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05 May 2016

Main points


  • Aged Care Funding Instrument to be ‘refined’
  • Indexation increase to Complex Health Care to be halved
  • $1.2 billion to be saved

An unexpected blowout in complex health care funding claims in aged care homes has led the Government to change the way it funds the sector.

The Government used the Budget to announce plans to save $1.2 billion from aged care from 2015-16 to 2019-20.

But AMA President Professor Brian Owler says the proposed cuts need more scrutiny.

“There are … significant cuts to the aged care sector which require closer examination,” Professor Owler said.

The Government plans to refine its Aged Care Funding Instrument (ACFI) so that it does not “encourage distortions in claiming behaviour and care delivery” after higher than expected growth in funding claims.

“The Government has increased funding estimates for residential aged care by $3.8 billion over five years from 2016-17 to 2019-20,” the Budget papers say.

“Growth in ACFI funding has been driven by higher than anticipated claims in the Complex Health Care (CHC) domain. This growth cannot be attributed to a natural increase in frailty as it is two and a half times the growth in the other two care domains (ie Activities of Daily Living and Behaviour) and increased sharply.

“In developing the measure, the Government consulted with the sector to understand the areas of ACFI that could be better aligned with contemporary care practices.”

Some of the savings will be reinvested, including $102 million to improve services in rural and remote areas, and $10.1 million to allow the Australian Aged Care Quality Agency to continue unannounced site visits to aged care homes.

But Associate Professor Helen Dickinson, from the University of Melbourne’s School of Government said aged care, like disability, had been targeted for unrealistic projected savings.

“In aged care, $1.2 billion will be saved through the ‘better use of funding’,” A/Prof Dickinson said.

“Some of the $249 million reinvestments will be welcomed … yet it is difficult to see how these relatively small investments will meet the intended aims of ‘preventing a spending blowout’ in coming years and are likely to shift increasing costs of aged care to future governments.”

Maria Hawthorne


Published: 05 May 2016