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Budget: $1.2 billion cut from ACFI

Peak bodies have hit back at “concerning” cuts to the Aged Care Funding Instrument announced in last night’s Federal Budget, which will see government save $1.2 billion over four years.

In order to stabilise what is said to be a continuation in higher than expected growth in Aged Care Funding Instrument (ACFI) expenditure, the Federal Government has announced it would make changes to the instrument’s scoring matrix to save $1.2 billion over the next four years.

“The measure will improve the Aged Care Funding Instrument so that funding outcomes better align with contemporary care practices and do not encourage distortions in claiming behaviour and care delivery,” according to the the budget paper.

Residential aged care expenditure is expected to grow 5.1 per cent per annum over the next four years. Minister for Aged Care Sussan Ley said expenditure on the ACFI was expected to blow out by $3.8billion by 2020 without action.

The government said growth in ACFI funding was driven by higher than anticipated claims in the ‘complex health care’ domain. It announced changes would be made to funding levels to certain areas of this domain, and that it would reduce the indexation increase of the domain by 50 per cent in 2016-17.

“This growth [in the complex health care domain] cannot be attributed to a natural increase in frailty as it is two and a half times the growth in the other two care domains, such as activities of daily living and behaviour, and increased sharply,” it said.

The $1.2 billion saving will be redirected to fund other health policy priorities, the government said.

Government will establish a $53.3 million transitional assistance fund to assist providers, and said stakeholder consultation would continue through the ACFI Technical Reference Group and the ACFI Expenditure Working Group of the Aged Care Sector Committee. It said it would also further consult with the sector to look at how care funding is determined, including options of separating residents’ needs assessment from service provision, and having it done by an independent party.

Adjustments to the ACFI expand on those already seen at the 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO), when the government announced it was cutting subsidies on certain claims in the complex health care domain to save $472 million.

Labor has criticised the cut, calling it “savage”, and said the budget had put high income earners and big business ahead of older Australians.

Peak bodies “concerned”

Aged and Community Services Australia (ACSA) said it was concerned with how the government intended to make the $1.2billion saving, calling the decision to cut the indexation for complex health care a “sting in the tail”.

While ACSA was disappointed but accepting of the cuts announced in the MYEFO because they targeted those who undertook ‘distortions’ in claiming, it said an across-the-board cut would penalise all aged care providers. “This will hit everyone who is a resident using Complex Health Care. This will impact not only on providers, but is a cut to the money available for care genuinely being provided to frail older people,” said CEO Adjunct Professor John Kelly.

Leading Age Services Australia called the continued cuts to aged care “devastating”, and said the government was “in denial about the true cost of providing complex care” in Australia. “Increasing numbers of senior Australians, due to a rapidly ageing population, are now requiring more complex care than ever before. And, with complex care comes more cost,” it said.

Chief executive officer of Catholic Health Australia (CHA) Suzanne Greenwood said volatility in funding had a negative impact on budgeting for the delivery of care, as well as a negative impact on financiers, investors and the financial markets on which it saw expansion in the sector depending. “This budget marks the third time in almost as many years that growth in care payments under ACFI has exceeded budget estimates,” said Mrs Greenwood.  “This is further evidence that ACFI is failing as a funding tool.”

Brian Owler, president of Australian Medical Association called the cuts to aged care significant and said they would require closer examination.

Worries for consumer quality

Alzheimer’s Australia said the adjustments to ACFI were concerning. “While the Government may have had little choice but to cut ACFI due to projections of unsustainable expenditure in aged care, this budget decision suggests the funding tool is flawed and needs an overhaul to ensure it leads to quality outcomes. The current model does not reward the very things that promote quality of life especially for people with dementia,” said CEO Carol Bennett.

Palliative Care Australia said the complex health care domain was what most aged care providers relied on to provide palliative care, and called on government to commit closely to monitoring the impact of the cut to ensure there was no negative impacts on quality of care.

IRT Group CEO Nieves Murray said while she understood that government needed to ensure aged care expenditure was sustainable over the long-term, it needed to be careful not to erode the ability of providers to deliver quality of care.

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13 Responses to Budget: $1.2 billion cut from ACFI

  1. Dave May 4, 2016 at 3:41 pm #

    You were warned about this but greed won the day.

    For the moment, let’s put aside the fact that ACFI is a flawed model that rewards deterioration and the CHC domain prescribes archaic, non-evidence based treatments. The constant push for higher daily ACFI results and the blatant twisting of the rules have ruined for everyone.

    Thank you to all those providers with 80 x 4b claims being serviced by one OT. And a special thanks to those claiming ‘protective bandaging’ for 90% of their resident population.

    Now what? Crank up the enemas, catheters and CPAP ?

    As a consolation, we’ll see some entertaining boardroom hand-wringing as they watch the Power-Point charts head south.

  2. nihal bhat May 4, 2016 at 5:13 pm #

    i very much doubt this will be passed in the senate
    this is the most controversial change

  3. David May 6, 2016 at 3:43 pm #

    Do we know exactly what the changes to the Complex Health Care domain will be? I haven’t been able to see any specifics online.

  4. Gai Anderson May 6, 2016 at 9:23 pm #

    Tax, and chase collection of tax due by big business, esp offshore entities. Set up tax on churches that don’t use it for appropriate services and cancel all the lurks and perks that past politicians get…..
    That should cover quite a lump of the “blowout” – I wonder if it was going to be their aging loved ones needing supported aged care whether they’d regret such a move?

  5. Natasha Egan May 9, 2016 at 4:51 pm #

    We are in the process of seeking detail on the proposed changes.
    Natasha Egan.

  6. Munro May 9, 2016 at 9:50 pm #

    I totally agree with you Dave, thank god this is finally being reeled in. Absolutely hated the aged care system for allied health. We were hardly doing any evidence based practice because it wasn’t as lucrative as sticking tens machines on 40 odd people an hour. Too bad the new policies aren’t making up for it with funding for activities that increase independence for residents.

  7. Jules May 11, 2016 at 9:58 am #

    Dave and Munro – Agree 100% with changing a system that encourages debility and complex needs. To be focusing on pain management and NOT encouraging falls prevention, falls classes and mobility in the elderly is simply wrong. Lets see what they hold, though I am scared for the people doing the “right” thing and management “losing” the ability to fund these services making an impact on patients.

  8. Drew May 17, 2016 at 10:57 am #

    Surprising that a sub acute or hospital bed receives around $1000 to $1500 dollars before a hand is on the care. There should be a focus on the need for providing funding for care that supports the older person to have a quality of life when in a residential setting.

    Palliative approaches for those that are in need should include things like massage, time with a carer, time to connect and keeping important ADLs active as possible to the end.

    Caring for someone who is aged and has comorbidity and disability and frailty is complex work, and it costs money.

    Very disappointing to see that half the money being spent on the beds in hospitals for elderly clients could not be better used in CHC for a residential setting or transition care at least.

  9. Kylie Wise May 18, 2016 at 11:25 am #

    And we’re off!

    The frantic rush to submit even more questionable claims before July 1 has begun. All those genius ACFI consultants are cranking up their marketing, just drooling at the opportunity to use fear and uncertainty to generate some extra business before it all goes down the gurgler.

    The endless push for more, constantly stretching the boundaries of claim validity and a plethora of ‘expert advice’ are the main reasons we’re in this situation…and you deserve everything you get (lose?).

    If you’re silly enough to pay for a service that promises everything but takes no responsibility when your claims get downgraded, carry on. Your consultant has already been paid and is busy fleecing the next greedy client.

    This is just another sad consequence of stupidly paying public money to private enterprises to perform public services.

  10. Marianne K May 24, 2016 at 10:27 am #

    Great contribution Kylie. Sounds like you’ve got all the answers to replacing ACFI with… a flat rate care subsidy?

    Many profit and not-for-profit RAC facilities alike rely almost exclusively on ACFI to survive. While the cost of wages, utilities, food, and extra services skyrocket, are those organisations are supposed to idly sit by, absorb those costs, whilst putting a cap on their revenue? If they are able to increase or maximise ACFI revenue by meeting all the evidence requirements for claims within the current framework, why on Earth wouldn’t they???

    ACFI is flawed, there is no doubting that. But any person or organisation that is able to improve their bottom line, would be both stupid and negligent in their duty of care to ensure future sustainability. People responsible for increasing ACFI revenue are no different than accountants or financial planners. Don’t blame the players, blame the game makers.

    However one thing is for certain, no one wins if RAC facilities have to close their doors, lay off staff, and compromise on quality of care outcomes, all because the Government didn’t budget for rules of their own game.

  11. Stef June 11, 2016 at 7:18 pm #

    Private nursing home seems to have increasing profits – cut staff hours and that affects quality of care, funding claims are not factual, some of the claims are exaggerated.
    One resident said instead of making place look posher, when the place looked lovely as it was, perhaps they could spend money on extra staff. Working in high care is exhausting if you care about yours residents care, it is a hard job but rewarding to improve someones final stage of life.

  12. Kerrie June 18, 2016 at 8:45 pm #

    If you have seen how others had twisted your progress notes, claim a walking person bed bound and how managers are putting on a show by feeding the resident but didn’t even know their routine, you would appreciate how severe the ACFI had been abused. 1 physio to massage 90 people per day just for 4Bs, how can it be even humanly possible?

    I would cut the funding too if others are simply getting ridiculous trying to get more money out of my pocket when I see nothing was true.

  13. Jude June 26, 2016 at 11:21 am #

    I am with you Dave and Munro. Let us do what will help our elderly people in care rather than do what brings in the most money. Let’s promote ability rather than disability. Let us be directed by clinical need rather than revenue. ACFI does not work for the residents … make the change to help them.

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