Residential aged care funding reform

On 1 October 2022, the Australian National Aged Care Classification (AN-ACC) residential care funding model replaced the Aged Care Funding Instrument (ACFI).

AN-ACC residential care funding model

The AN-ACC funding model is an efficient, transparent and sustainable funding model for residential aged care.

It provides more equitable funding to residential aged care providers that better matches residents’ needs and the costs of delivering care, particularly in:

  • rural and remote locations
  • Indigenous and homeless specialist services.

AN-ACC key elements

There are 3 main elements under the AN-ACC funding model:

  1. resident assessments will be completed by an independent AN-ACC assessor instead of residential aged care workers
  2. the AN-ACC subsidy paid to providers has 3 components – fixed, variable, and a one-off entry payment. The characteristics of a residential aged care home, such as location or specialisation, determines a fixed amount of funding, and the variable funding component is determined by an independent assessment of a resident’s care needs
  3. annual pricing and model review, informed by independent analysis from the Independent Health and Aged Care Pricing Authority (IHACPA) based on costing studies and other available aged care sector data.

Learn more about the AN-ACC funding model.

AN-ACC background

Under the Aged Care Funding Instrument (ACFI), funding levels for residential aged care services:

  • did not adequately differentiate between residents about the costs of delivering care
  • resulted in volatile revenue streams for providers and costs to the government
  • required clinical workers in residential aged care to assess residents for funding, reducing their availability to deliver care.

Reflecting on these issues, the Royal Commission into Aged Care Quality and Safety recommended introducing a case-mix funding model for residential aged care, such as AN-ACC.

The Australian Health Services Research Institute developed the AN-ACC for the government between 2017 and 2019. The model was independently researched, trialled and tested.

The AN-ACC timeframes outline the key milestones for the implementation of the AN-ACC funding model.

AN-ACC timeframes

Stages

Date

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

February 2017

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

June 2017

Resource Utilisation and Classification Study Reports (University of Wollongong)

February 2019

Trial of the AN-ACC assessment model announced

10 February 2019

Report on the trial of the AN-ACC

August 2020

Aged Care Royal Commission Report

26 February 2021

Reform package for aged care to improve residential aged care services announced at the 2021-22 Budget

May 2021

AN-ACC - Shadow Assessment Period  

April 2021 – Sept 2022

Basic Daily Fee supplement commenced

1 July 2021

AN-ACC pricing for 2022-23 financial year released

30 March 2022

AN-ACC Transition Support Plan published

8 April 2022

Shadow Assessment data released

8 April 2022

New quarterly financial reporting requirements commenced – the first quarterly report was due on 4 November 2022 for the September quarter

1 July 2022

Palliative care entry arrangements commence

23 July 2022

Australian Government passed the Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022

August 2022

New Services Australia payment system went live

August 2022

AN-ACC Transition Fund applications opened

10 August 2022

Care minutes targets available in My Aged Care Service and Support  Portal

August 2022

Publication of guide to the AN-ACC funding model

September 2022

AN-ACC commenced (replaced ACFI)

1 October 2022

Funding for care minutes (200 minutes, including 40 minutes registered nurse time) commenced

1 October 2022

AN-ACC Transition Fund commenced

1 October 2022

New residential respite funding model commenced

1 October 2022

Publication of Star Ratings to help senior Australia, their carers and families to compare services and choose one that is right for them

December 2022

AN-ACC pricing for 2023–24 commenced, as recommended by the Independent Hospital and Aged Care Pricing Authority 

1 July 2023

Mandatory requirement for a registered nurse onsite and on duty 24 hours a day commenced

1 July 2023

Mandatory care minutes standards (200 minutes, including 40 minutes registered nurse time) commenced

1 October 2023

Mandatory care minutes standards increases to 215 minutes, including 44 minutes registered nurse time

1 October 2024

Learn more

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