May 25, 2023

Concerns raised over new aged care funding model

Under the recently introduced Australian National Aged Care Classification (AN-ACC) funding model, subsidies paid to providers are determined by the care needs of each resident. [Source: Shutterstock]

Concerns around the new aged care funding model have seen advocacy groups warn that providers could exploit the system for financial gain by taking on clients that would generate the most subsidies.

Consultancy firm, Mirus Australia, exposed the flaw in the model and earlier this month gave providers a list of the most profitable older Australians based on the subsidies they generate and their care requirements. They advised providers to make strategic decisions “in a way that benefits the business”.

The analysis suggested a resident who is immobile and could be in respite care is the least profitable.

The firm backed its choice to do this by saying they were trying to help aged care providers understand how the funding model works to ensure the sector remained afloat. The Guardian states its advice would never “negatively affect the provision of care”.

The funding model operates by placing residents in a category from one to 13 depending on the level of care they require. Those who require more receive bigger subsidies and from October, these subsidies will help providers deliver mandated care minutes for each resident in line with their care needs.

With this in mind, the firm warned that reclassifying residents to reflect their deteriorating health, which would result in more mandated care minutes, could negatively impact a provider’s budget as increased subsidies won’t cover costs after October.

Mirus Australia partner, Andrew Farmer,  said in a video webinar that many providers were not prepared for a key recommendation of the Royal Commission into Aged Care Quality and Safety and that funding does support what is needed to sustainably implement mandated care minutes, to be conducted by a Registered Nurse (RN).

“The cost to the business to meet that new level of care that we are mandated to [provide] means that ultimately we are moving backwards in our sustainability,” he said. 

Professor Kathy Eagar helped design the new funding model and is a former adviser to the Aged Care Royal Commission, and told The Guardian that the new system made it harder for providers to manipulate the assessment system for profit.

“Aged care is big business and consultants make a fortune attempting to manipulate the system.” 

Greens Senator for Victoria, Janet Rice, took to Twitter to slam the potential funding loophole and said she planned to raise it with the Aged Care Department at today’s Senate Estimates (May 25).

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Janet Rice. [Source: Mick Tsikas, Australian Associated Press]

“People in aged care deserve care and support, not exploitation that maximises provider profits.” 

Doctor Bryan Keon-Cohen, Founder and Chair of Aged Care Justice, a not-for-profit organisation that assists families access legal representation, told HelloCare that the new funding model raises questions about how the aged care sector is funded and managed and that the drafting of the new Aged Care Act signifies the “time to get it right”. 

“Are providers being adequately financially supported by the Government to provide care in a sustainable way or are they too reliant on profitability? Is the sector being sufficiently regulated and monitored to ensure funds are allocated to achieve a safe and high standard of care?” he asked.

“Now is the time to get it right. With the new Aged Care Act currently being drafted, broader questions regarding how care delivery is approached, funded and regulated need to be addressed so that confidence in the aged care sector can finally be restored.”


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  1. So, it’s wrong to categorise residents? How would the government choose to fund residential care then… would a “low care” resident that requires minimal assistance be funded the same as a “high care” resident that requires full assistance?
    How and why would the government fund a low care resident at the top rate and how and why would a facility take on a high care resident and not be paid for it?

    The ANACC funding model was developed during a period of chronic underfunding brought about by the liberals, it was calculated in 2021 and finally introduced late in 2022. It was out of currency on day one and is presently about 20% below where it should be with rising costs etc.

  2. Aged care is big business and consultants make a fortune attempting to manipulate the system.”

    ‘Care’ and business are not compatible. People must stop using the word ‘care’ to describe this industry. Get real


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