Funding higher wages in residential aged care

More funding for residential aged care

In the 2023–24 Budget, the Government increased residential aged care funding to support the Fair Work Commission’s decision on the Aged Care Work Value case. This meant a 15% award wage increase for aged care workers on the Aged Care Award 2010 and Nurses Award 2020.

Funding included:

an additional $10.1 billion in Australian National Aged Care Classification (AN-ACC) funding (over 4 years from 2023–24), with an increase to the AN-ACC price to $243.10, including:

– $7.6 billion to align with the award wage increase (at 200 care minutes)

– $2.5 billion in indexation to cover other cost increases since the AN-ACC price was set
a new $10.80 per resident per day hotelling supplement, including additional funding of $116 million (over 4 years from 2023–24) (the supplement increased to $11.04 when indexed in September 2023)
an additional $743 million (over 3 years from 2024–25) to align with the award wage increase to deliver a sector average of 215 care minutes from 1 October 2024
an increase in the 24/7 registered nurse supplement of $178 million (over 4 years from 2023-24) to align with the award wage increase.

An additional $6 million in 2023–24 for a new grant opportunity under the AN-ACC Transition Fund (in 2023–24) provides targeted support to particular residential aged care services.

AN-ACC and hotelling supplement funding comparisons

The funding uplift increased the average AN-ACC funding per resident per day by approximately 17% from $223 to $260. This is in addition to funding provided from 1 July 2023 through the 24/7 registered nurse supplement.

Under the AN-ACC increase, more equitable care funding was provided to regional, rural and remote, First Nations and homeless facilities, recognising additional care cost requirements:

under the AN-ACC price of $216.80, non Aboriginal and Torres Strait Islander services in remote (Modified Monash Model (MMM 6) and very remote (MMM 7) locations received on average $283 per person per day, compared to an estimated $328 per person per day under an AN-ACC price of $243.10 combined with a hotelling supplement of $10.80 per person per day from 1 July 2023
under the AN-ACC price of $216.80, services in regional Australia (MMM 5) received on average $229 per person per day, compared to an estimated $267 per person per day under an AN-ACC price of $243.10 combined with a hotelling supplement of $10.80 per person per day from 1 July 2023
under the AN-ACC price of $216.80, homeless services received on average $298 per person per day, compared to an estimated $344 per person per day under an AN-ACC price of $243.10 combined with a hotelling supplement of $10.80 per person per day from 1 July 2023
under the AN-ACC price of $216.80, specialised remote and very remote Aboriginal and Torres Strait Islander services received on average between $380-$650 per person per day, compared to an estimated $437-$740 per person per day under an AN-ACC price of $243.10 combined with a hotelling supplement of $10.80 per person per day from 1 July 2023.

This funding also helped recruit and retain staff to prepare prepare the residential aged care sector for the start of the 24/7 registered nurse responsibility from 1 July 2023, and mandatory care minutes.

Increase to the AN-ACC price

The increase to the AN-ACC price funded the 15% award wage increase for:

registered nurses
enrolled nurses
personal care workers
assistants in nursing
recreational activities officers (lifestyle workers).

The wage rise also encouraged recruitment and retention to help protect the sustainability of the sector. The increase also accounted for inflation and other cost increases since the first AN-ACC price set on 1 October 2022.

The new AN-ACC price reflected the recommendation of the Independent Health and Aged Care Pricing Authority (IHACPA). IHACPA has released its Residential Aged Care Pricing Advice 2023–24 to Government that informed the new AN-ACC price of $243.10, which commenced on 1 July 2023.

IHACPA also released the following documents:

This determined the fixed (Base Care Tariff (BCT)) and variable (casemix of AN-ACC classes) funding residential aged care services received under the AN-ACC funding model.

Each BCT and AN-ACC class has a corresponding National Weighted Activity Unit (NWAU). This adjusts funding based on factors like location of a service and casemix of residents. The AN-ACC price is equivalent to one NWAU.

For the change to funding amounts for BCT categories and AN-ACC classes on 1 July 2023, see the tables below.

Table 1a BCT funding for services where funding is calculated based on occupied places

BCT Category	Services Australia Payment Statement code	NWAU	Funding Basis	Funding per occupied place before 1 July 2023	Funding per occupied place from 1 July 2023
Standard MMM 1–4	Fixed subsidy – class 6	0.49	Occupied places	$106.23	$119.12
Standard MMM 5	Fixed subsidy – class 7	0.55	Occupied places	$119.24	$133.71
Specialised homeless	Fixed subsidy – class 5	0.92	Occupied places	$199.46	$223.65

Table 1b BCT funding for services where funding is calculated based on operational places

BCT Category	Services Australia Payment Statement code	NWAU	Funding Basis	Funding per operational place before 1 July 2023	Funding per operational place from 1 July 2023
Standard MMM 6–7	Fixed subsidy – class 3H	0.68 for first 29 places	Operational places	$147.42	$165.31
Standard MMM 6–7	Fixed subsidy – class 3L	0.52 for places 30 and above	Operational places	$112.74	$126.41
Specialised Aboriginal and Torres Strait Islander MMM 6	Fixed subsidy – class 2	0.78	Operational places	$169.10	$189.62
Specialised Aboriginal and Torres Strait Islander MMM 7	Fixed subsidy – class 1	1.80	Operational places	$390.24	$437.58

Table 2 Variable funding rates by AN-ACC class

AN-ACC class	Resident description	NWAU	Funding before 1 July 2023	Funding from 1 July 2023
Class 1	Admit for palliative care	1.00	$216.80	$243.10
Class 2	Independent without compounding factors	0.19	$41.19	$46.19
Class 3	Independent with compounding factors	0.31	$67.21	$75.36
Class 4	Assisted mobility, high cognition, without compounding factors	0.21	$45.53	$51.05
Class 5	Assisted mobility, high cognition, with compounding factors	0.37	$80.22	$89.95
Class 6	Assisted mobility, medium cognition, without compounding factors	0.35	$75.88	$85.09
Class 7	Assisted mobility, medium cognition, with compounding factors	0.49	$106.23	$119.12
Class 8	Assisted mobility, low cognition	0.54	$117.07	$131.27
Class 9	Not mobile, higher function, without compounding factors	0.54	$117.07	$131.27
Class 10	Not mobile, higher function, with compounding factors	0.87	$188.62	$211.50
Class 11	Not mobile, lower function, lower pressure sore risk	0.83	$179.94	$201.77
Class 12	Not mobile, lower function, higher pressure sore risk, without compounding factors	0.81	$175.61	$196.91
Class 13	Not mobile, lower function, higher pressure sore risk, with compounding factors	1.00	$216.80	$243.10

Table 3 Variable funding rates by respite class

Respite Class	Services Australia Payment Statement code	Resident description	NWAU	Funding before 1 July 2023	Funding from 1 July 2023
Respite Class 1	Variable subsidy – class 101	Independent mobility	0.304	$65.91	$73.90
Respite Class 2	Variable subsidy – class 102	Assisted mobility	0.404	$87.59	$98.21
Respite Class 3	Variable subsidy – class 103	Not mobile	0.864	$187.32	$210.04

For more information on AN-ACC, see the Australian National Aged Care Classification (AN-ACC) funding guide.

Hotelling supplement

An $11.04 per person per day hotelling supplement will be provided in addition to the AN-ACC funding increase (the supplement increased from $10.80 when indexed in September 2023). This separates hotelling funding (representing the previous Basic Daily Fee (BDF) supplement that was rolled into AN-ACC) from care funding and was equivalent to $3.5 billion over 4 years from 2023–24.

This supports providers to meet the costs of hotelling services (such as catering, cleaning and gardening) not covered by the BDF. It also funds higher wages for heads chefs and cooks and established a mechanism to fund other non-care professionals for future Fair Work Commission decisions.

The separation of this funding from AN-ACC aligned with the expectation that additional care funding should be spent on delivering care, including increased worker wages.

The hotelling supplement is indexed on 20 March and 20 September each year.

See the supplement rate in the Schedule of Subsidies and Supplements.

24/7 registered nurse supplement

The 24/7 registered nurse supplement commenced on 1 July 2023 to support providers to meet the 24/7 registered nurse responsibility. This supplement includes the 15% award wage increase for registered nurses.

The new monthly supplement rates are as follows:

Table 4 Monthly supplement funding

Average number of residents per day	MMM 1–4 from 1 July 2023	MMM 5–7 from 1 July 2023
1–5	$27,667	$77,083
6–10	$27,667	$69,000
11–15	$27,667	$63,500
16–20	$27,667	$53,250
21–25	$27,667	$42,250
26–30	$27,667	$32,083
31–35	$19,167	$23,833
36–40	$14,750	$17,750
41–45	$13,167	$15,750
46–50	$11,750	$13,583
51–55	$9,833	$11,250
56–60	$7,917	$8,917
60+ residents	No supplement

Targeted support under the AN-ACC Transition Fund

From 1 July 2023, a new grant opportunity under the AN-ACC Transition Fund offered more targeted support to residential aged care services. This included specific characteristics, such as being located in an isolated community, and/or larger services in remote and very remote locations, who do not fit into the profile of the current BCT categories.

For more information, see AN-ACC Transition Fund.

Date last updated:

1 December 2023

Tags:

Aged care workforce

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