Analysis of December 1st Rate Increase and Q4 Industry Trends

Well, what another year in Aged Care it was! 2023 ended with a welcome surprise for Providers: on the 1st of December, the Department of Health increased the AN-ACC starting price to $253.82 – a 4.4% increase. However, we’d already seen the AN-ACC starting price increase from $216.80 to $243.10 on 1st of July 2023. So, why did the rate go up again and does that mean it’s time to throw a celebration party? Although it is positive news, maybe it isn’t time to let our hair down just yet – let’s look at what this increase means for the industry.

What led to this decision?

In June 2023, the Fair Work Commission (FWC) released their decision on the Annual Wage Review (AWR). In relation to Aged Care, the primary outcome handed down by this investigation was that the minimum rates under the Nurses’ Award would increase by 5.75% from 1st July 2023.

So, although we received a significant boost to the AN-ACC starting price from $216.80 to $243.10 from 1 July 2023, the FWC AWR decision had not been factored in. To fund the decision, in July 2023 the Independent Health and Aged Care Pricing Authority (IHACPA) recommended that the AN-ACC starting price increase from $243.10 to $249.34.

On 1st December, the Department of Health responded and increased the AN-ACC starting price to $253.82 (4.4% increase). The decision to increase the starting price above the IHACPA’s recommended rate was to effectively ‘back pay’ Providers to when the minimum award rate was mandated, as if the starting price increase had occurred on the 1st of July 2023. An important distinction to make is that Providers will not actually receive a lump sum back payment. Rather, this increased rate will make up the difference as if the starting price had been increased to $249.34 for the period between 1st of July 2023 and the next scheduled rate change later this year.

So, what does this mean for you?

Time to look at the data! We have conducted a benchmarking analysis to provide some meaningful takeaways for the industry.

As of 31st December 2023, our MyVitals benchmarking database demonstrated that the average Total AN-ACC Daily Funding was $269.92 per resident. Without the rate change, this would have otherwise been $258.52 per resident – a $11.40 per day increase.

Taking a mid-sized 60 bed facility, the impact of this daily increase results in on average an additional of annual funding. Meanwhile, using the average costs of delivering this care we estimate the 5.75% increase to the Nurses Award increases employment costs by $113,685.32 a year.

Extrapolating this out for the 188,000 residents in Residential Aged Care (as per the Australian Institute of Health and Welfare 30 June 2022), this rate increase produces an additional $782 million for the industry.

The annual figure comes to me as $249,291.35 instead? Is there another calc I need to consider?

Reclassification Workflow

Of course, parallel to this, Aged Care Facilities’ regular workflow is ongoing to ensure that all Resident’s care needs reflect their AN-ACC classifications.

Looking at the Q4 Oct-Dec, our benchmark demonstrates that the average Reclassification outcome has dropped 4% compared to Q3 July-Sept, but this is still a 10% increase compared to Q2 April-June. The Reclassification rates have maintained consistency (<1% fluctuation) between these quarters, which suggests that Providers have not dropped off on submitting Residents for Reclassifications where their care needs change.

All of this indicates that the industry’s Reclassification outcomes are stabilising. AN-ACC Assessors and Facilities appear to be working effectively in tandem to reach more consistent outcomes. This will remain a key area to consider in 2024 and will be a crucial metric for determining the efficiency of your Facility’s Reclassification workflows through comparison to a stable benchmark. To conduct this analysis, reach out to Provider Assist to explore MyVitals!

So, is it time celebrate?

All things considered this is welcome news for the industry and it’s great to see that our Carers and Nurses are rewarded appropriately for all their hard work and ongoing effort to deliver the care required for our residents. However, you may need to hold off on the champagne until you’ve considered how the increase impacts your Organisation. Whilst many Providers already pay above the award, it’s important to ensure you’re compliant with the new increase.

Peter Morley

Peter Morley

CEO & Co-Owner

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