The Victorian government has signed a heads of agreement for a new four-year hospital funding deal to begin in July 2020, after a long-running funding stoush between the federal and state governments.

Health Minister Greg Hunt agreed to key concessions around how activity-based funding will be calculated after state governments were angered by a bureaucratic "recalculation" they say robbed them of hundreds of millions of dollars.

Health Minister Greg Hunt agreed to key concessions around how activity-based funding will be calculated. Credit:AAP

The deal comes after more than a year of negotiations, which were delayed when state governments pushed back against the Independent Hospital Pricing Authority's recalculation, which they say clawed back $600 million worth of funds already spent on services.

Mr Hunt said the agreement provided that any future changes in methodology for calculating the amount the federal government must contribute to state hospitals' activity-based funding "will be implemented through a transition period" to ensure it was based on "accurate information".