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An overview of the aged care reforms, the legislative framework, and the legal implications for providers

Newsletter 21 September 2016

In the 2015 – 2016 Budget the Federal Government announced significant reforms to the way in which home care is to be provided to elderly Australians, to be implemented over two stages.  From February 2017 (Stage 1), it is proposed that funding for a home care package will follow the consumer.  From July 2018 (Stage 2), the Government intends to integrate the Home Care Packages Programme and the Commonwealth Home Support Programme into a single care at home programme. 

Why Reform?

In its explanatory memorandum, the Government provides rationale for introducing the reforms. That rational includes:

  • 68% of Australians aged 65 years and over currently live at home without accessing Government-subsidised aged care services, 25% live at home with some access of services, and 7% live in residential aged care.
  • The number of people aged 65 and over is projected to more than double from 3.6 million (15% of the population) in 2014-2015 to 8.9 million (23%) by 2055.
  • The highest growth rate of all age groups will be for people aged 85 years and over, almost quadrupling current numbers (500,000 in 2015 to reach 2 million by 2055).
  • By 2050, it is expected that 3.5 million Australians will be using aged care services.
  • Older Australians have a strong preference for continuing to live in their homes and communities for as long as possible, and having a greater role in decisions about their care. 
  • The current process and criteria for becoming an ‘approved provider’ is considered out-dated and inefficient.
  • Providers must go through separate processes to be approved as a provider for home care and residential care.
  • There is a lack of a nationally consistent approach for prioritising access to care.

The Legislative Framework of Stage 1 Reforms

The Aged Care Legislation Amendment (Increasing Consumer Choice) Bill 2016 (Cth) (‘the Bill’) was introduced into the House of Representatives on 11 February 2016. If enacted, the Bill will give effect to the first stage of the home care reforms from February 2017 by amending the Aged Care Act 1997 (Cth) (‘the Act’) and the Aged Care (Transitional Provisions) Act 1997 (Cth) in three main areas:

  1. Rather than the current system whereby home care places are allocated to individual approved providers in a particular location or region, the consumer will be able to choose a provider and direct the funding to that provider.
  2. There will be a consistent national approach to prioritising access to home care packages through My Aged Care.
  3. There will be reduced red tape associated with providers who become approved under the Act to encourage new providers to enter the home care market provided they meet quality standards.

The Aged Care Amendment (Red Tape Reduction in Places Management) Act 2015 (Cth) commenced on 11 February 2016 to streamline the transfer process for allocated care places between approved providers.  

The Legislative Framework of Stage 2 Reforms

The Government intends to introduce separate legislation to give effect to the second stage of the reforms by July 2018. 

Major Changes from the Stage 1 Reform

Whilst providers will still need to be approved by the Department of Health in order to qualify for subsidised home care, the process for obtaining approval will be simplified. The proposed Bill reduces the number of relevant criteria to be taken into account, with the focus being on the provider’s knowledge of aged care services and its record of financial management. There is no longer any reference in the criteria to the provider’s key personnel.

Approved providers will no longer be required to apply for home care places through the Aged Care Approvals Round. Under the new legislation, once a consumer is assessed as requiring home care through the My Aged Care website and their level of priority is determined, the consumer will choose which approved provider they wish to enter into a home care agreement with. The approved provider is entitled to a subsidy for each home care agreement.

The number of home care packages available will be capped, and the packages will be assigned to consumers through the My Aged Care website via a process of prioritisation. Consumers are to be prioritised based on the period of time they have been waiting, the priority status they receive following an ACAT assessment and any other matters the Secretary specifies in the Prioritised Home Care Recipient Principles. 

Consumers who are assessed as requiring a high level care package can access a lower level care package while they wait for a higher level care package to become available.

Whilst accumulated or unspent fees could previously be retained by an approved provider when a consumer ceased receiving home care from that provider, any unspent fees will now move with the consumer to the new provider. 

Legal Implications for Providers

The Government has made it clear that the aim of the reforms is to move towards an aged care system that gives the power of choice to the consumer. This raises a number of legal questions for approved providers delivering services to the consumer, including:

  • Who is responsible for explaining to consumers the new system and the choice they have when selecting a provider before a home care agreement is entered.
  • Where does the limit of a provider’s duty of care lie in circumstances where the choice and control rests with the consumer, particularly if it has concerns about the consumer’s capacity to make an informed choice.
  • What is a provider’s liability if a consumer elects to receive a lower level care package while they wait for a higher level care package, meaning they are not receiving a level of care which matches their assessed needs.
  • What is a provider’s liability if a consumer chooses to utilise less services than they require as a means of accumulating unspent funds for a ‘rainy day’, such as if they are concerned that their care requirements might increase in the future. 
  • What rights does a provider have with respect to retaining a consumer’s unspent fees if a consumer chooses to move to a new provider whilst they have unpaid consumer fees with the previous provider outstanding.
  • What is a provider’s liability when utilising a contracted service provider to provide services to a consumer.

It remains to be seen what final form the Bill will take. Whilst each situation needs to be assessed on its own facts, the following precautions may assist providers with reducing their liability when providing services to a consumer in a deregulated market from February 2017:

  • Providers should ensure compliance with the Home Care Common Standards under the Quality of Care Principles 2014.
  • Providers should discuss the care package options openly with the consumer. 
  • Providers should give the consumer time to consider the options before a home care agreement is entered.
  • Providers should give consumers a plain language home care agreement which complies with the requirements of the Australian Consumer Law.
  • Providers should ensure that a consumer is aware of any exit fees before a home care agreement is entered.
  • Providers should keep excellent records.
  • Providers should consider asking a consumer to sign appropriate risk acceptance and/or indemnity forms if the consumer decides to take an acceptable risk with respect to their care (such as accepting a lower level care package while they wait for a higher care package). 
  • Providers should give consideration to declining a request for services if it does not believe that it is capable of providing an adequate level of service to a consumer.
  • If a consumer decides to switch providers a dated direction should be obtained where possible. 

Dominique Egan, Partner

Zoe Hamilton, Associate

Newsletter 21 September 2016
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