New aged care funding model hailed as “game changer”

A radical overhaul of aged care funding is being pushed in a new report the government has hailed as a “game changer”.

Minister for Aged Care Ken Wyatt. Picture: AAP

A report recommending a radical overhaul of the aged care funding system, released by the Coalition on Friday, would force nursing homes to take residents without knowing their cost classification and help the government reject calls for mandatory staff-to-patient ratios.

The study, commissioned by Aged Care Minister Ken Wyatt and authored by the University of Wollongong’s Australian Health Services Research Institute, recommends individual residents be split into 13 cost classes based on their mobility and a separate tariff be paid to all nursing homes for costs that are shared across all occupants of a facility.

The results of the study, first revealed by The Australian last month, show those with the highest needs will receive 75 per cent more funding than the current model provides, while some people in the medium-to-high categories will receive close to double.

A one-off adjustment payment will be made for each new resident of a home, allowing providers to spend the average of 16 weeks it takes getting to know the care needs and preferences of their charges.

“The Commonwealth (should) build strong accountability into the system to ensure that the adjustment payment is used for the intended purpose, not added to the bottom line and no contracted out to third party providers,” the report says.

“A desirable feature of a funding model for residential aged care is that it does not create incentives for homes to select residents based on their payment class.”

To combat this, the study authors recommend nursing home providers not be told the classification of a new resident until after they have been settled into a facility.

A new model will adopt the National Efficient Price used in the hospital system, where a cost study is done each year which informs the government funding for the next year.

“There is no reason to adopt a difference approach in the pricing of residential aged care,” the study authors write.

Although the report provides “significant evidence” about the funding level required for the future, it could be adopted by the federal government based on the current overall budget allocation.

The new model allocates money based on relative differences in care classes.

“There will inevitably be some homes that will experience a funding increase with the introduction of the (new classification) and some that would experience a funding decrease,” the study says.

Crucially, however, nursing homes will not lose money if a resident starts showing signs of improvement in their ability to move or function.

“If the capacity of the resident improves after entry into residential care, the payment rate does not change and there is no need for a resident to be reassessed or assigned to a lower paying class,” the report says.

“This is an explicit incentive for high quality services with a focus on restorative care.”

Minister Ken Wyatt said the new model can be a “game-changer” for the sector.

“The proposed new system is a completely different way of allocating funding

for residential aged care,” he said.

“The proposal includes the removal of identified flaws in the Aged Care Funding Instrument including complex and time consuming assessment process as well as eliminating incentives found not always to be in the best interests of consumers.”