Proposed New Residential Care Funding Model

A landmark University of Wollongong study about a proposed new and improved residential aged care funding model—the Australian National Aged Care Classification—has been released today.

This study addresses the need for a more stable, contemporary, efficient and effective funding tool and system to provide greater financial stability to both the residential aged care sector and the Government.

The Morrison Government’s investment in residential aged care was around $12.2 billion in 2017–18 with around $11.3 billion being payments made under the Aged Care Funding Instrument (ACFI).

This is supported by the 18-19 MYEFO announcement of a $4.6 million trial of a new residential care funding tool to replace the Aged Care Funding Instrument. This new tool will ensure better levels of accountability and transparency in the aged care sector, ensuring people have certainty and confidence about providers.

The Morrison Government commissioned the University to undertake a detailed Resource Utilisation and Classification Study of the aged care sector to inform the development of a new funding model and system.

The university’s comprehensive research could be a ‘game changer’ for aged care because the proposed new system is a completely different way of allocating funding for residential aged care.

The proposal includes the removal of identified flaws in the ACFI including complex and time consuming assessment process as well as eliminating incentives found not always to be in the best interests of consumers.

The Morrison Government is now seeking sector and community feedback.

This feedback will help inform decisions around residential care funding reform and the design elements of the proposed new funding model, the Australian National Aged Care Classification.

Consultation is open until 31 May 2019.

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The consultation paper can be accessed at the Department of Health’s Consulation Hub and the University’s reports at the Department of Health’s website.

The Morrison Government is committed to delivering a range of aged care reforms to provide more choice, support and certainty for all Australians as they age.

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