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The long awaited report into the Aged Care Funding Instrument (ACFI) was released today. Click here to view the report. The report handed down recommendations for the future of the aged care sector, with the aim to ensure financial sustainability in light of the substantial growth in government expenditures.

The five potential options are:
1: Refinement of the current ACFI model
Retaining the overall design of the existing AFCI model, with the model refined and pruned where required, with clinical oversight forming the benchmark for change. Long term, a costing study would be utilised to determine changes to the ACFI system. Rover Consulting does not expect the government to retain ACFI in it’s current form.

2: A simplified model with four funding levels
This ‘consumer directed care’ model would be reflective of the home care model; with four funding levels or bands linked to the projected costs of care for that level of care. This model would be implemented over 6-12months and include a costing study. Rover Consulting does not expect the government to implement this simplified system.

3: Option 2 plus supplements subject to external assessment
This is a variant of option 2 and includes additional supplements yet to be finalised, but could include challenging behaviours, the management of complex conditions of time-limited end of life care. Rover Consulting does not expect the government to implement this simplified system even with the additional supplements.

4. An Activity Based Funding (ABF) model with a branching classification
This model utilises the existing national public hospital ABF model which would involve an aged care Weighted Activity Unit (WAU) and the determination of a National Efficient Price (NEP). This option would develop classes of residents and be based on assessment variables aligned with cost drivers. This option would require two or more years to implement, with regular costing studies undertaken to ensure a contemporary NEP. Rover Consulting believes this is a feasible option for the government to implement.

5. A blended payment model with fixed and variable costs
This option recognises the fixed and variable costs of delivered residential aged care, with this option differentiating fixed and variable costs. This model includes the allocation of fixed payments to cover fixed costs (rent, land, infrastructure), and variable payments to cover the costs of individualised care. This model would be implemented over 2 years and include a costing study for all costs. Rover Consulting believes this is the option that will be chosen.

The Report recommends option 1 in the short term and option 5 in the long term. This would provide the government cost-control over the ACFI in it’s current form and allow the government to plan for the future.

Concern about the impending changes is well justified, with Annette Nuck of Yackandandah Health sharing ‘I am really concerned about the decisions that will be made for the next budget.  We know that the government’s focus will be on reducing costs.  Expect the interim adoption of Option One, “the refinement of the ACFI”, to be introduced within the first six months to address the more immediate concerns about the performance of the current ACFI tool, to significantly reduce funding for the next financial year.’

The sector which has recently seen the de-regulation of Home Care is now set to be overcome with mroe changes to funding and operations. Changes will impact both not-for-profit (NFP)  and for-profit (FP) services, with FP services expected to be impacted more harshly.

Annette continues, ‘I have little confidence that fixed and variable payments in Option 5 will be fair and expect further stress on residential aged care services to remain viable as they juggle the increasing expectations of consumers with an ongoing decrease in funds. Not looking promising.’

Annette’s thoughts are not unique and this is the feedback we at Rover Consulting receive routinely. We urge providers from the NFP and FP sectors to contact their local, State and Federal politicians to discuss the impending changes.

May Budget

The upcoming Federal Budget will most likely include changes to the aged care system, in line with the reports recommendations. The government has had this report from February 2017 and has had multiple months to plan the dissemination of the findings and the implementation of it’s decision.

The sector should expect further monies to be allocated to the Aged Care Approvals Round (ACAR) and expect further increases in the forward estimates for the provision of aged care services. This is a reflection of current funding projections, with Rover Consulting not expecting any concrete financial modelling to be provided by the government on this reports options until later in the year.