Aged Care Funding Instrument changes 1 July 2012

Issue

From 1 July 2012, the Australian Government has made changes to the Aged Care Funding Instrument (ACFI).

Response

Since the introduction of the ACFI in 2008, Government funding per resident has been growing at a rate that is significantly higher than occurred under the previous funding classification scale. In November 2011, the Government increased the amount it estimated it would spend on residential care by $2.3 billion for the four years from 2011-12 to 2014-15.

On 21 June 2012, a range of changes to the ACFI were announced:

changes to the scores for Activities of Daily Living question 3 from 1 July 2012; and
changes to the Complex Health Care domain from 1 July 2012.

In addition, a one-off price change took effect from 1 July 2012, which when taken with the indexation that applies at the same time, results in all ACFI subsidy rates remaining unchanged.

On 1 February 2013 further changes to the ACFI were implemented to enhance the evidence requirements within the ACFI and reinforce the original intent of the ACFI. A third set of changes to the ACFI are proposed for 1 July 2013 which will further enhance the evidence requirements within the ACFI.

These changes to the ACFI are intended to bring the future growth in funding back to the long-term trend rate. They are not intended to reduce funding for residential aged care subsidies below sustainable levels. The Government has increased funding for residential care by $382 million to $9.1 billion in 2012-13, $422.7 million more than estimated in the 2011-12 Budget. Under these reforms, average care subsidies are projected to grow by 2.7% per annum (above indexation) between 2012-13 and 2016-17.

The ACFI changes have been informed by the deliberations of the ACFI Monitoring Group. The Department of Health and Ageing will continue to work closely with national peak bodies and aged care stakeholder groups, through the Monitoring Group to ensure the changes are implemented as intended and to identify whether there are any unintended outcomes so that they can be addressed.

The Monitoring Group has now met six times on 10 August, 26 September, 23 October and 13 December 2012, and 8 February and 27 March 2013 in Canberra. The ACFI Technical Reference Group has also been established to provide advice to the Monitoring Group on possible changes to the ACFI from a technical perspective including improving the evidence requirements supporting the ACFI. The Technical Reference Group has met three times on 24 September, 19 October and 16 November 2012.

At its 27 March 2013 meeting, the Monitoring Group reviewed the data from July to December 2012. The analysis of this early data shows that average subsidies grew from $133.96 per resident per day in June to $135.70 in December. The Monitoring Group noted that the analysis of the first six months of ACFI appraisal data showed it was broadly in line with the Government’s estimated impact prior to implementation. It expects that over the next three months, following the analysis of further data, this trend will be supported. The Monitoring Group will continue to meet on a regular basis.

Further information about the ACFI changes is available on the Department’s Aged Care Funding Instrument page.