The Australian Government has changed its Modified Monash Model (MMM) funding categories to reflect the higher costs of delivering aged care services in regional areas.

Until 1 October 2024, aged care services in MMM areas 1 to 4 were grouped together, wrapping aged care homes in metropolitan cities, regional areas, large rural towns, and medium rural towns into a single funding category.

Following sector concern, Government analysis found costs for services in MMM 1 to 4 areas varied enormously.

"Non-metropolitan residential aged care services have different cost drivers and experienced poorer financial outcomes than their major city counterparts," Claudia Dukats, Director, AN-ACC Policy and Funding Reform, Department of Health and Aged Care, told the Residential Aged Care Funding Reform Update webinar on Wednesday.

"Analysis has also found the cost profile of services located in MMM 4 more closely resembles that of MMM 5 services, rather than services located in MMM 1 to 3 areas."

As a result, aged care homes in MMM 2 to 3 and MMM 4 to 5 locations will be grouped together for funding purposes. Funding will also be adjusted to reflect the higher cost of delivering aged care services outside metro areas.

Chris Mamarelis, CEO of Not For Profit aged care provider Whiddon, which operates 17 aged care homes in regional areas, said, "This increase acknowledges the cost pressures that come with operating in these regional locations, that we have been highlighting and experiencing for many years.

"Whiddon played a significant role in having MMM5 recognised when the AN-ACC funding model was introduced and it's great to see these further reforms finally implemented. 

"No longer do I have to draw the comparison of a home in Moree being grouped with a home in Mosman!"