HSAAP on time and on budget after slow start - HNZ

NEWS - eHealthNews.nz editor Rebecca McBeth

The Health Sector Agreements and Payments Programme (HSAAP) build is almost complete and $4 billion in payments are due to be running through the system by July 2025, programme leaders say.

The Treasury’s most recent quarterly investment report says a HSAAP gateway review found “major issues which at this stage do not appear to be manageable or resolvable” and 2024 Budget documents say funding for tranche three has been ‘reprioritised’.

However senior responsible officer Mark Woodard and HSAAP programme director Leanne Tomlinson say HSAAP is a 10-year programme which is on time and on budget and there has been no reduction in funding. 

Most of the build is complete and the system is live. 

“We are currently running $435 million in in annual payments through the system and processing 400,000 claims, which already makes it one of the larger payment systems in the country, so we are pleased with having made that degree of progress so far,” Woodard tells eHealthNews.

The systems involved are responsible for over 120 million transactions and $12 billion funding annually and the last attempt to make significant upgrades was in 2006.

The 2021 Budget promised up to $116 million over the following four years to transform HSAAP and an ROI released that year said the programme would be delivered across three tranches, with final delivery in 2024.

The gateway review says that HSAAP is still very much needed and is still the most viable option to deliver, but “the programme may need re-baselining and/or its overall viability re-assessed”.

Tomlinson says the programme is not delayed, as the detailed business case was always clear that HSAAP was a 10-year programme, with enduring funding beyond that. 

However, she concedes confusion has been caused by tender documents referencing an end date of 2024, which was inconsistent with the business case.

Tomlinson says the reported end date of 2024 is why the gateway review gave the programme a red risk rating, saying it would not be achievable.

“We are into year three of our 10 year programme. We expect to complete the programme on time and on budget within that 10 year period, and we are busy trying to assess whether we can go faster than that,” she says.

The Treasury report says $85 million has been spent on the programme to date, and Budget documents show a reprioritisation of funding for tranche three, totalling around $50 million over the next four years.

Woodard says there has been no reduction in funding and Budget documents reflect a ‘flat phase’ in terms of funding now that the build is almost complete.

“The Budget was not taking money away from the programme, it was reflecting the previously agreed funding profile, which was a lot in the first three years and less in the next seven,” he explains.

He says the programme started during the Covid-19 response at the Ministry of Health, which was a difficult time for the Ministry and for the sector as a whole. 

There has also been major sector change and transformation, as well as significant internal reorganisation within Health New Zealand during those early years of the programme, which slowed it down.

“We did not get off to as quick a start as we hoped, but we absolutely expect to end on time and on budget based on our current profile,” Woodard says.

A third of the dollar volume of all transactions is expected to be running through the system by July 2025, totalling around $4 billion.

The three core systems that make up HSAAP are a rules engine, finance system and contract management system, along with a range of smaller systems.

Tender documents released in 2021 describe HSAAP at the time as a “complex and aged ecosystem that presents ongoing operational risk and increasing system outages” which could potentially lead to a complete system failure.

Woodard says Health NZ has been taking active steps to “shore up” the legacy systems in the meantime.

The new systems will enable “more creative, modern and flexible approaches to  the commissioning models”, he says.

Tomlinson says the new system has reduced time to pay providers, reduced the time taken to resolve errors due to clearer payment documentation and allowed the introduction of schedule based payment  so regular providers do not have to submit monthly invoices. 

“A key driver is reducing administrative burden on providers and internal teams,” she says.

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