The Integrated Assessment Tool was introduced in November to help distribute funding more equitably, after more than $4 billion was wrongly allocated under the old system.
More than 1000 Australians have asked for their claims to be reviewed since the tool was rolled out, a senate committee was told on Thursday.
Assessors input information about a person into the tool, which then uses an algorithm to determine how much money they are entitled to.
The outcome cannot be changed.
Health department officials told the committee there had been limited consultation with providers about the tool.
Peter Willcocks, an aged care advocate, likened the automated tool to robodebt because assessors can't opt to give clients a higher level of care than what the algorithm says they need.
Robodebt was an unlawful government program that used an automated system that led to thousands of welfare recipients being pursued for debts that, in many cases, they did not owe. It was linked to a number of suicides.
Aged Care Minister Sam Rae does not agree there is no ability for humans to intervene in the tool's outcomes.
"There is a mathematical component, that's the nature of a process. An algorithm is just a process. There is a process by which the aged care rules are applied. That's an automated process," he told ABC Radio.
"The objective piece is the application of the rules. That's the part that's standardised."
Mr Rae said median wait times for assessment had decreased to under a month because of the tool.
Previously, some older Australians have had to wait years for help or even died before they were granted funding.
Independent senator David Pocock told the committee about a visually impaired man whose daughter had to take leave from work and move in with him while he awaited funding.
Officials said the case was "terrible", but questioned whether the assessment was done properly.
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