Residential Aged Care Funding Reform

The Australian National Aged Care Classification (AN-ACC) is a proposed new assessment and funding model for residential aged care. Find out about the research we have done to create and test the model, who we have consulted and what we’re doing now.

The AN-ACC Funding Model

The Australian Government has approved the continued development of the Australian National Aged Care Classification (AN‑ACC) as a possible replacement for the Aged Care Funding Instrument (ACFI). 

The AN-ACC model aims to:

  • make funding for residential aged care fairer and more stable
  • improve the assessment process for funding so it is more accurate and nationally consistent
  • remove the paperwork burden on aged care providers and their workers so they can spend more time on providing safe and effective care.

What do we want to change?

The proposed AN-ACC funding model would introduce changes in three main areas:

1. Funding – under AN-ACC, funding would consist of three separate components:

  • a variable component reflecting the casemix classification for individuals.
  • a fixed component reflecting the characteristics of a facility i.e. region in which the facility is located and associated delivery costs for that region.
  • a one-off adjustment payment for new residents.

2. Casemix Classification – every person within an Australian Government funded Residential Aged Care Facility (RACF) will be allocated a classification of 1 to 13 based on the results of an AN-ACC assessment, which will determine the variable component of the funding.

3. AN-ACC Assessment – designed by clinicians, the AN-ACC assessment looks at a person’s functional, cognitive and physical capability to ensure they get the right amount of funding to support their care needs. Dedicated and clinically trained assessors will conduct face to face AN-ACC assessments except when a person is palliative.

Why do we need to make changes?

In 2016–17, the Australian Government announced it would look into strengthening residential aged care funding, including looking at:

  • possibly replacing the current funding assessment tool, the ACFI
  • options to use external assessment services.

The AN-ACC aims to improve funding arrangements to RACFs and promotes better care for senior Australians through:

  • independent, accurate and nationally consistent funding assessments
  • removing the administrative burden of the ACFI assessments from aged care providers so they can spend more time providing high quality and safe care.

Next steps – AN-ACC Shadow Assessment Period

Starting in April 2021, all residents in an Australian Government funded RACF (excluding Palliative Residents) will undergo an AN-ACC assessment. This period will be referred to as the ‘shadow assessment period’, and will run over 12 months, alongside the current ACFI arrangements. These assessments will help to facilitate an easy transition to the AN-ACC funding model, if the Government proceeds with AN-ACC as a replacement for the ACFI.

AN-ACC assessments completed during the shadow assessment period will:

  • be conducted using a purpose-built, clinically trialled and tested, digital assessment tool
  • consider the person’s functional, cognitive and physical capability
  • be a combination of interviews, observation and clinical reference
  • be used to determine the appropriate casemix classification to support a person’s individual care needs under the proposed funding reforms.

There will be no change to the current ACFI funding system during the shadow assessment period. ACFI assessments, funding, and reviews will continue as normal for new and existing residents.

Background - the road so far

We have been working since 2016–17 to build evidence for a new funding model. This includes two scoping reports in 2017:

Review of the Aged Care Funding Instrument Report (Applied Aged Care Solutions Pty Ltd)

Alternative Aged Care Assessment, Classification System and Funding Models Report (University of Wollongong)

The second report recommended a blended payment model based on fixed and variable costs. The report also recommended research into what drives residential aged care costs. The Government accepted recommendations from this Report.

Resource Utilisation and Classification Study (RUCS)

In 2017 the Australian Health Services Research Institute (AHSRI) at the University of Wollongong developed a funding model to meet these aims.

AHSRI ran a research study, known as the RUCS, to:

  • look at the costs of residential aged care
  • work out which characteristics of residents and services drive costs
  • create a new model to assess needs, classify residents and distribute funding
  • develop an assessment tool suitable for use by external assessors.

AHSRI completed the study in December 2018 and presented the results in seven reports. The result of the RUCS was the proposed new AN-ACC assessment and funding model. 

The RUCS Reports can be found at:

Resource Utilisation and Classification Study Reports (University of Wollongong)

Trial of the AN-ACC assessment framework

After consultation with the aged care sector, the Department undertook a trial of the AN-ACC assessment framework which was completed in March 2020, and concluded that:

  • it is fit for purpose
  • it can be expanded to a national scale
  • AN-ACC assessments are able to be efficiently completed by an external assessment workforce.

To find out about the trial results, read the Report on the trial of the AN-ACC (Department of Health).

Who was consulted?

Residential Aged Care Funding Reform Working Group

This group was set up in November 2019 and meets regularly to discuss ways to develop and implement policy on residential aged care funding reform.

Find out more about the Residential Aged Care Funding Reform Working Group, including membership and communiques.

Resource Utilisation Classification Study Sector Reference Group

From 2017 to 2019 this group of aged care managers, clinicians, finance officers and other administrators met regularly to discuss residential aged care funding reform policy development and implementation.

This group was replaced by the Residential Aged Care Funding Reform Working Group in late 2019.

View resources related to the RUCS Sector Reference Group on the National Library Web Archive.

2019 consultation paper

The public was invited to submit their thoughts on the proposal for a new residential aged care funding model in 2019. The consultation paper can be viewed online.

Submissions closed on 31 May 2019, with 91 submissions received. The submissions highlighted enthusiasm for ongoing conversations on funding reform and more information about the model.

Further information

Aged care funding reform contact:

Email us if you have questions about the AN-ACC or the AN-ACC Shadow Assessment Period:

ACFR [at]

AN-ACC Fact Sheets


Aged care funding reform contact

Email us if you have questions about the Resource Utilisation Classification Study (RUCS) or the Australian National Aged Care Classification (AN-ACC).

ACFR [at]

View contact

Last updated: 
21 April 2021

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