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Back to "Community & Associations Newsletter - June 2022"


Australian National Aged Care Classification – Royal Commission into Aged Care Quality and Safety

The Australian National Aged Care Classification (AN-ACC) is a care funding model that will be implemented on 1 October 2022. As highlighted in the findings of the Royal Commission into Aged Care Quality and Safety, an ongoing issue within the aged care sector has been the lack of funding available to provide effective and quality care.

Following the recommendation of the Royal Commission, the Australian Government will put into effect the AN-ACC which will provide much-needed funding for our ageing population.

The current model in place is the Aged Care Funding Instrument (ACFI), which has been in effect for over 10 years. During this period, we have seen significant changes in our way of living with the onset of COVID-19.

The new AN-ACC model alters the payment schedule from a prospective model to a retrospective model. Funding allocation is individual in the sense that it first assigns a base rate to each resident to be provided as funding to the facility. This figure can then be increased depending on the level of funding required by the facility to care for the individual resident.

Aged care providers will receive funding based on three components:

(1) Fixed component – which accounts for shared costs among all residents;

(2) Variable component – which accounts for the individual cost of care of a resident based on their classification following an examination by a medical practitioner; and

(3) A one-off adjustment payment for when a resident enters a new facility.

The main difference between the ACFI and AN-ACC is that there is no requirement under the AN-ACC for a resident to be reassessed and reassigned to a lower payment class if the capacity of a resident improves. What this means, is that the An-ACC provides an inbuilt financial incentive for aged-care providers to invest in restorative care to effectively reduce the care needs of residents.

The implementation of the AN-ACC will deliver a scientifically valid report of the residents living in aged care. The model will utilise accurate data to discern the individual needs of residents so that care homes can adequately adjust the costs to cater for the changing needs of residents.

This is the first step into the Government’s $18.8 billion aged care reform program, which will also be supplemented by a further $20.1 million in the 2022 Commonwealth Budget to support the transition from the Aged Care Funding Instrument to the new AN-ACC model. This will not only promote fair and transparent funding, but will help to restore public faith in the aged-care sector.

Grace Brophy, Lawyer

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