IHACPA seeks feedback for 2025-26 pricing framework

Aged care stakeholders can have their say on the development of residential aged care pricing for the 2025-26 financial year after the Independent Health and Aged Care Pricing Authority (IHACPA) released its Consultation Paper on the Pricing Framework for Australian Residential Aged Care Services. 

Key points

• IHACPA is an independent government agency first established to focus on public hospital services. More recently, its role expanded to include the provision of advice on aged care pricing and costing matters, among other new roles
• Independent aged care pricing advice ensures that aged care funding is directly informed by the actual costs of delivering care
• Submissions on the consultation paper are open until 5 PM AEST September 20, 2024, with the release of feedback and pricing framework expected in 2025

As part of its functions, IHACPA undertakes cost collections to gain a better understanding of the resources and costs associated with delivering aged care services. It provides annual pricing and costing advice to the Government to inform decisions on the AN-ACC price and funding model.

IHACPA has also conducted a costing study to inform pricing for the Support at Home program, separate from residential aged care prices. 

The Pricing Authority Chair, Mr David Tune AO PSM said, “Through this consultation we are committed to ensuring our pricing advice is informed by open and transparent consultation with a wide range of stakeholders and views across the aged care sector.”

“This helps ensure our advice to government is appropriate for the residential aged care sector and represents the diversity of aged care providers and stakeholders. Public consultation is open to a range of individuals and organisations, including people receiving care and their families or representatives”. 

Its latest consultation paper was released this week with several new focus areas for residential care, including: 

• Australian National Aged Care Classification (AN-ACC) branching structure and funding model 
• Aboriginal and Torres Strait Islander specialisation and base care tariffs
• Homeless specialisation and base care tariffs
• Residential respite care
• Proposed changes to IHACPA’s residential aged care pricing principles

AN-ACC adjustments

There is a clear focus on the accuracy of AN-ACC with IHACPA seeking to clarify whether the current prices are suitable for residents where direct care costs are highest. 

This includes a specific investigation of the AN-ACC branching structure and classes for residents with independent mobility. 

Consultation question 1: Do the current AN-ACC classes in Figure 10 group independently mobile residents in a manner that is relevant to both care and resource utilisation (that is, require the same degree of resources to support their care delivery)?
a. What factors should be taken into consideration in developing any future refinement to the AN-ACC branching structure for independently mobile residents?
b. What evidence is there to support this?

Two separate questions also look at specific resident-related factors that “significantly influence the costs of their care”: 

Consultation question 2: What, if any, factors should IHACPA consider when looking at specialised BCT rates for Aboriginal and Torres Strait Islander peoples? 

What, if any, additional cost variations and eligibility requirements are associated with the provision of care for Aboriginal and Torres Strait Islander residents?

Consultation question 3: What, if any, factors should IHACPA consider when looking at specialised BCT rates for specialised homeless status? 

What, if any, additional cost variations and eligibility requirements are associated with the provision of care for these residents?

IHACPA has outlined residential respite care’s classification system as another area of potential refinement. It wants to know if the three current classes are suitably incentivised.

Consultation question 4: What should be considered in any future refinement to the residential respite classes and AN-ACC funding model?
a. Is the funding model approach across each respite classification adequate to incentivise services to provide a residential respite model of care?
b. What evidence is there to support this?

Lastly, there is a proposal to revise terminology related to activity based funding. Examples can be seen in the consultation paper.

Consultation question 5: What, if any, changes should IHACPA consider for the proposed (highlighted in green) updated residential aged care pricing principles, which take into consideration a move toward revised funding model terminology?

As for the future, IHACPA said it has a long-term objective to provide advice on safety and quality pricing adjustments, investigate whether Multi-Purpose Services (MPS) or National Aboriginal and Torres Strait Islander Flexible Aged Care Program (NATSIFACP) could be funded through AN-ACC and potential specialist funding arrangements for thin markets and rural regions.