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How the aged care sector deals with commonwealth funds

By Kym Durance - posted Friday, 14 September 2018

Aged care funding comes largely from the Commonwealth. It is derived from an application from the providers of residential aged care based on a funding tool known as the Aged Care Funding Instrument (ACFI). Some 70% of residential aged care funding is derived from the ACFI. ACFI is the bastard child of its predecessors the Resident Classification Scale and Resident Classification Instrument; both of these funding tools were pigs. The ACFI is simply a pig with lipstick.

When a resident is admitted into a nursing home their needs in three distinct domains are assessed by the care staff. These are, the Activities of Daily Living (ADL's) in the areas of personal hygiene, continence mobility and their capacity to manage the process of eating, Behaviour (BEH) be it physical or verbal including things such as self-harm, inappropriate verbalisation and wandering. The third domain is Complex Health Care (CHC) which incorporates procedures including diabetic management, the administration of medicine and pain management and a raft of other technical processes. All in all there are 12 separate subsets that make up the aforementioned domains. A series of assessments are undertaken along with intensive charting and documentation to provide proof that these tasks have been undertaken and to comply with particular regulations.

In order to ensure revenue arising from the ACFI is maximised most if not all facilities engage one or more specialists in the area of the ACFI whose primary role is to manage the process. Often external consultants are engaged to further enhance this process. All of this comes at a cost in relation to in house salary and wages or fees to external providers. It is a laborious task requiring considerable co-ordination, attention to detail and is governed by specific business rules set down by the Commonwealth.


Given the expertise and resources dedicated to this function and the existence of unequivocal business rules one has to wonder why then, in the quarter April to June 2018, when some 1717 claims were evaluated, close to 40% of those assessed by the Commonwealth were downgraded in one or several of the 12 segments of the claim. In that quarter the most frequently question downgraded was that relating to Complex Health Care. Such a high error rate might suggest wide spread ineptitude and a waste of money. Other possible reason is equally as worrying. And that is the industry chancing its arm at lodging inflated claims.

It might be argues that the process is too complex and arduous yet the ACFI process has been in place for a decade, the industry itself along with the Commonwealth routinely run education programs and provide written advice on the process. It has also been posited that the industry games the system; given that not every claim can be evaluated it might be considered worth the risk to over claim on the off chance it will slip through the net. The Commonwealth has recently ramped up the fines applicable in the case of proven fraudulent applications for funding under the ACFI how they demonstrate and separate fraud from ineptitude is a vexed question given that down grading of ACFI claims has been a long standing issue.

The industry however denies that there is widespread fraud or gaming in the most strident terms. Yet there is evidence to suggest that the industry might have form in gilding the funding application lily. In 2014 the then Assistant Minister for Social Services ceased the dementia and severe behaviours supplement brought in by the previous government providing a facility some $5840 per annum per resident as the scheme had been largely over-subscribed. Homes were invited to submit claims using a Nero-Psychiatric Inventory outlining the nature of behaviours, the severity and frequency and the impact these had on the service. It was a simple tick the box template, it was not subject to evaluation or assessment; facilities submitted the form and the money was forthcoming.

Experts estimated that some 2,000 people in residential aged care might be eligible for the funding. The industry in a very short period of time found some 25,000 people residing in their facilities who, to their way of thinking, met the criteria. The scheme was curtailed, the industry protested and claimed residents would suffer. It was suggested that application of the tool was undertaken by nursing staff not fully educated in its application. Little or no mention was made that might suggest these clinicians were subject to direct or indirect pressure from senior managers to submit as many claims as possible given the fact the claims were not audited. Yet very little scrutiny was undertaken to clarify why some facilities claimed that more than half their residents for example met the appropriate criteria. The scheme is seldom talked about these days and little or no verification of submitted claims was ever undertaken. There is also little evidence to support claims from the industry that additional funding went, for example, to provide improved staffing levels, enhanced behaviour management education or improved amenities for the resident.

The Commonwealth has initiated a comprehensive review of the ACFI; some early evidence indicates that the new pig might at best be enhanced with earrings to match its lipstick. ACFI is a flawed system open to manipulation. It is an onerous tool that fails, or has failed to account for changes in nursing practice or the rapid change in the nature of the aged care residents in recent years. If a similar funding scheme was applied to the acute sector it would grind to a halt.

ACFI has been born out of scientific management theory deriving from the early 20th Century and theorists like Frederick Winslow Taylor. It is essentially incompatible with a profession that is both rooted in medical, nursing and the social sciences as well as having a historically based vocational approach to work. There is a marked cognitive dissonance between the application of the ACFI and nursing work.


What the ACFI fails to account for is the progressive creep back of non-nursing work undertaken by nurses in the aged care sector. They operate as goods receiving clerks in relation to some medical stock and all pharmaceuticals, after hours they are de-facto telephonists, fire wardens and security officers. Regardless of the shift they operate in a clerical mode faxing amended drug orders to pharmacies and undertaking a degree of filing. The gains of the 1980's, have in the aged care sector, largely been lost and simply not measured as part of their current work load.

Both the captains of aged care industry along with the government are engaged in a folie a deux where each thinks the ACFI is a fair and reasonable means to determine funding based on a questionable measure of resident need and how it might translate into nursing activity. Erroneous claims are the norm. Money is transferred back to the Commonwealth as a result of these claims similar claims are submitted and the cycle continues unabated. This process merely results in a race to the bottom in terms of the application of nursing resources to care while enabling proprietors to "optimise revenue to enhance resident care". Any examination of industrial bench marking data will graphically indicate any wide spread decrease in nursing hours deployed is met with a green tick of approval in partnership with any increase in revenue that is met with the same symbolic reward.

The claim of optimising care is difficult to prove. Proprietors hang their hat and widely publicise the fact that they are accredited facilities. The reality is that accreditation is merely a pass mark; it is a measure of adequacy not excellence as so often claimed. Accreditation is a licence to operate not a recommendation of quality and consumers would be wise to remember that it is accredited facilities that give rise to the endless crises one reads about with sickening regularity.

We have had a Royal Commission into the Banks and financial sector. There is talk of a Royal Commission into the Energy Sector. Here we have a burgeoning industry, already a massive recipient of government funds which demonstrates apparent ineptitude in its claims process, where some 41% of homes have recently reported financial losses and many of the larger providers pay little tax. Maybe it is time to press for a Royal Commission into the Aged Care Sector as well.

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About the Author

Kym Durance is a health professional and has worked both as a nurse and in hospital management. He has managed both public and private health services in three states as well as aged care facilities; and continues to work in aged care.

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