A Mirus Australia review of 573 homes shows behavioural complexity is worth less to the funding model than physical dependency, and last year’s recalibration widened the gap.
As Dementia Action Week urges Australians to talk more openly about dementia, new analysis from aged care data firm Mirus Australia has found the sector’s funding model is structurally unable to do the same, and that when the model was recalibrated last year, the one class of resident it moved money away from was the one that most closely resembles ambulant dementia care.
“Dementia is in the data, just not by name,” said Ty Fisher, Mirus Australia’s Head of Data and Insights, who led the analysis. “That is not an oversight. It is the design.”
The analysis drew on a point-in-time extract of 573 residential aged care services across 134 provider organisations, covering 49,692 residents. The cohort’s class distribution sits within 0.1 percentage points of the national figures at every one of the thirteen permanent AN-ACC classes.
A funding model that can’t say “dementia”
AN-ACC, the classification system that determines how much residential aged care providers are paid per resident, was deliberately designed to exclude diagnoses.
Formal diagnoses (dementia chief among them) are hard for clinicians to pin down, especially in early or mixed presentations, and were never meant to be a precondition for funding. Instead, AN-ACC funds the consequences: frailty, impaired mobility, cognitive loss, behavioural disturbance and nursing need.
But stripping out the diagnosis doesn’t remove the problem, Fisher says, it just relocates it. “The problem does not disappear. It moves. Where a diagnosis once carried the evidentiary weight, that weight now sits with the registered nurses who observe and document behaviour, and with the assessors who interpret what they wrote. Whoever writes the progress note now sets the claim.”
It also leaves the sector unable to answer a basic question about itself. “Once diagnoses are stripped from the funding record, tracking system-wide outcomes for people living with dementia becomes a modelling exercise rather than a simple query.”
Why Class 8 matters
The clearest illustration of where this leaves dementia residents is Class 8 (ambulant, with low cognition), described in the analysis as the purest ambulant dementia cohort the model recognises. It holds 5,281 residents in the cohort, or 11.3 per cent.
Fisher’s data shows just how rare a “clean” ambulant dementia classification actually is. Only 249 of the 46,696 permanently classified residents in the cohort, 0.53 per cent, sit in Class 3, the class that on paper looks like the natural home for mobile residents living with dementia.
“The class that looks, on its description, like the natural home for mobile residents living with dementia is very nearly empty, because the classification tree sends almost everyone who fits that description somewhere else.” Most of that cohort instead lands in Classes 6, 7 and 8.
When the Department of Health, Disability and Ageing recalibrated both the AN-ACC price and class weightings on 1 October 2025, Class 8 was the only class in the entire cognition branch to go backwards in cash terms, falling 1.9 per cent to $177.38 a day, even as the sector-wide average variable subsidy rose 2.1 per cent over the same comparison.
By contrast, Class 3 received the largest proportional lift in the cognition branch, up 13.2 per cent. Given how few residents sit in that class, the practical effect was to move around seven cents per resident per day across the whole cohort.
Meanwhile Class 11 (not mobile, lower function) gained 7.8 per cent, pushing its rate to $201.04 a day, $23.66 more than Class 8, despite a resident who crosses into the not-mobile branch often becoming measurably less behaviourally demanding, not more.
Mobility outweighs cognition roughly two to one
Fisher’s regression modelling, which explains 81.5 per cent of the variation in homes’ claim profiles, found that a home’s share of not-mobile residents and its share of “ambulant cognitive load” residents (Classes 3, 6, 7 and 8) both drive funding, but not equally.
Every additional 10 percentage points of not-mobile residents adds $10.26 per resident per day to a home’s variable claim; the same increase in ambulant cognitive load adds only $5.66.
“AN-ACC tracks bodies that cannot move far more faithfully than it tracks minds that cannot navigate,” Fisher said.
Care minutes hold up, but the buffer is thin
One finding ran against Fisher’s own expectations going in. “This was the surprise. We expected high cognitive load homes to be pushing minutes well beyond what their funding implied. They are not, at least not measurably.”
Total care minutes performance sat flat at roughly 103 per cent of target regardless of a home’s cognitive load quintile. Registered nurse minutes did trend upward with cognitive load, from 109.3 per cent of target in the lowest quintile to 113.3 per cent in the highest, though this didn’t reach conventional statistical significance.
Fisher puts that down to the fact that care minute targets are already acuity-adjusted from the same class mix that sets the claim, so homes are largely staffing to the target the model gives them and hitting it. “That part of the system is working as intended.”
Even so, the margins are tight: 20.6 per cent of homes sat below their total care minutes target at the time of the extract, and a further 29.5 per cent were within two percentage points of it.
The uncomfortable shape of the model
Taken together, Fisher argues the data points to a funding model with a clear, if unintended, hierarchy of what counts. “None of this is evidence of intent,” he cautioned of the recalibration, “but the net effect on a home that specialises in ambulant dementia care was close to zero.”
“That is the uncomfortable shape of the model,” he said. “Behavioural complexity, which is what exhausts a workforce, is worth less than physical dependency, which is what a roster can plan around. Our registered nurses carry the assessment burden for the cohort the model rewards least.”
“Dementia is now Australia’s leading cause of death, and around 446,500 Australians are living with it, yet our funding model literally cannot hear the word,” Fisher said. “In a diagnosis-blind model, the note is the evidence.”
The Dementia Funding Cliff: How Documentation, Case Mix, and Design will Decide Provider Survival
Aged care providers who specialise in ambulant dementia care are heading into a period where survival will depend on strategic adaptation, because the current AN ACC settings structurally underfund the very cohort that costs them the most to support.
This means homes with many ambulant dementia residents are structurally underfunded, even though these residents often require more RN supervision, more behavioural management, and more environmental safety interventions.
Providers specialising in ambulant dementia care are effectively doing the financial heavy lifting for the Commonwealth. They must deliver:
• High RN minutes (which trend upward with cognitive load)
• High behavioural supervision
• High documentation burden (because “the note is the evidence”)
But they receive less funding per resident than homes with physically dependent residents.
This mismatch creates thin margins, with homes already below care minute targets.
1.Shift Case Mix Strategy (even if reluctantly)
Providers may begin actively managing their intake to increase the proportion of:
• Class 11 residents (not mobile)
• Higher physical dependency cohorts
This is not because they want to—but because the model financially rewards immobility.
Homes specialising in dementia may diversify their resident mix to avoid insolvency.
2. Invest in Documentation as a Core Business Function
Because the AN ACC algorithm is fixed and diagnosis blind, documentation quality determines funding.
• dementia behaviours must be documented in detail
• RN notes must reflect cognitive load
• behavioural patterns must be visible
• supervision needs must be explicit
If not, the algorithm will default to the lower funded ambulant classes.
This is why dementia specialist providers are financially squeezed: they carry the highest behavioural burden but fall into the lowest mobility weighted funding classes.
Providers will need to:
• Train RNs and care staff in behavioural documentation
• Implement structured note writing templates
• Use digital tools to capture behavioural triggers, wandering patterns, supervision needs
• Audit progress notes weekly
Homes may create “documentation excellence teams” to ensure every behavioural complexity is captured and justified.
3. Develop Specialised Dementia Programs That Attract Non AN ACC Revenue
To survive, providers may pursue:
• Private fee for service dementia programs
• Dementia specific respite packages
• Partnerships with PHNs, universities, or Dementia Australia
• Grants for innovation in dementia care
• Paid family education programs
4. Reconfigure Workforce Models
Ambulant dementia residents exhaust staff more than physically dependent residents. But AN ACC does not pay for that exhaustion.
Providers may:
• Shift to behavioural support workers rather than only RNs
• Use small team “household” models to reduce supervision burden
• Increase sensor based monitoring (fall detection, exit alerts)
Homes may adopt low cost behavioural supervision models to reduce RN load. Reduce reliance on 1:1 supervision by using environmental design
5. Advocate Collectively for Model Reform
The article shows the model is “fatally flawed” for ambulant dementia care. Providers may:
• Form alliances to lobby for a cognition weighting uplift
• Push for a “behavioural complexity supplement”
• Demand reinstatement of assessor override powers
• Argue for recognition of dementia as a cost driver
Sector wide advocacy may intensify, especially from dementia specialist providers.
6. Increase Focus on Environmental Dementia Design
To reduce staffing costs, providers may invest in:
• Circular walking paths
• Visual cues for navigation
• Reduced exit seeking triggers
• Sensory rooms
• Smaller living units
Homes may redesign spaces to reduce behavioural incidents and supervision needs.
7.Consider Strategic Mergers or Partnerships
Smaller providers with high ambulant dementia loads may:
• Merge with larger organisations
• Outsource behavioural support
• Share specialist dementia staff across multiple sites
The Hard Reality for Providers
The article’s data shows that ambulant dementia care is the least financially rewarded and the most labour intensive cohort in aged care. Unless the model changes, providers will need to adapt or risk collapse.
The most likely survival pathway is a combination of:
• Case mix management
• Documentation optimisation
• New revenue streams
• Workforce redesign
• Advocacy