This paper presents a case study of an early discharge scheme funded by casemix incentives and discusses limitations of a casemix model of funding whereby hospital inpatient care is funded separately from care in other settings. The POSITIVE Rehabilitation program received 151 patients discharged early from hospital in a twelve-month period. Program evaluation demonstrates a 40.9% drop in the average length of stay of rehabilitation patients and a 42.6% drop in average length of stay for patients with stroke. Other benefits of the program include a high level of patient satisfaction, improved carer support and increased continuity of care. The challenge under the Australian interpretation of a casemix model of funding is ensuring the viability of services that extend across acute hospital, non-acute care, and community and home settings.