AN-ACC Classification: How Aged Care Funding Works

The Australian National Aged Care Classification (AN-ACC) is the funding model for residential aged care in Australia. It replaced the Aged Care Funding Instrument (ACFI) from 1 October 2022, fundamentally changing how residential aged care providers receive government funding for the care they deliver.

Under AN-ACC, funding is based on an independent assessment of each resident's care needs, combined with a facility-level base care tariff. This is a significant departure from ACFI, which relied on provider-completed appraisals that were often criticised for encouraging claim maximisation rather than accurate needs assessment. Understanding how AN-ACC works is essential for every residential aged care provider's financial viability and compliance posture.

ACFI was introduced in 2008 and served as the primary funding instrument for residential aged care for 14 years. Under ACFI, providers completed detailed appraisals of each resident's care needs across three funding domains — Activities of Daily Living, Behaviour, and Complex Health Care — and submitted claims based on those appraisals. The Department validated claims through audits.

The problems with ACFI were well-documented. The system incentivised providers to maximise claims rather than accurately assess needs. There was significant variation in claiming practices across the sector. The appraisal process was administratively burdensome for providers. And the funding did not adequately reflect the actual cost of delivering care to residents with different levels of need.

AN-ACC was designed to address these issues by separating the assessment function from the provider and basing funding on independent, standardised assessments conducted by the Department's assessment workforce.

AN-ACC classifies residents into 13 classes (Class 1 through Class 13), with Class 1 representing the lowest care needs and Class 13 representing the highest. Each class has a corresponding daily funding rate (the variable component) that reflects the cost of delivering care to a resident with that level of need.

The classification is determined by an independent assessor using the AN-ACC assessment tool, which evaluates the resident's functional capacity, cognitive status, and clinical care requirements. The assessment considers factors including mobility, personal care needs, cognitive and behavioural status, and the complexity of clinical interventions required.

Residents in higher classes (typically Classes 10 through 13) have complex care needs that require more intensive nursing and allied health interventions. Residents in lower classes (typically Classes 1 through 4) are more independent but still require the support and services that residential aged care provides. The funding differential between classes is substantial, making accurate classification critical for financial sustainability.

AN-ACC assessments are conducted by independent assessors employed by the Department of Health and Aged Care's assessment workforce — not by the provider. This is a fundamental difference from ACFI, where providers completed the appraisals themselves.

The assessment process involves the assessor visiting the facility, reviewing clinical records, speaking with care staff, and — where possible — interviewing the resident. The assessor uses a standardised tool to evaluate the resident across multiple domains and assigns a classification based on the results.

New residents receive a shadow assessment (interim classification) upon entry, followed by a full assessment within approximately 12 weeks. The full assessment determines the ongoing classification and associated funding.

Reclassification can be requested when a resident's care needs change significantly — for example, following a major health event, a significant decline in cognitive function, or a change in mobility status. Providers must submit a reclassification request with supporting clinical evidence. The assessor will then conduct a new assessment.

It is critical that providers maintain comprehensive, up-to-date clinical documentation for every resident. The assessor relies heavily on clinical records, care plans, and progress notes to inform their classification. Poor documentation can result in a lower classification than the resident's actual care needs warrant — directly affecting funding.

AN-ACC funding comprises three components:

1. The base care tariff. This is a facility-level payment that reflects the fixed costs of operating a residential aged care facility, regardless of individual resident needs. It covers infrastructure, administration, catering, cleaning, and laundry. The base care tariff varies by facility based on factors such as location and facility size.

2. The variable component (AN-ACC class payment). This is the per-resident daily payment based on the resident's AN-ACC classification (Class 1 through 13). It is designed to cover the variable costs of delivering care — nursing, personal care, allied health, and other direct care costs. Higher classifications attract higher daily payments.

3. The adjustment component. This includes additional funding adjustments for specific circumstances, such as residents in respite care, residents who require palliative care, and other defined situations. These adjustments are applied on top of the base care tariff and variable component.

Providers receive AN-ACC funding through monthly advance payments from the Department, with quarterly reconciliation against actual occupancy and classification data. Accurate and timely submission of occupancy data is essential to avoid overpayment recovery or underpayment.

AN-ACC funding is paid as a monthly advance based on estimated occupancy and classification mix. Each quarter, the Department reconciles advance payments against actual data. If a provider has been overpaid — for example, because occupancy was lower than estimated or because residents were reclassified to lower levels — the overpayment is recovered from future payments.

This reconciliation process requires providers to maintain accurate, real-time occupancy and classification data. Providers should track: the current AN-ACC class for every resident, the date of the most recent assessment, whether any reclassification requests are pending, current occupancy rates, and expected admissions and discharges.

From a financial planning perspective, providers should model their revenue based on their actual classification mix rather than assuming all residents will be classified at the median or higher levels. Understanding your classification distribution — and the revenue implications of shifts in that distribution — is essential for budgeting, workforce planning, and investment decisions.

Providers who also need to manage prudential compliance should consider AN-ACC revenue alongside refundable deposit holdings when assessing their overall financial position.

Statura Care's Financial Compliance module helps residential aged care providers track AN-ACC classifications, monitor assessment and reclassification timelines, and reconcile funding against occupancy data. The platform alerts you when residents are due for reclassification, tracks pending assessment requests, and provides dashboards showing your classification mix and revenue projections.

Integrated with the platform's clinical governance and workforce modules, Statura Care helps you ensure that clinical documentation supports accurate classification, that care minutes are being met against the staffing requirements that AN-ACC funding is designed to support, and that your governing body has full visibility of the organisation's financial compliance position. Explore how Statura Care's aged care compliance software supports your funding and compliance needs.