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Industry analysis finds impact of ACFI budget measures understated


The changes to claw back aged care funding announced in last week’s budget are far more than the government predicted, and if they go ahead, will impact sector viability and result in exclusion of high-needs residents and inadequate treatment for symptoms of suffering such as pain, according to new analysis by Ansell Strategic.

Following cuts to Aged Care Funding Instrument (ACFI) announced in December’s Mid-Year Economic and Fiscal Outlook (MYEFO), the Federal Government announced in the budget that it would be making further changes to ACFI to save $1.2 billion over the next four years to stabilise what it described as a continuation in higher than expected growth.

The Government said the growth in ACFI was driven by higher than anticipated claims in the ‘complex health care’ (CHC) domain and that it was changing to certain areas of that domain and reducing indexation levels.

  • What was announced in the budget and MYEFO? Read AAA’s stories here and here
  • What do the changes to the CHC look like? See a summary bottom

Ansell Strategic’s analysis, which was commissioned by Leading Age Services Australia (LASA), has found that the proposed changes to ACFI would equate to cuts $350 million in excess of those announced by Government in the budget and MYEFO.

“Our analysis indicates that funding claw backs to providers will be in excess of $2 billion over the next four years alone. As the proposed changes are permanent, there will be long term ramifications for the most vulnerable residents and the providers that care for them,” the report said.

The analysis found that from January 2017, the average 80-bed facility would lose about $439,000 per year, less than 13 per cent of residents would be classified as having high complex health needs compared to the 44 per cent currently, and the average daily funding for the care of CHC needs would fall from the current $45.84 to $30.80 for residents entering care after the proposed changes are implemented.

Cam Ansell

Cam Ansell

Ansell Strategic managing director Cam Ansell said the analysis highlighted major concerns that required urgent attention.

“While the cuts compromise the viability of the sector, the threats to the vulnerable aged are even more concerning. The ACFI changes create a disincentive to admit high dependency people and will ultimately result in their displacement to hospitals,” Mr Ansell said in the report.

“We believe that it is critical that the aged care and broader healthcare sector work collaboratively with Government to ensure that these changes do not proceed.”

Beth Cameron

Beth Cameron

LASA spokesperson Beth Cameron said: “We are appalled that the government and department have downplayed the total amount they are ripping from aged care services through changes to ACFI.”

These changes will affect providers and the people whose high care needs are being reclassified, she said.

“Downgrading a person’s care score will not actually change their personal health care needs. If someone needs two injections and five tablets at certain times of the day, that is what they need and that is what aged care providers will still have to ensure they can deliver,” she said.

Ms Cameron said it was extremely disappointing the changes were determined without adequate engagement with industry, including the peaks.

“We will continue to demonstrate to both the Government and Department that these changes are unsustainable and do not reflect the increasingly complex care needs of older Australians or the true costs of care,” Ms Cameron told Australia Ageing Agenda.

Similarly, fellow peak Aged and Community Services Australia (ACSA) reported in its National Report yesterday that it had growing concerns about the impact the ACFI changes announced in the budget would have on funding.

“We are getting modelling on this to confirm our concerns and have requested an urgent meeting with the Department. We will get back to members as soon as possible,” ACSA said.

Proposed CHC reductions

The Government’s proposed changes are in two parts and, as set out in the fact sheets accompanying the budget announcement, involve the following:

The first, effective 1 July 2016, would see indexation of funding in the Complex Health Care (CHC) domain of the ACFI halved for one year, returning to 100 per cent from 2017–18.

Further, for new appraisals or reappraisals from 1 July to 31 December 2016, the scoring of certain medication and complex health care question combinations in the CHC matrix will be reduced.

As per the figure below, the DC combination reduces from high to medium and AC from medium to low. The current dollar value of each domain level per resident per day is ranges from $16.25 (low) to $46.27 (medium) and $66.82 (high).

CHC ACFI Budget changes Figure 1

In the second part, effective 1 January 2017, a redesigned scoring matrix (below) that reduces the rating categories for medications from four to three rating points and changes to scoring for some CHC procedures will replace the above for new appraisals or reappraisals of existing residents.

CHC ACFI Budget changes Figure 2

“If assistance is needed with medication this will now in all cases receive the middle B rating, rather than the previous matrix which provided an incentive to take longer to deliver medication by allocating the highest level of funding where medication assistance was required for more than 11 minutes per day,” according to the fact sheet.

As part of calculating the overall complex health care score, items affected by the changes include:

  • blood pressure measurement will be reduced from 3 points to 1
  • complex pain management at least weekly and for 20 minutes will be reduced from 3 points to 2
  • complex pain management by allied health professional at least 4 times per week will be reduced from 6 points to 4 and 120 minutes of delivery of treatment over a week will be required
  • management of arthritic joints and arthritic oedema involving the application of tubular elasticised support bandages will be reduced from 3 points to 1

Want to have your say on this story? Comment below. Send us your news and tip-offs to editorial@australianageingagenda.com.au 

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12 Responses to Industry analysis finds impact of ACFI budget measures understated

  1. David F May 13, 2016 at 4:18 pm #

    Agreeing with Beth Cameron, ‘down grading a person’s health score will not actually change their actual health care needs, for if someone requires 2 injections and 5 tablets at specific times’, then they still require the same level of care as they did before. The labour & materials output and costs remain the same both before the Government alters ACFI scoring and after.

    A provider cannot administer all of the prescribed treatment at the same time, neither can they only give part of the treatment, so what makes the Dept of Health believe this decision is in the best interests of the frail aged with complex health issues. Hardly the way forward.

    Why don’t the Dept bean counters admit that their modelling was totally inaccurate and this resulted in a vastly understated allocation to cover ACFI complex health scoring at a time when more and more aged persons are being admitted to residential care much later in life when they have serious health issues.

  2. K. Bell May 13, 2016 at 5:34 pm #

    These measures are appaling!
    Reducing the cost of what facilities get paid for care needs is not gong to suddenly magically reduce the actual care needs!!!
    It WILL put more pressure on an already undervalued service.
    I find it ridiculous that deeper consultative processes were not involved prior to releasing this sham of a budget.

  3. Munro May 14, 2016 at 8:49 pm #

    Wow thank you for this article, very neatly laid out.

  4. Lee May 16, 2016 at 9:30 pm #

    It’s going to be very difficult to achieve good outcomes for residents, and job satisfaction will plummet. I hate to say it, but, it might be time for this nurse to look outside of aged care.

  5. Greg P. May 17, 2016 at 10:11 am #

    So the amount of intervention by an allied health professional will be substantially increased, however the funds to pay for this skilled professional will be reduced. If the cost of providing the service are not covered, the facilities may simply opt to withdraw the service. How does that help the residents?

  6. Raf May 18, 2016 at 7:43 am #

    The changes coming in July 2016 and then January 2017 will affect the survival and success of smaller “stand alone” facilities.
    The expectations for care and the actual resident needs continue to grow but funding continues to drop. Is it any wonder that some larger ‘for profit’ organisations have opted to rid themselves of trained nursing professionals and opt for credentialed care workers to replace them?
    What exactly will this mean for the future of aged care in this continually ageing society of ours? 2nd rate care? 3rd rate even?
    Baby boomers prepare yourselves for the oncoming lack of trained and appropriately skilled nursing care that you may have been expecting to receive in your ‘golden years’.
    Providers get ready for even more stressful validation visits and accusations of not being honest ( no matter how hard you try) The Validation system is already seen as a punishment session without the added stress of the government needing to claw back more and more funding because they didn’t plan well enough for our future care needs. we have lost “The Arts” now it’s time to lose the “Aged” well not the aged but the quality of care.

  7. Dave May 18, 2016 at 12:49 pm #

    Why all the outrage? They’ve been tinkering with ACFI since the day it was born. Dump it.

    The problem lies further up the chain with those responsible for steering aged care over the cliff. Where are they and what are they doing for us?

    Shouldn’t we be just a little concerned that the predominant government advisor, The Aged Care Sector Committee, consists of public servant bureaucrats, past CEOs of biscuit companies, economists and church representatives? Not one person with any contemporary experience of caring for real people or first hand knowledge of what it’s really like out there.

    Disappointingly, even the Aged Care Commissioner has gone down this road with the appointments to her consultative committee.

    By accepting the premise that the best people to oversee aged care are those who have never actually provided any care, we’re complicit in the demise of our sector’s standards. Instead of complaining about the latest ACFI swindle we should be pushing for a better model. Rather than blaming the government for aged care’s declining standards we should be targeting the peak bodies who advise them..

    Until then, every little adverse change is just noise that soon fades…until the next one appears.

  8. Pam May 18, 2016 at 3:42 pm #

    I have taken the last 10 ACFIs we have lodged under the current rules and applied the proposed changes in scoring in Medication Management, Pain Management, Oedema, and BP. Result: an average decease in ACFI funding of $5500 per resident per year, a result similar to the Ansell Strategic outcome. All aged care providers throughout Australia need to contact their peak body to see how they can help to take on this government, instead of our usual stance of just taking it. The question I would like the government to answer, and in particular the Health Minister, is: both sides of government have agreed to introduce the NDIS which does not place a cap on the amount of money that any individual can receive, that it is based on their assessed needs, but in aged care a person can be assessed by their GP as having some or many complex care needs, but the amount of funding is capped to an amount that bears no resemblance to the actual cost of providing that assessed care need…is this fair? Why are the most frail people in our nation, our elderly citizens, treated in such an off handed manner?

  9. Dennis Priede May 18, 2016 at 5:10 pm #

    Why so surprised?

    ACFI subsidies have been corrected once before, and probably will again as our government doesn’t have unlimited funds for residential aged care.

    But, as an average provider earning 8% can double profit with a 10% increase in ACFI finding, it’s also unsurprising that there are a multitude of companies offering to help maximise claims, and that some staff have reported being pressured to falsify claims.

    Perhaps the industry should look at other ways to generate more sustainable profits instead, as an average provider can also double profit with a 10% increase in occupancy, without the risk of penalties and bad publicity.

    For those interested, there are Australian and international guidelines on how to improve safety and quality and significantly improve client outcomes and goodwill.

    As some providers have found, spending large amounts of time and money on unnecessary data can also prevent staff from delivering safe, high quality care.

  10. Heather May 19, 2016 at 8:20 am #

    Our industry body is lame and does nothing to promote high quality resident care. It only looks at lining the pockets of private providers. Some private providers are only interested in the profit, not actual resident care and how we can improve it.
    It is the people who have actually experience in providing care to residents, who should have a voice in the decision making process.

  11. Heather May 20, 2016 at 2:54 pm #

    Perhaps needs based funding is the problem. Having worked as an allied health provider in aged care I could see that needs based funding really meant assessment and treatment of residents was aimed at maximising funding rather than providing good care. Pressure is brought to bear to exaggerate disability rather than to maintain mobility and independence. There is also a lot of waste of senior staff time massaging the care needs to suit the funding model and gathering the statistics to present for Validation. Surely it is not rocket science to work out the funding needs of an aged care facility. If this was provided without the need for justification, we could all get on with providing optimal care and the government would not have to fund a bureaucracy whose role it is to check up on us.

  12. Jan November 4, 2016 at 2:22 pm #

    I wonder how long it will take before RNs are no longer used as they cost too much and the industry can now work without them legally. Help them to keep costs down, don’t worry about the oldies though.

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