Changes to residential aged care funding by government in 2017

The Commonwealth Government contributes 96 per cent of the cost of care in residential aged care homes. This costs about $10.5 billion annually and with its budget deficit growing, the treasurer is keen to get this cost down.

The Aged Care Funding Instrument (ACFI) distributes funds by scoring an aged care resident in response to a number of questions from which a resident’s health care needs and level of assistance required is estimated. What has become obvious to government is that there is a growing number of older residents with increasingly complex health needs which attract higher funding.

In its last budget the government indicated that the ACFI would be reduced by around $6,500 per year per new resident from 1 January 2017. To achieve this reduction the government made it harder for residents with complex health needs to get a higher score and hence a higher level of funding.

Following consultation with aged care providers, the scoring matrix for complex pain management is not to be reduced as severely as indicated in the last budget. This should lead to a reduced reduction in the ACFI funding as the government attempts to cap the growth in residential aged care funding to 5.1% per annum.

Department of Health 6 December 2016

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