Nursing home funding to surge under blueprint for aged care

Funding for high-care nursing home residents would be doubled under a plan being examined by the federal government.

A multi-­billion-dollar aged care plan is being examined by the federal government.

Funding for high-care nursing home residents would be doubled and aged-care providers given ­operating payments to “keep the doors open” under a multi-­billion-dollar plan being examined by the federal government.

The first study into the cost of delivering aged care has been completed and handed to Aged Care Minister Ken Wyatt. It will form the blueprint for a once-in-a-generation overhaul of the sector, which has a current taxpayer-funded budget of $18 billion.

The major findings of the ­research are that nursing homes should be funded through a “blended payment”, with about half in the form of a subsidy recognising the cost of keeping their doors open, regardless of the needs of individual residents. A second payment would cover the care needs of elderly residents, who would be split into 13 “cost classes” based largely on how much assistance they need to walk or even move in bed.

Such a model would be a departure from the way facilities are subsidised now — through the imprecise Aged Care Funding Instrument (ACFI) — and deliver a 75 per cent increase in the level of support for the most expensive category of resident. The ­Coalition reduced funding growth for the ACFI by $2bn ­partly because of “over-claiming” by aged-care providers at the ­lucrative end of the scale.

 

In the past decade, for example, the proportion of nursing home residents classified as needing complex healthcare, which ­attracts the highest subsidy, jumped from 12.7 per cent to 53 per cent.

Australian Health Services Research Institute director Kathy Eagar, who headed the study, said the work provided proof, for the first time, that the cost of care was surging ahead of funding. “This gives us empirical evidence that people in residential aged care are extremely frail and need much higher levels of care than they have in the past,” she said. “Whenever I have presented these findings, people have been surprised at what a frail population this is.”

Mr Wyatt told The Australian he was “personally committed” to introducing the model if the ­Coalition were returned to government.

“(The study) is potentially a completely different way of allocating funding for residential aged care, that will fix flaws in the ACFI, including replacing ACFI’s complex and time-consuming ­assessment process and eliminating incentives for providers to ­‘upcode’ resident need,” he said.

“Once implemented, (it) will better identify the needs of individuals in residential aged care and better allocate resources to meet their needs.”

The minister last week told a meeting of the National Aged Care Alliance that he was “really happy” with the research. But ­moments after Mr Wyatt ­addressed the forum, Department of Health first assistant secretary Jaye Smith told the room: “I don’t want to temper the minister’s enthusiasm but no decision has been made on implementation yet.”

The exchange, some of those who were in the room believe, is confirmation that health bureaucrats are reluctant to commit to a reform that would be seismic in the sector and could come with a hefty price tag.

A new classification system, if the government adopted it, would cement the mechanism for distributing money in the system ­before the Royal Commission into Aged Care Quality and ­Safety issues its final report in April next year.

It is likely to include recommendations that would cost at least $5bn to implement.

In evidence to the royal commission last week, Department of Health secretary Glenys Beauchamp said it would cost “several billions” just to reduce the waiting list in home-care packages from one year to three months.

Under the proposed model, the highest category of support would be for those who need palliative care in nursing homes — a fast growing group — while another five categories, or one-third of all residents, are for “non-mobile” people requiring the most significant resources.

Every nursing home would also receive a one-off “adjustment” payment for each new nursing home resident to cover the cost of the extra time needed to fully understand their care needs.