This sounds like a fine way to craft the often-problematic structure of master class teaching. Are there multiple groups taking place at the same time, Bruce? (Because I thought there were several dozen participants in this program.)
Indeed, there are several master classes (usually not more than seven students per class). Not all the master classes necessarily take place at the same time, but the students in each class are scheduled together by (relative) ability/advancement.
The application form asks for examples of current repertoire with the aim of putting each student in with other students of similar ability. This avoids the rather uncomfortable situation of putting relative beginners in with near professional performers. It does not, however, prevent students from exaggerating their accomplishments in the application form!
It is very rare in my experience, but it has happened, that a student may claim to have studied - if not mastered - a major work in the standard repertoire, is placed in a more advanced master class by virtue of that claim, only to spend time at the piano in the master class doing little more than stumbling through a sight-reading attempt. This, I repeat, is extremely rare, but it has happened through no fault of the Academy's registration process.