AGED care providers are up in arms after the Federal Government announced it will implement fines for providers making false claims for subsidies and reduce the subsidies available for some complex health care needs.
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The change, which comes after a dire mid-year economic forecast, is part of belt-tightening which is expected to save $472 million in aged care over the next four years.
Other cuts will reduce funding for workforce programs following the release of an audit report which claims duplication.
On the upside, there will be more funding for health care training in rural areas.
Aged Care Minister Sussan Ley said the new tough approach to Aged Care Funding Instrument claims meant providers caught making repeated false claims under the $10.6 billion program would pay a fine of $10,800 per offence.
An audit showed one in eight of the 20,000 ACFI claims made in 2014-15 were deemed to be incorrect or false, and preliminary data shows that figure is likely to be higher in 2015-16.
In some cases, providers were dosing residents with unnecessary medications or performing unnecessary procedures in order to claim higher level subsidies.
"Unfortunately we've seen a concerning number of incorrect claims and unaccounted for growth in spending in complex health care creeping into the system in recent years, " Ms Ley said.
"It's for all these reasons and more that I therefore want to protect the integrity of Australia's aged care sector.
"This government funding is designed to maximise care outcomes for older Australians.
"This measure is designed to nip any noncompliance or sharp practices in the bud before they become a major problem.''
She said claims by parts of the aged care sector that an increase in frailty was behind the unexpected increase in ACFI claims, which led to a $150 million overspend last year, were not consistent with government data or the demand for other ACFI funded service affected by frailty.
A further $472 million will be saved by better targeting funding on high value claims at the upper end of the complex health care scale, including reducing some subsidies, from July 2016.
Leading Age Services chief executive Patrick Reid said ACFI was growing because of significant increases in the cost of care and an increase in people with higher care needs.
He said the workforce funding cuts were also a concern.
"Although cast as a reduction in duplication, the merging of workforce programs across vocational education and training and other initiatives across health will almost certainly impact the ability of aged care to attract and recruit people to the industry, and providers' capacity to train and upskill staff," he said.
Ms Ley said the government would also implement closer scrutiny of claims, including stronger auditing and IT system updates.
Opposition leader Bill Shorten said the funding cuts would affect the most vulnerable.
