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Dump Aged Care Funding Instrument: Report

The Aged Care Funding Instrument should be dumped and a “blended payment” model with activity-based funding implemented in residential care, the government-commissioned report into ACFI has found, Australian Ageing Agenda reports.

The report also backs long-standing sector calls for an independent cost of care study in residential aged care.

In a robust critique of the ACFI, the University of Wollongong report found that the funding tool was “no longer fit for purpose” while its structure was “not clinically plausible”.

The review found residents were now “older and frailer” than when ACFI was implemented almost a decade ago and the tool “does not adequately focus on what drives the need for care” and “no longer satisfactorily discriminates between residents based on their care needs.”

While the review details five possible funding models – including a revamped ACFI – the experts recommend the sector adopts a “blended payment model”, which would utilise activity-based funding, within two years.

In the interim, the experts also propose a “refinement of ACFI” to address its key failings – a process that is underway, as Australian Ageing Agenda reports today (read story here).

The experts found a “structural problem” in ACFI in that its three measurement scales effectively worked in isolation – with the scores from each being added to give a total score that determined a resident’s subsidy. Instead, they advocated a “branching classification” approach in which a resident’s needs in each domain would be considered in combination.

Their proposed “blended payment” model would also fund care based on two elements: fixed costs, as determined by factors such as the number of residents, and variable costs, as determined by resident complexity and acuity.

An activity-based funding model, akin to that which operates in the hospital sector, would be used to fund the variable care costs.


Review recommends new funding model for residential care (Australian Ageing Agenda)

Aged care alternatives report (Department of Health)


Matthias Zomer / Pexels