mental health from the rest of the health system. Rather, it recognises that effective mental health care requires a whole of government approach that includes other human services such as housing and employment. The limitations of existing historical models along with the cross agency, jurisdiction, provider and care setting nature of mental health care requires a different approach. However the model could be expanded to other health sectors following implementation in the mental health sector.

This reformed funding approach must be founded on a robust needs-based resource allocation methodology that covers the continuum of care, and includes both the public and private sectors with aligned incentives. A blended funding model would be used to distribute funds from the RMHFA to service providers which includes the use of capitation, fee for service, case mix and outcomes based incentives. Such models have been implemented and trialed by the national Mental Health Integration Projects and currently used by the New Zealand District Health Boards and Primary Health Organisations. In such models, fee-for-service and output based funding models continue for those able to negotiate the system or requiring short term episodic care. Other funding models are used for those requiring coordinated, collaborative, cross agency packages of care (e.g. housing, employment, mental health, primary care).

As a first step, funding for mental health should be partitioned within the Australian Health Care Agreements to allow the directing and monitoring of resources to this national health priority area.

The recommendations are not a radical change from current systems in that they do not dispel the need for fee-for-service or episode funding. Rather, they allow for the pooling of funds and provide robust governance structures to allow the effective and efficient use of these resources.

The proposed model aims not be isolationist; rather the scope of the resource distribution and governance model is highly relevant to and may include drug and alcohol, all long-term, persistent and recurrent medical conditions, and other appropriate clinical services within the population needs based funding system as required. A particular model of care is not recommended as regional funders and providers would have the responsibility for the commissioning and delivery of services and models based on local needs."

(from "Mental Heath Funding Methodologies" Roundtable Discussion Paper, Sept '08)