Aged Care Funding: Master AN-ACC, Support at Home, and Revenue Optimisation
Aged care funding is one of the most complex revenue systems in Australian healthcare – and one of the most lucrative for providers who understand it. Federal government expenditure on aged care exceeds $25 billion annually. The providers capturing their maximum share of that funding are not necessarily the biggest or the oldest. They are the ones who understand the funding mechanisms, code correctly, and optimise their revenue strategy deliberately.
HCPA has supported 25+ aged care providers through Commission approval and into ongoing operations this year. Our team, led by Team Lead Shayan – 7 years in quality and compliance, 3 years specialising at HCPA – has seen providers systematically leave hundreds of thousands of dollars in government funding unclaimed through poor coding, outdated pricing strategies, and misunderstood funding rules. This guide covers every major aged care funding stream and explains how to optimise each one.
The Australian Aged Care Funding Landscape in 2025
The aged care funding system has undergone its most significant structural reform in decades. The Support at Home program, which replaced both the Home Care Packages program and the Commonwealth Home Support Programme on 1 July 2025, has fundamentally changed how home-based aged care funding works. For residential care, the AN-ACC (Australian National Aged Care Classification) system, introduced in October 2022, replaced the former ACFI model and changed both how funding is calculated and how providers can optimise it.
Any provider or investor relying on pre-2022 funding knowledge is operating with an outdated map. The funding landscape has changed materially, and the providers who have adapted their revenue strategies to the new models are outperforming those who have not. Here is the current structure in full.
Residential Aged Care Funding: AN-ACC Explained
What AN-ACC Is and How It Works
AN-ACC is the government funding model for residential aged care. Every permanent resident is assessed by an Independent Assessor (a health professional contracted by the government) and assigned to one of 13 AN-ACC classes based on their care complexity and support needs. Each class carries a different per-resident, per-day government funding rate.
The AN-ACC classes range from Class 1 (the highest funding, for residents with the most complex needs) to Class 13 (standard funding for residents with lower care needs), plus a separate class for transition care and short-term restorative care. The spread between the lowest and highest AN-ACC funding rates is significant – providers whose residents are correctly classified at Class 1-3 receive substantially more funding per resident per day than those classified at Class 8-13.
The AN-ACC Revenue Opportunity: Correct Classification
Unlike ACFI, where providers submitted clinical data and claimed funding, under AN-ACC the government’s Independent Assessors conduct the classification. This does not mean providers are passive. Preparation for the Independent Assessor visit is the highest-return activity in AN-ACC optimisation.
Assessors observe residents and review clinical records during their visit. Residents who are well-supported and calm during the visit may present as having lower care needs than they actually have. Comprehensive, up-to-date clinical documentation that accurately captures the resident’s care complexity – including behavioural needs, medication complexity, wound care, and cognitive status – ensures the assessor has the full clinical picture. Providers who prepare residents and clinical records systematically for assessor visits consistently achieve higher AN-ACC classifications than those who do not.
The Funding Supplement System
In addition to AN-ACC base funding, residential providers can access a range of supplementary funding streams. These include: the Viability Supplement (for providers in rural and remote areas or serving specific population groups); the Oxygen Supplement; the Enteral Feeding Supplement; the Dementia and Cognition Supplement; the Veterans’ Supplement; and the National Aboriginal and Torres Strait Islander Flexible Aged Care Supplement.
Many providers miss supplementary funding simply because they have not reviewed which supplements apply to their current resident population. A resident who qualifies for the Dementia and Cognition Supplement and the Oxygen Supplement simultaneously represents a material funding uplift. A quarterly audit of supplement eligibility across your entire resident population is a straightforward and often overlooked revenue management activity.
Basic Daily Fee and Means-Tested Care Fee
All permanent residents pay the Basic Daily Fee (BDF), currently set at 85% of the single age pension rate. For the September 2025 quarter, this is approximately $63.57 per day. Some residents also pay a Means-Tested Care Fee, assessed by Services Australia based on their income and assets, which provides additional revenue to the provider. The Means-Tested Care Fee can add $0-$252 per day per eligible resident – a significant revenue uplift for facilities serving residents with above-average assets or income.
Accommodation Funding: RAD and DAP Strategy
Understanding RADs and DAPs
Residential aged care providers can charge accommodation contributions from residents who are assessed as not fully supported (non-concessional residents). Accommodation is priced either as a Refundable Accommodation Deposit (RAD) – a lump sum that is fully refundable on exit – or as a Daily Accommodation Payment (DAP), calculated daily based on the RAD amount and the Maximum Permissible Interest Rate (MPIR). Residents can also pay a combination of both.
The accommodation price must be published in the My Aged Care service finder and cannot exceed the maximum accommodation price approved by the Minister (currently $550,000 unless a higher amount has been approved). Providers who price accommodation strategically – balancing market positioning, competitive landscape, and working capital requirements – achieve materially better financial performance than those who default to industry average pricing without analysis.
RAD Working Capital: The Double-Edged Sword
RADs provide providers with significant working capital – a large residential facility may hold $30-60 million in RAD deposits. This capital can be used to fund infrastructure improvements, working capital, or debt reduction. However, RADs are liabilities: they must be refunded within 14 days of a resident’s departure, with interest on any delayed repayment. RAD liquidity management is one of the most sophisticated financial management requirements in aged care, and providers who mismanage it face serious financial and regulatory consequences.
Effective RAD management requires: a clear investment policy for RAD funds; a liquidity reserve to manage anticipated departures; financial modelling that tracks projected departures and RAD refund obligations; and governance oversight at board level. This is not a back-office administrative function – it is a core financial governance requirement.
Support at Home: The New Home Care Funding Model
What Changed on 1 July 2025
The Support at Home program replaced two separate programs (the Home Care Packages Program and the Commonwealth Home Support Programme) with a single, unified funding framework. The key structural changes are: individual participant funding budgets across eight support categories; revised fee schedule rates for each service category; changed co-contribution requirements; new transition arrangements for existing recipients; and a new assessment pathway through the Support at Home Assessment Organisation.
Providers who operated under the Home Care Packages model will find the core revenue mechanic similar – funding is allocated to participants and providers claim for services delivered. However, the fee schedule rates, the category structure, and the administrative processes have all changed. Providers who have not updated their billing systems, case management processes, and financial models to reflect the new framework are at risk of non-compliance and revenue leakage.
The Eight Support at Home Categories
Support at Home funding is allocated across eight categories: Everyday Living (personal care, domestic assistance, meal preparation); Social Support (group and individual social activities); Support Coordination; Allied Health and Therapy (physiotherapy, occupational therapy, speech pathology, podiatry, dietetics, and others); Clinical Nursing; Home Modifications; Assistive Technology; and Transport.
The fee schedule rate for each category varies significantly. Clinical Nursing and Allied Health services attract higher rates than Everyday Living support. Providers with genuine allied health and nursing capability can access higher-value funding categories than those limited to personal care and domestic assistance. This creates a strategic incentive to build multidisciplinary capacity within your home care operation over time.
Revenue Optimisation Under Support at Home
Margin in home care is generated by the spread between government fee schedule rates and your cost of service delivery. The three key levers for margin optimisation are: service mix (delivering higher-rate services where your workforce capability supports it); operational efficiency (minimising non-billable time through intelligent rostering and geographic clustering of clients); and case management quality (ensuring participants’ assessed budgets are fully utilised and services are delivered as planned).
Many home care providers underutilise participant budgets through poor case management discipline. An unspent budget is lost funding – it does not carry forward indefinitely. A systematic approach to budget monitoring, proactive support planning, and prompt service delivery is one of the highest-return operational investments a home care provider can make.
NDIS Funding and the Aged Care Intersection
Older Australians with disability who entered the NDIS before age 65 can continue to access NDIS funding into old age. Providers who hold both aged care approval and NDIS registration can serve this population across both funding streams – a significant revenue opportunity as this group grows. The interface between NDIS and aged care funding is complex: aged care funding is generally expected to meet aged care support needs, while NDIS funding covers disability-related supports, but the practical boundary requires careful assessment and documentation in each participant’s plan.
For providers considering dual registration, understanding the requirements and opportunities across both systems is essential. HCPA supports providers through both NDIS registration and aged care approval, and our team can identify where dual registration creates genuine revenue opportunity versus regulatory complexity that outweighs the benefit.
Revenue Optimisation: The HCPA Framework
HCPA’s approach to aged care funding optimisation follows a structured Regulatory Growth framework that covers every major revenue lever available to approved providers. Our consultants work alongside your finance and operations teams to identify where funding is being left unclaimed, where coding or documentation can be strengthened, and where strategic pricing adjustments would improve financial performance without compromising resident or client experience.
For Residential Providers
We review AN-ACC classification rates against clinical documentation quality; audit supplement eligibility across the current resident population; assess accommodation pricing strategy against local market rates and maximum permitted prices; and review Means-Tested Care Fee capture for eligible residents. Providers who engage HCPA for a revenue optimisation review typically identify 15-25% uplift opportunities in their existing funding base within 90 days.
For Home Care Providers
We review budget utilisation rates across your participant base; assess your service mix against available fee schedule rates; review rostering efficiency and non-billable time metrics; and evaluate whether your case management model is driving optimal outcomes for both participants and the organisation. The Support at Home transition has created both risk and opportunity for home care providers – those who adapt their operating model to the new framework quickly will outperform those who continue operating as they did under the Home Care Packages model.
Combining a strong funding strategy with a robust aged care business plan and sound compliance management creates an organisation that performs financially and from a compliance standpoint. These three elements reinforce each other: funding optimisation requires accurate clinical documentation (a compliance requirement); compliance performance protects your approval to operate (your revenue licence); and strong financial performance funds the operational investment required to maintain compliance.
Frequently Asked Questions: Aged Care Funding
What is the difference between AN-ACC and ACFI?
ACFI (Aged Care Funding Instrument) was the previous residential aged care funding model, replaced by AN-ACC in October 2022. Under ACFI, providers submitted clinical data in 12 domains and the funding was calculated based on provider-submitted assessments. Under AN-ACC, government-contracted Independent Assessors conduct standardised assessments and assign residents to one of 13 classes. The shift removed provider control over the assessment process but created a more consistent national classification system. AN-ACC generally rewards providers whose residents have genuinely high care needs and whose clinical documentation accurately reflects those needs.
How often are AN-ACC assessments conducted?
AN-ACC assessments are conducted when a resident enters a facility (the initial classification) and when there is a significant change in the resident’s condition that warrants reassessment. Providers can also request a reassessment if they believe a resident’s care needs have changed materially since their last classification. There is no automatic periodic reassessment schedule under AN-ACC, unlike some elements of the ACFI model. This means providers must be proactive in requesting reassessments when resident care needs increase significantly.
Can a home care provider also receive residential aged care funding?
Yes, but only if the provider holds separate approval for residential aged care in addition to home care. Funding is tied to the approved care type and the specific service location. A provider approved for home care only cannot access AN-ACC or accommodation funding. Providers seeking to expand from home care into residential care must apply for residential approval through the standard Commission process, demonstrating capability to manage the significantly more complex regulatory and operational requirements of 24-hour care.
What is the Maximum Permissible Interest Rate (MPIR) and why does it matter?
The MPIR is the interest rate used to convert between RADs and DAPs. It is set quarterly by the Minister. The MPIR determines how much a resident pays in DAPs per day relative to the RAD amount. When the MPIR rises, DAP payments increase (making RADs relatively more attractive for residents). When it falls, DAPs decrease. Providers who model their accommodation revenue under multiple MPIR scenarios make better pricing and financial decisions than those who assume a fixed rate in their projections. The MPIR also determines the interest providers must pay on late RAD refunds – another reason financial discipline around departure timing matters.
How does the Support at Home program handle participants who were on Home Care Packages?
Existing Home Care Package recipients transitioned to Support at Home on 1 July 2025, with their funding broadly maintained at equivalent or higher levels under transition arrangements. The specific transition terms depend on the recipient’s package level, care needs, and assessed Support at Home budget. Providers were required to communicate the transition arrangements to each client and update their service agreements. Providers who managed this transition systematically maintained client retention; those who communicated poorly experienced client movement to competitors who handled the transition better.
What happens to aged care funding if a provider loses its approval?
If a provider’s approval is revoked or suspended, Commonwealth funding ceases immediately for new residents or clients. Existing residents and clients are transferred to other approved providers. The financial impact on a revoked provider is catastrophic: loss of revenue, RAD refund obligations accelerating, staff redundancy costs, and the legal costs of any Commission proceedings. This is why compliance is not optional in aged care – it is the fundamental precondition for receiving any government funding at all. Protecting your approval is protecting your revenue. This is why Regulatory Growth — not just regulatory compliance — is the right frame for aged care strategy..
Maximise Your Aged Care Funding With HCPA
HCPA’s aged care funding expertise spans the full spectrum: AN-ACC optimisation for residential providers, Support at Home revenue strategy for home care operators, accommodation pricing analysis, supplement eligibility audits, and financial modelling for new market entrants. Our team of consultants, each with 6+ years of specialised aged care experience, works alongside your leadership team to build a Regulatory Growth strategy that is compliant, optimised, and financially sustainable.
We have helped providers identify 15-25% revenue uplift opportunities within their existing operations – without adding a single new resident or client. The funding is there. It is a matter of claiming it correctly, documenting it accurately, and managing it strategically. That is what HCPA delivers.
Aged care funding rewards knowledge and discipline. Providers who understand AN-ACC, Support at Home, and the full supplement landscape outperform those who do not – consistently and materially. Talk to HCPA today and build a funding strategy that captures every dollar your operation is entitled to.
