Supporting older Australians

These measures continue aged care reform, with the Government seeking to balance the need to fund the nation’s continually growing aged care bill, while appropriately subsidising providers to meet residents’ care needs, and giving consumers more choice, control and protection around their aged care options.

Page last updated: 19 December 2016

Why is this important?

Following unexpected growth in funding claims by providers, the Government is looking to strengthen the way residential aged care funding is determined.

MYEFO 2016–17 outlines changes to previously announced 2016–17 Budget measures relating to funding for the Aged Care Funding Instrument (ACFI), which determines the level of funding the Government pays to providers. The changes balance the need to fund the nation’s continually growing aged care bill, while taking into account provider concerns around some of the original Budget measures. The Government has redesigned the measure, adjusting or removing some of the previously proposed changes relating to the delivery of complex pain management.

In their place, the Government is pausing indexation to all ACFI care domains in 2017–18, and implementing a 50 per cent indexation pause to the Complex Health Care domain in 2018–19.  This will ensure the impacts of the original Budget measures are more evenly distributed amongst the aged care sector.

The Government will also fund a small pilot in 2017 to test alternative funding models for residential aged care funding. This will inform changes to the ACFI, including possibly replacing ACFI, and potentially taking assessment of residents’ needs –  which determines the level of funding providers claim – out of providers’ hands, and having the assessment done externally.

The viability supplement will be increased to support rural, remote and homeless providers who may otherwise be more affected by the impacts of ACFI changes.

This will be paid to around 350 eligible services under the Modified Monash Model scheme through a flat rate increase of an additional $2.12 per resident per day.  For a 40 bed service, this equates to around $30,000 a year.

Annual unannounced site visits to aged care homes are the major monitoring and compliance activity undertaken by the Commonwealth. The Commonwealth manages risks to aged care consumers’ health and wellbeing through quality assurance activities focused on providers of residential aged care services, including initial accreditation, re‑accreditation, monitoring and compliance activities. Extended funding for the Australian Aged Care Quality Agency will enable it to continue unannounced site visits to aged care homes in 2017–18, until a levy to be paid by providers is introduced from 1 July 2018.

Another measure – a 2016 election commitment – will establish specialist dementia care units to care for people with very severe behavioural and psychological symptoms of dementia. Residents will live in the units for typically 12-18 months or until their behaviours have been stabilised.

Who will benefit?

The ACFI measures will help protect the integrity of the residential aged care sector and the thousands of providers delivering high quality care every day. At the same time, they will ensure residents get the care they need, with the highest levels of funding going to the residents with the highest needs.

Removing some original components of the ACFI changes and replacing them with a two staged indexation pause means that the impact on the average ACFI subsidy will be more evenly spread for providers. Both the Government and the sector want a more stable and sustainable funding system. The revised package provides more certainty for the sector and will deliver sustainable expenditure growth over the short term while paving the way for longer term reform options. The Government will consult closely with the sector on these options. 

The additional viability supplement increase will support eligible rural, remote and homeless aged care providers, building on the increase in the viability supplement already announced in the Budget.

Unannounced site visits help ensure that older Australians in aged care homes receive optimal care and services, and will continue to act as a deterrent to provider non-compliance. They also enable aged care homes to maintain appropriate standards of performance.

The small number of people with very severe dementia will benefit from special accommodation. The units will be designed to accommodate a resident for typically 12-18 months or until their behaviours have been stabilised and they can transition to a less intensive dementia care environment in a mainstream aged care setting.

How much will this cost?

ACFI revision and indexation pause – saving of $21.6 million from 2016–17 to 2019–20.

ACFI pilot – $2.4 million in 2016–17.

Viability supplement – $19.3 million from 2016–17 to 2019–20. 

Unannounced visits – $10.8 million in 2017–18.

Specialist Dementia Care Units – Cost neutral over five years.