Stronger compliance to protect integrity of Aged Care Funding Instrument

Page last updated: 18 December 2015

A stronger compliance regime and refinements to the scoring matrix for funding claims involving complex health care will be introduced to protect the integrity of Australia’s residential aged care sector and the providers delivering high quality care to older Australians every day.

Each year, the Government provides $10.6 billion in residential aged care subsidies to approved providers based on the appraised care needs of their residents using the Aged Care Funding Instrument (ACFI).

Expenditure on residential aged care subsidies under the ACFI for 2014-15 has exceeded budget estimates by approximately $150 million. This level of growth is not sustainable for Government. It is clear that the growth is being driven by claims in the complex health care domain which are higher than can be explained by the increase in the frailty of residents.

While the overwhelming majority of ACFI claims from aged care providers audited by the Department of Health are correct, one-in-eight of 20,000 checked last year (2014-15) were deemed to be incorrect or false. This figure is already tracking even higher at one-in-seven in 2015-16.

To address these matters, the Government has introduced measures as part of the Mid-Year Economic and Fiscal Outlook 2015-16 to improve the integrity of the ACFI.

A new fine of $10,800 per offence will be introduced. This will be restricted to providers who make multiple, deliberate false claims following audit and compliance actions having already been undertaken, not genuine one-off mistakes.

This will be supported by increased targeting of providers at highest risk of submitting inaccurate claiming and increased stakeholder education to support ongoing voluntary compliance with the ACFI claiming process.

Overpayments will be recovered from the date of the provider’s ACFI appraisal, and a fee will be introduced for unsuccessful reconsideration requests. In addition, providers may be required to reappraise a claim where a single ACFI audit has identified evidence of false, misleading or inaccurate information.

The new approach is estimated to save taxpayers more than half a billion dollars over the next four years. This includes $60 million over that period to improve compliance.

A total of $472 million will also be saved by placing better targeted funding, including reductions in subsidy prices, on certain high value claims at the upper ‘Complex Health Care’ end of the scale that were consistently higher than expected and not consistent with claiming practices in other ACFI areas. Starting from 1 July 2016, this will ensure the highest levels of funding go to the residents with the highest needs.

The new measures will begin rolling out in 2016 with stakeholder engagement to occur over the next six months.