AGED CARE Alert: Revised aged care funding cuts

14 December 2016


On 6 December 2016, the Federal Government announced a revision to the aged care funding package which was originally proposed in the 2016-17 Budget (Budget). The revisions come in the form of the Classification Amendment (Budget Savings Measures No. 1) Principles 2016, and focus on amendments to the Aged Care Funding Instrument (AFCI), specifically the Complex Health Care Domain (CHCD) Scoring Matrix. Essentially, the revisions will soften the severe funding cuts initially announced in the Budget.

The revised package is a response to significant industry discomfort with the original cuts, which were forecast to cost the aged care sector in excess of $2.5 billion over the next four years, almost $840 million more than initial government estimates.

The revised aged care funding package will take effect from 1 January 2017, with the ACFI Answer Appraisal Pack, Assessment Pack and User Guide being updated to incorporate the changes to the CHCD Matrix. The changes will not be applied retroactively, meaning only ACFI appraisals occurring after that date being subject to the new scoring matrix.

The Department of Health Fact Sheet accompanying the amendments states that after the changes are implemented, funding to the residential aged care sector will grow in aggregate at an average of 5.1 per cent each year over the forward estimates.

These measures have acted to boost confidence in the sector, with major listed providers experiencing strong trading gains on the day of the announcement.

For further information please contact:
Lucinda Smith | Partner | +61 2 9020 5748 |
Alexandra Adams | Senior Associate | +61 2 8248 3466 |
Amy Jee | Law Clerk | +61 2 8248 5805 |