Government to introduce pricing risk assessments for residential aged care

The federal government will begin pricing risk assessments for residential aged care from the April to June 2026 quarter, aiming to better understand how inconsistencies in financial reporting may be influencing national aged care pricing.

Led by the Department of Health, Disability and Ageing, the assessments will review a sample of providers’ Aged Care Financial Reports (ACFR) to examine how variations in financial reporting may influence national aged care pricing and funding decisions.

The move reflects growing attention on the reliability of the financial data used to determine the price of residential aged care.

Why the government is introducing the assessments

Residential aged care pricing relies heavily on cost data submitted by providers through the ACFR. However, the department says providers often prepare their financial reporting differently, which can affect the overall picture of what it costs to deliver care.

The new assessments aim to:

• identify common reporting errors in ACFR submissions
• measure the impact of misreporting on pricing decisions
• support the development of more accurate funding and pricing policy.

Ultimately, the program is intended to ensure that pricing decisions reflect the true underlying cost of delivering residential aged care.

What the reviews will focus on

The department will review reporting from a sample of residential aged care homes across different market segments, focusing on key cost items in the ACFR.

These may include:

• labour costs
• care consumables
• depreciation expenses
• other high-priority financial line items.

If selected, providers will be required to provide supporting documentation, including payroll records, rosters and other financial records used to prepare their ACFR submission.

The department will then review this information to understand how costs have been reported and to identify any discrepancies.

Not a compliance exercise

The government has emphasised that pricing risk assessments are not intended to be a compliance activity or regulatory audit.

Instead, the goal is to better understand how reporting practices across the sector affect the data used to determine residential aged care pricing.

Findings from the assessments may also be published so the sector can better understand common reporting issues.

What providers should do now

While participation will only apply to a sample of providers, the department is encouraging all providers to ensure their financial reporting processes are well-documented and supported by clear records.

Providers selected for review will be required to respond within a specified timeframe and provide the requested documentation.

For executives and finance teams, the assessments serve as a reminder that accurate and consistent ACFR reporting is becoming increasingly important, particularly as aged care pricing moves towards more data-driven models.

As government funding decisions rely heavily on sector-wide cost data, the accuracy of that data may play a growing role in shaping future residential aged care pricing.