Topic - aged care
IHACPA releases aged care pricing advice and framework

The Independent Health and Aged Care Pricing Authority (IHACPA) has provided the Government with its first advice about the pricing of aged care services in Australia.

In August 2022, the Government passed the Aged Care and Other Legislation Amendment (Royal Commission Response) Act 2022, which enabled the IHACPA (formerly the Independent Hospital Pricing Authority) to provide advice on aged care pricing.

IHACPA provides advice on the price for residential aged care based on the actual cost of care.

Last week, IHACPA released four reports:

  • IHACPA Residential Aged Care Pricing Advice 2023-24 (which was published in April, but only released last week), which will inform AN-ACC pricing,
  • IHACPA Residential Aged Care Pricing Advice 2023-24 Technical Specifications, which supports the pricing advice,
  • Pricing Framework for Australian Residential Aged Care Services 2023–24, which outlines the principles, scope and methodology used to inform the pricing advice, and the
  • Towards an Aged Care Pricing Framework Consultation Report, which presents the findings gathered from 2022 consultations.

To calculate costs, IHACPA used Aged Care Financial Report data from 2020-21, the latest available, which includes information at a facility level on care service income and expenses, balance sheets, income statements, prudential compliance statements, labour costs and hours worked.

The data was “cleansed” with the help of StewartBrown in conjunction with the Department of Health and Aged Care.

17.6% INDEXATION

As announced earlier this month, IHACPA recommends an AN-ACC price of $243.10 for 2023-24.

The AN-ACC price is calculated by subtracting $10 (the Basic Daily Fee Supplement) from the 1 October 2022 AN-ACC price of $216.80 (which was set by the Department), and indexing the resulting $206.80 by 17.6% to account for:

  • inflation and wage rises in 2022–23 (3.1%)
  • the Fair Work Commission interim wage rise decision (10.7%), then
  • the superannuation guarantee increase (0.4%), then
  • underlying inflation from 2022–23 to 2023–24 (2.6%).

The advice will also cover the gap between the costs of delivering hotel services, such as cleaning, catering, and gardening, and the revenue received from the Basic Daily Fee (BDF), and how this can be reflected in the AN-ACC price.

IHACPA will provide advice on Support at Home pricing from 1 July 2025.

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