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Why ACFI isn’t the only game in town


Further moving to user pays and consumer directed care in residential aged care will see providers become less reliant on government funding, argue Mark Sheldon-Stemm and Kay Horgan.

The current debate around the Aged Care Funding Instrument (ACFI) has once again led to calls for a cost of care study. A number of players are now calling for a review of ACFI changes as the industry feels the squeeze of yet another decrease in funding.

But is this anything new?

Aged care funding has never kept pace with cost increases, with annual ACFI reimbursement increases of around 1.5 per cent compared to wage and other cost increases of 3 to 5 per cent per annum. This disparity in funding the real costs of providing care has, in fact, been happening for nearly 20 years. It has led to the ‘ACFI game.’

At the first roll of the dice the government sets the business rules as to what providers can claim. Providers make their move. Some play by the rules and get smart about how to claim for care and increase their funding beyond the annual subsidy increase. Some don’t play smart and miss out on tens and even hundreds of thousands of dollars. The government sends their ACFI review teams out all over the country to check on how claims are being made. Some get caught red handed (perhaps pushing the boundaries a bit too far in their quest for income), others may get away with it. In many cases government teams claim dollars back. When government funding increases above its forward estimates, it claws back the funding by either freezing any increase or adjusting the ACFI.

The game continues. Many aged care providers employ experts to help them find more creative ways of claiming ACFI. This is followed by the inevitable cycle where the government reins in funding again. The ACFI game is distracting and a waste of resources. The outcome is that funding has been prescriptive leading to a limited menu of services. Residents get what they are given.

However, the future is clear and has been for some time. It is embodied in the recent government Aged Care Roadmap that sets out a pathway towards a deregulated residential care market. The trend to a market-based service has commenced in home care.  Reality will set in when providers lose their home care packages in February next year. This will open the way for many other home care services, and for consumers to have a say in what they get, by whom and for what cost.

It follows that as consumers of home care services begin to enter residential care they will be more financially literate. They will expect to control the funds that influence the services they receive. Therefore, the market-based service model is creeping its way to residential care.  The current funding model is no longer sustainable as the government has clearly indicated it does not have the funds for an increasingly aged population.

So why don’t we stop the AFCI game? Let’s acknowledge that a user pays system in residential care is already here – it commenced in July 2014 with means tested fees. The door has been opened to introduce consumer directed care (CDC) into residential care. Isn’t it time to do a reality check? To focus on giving the funding to customers? Here is an alternative to relying totally on government funding.

CDC is, or should be, about a level of openness and honesty with the consumer that has not been seen before. We feel happiest doing business when we know what we are getting and how much it costs. When you open your books to consumers and their families and show them where the money comes from and where it goes there is a surprising recognition by them of what services can be provided and who pays for them.

While anything new poses the threat of the unknown, embracing CDC in residential has its rewards. Greater clarity about specific costs provides the mechanism to enable a more realistic understanding of what is possible. It provides a way of setting clearer expectations with consumers about the services they receive from the outset. If consumers want more then they will pay for it, as they would any other service they purchase. Therefore, it is not about government funding or ACFI, but more about what contribution is made by each of the parties to the service. The government will make a contribution, as will the consumer, based on their ability to pay and the services they want.

Eventually the ACFI game, like all games, has to come to an end. The new market-based system has begun. There are new rules that require different thinking. Greater control will go to consumers, who will be choosing what services they receive, where, by whom and at what cost.

It is up to providers to prepare for a market-based service system. This will require a shift in focus. Less wishful thinking that government funding is the only way services can be provided. Those in the industry who believe there are no systems, or way of providing CDC in residential care, are sadly wrong.

Mark Sheldon-Stemm is principal of Research Analytics and Kay Horgan is principal of AgeWorks.

Aged care funding cuts: Follow AAA’s full coverage here

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5 Responses to Why ACFI isn’t the only game in town

  1. Jason B June 24, 2016 at 3:22 pm #

    Having visited nursing homes in USA I would hate to see us end up with a haves and have not similar system.

  2. Michael June 25, 2016 at 11:37 am #

    The problem here is that the elderly and their families are more easily gamed than the government. So we will simply have a new game. In a game someone loses and in any market game it is the vulnerable who lose. In aged care this is recipients of care. This has happened in the past, is happening now and will happen in any new game.

    Wouldn’t it be better to simply abandon this failed mess and instead manage both funding, resident support and oversight through local community structures in which the community and families are strongly represented and have a controlling interest. Funding would then be flexible and could be directed to where it was needed. it would soon by apparent if anyone was trying to play games with the system or with residents’ interests.

    After all aged care is a service to the community and the real customer should be the local community rather than vulnerable and powerless residents. They should have oversight and control of the services provided to their seniors. All functioning markets require an effective and powerful customer to control marketplaces excesses. Without one they fail and instead exploit the vulnerable.

    What is lacking in all the current and past aged care market models is an effective customer. The weak and powerless have suffered . We need to create one and ensure that it has access to all the data needed to assess performance and the necessary market power to address problems. That is how successful markets work.

  3. Dave June 27, 2016 at 8:13 am #

    How would you structure this new market-based system? A ‘Pay-Per-View’ model of care wIll only end in tears. The assumption that CDC empowers the consumer only holds if the consumer knows exactly what they need and has the ability to make complex and informed decisions. When (if) Beryl wakes up after that big CVA and the hospital starts pushing for her discharge, it’s unlikely she’ll be capable of either.

    For all its flaws, at least ACFI is based on care needs and it’s available to everyone, not just those with the ability to choose and pay. Past experience suggests our industry cant be trusted to play it straight so we’ll need an onerous dose of legislated protections just to keep vulnerable folks safe…which sort of defeats the whole CDC thing, doesn’t it? .

    The practical implications of providing residential care for the haves and have-nots under the same roof could be tricky. How should we arrange the accommodation…first care, business care, economy care? At best, we’ll spend all day consoling Betty because she cant afford to attend the physio classes like Ethel does. At worst, we’ll see people paying for their daily shower and springing for the cost of essential equipment…if they can afford it. As for complex care, well, sorry ’bout that ulcer but your budget only covers vaseline gauze and a used bandage.

    Accentuating financial inequality among the frail elderly when they’re already in distressing situation would be daily reminder that our society values the dollar more than its seniors.

    This is model might suit items like Foxtel and daily newspapers but assuming that every client can leisurely sit back and make a shopping list of their specific care needs is misguided.

  4. conscientious observer June 27, 2016 at 12:36 pm #

    It is not as simple as the authors suggest that, “if you want more you can pay for it”. Many do not have it or would rather die at home than spend their accumulated savings which they intend to pass on to the next generation.

    The aged care market operates on such different principles that it could hardly be called a market. It is a system created by legislation and funded by government as part of the post-WW2 social compact – work hard, pay taxes, raise the next generation of workers and the people through the government will repay you with health care, pensions and aged care.

    If there is not enough in the kitty to meet these obligations then the government needs to open up a dialogue with it’s citizens about the best way forward.

  5. Tim June 28, 2016 at 10:25 am #

    We did have the best aged care system in the world.

    Well lets look at the UK system (which we seem to be following) there you will enter a ‘for-profit’ facility until your personal wealth is exhausted. Then you will transfer to a publicly run facility, subsidised by the government. Is this how we ‘look after our mates’ in this country?

    Just a fraction of the money being spent on submarines, or the NBN, would provide the services that our elderly deserve. They sacrificed so much to create our society.

    CDC is an excuse to avoid or reduce societies responsibility for the frail aged and will lead to the demise of our aged care services (see Mental Health).

    Aged Care is the unmentioned topic in this election, and this shows that all parties see it as a financial problem.

    The government (whichever one we get) must also be challenged on their forward estimates statements for aged care. There budget reflects the increase in the number of elderly people, not an increase in ‘per resident per day funding.

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