Peak bodies have hit back at “concerning” cuts to the Aged Care Funding Instrument announced in last night’s Federal Budget, which will see government save $1.2 billion over four years.
In order to stabilise what is said to be a continuation in higher than expected growth in Aged Care Funding Instrument (ACFI) expenditure, the Federal Government has announced it would make changes to the instrument’s scoring matrix to save $1.2 billion over the next four years.
“The measure will improve the Aged Care Funding Instrument so that funding outcomes better align with contemporary care practices and do not encourage distortions in claiming behaviour and care delivery,” according to the the budget paper.
Residential aged care expenditure is expected to grow 5.1 per cent per annum over the next four years. Minister for Aged Care Sussan Ley said expenditure on the ACFI was expected to blow out by $3.8billion by 2020 without action.
The government said growth in ACFI funding was driven by higher than anticipated claims in the ‘complex health care’ domain. It announced changes would be made to funding levels to certain areas of this domain, and that it would reduce the indexation increase of the domain by 50 per cent in 2016-17.
“This growth [in the complex health care domain] cannot be attributed to a natural increase in frailty as it is two and a half times the growth in the other two care domains, such as activities of daily living and behaviour, and increased sharply,” it said.
The $1.2 billion saving will be redirected to fund other health policy priorities, the government said.
Government will establish a $53.3 million transitional assistance fund to assist providers, and said stakeholder consultation would continue through the ACFI Technical Reference Group and the ACFI Expenditure Working Group of the Aged Care Sector Committee. It said it would also further consult with the sector to look at how care funding is determined, including options of separating residents’ needs assessment from service provision, and having it done by an independent party.
Adjustments to the ACFI expand on those already seen at the 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO), when the government announced it was cutting subsidies on certain claims in the complex health care domain to save $472 million.
Labor has criticised the cut, calling it “savage”, and said the budget had put high income earners and big business ahead of older Australians.
Peak bodies “concerned”
Aged and Community Services Australia (ACSA) said it was concerned with how the government intended to make the $1.2billion saving, calling the decision to cut the indexation for complex health care a “sting in the tail”.
While ACSA was disappointed but accepting of the cuts announced in the MYEFO because they targeted those who undertook ‘distortions’ in claiming, it said an across-the-board cut would penalise all aged care providers. “This will hit everyone who is a resident using Complex Health Care. This will impact not only on providers, but is a cut to the money available for care genuinely being provided to frail older people,” said CEO Adjunct Professor John Kelly.
Leading Age Services Australia called the continued cuts to aged care “devastating”, and said the government was “in denial about the true cost of providing complex care” in Australia. “Increasing numbers of senior Australians, due to a rapidly ageing population, are now requiring more complex care than ever before. And, with complex care comes more cost,” it said.
Chief executive officer of Catholic Health Australia (CHA) Suzanne Greenwood said volatility in funding had a negative impact on budgeting for the delivery of care, as well as a negative impact on financiers, investors and the financial markets on which it saw expansion in the sector depending. “This budget marks the third time in almost as many years that growth in care payments under ACFI has exceeded budget estimates,” said Mrs Greenwood. “This is further evidence that ACFI is failing as a funding tool.”
Brian Owler, president of Australian Medical Association called the cuts to aged care significant and said they would require closer examination.
Worries for consumer quality
Alzheimer’s Australia said the adjustments to ACFI were concerning. “While the Government may have had little choice but to cut ACFI due to projections of unsustainable expenditure in aged care, this budget decision suggests the funding tool is flawed and needs an overhaul to ensure it leads to quality outcomes. The current model does not reward the very things that promote quality of life especially for people with dementia,” said CEO Carol Bennett.
Palliative Care Australia said the complex health care domain was what most aged care providers relied on to provide palliative care, and called on government to commit closely to monitoring the impact of the cut to ensure there was no negative impacts on quality of care.
IRT Group CEO Nieves Murray said while she understood that government needed to ensure aged care expenditure was sustainable over the long-term, it needed to be careful not to erode the ability of providers to deliver quality of care.
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