Aged Care
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Aged Care

Significant reform has, and will continue to, impact how aged care and services are delivered to older Australians. The funding and regulation of aged care services is predominantly the role of the Australian Government. The industry is governed under the Aged Care Act 1997 and the Aged Care Principles.

Aged care in Australia comprises a range of different services which have specific access requirements and funding arrangements. These are briefly outlined below. A more detailed overview of the Australian aged care system can be found in Background Paper 1 - Navigating the maze: an overview of Australia's current aged care system. [1]

Service access and type

A person is eligible to access Government funded aged care services if they are an older person (usually aged 65 years and over, or 50 years and over for Aboriginal and Torres Strait Islander people).

Access to government funded services requires registration with My Aged Care followed by assessment, and the type of assessment will depend on the person’s level of need:

ACAT assessments are based on the ACAT Guidance Framework (167kb pdf) which sets out five domains for assessment. The five domains are:

  • Social (includes family, friends, and broader community relationships)
  • Physical (Includes ability to attend to all the basic aspect from dressing to cooking & maintaining finances, etc as well as the level of physical and personal health)
  • Medical (includes ongoing health conditions medication management and allergies)
  • Psychological (includes any cognitive, behavioural and psychosocial concerns)
  • Complexity and/or vulnerability (includes an assessment of the level of complexity/vulnerability as a consequence of all other factors).

The four basic types of services that form Australia’s Aged Care service system are:

The Australian government sets national and regional targets – aged care target provision ratios – to regulate the supply of government funded RAC places and HCPs provided for every 1,000 people over the age of 70 years. [1] Most people access care through CHSP (65% of people accessing aged care services) with a smaller proportion accessing RAC (19%).

All services are provided by a mix of for-profit, not-for-profit, and government providers. In 2013-14 not-for-profit organisations accounted for 74% of home support services, 69% of home care services, and 52% of residential aged care. [2] For-profit accounted for 18%, 12% and 37% of the corresponding service types respectively in the same period. Detailed summaries of the various programs are available by accessing the Department of Health’s, Ageing and Aged Care Programs page. There is also more detail on the MyAged Care website on the 'Find and Setup Services’ page.

Demand for services

In 2017–18, over 1.3 million people received some form of aged care throughout the year, the majority of whom received ‘low level’ home support services: [3]

  • 847,534 people received Home Support
  • 116,843 people received care through in-Home Care Packages
  • 61,993 people received short term residential respite care, of whom approximately 53% were later admitted to permanent care
  • 32,132 people received some form of flexible care
  • 241,723 people received permanent residential aged care.

Home Support Program includes the WA HACC program which ceased at 30 June 2018.

Aged Care and Disability

Most older people prefer to live in their own home, but if you’re also living with a disability, this can be hard without help. The NDIS funds supports assessed as meeting the reasonable and necessary criteria under Section 34 of National Disability Insurance Scheme Act 2013 for those aged between 7 years and 65 years. People who start the NDIS before age 65 may choose to keep receiving services under the scheme as they age. Otherwise support is provided through the Aged Care system. 

Aged Care Funding

Another way to understand the size of the aged care sector is total revenue of the sector and Government funding.

The Aged Care Financing Authority (Financing Authority) has been established to provide independent advice to the government on funding and financing issues associated with the supply of aged care services. A summary of the finances of the aged care sector for the year ended 30 June 2017 is reported in the Sixth Report on the Funding and Financing of the Aged Care Sector. [4]

The following are key figures for 2017 from that report:

  • Total revenue from all sources received by aged care services is $22 billion
  • The aged care sector accounts for 1% of Australia’s GDP
  • Users of the services contributed $4.8 billion (excluding refundable accommodation deposits)
  • The Australian Government contributed $17.1 billion, including:
    • $2.4 billion for home support
    • $1.6 billion for home care
    • $11.9 billion for residential care
    • $1.3 billion for flexible and other aged care
  • Government expenditure is expected to increase to $22.2 billion by 2020-21

In 2016-17, residential aged care received the largest share of available Commonwealth funding (69%), with CHSP (the largest sector type) receiving 14% followed by HCP and flexible care with 9% and 8% of available funding, respectively.

Resource allocation in residential aged care is based on application of the Aged Care Funding Instrument (ACFI). [5] The twelve question ACFI tool is used to rate resident needs and allocate funding to the financial entity providing the care environment.

Three domains of residential care are subsidised by the ACFI: [6]

  • Activities of Daily Living Domain (ACFI Questions 1-5; Nutrition, Mobility, Personal Hygiene, Toileting and Continence) Ratings calculated from completing checklists in this domain determines the level of the subsidy.
  • Behaviour Domain (ACFI Questions 6-10; Cognitive Skills, Wandering, Verbal Behaviour, Physical Behaviour and Depression). Ratings calculated from completing checklists in this domain determines the level of the subsidy.
  • Complex Health Care Domain (ACFI Questions 11-12; Medication and Complex Health Care Procedures) Ratings calculated from completing checklists in this domain determines the level of the subsidy.

The amount payable in respect of a particular care recipient depends on the ratings (A, B, C or D where relevant) determined for each of the ACFI questions (1–12) as well as the supporting documentation provided in the Answer Appraisal Pack against each of the ratings. Diagnoses are also required to be contained in the ACFI Answer Appraisal Pack and are used to support the claim for subsidy. Work is underway to investigate alternative approaches to determining residential care funding that delivers more stable funding arrangements. The government has been engaging with the sector on the development of this longer-term reform.

Page updated 25 June 2019

  • References

  1. Royal Commission into Aged Care Quality and Safety. Navigating the maze: an overview of Australia's current aged care system - Background Paper 1. Royal Commission into Aged Care Quality and Safety; 2019 Feb.
  2. Deloitte Access Economics Pty Ltd. Australia’s aged care sector: economic contribution and future directions (1.07MB pdf). Australia: Deloitte Access Economics Pty Ltd; 2016 Jun.
  3. Australian Government Department of Health. 2017-18 Report on the Operation of the Aged Care Act 1997. Canberra: Australian Government Department of Health; 2018 Nov.
  4. Australian Government Aged Care Financing Authority. Sixth Report on the Funding and Financing of the Aged Care Sector. Canberra: Australian Government Aged Care Financing Authority; 2018 Jul.
  5. Australian Institute of Health and Welfare (AIHW). Palliative care services in Australia [Internet]. 2019 [updated 2018 Oct 17; cited 2019 Apr 24].
  6. Australian Government Department of Health. Aged Care Funding Instrument (ACFI) User Guide. Canberra: Australian Government Department of Health; 2016.