12 months ago almost to the day, Scott Morrison announced the $1.2B cut over four years in aged care funding (ACFI). It created shock waves.
Shares in listed aged care operators crashed. Not For Profits claimed they will lose $5,475 per resident each year in revenue, sending them into the red, so the Government commissioned a report on alternatives by the University of Wollongong.
It outlines five options – including refining the current ACFI model – but recommends the move to a “blended payment model” based on Activity Based Funding (ABF) that would be implemented over two years.
The authors point to a “structural problem” with ACFI, which evaluates a residents’ subsidy based on three scales which are added together for a total score – the higher the score, the more funding. Instead, they suggest a “branching classification” that would consider a residents’ needs in combination.
This would fund care based on two elements:
- fixed costs, like the number of residents; and
- variable costs, such as residents’ complex care needs
They also recommend an independent study to work out which costs are fixed and variable as these can differ between facilities depending on their size, location and role.
While this is “the most robust model and achieves greater equity”, the report acknowledges it would require a “staged approach” over two years – starting with a refinement of the current ACFI in the first six months – followed by consultation with the sector, development and trialling of the new system.
Download the report here.
