Signature
NWAU_i = PW_g * A_paed * (1 + A_res + A_ind + A_rt + A_dia) * (1 + A_treat) + A_icu * h_i; P_i = NWAU_i * NEP
| Inputs | Definition | Unit |
|---|---|---|
PW_g | Price weight of the AR-DRG to which the episode is grouped, from the determination's admitted acute tables; the inlier weight for a stay within the group's bounds | NWAU |
A_paed | Paediatric adjustment for an eligible patient treated in a specialised children's hospital, entered as a multiplier; 1 when it does not apply | ratio |
A_res | Residential remoteness area adjustment, entered as a proportion added to 1; 0 when it does not apply | proportion |
A_ind | Indigenous adjustment, entered as a proportion added to 1; 0 when it does not apply | proportion |
A_rt | Radiotherapy adjustment, entered as a proportion added to 1; 0 when it does not apply | proportion |
A_dia | Dialysis adjustment, entered as a proportion added to 1; 0 when it does not apply | proportion |
A_treat | Treatment remoteness area adjustment, entered as a proportion added to 1; 0 when it does not apply | proportion |
A_icu | Intensive care unit adjustment per hour for an eligible patient in an AR-DRG not marked as bundled ICU; 0.0446 NWAU per hour in 2026-27 | NWAU per hour |
h_i | Hours spent by the patient in a specified intensive care unit during episode i | hours |
NEP | National efficient price for the pricing year, AUD 7,418 per NWAU in 2026-27 | AUD per NWAU |
NWAU_i | Activity units for admitted acute episode i, its case weight in units of the average hospital service | NWAU |
|---|---|---|
P_i | National efficient price of episode i before any private patient deduction | AUD |
Function
Case weight derivation, case-weighted payment and casemix cost comparison function
Maps the mean costs of patient classification groups, such as diagnosis-related groups (DRGs), to relative case weights, and uses the weights to price hospital cases and to compare hospital costs for a given casemix. The records follow the notation of the Case Weight article, where w_g is the weight of group g and c_bar the mean cost per case across all groups, so a weight of 1 marks a group whose cases cost the same as the average case.
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Implementations
Excel
Episode NWAU and price in two cells
The first formula, in a cell named EpisodeNWAU, applies the adjustments held in named cells; the second, in a cell named EpisodePrice, multiplies the result by the NEP held in a cell named NatEffPrice.
=PriceWeight*PaedAdj*(1+ResAdj+IndAdj+RtAdj+DiaAdj)*(1+TreatAdj)+ICUAdjPerHour*ICUHours; =EpisodeNWAU*NatEffPrice
Assumptions
Public patient episode with shadow-priced safety terms left at zero
The episode is a public patient episode, so the private patient service and accommodation deductions are zero, and the hospital-acquired complication and avoidable readmission terms are left at zero because they are shadow priced in 2026-27. IHACPA holds any negative result of those deductions at zero NWAU.
Price weight matched to the stay's length and year
PW_g is the inlier price weight when the stay lies within the AR-DRG's bounds; same-day, short-stay outlier and long-stay outlier stays use the other parameters in the determination's tables. NWAU(26) weights are used only with the 2026-27 NEP.
Worked examples
Tonsillectomy priced at the 2026-27 national efficient price
AR-DRG D11Z, tonsillectomy and adenoidectomy, has an inlier price weight of 0.7417 NWAU(26). With no adjustments and a NEP of AUD 7,418 the price is about AUD 5,501.93 (computed here), which IHACPA reports as AUD 5,502.
PW_g = 0.7417; A_paed = 1; A_res = 0; A_ind = 0; A_rt = 0; A_dia = 0; A_treat = 0; A_icu = 0.0446; h_i = 0; NEP = 7418; NWAU_i = 0.7417; P_i = 5501.93
Minor-complexity hip replacement priced at the 2026-27 NEP
AR-DRG I03B, hip replacement for traumatic condition, minor complexity, has an inlier price weight of 3.8021 NWAU(26). With no adjustments the price is about AUD 28,203.98 (computed here), which IHACPA reports as AUD 28,204.
PW_g = 3.8021; A_paed = 1; A_res = 0; A_ind = 0; A_rt = 0; A_dia = 0; A_treat = 0; A_icu = 0.0446; h_i = 0; NEP = 7418; NWAU_i = 3.8021; P_i = 28203.98
Episode with 24 hours in an eligible intensive care unit
An illustrative episode with a price weight of 1.0000 NWAU in an AR-DRG not marked as bundled ICU, and 24 hours in a specified intensive care unit, adds 24 × 0.0446 = 1.0704 NWAU. The episode is worth 2.0704 NWAU, a price of about AUD 15,358.23 (computed here for illustration).
PW_g = 1; A_paed = 1; A_res = 0; A_ind = 0; A_rt = 0; A_dia = 0; A_treat = 0; A_icu = 0.0446; h_i = 24; NEP = 7418; NWAU_i = 2.0704; P_i = 15358.23
Common errors
Entering the paediatric adjustment as 0 when it does not apply
A_paed multiplies the price weight, so its neutral value is 1. Entering 0 for a patient with no paediatric adjustment sets the weighted part of the episode to zero, and a tonsillectomy priced at AUD 5,502 is returned at AUD 0.
Pricing a price weight from another year at the 2026-27 NEP
Each year's price weights are scaled to that year's reference cost and paired with that year's NEP. Multiplying an older NWAU by AUD 7,418, or an NWAU(26) by an earlier NEP, mixes two scales and misprices the episode.
Sources
IHACPA National Efficient Price Determination 2026-27
Independent Health and Aged Care Pricing Authority. National Efficient Price Determination 2026-27. Sydney: IHACPA; March 2026. Section 2.1 (NEP of AUD 7,418 per NWAU(26)), Section 2.3 (price formula for an admitted acute activity), Table 1 (ICU adjustment of 0.0446 NWAU(26) per hour), Section 6 (shadow pricing of hospital-acquired complication and avoidable readmission penalties) and Appendix H (price weights for D11Z and I03B). Archived copy of the determination (Internet Archive, 18 May 2026): https://web.archive.org/web/20260518013308/https://www.ihacpa.gov.au/sites/default/files/2026-03/national_efficient_price_determination_2026-27_2.pdf.
Canonical Identity
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