On 1 October 2022, a new funding model - the Australian National Aged Care Classification (AN-ACC) - will replace the Aged Care Funding Instrument (ACFI) (DoH 2021a).

This new funding instrument will be introduced as part of the Budget 2021-22 Aged Care Reforms (DoH 2021a).

Why is the ACFI Being Replaced?

Since the introduction of the ACFI in 2008, the care needs of older adults entering residential aged care have changed significantly (Eager et al. 2020).

This is largely due to the success of home care programs that allow older adults to live at home independently for longer, meaning that when people do eventually enter residential aged care, they are older and frailer (with half of new residents being over the age of 84), and typically pass away within two years of admission (Eager et al. 2020).

Furthermore, a review in 2017 found that the existing ACFI model was no longer ‘fit for purpose’ due to several factors, including:

• Being unable to properly discriminate between the care needs of residents
• Administrative inefficiency
• Perverse incentives (e.g. reducing funding if a resident’s functioning improves, meaning that providers are ‘rewarded’ for failing to prevent or improve certain conditions and behaviours).

(Eager et al. 2020; Loggie et al. 2021)

In response to these issues, the Australian Government Department of Health engaged the Australian Health Services Research Institute (AHSRI) at the University of Wollongong to design a new and more appropriate funding model (Loggie et al. 2021).

What is the AN-ACC?

The AN-ACC, like the ACFI, will assess the degree of care required by each aged care resident and based on this assessment, allocate funding to the facility that is providing their care (McNamee et al. 2019).

These subsidies incorporate three components:

1. A base care tariff to cover fixed costs such as clinical supervision and training, facility clinical management and shared care activities. This fixed amount is based on the characteristics of the facility (e.g. location, specialisation) and remains the same regardless of changes in individual care needs or occupancy.
2. Variable funding to cover the costs of each resident’s individual care needs. This is determined based upon an assessment of the resident, during which the resident will be aligned with one of 13 classes of care.
3. A one-off entry payment made each time a new resident enters the facility. This is used to cover one-off transition costs.

(DoH 2021a; McNamee et al. 2019)

The AN-ACC Assessment Tool

The AN-ACC Assessment Tool is used to assess an individual resident’s care needs in order to determine the amount of funding that needs to be allocated to their provider. Based on this assessment, the resident will be placed in one of 13 classes of care funding (DoH 2021b).

These assessments are performed by independent aged care clinicians (with no relation to the resident’s aged care provider).

The AN-ACC assessment tool takes into account:

• Physical ability (including pain)
• Cognitive ability ( including memory, communication, sequencing, social skills and problem-solving)
• Behaviour (including cooperation, agitation, wandering, passive resistance and verbal aggression)
• Mental health (including depression and anxiety).

(DoH 2021b)

For information on the AN-ACC Assessment Tool and what it comprises, see the AN-ACC Reference Manual.

Classes of Care Funding

Each of the 13 classes represents residents who:

• Have similar needs and require the cost of staff time to deliver consistent care
• Have similar daily care costs
• Have similar clinical risks and safety indicators.

(DoH 2021b)

Each class is assigned a National Weighted Activity Unit (NWAU) based on the relative cost of providing care to residents in that class. The higher the NWAU, the more costly the resident.

The classes are:

(DoH 2021b; McNamee et al. 2019)

Note: The term ‘compounding factors’ refers to ‘the combined incremental resource use associated with other independent variables’, which includes frailty, falls, daily injections, wound management, behavioural issues and other variables (Eager et al. 2020; McNamee et al. 2019).

Additional Resources

• AN-ACC Reference Manual | DoH
• Residential Aged Care Funding Reform | DoH
• The Aged Care Funding Instrument (ACFI) Explained | Ausmed Article

References

• Department of Health 2021b, Assessment Process and Classification, Australian Government, viewed 17 November 2021, https://www.health.gov.au/health-topics/aged-care/aged-care-reforms-and-reviews/residential-aged-care-funding-reform/assessment-process-and-classification
• Department of Health 2021a, Residential Aged Care Funding Reform, Australian Government, viewed 17 November 2021, https://www.health.gov.au/health-topics/aged-care/aged-care-reforms-and-reviews/residential-aged-care-funding-reform
• Eager, K, Gordon, R, Snoek, M F, Loggie, C, Westera, A, Samsa, P D & Kobel, C 2020, ‘The Australian National Aged Care Classification (AN-ACC): A New Casemix Classification for Residential Aged Care’, Medical Journal of Australia, vol. 213, no. 8, viewed 17 November 2021, https://www.mja.com.au/journal/2020/213/8/australian-national-aged-care-classification-acc-new-casemix-classification
• Loggie, C, Westera, A, Kobel, C & Eager, K 2021, ‘The New Aged Care Funding Model Explained’, Australian Journal of Dementia Care, vol. 10, no. 3, viewed 17 November 2021, https://journalofdementiacare.com/the-australian-national-aged-care-classification-an-acc-an-overview/
• McNamee, J, Snoek, M, Kobel, C, Loggie, C, Rankin, R & Eagar, K 2019, A Funding Model for the Residential Aged Care Sector: The Resource Utilisation and Classification Study: Report 5, Australian Health Services Research Institute, University of Wollongong, viewed 17 November 2021, https://agedcare.royalcommission.gov.au/system/files/2020-06/RCD.9999.0145.0001.pdf