More widespread reforms for Aged Care – the key changes for investors

From 1 October 2022, the new funding model, known as The Australian National Aged Care Classification Model (ANACC), replaced the ACFI.

Under ANACC, a resident’s care needs are assessed considering their physical ability, cognitive ability, behaviour and mental health and funding is determined by a two-tier payment system:

1. a fixed subsidy per day based on costs of care shared by residents; and
2. a variable subsidy per day based on a particular resident’s ANACC classification level, which will be determined by an independent, external assessor.

The intention is that the new subsidy funding model helps to standardise assessments (as classifications are done by external assessors), while also more effectively accounting for the Provider’s actual costs of caring for its residents e.g. accounting for higher fixed operating costs on account of services being delivered in remote locations or specialist services.   

Residential aged care facilities will be rated based on a wider range of categories (including compliance) using a ‘star ratings’ system.

Providers will get an overall rating as well as ratings against four sub-categories:

1. Quality indicators (pressure injuries, physical restraint, unplanned weight loss, falls and major injury and medication management);
2. Service compliance ratings relevant to the regulatory activities undertaken by the Aged Care Quality and Safety Commission (Commission);
3. Consumer experience information collected through face-to-face interviews; and
4. Staff minutes of care.

Key features of the Star Ratings are that they introduce compliance as one of the core categories used to rate Providers, and are more comprehensive than the existing ratings system, using a wider range of service quality indicators.  In a measure which is intended to reinforce the integrity of the Star Ratings, the Secretary is not liable to Providers for financial or other loss suffered by a Provider as a result of the publication of the Star Ratings.

A national Code of Conduct specific to the aged care sector and overseen by the Commission.

The new Code will apply to Providers, their aged care workers and governing persons.

SIRS extended beyond care provided in a residential setting to home care and flexible care delivered in a home or community setting.

SIRS requires mandatory reporting of certain incidents of abuse and neglect to the Aged Care Quality and Safety Commissioner (Commissioner).  It also requires Providers to establish effective incident management systems to manage and prevent incidents.

The existing SIRS protections against retribution or vilification for reporting such incidents will still apply.

New governance requirements for Providers which seek to improve transparency and accountability. 

The governance responsibilities relate to (1) the membership of Providers’ governing bodies, (2) the establishment of new advisory bodies and (3) measures to improve leadership and culture.  They include requirements to notify the Commissioner of changes to key personnel and a suitability test for key personnel.

There are also new obligations for Providers to report to the Secretary on matters relating to their operations on an annual basis. 

The Secretary has expanded powers to disclose protected information where he or she believes, on reasonable grounds, that the conduct may breach professional standards.

Other laws have also been amended to facilitate information sharing between Commonwealth bodies across the aged care, disability and veterans’ affairs sectors.  In particular, these changes permit information sharing on matters that present risks to people receiving care, support or treatment.

The Royal Commission Response Act implements Phase 2 of the Framework.

Phase 2 is aimed at strengthening provider accountability and transparency and protecting refundable accommodation deposits.

Under the reforms, the Secretary or Commissioner has the power to request information or documents from a Provider or borrower regarding loans made using a refundable deposit or accommodation bond. 

The Pricing Authority will be renamed the ‘Independent Health and Aged Care Pricing Authority’.

The renamed Pricing Authority will have the functions relating to aged care pricing and costing matters, including:

1. providing advice on aged care pricing or costing matters to the relevant Minister; and
2. collection and review of data, costing and other studies and consultation for the purpose of performing an aged care pricing function or related function.

The Royal Commission Response Act also includes further reforms to support the Pricing Authority, including the establishment of an Aged Care Advisory Committee within the Pricing Authority, to be chaired by a new Deputy Chair of the Pricing Authority.