Will you be on the hook for clients’ overspending?

The rise of online care worker platforms and increased levels of self-management mean providers should take steps to minimise the risk of clients overspending their home care budgets, write Solomon Miller, Anita Courtney and Sophie Bolzonello.

The rise of online care worker platforms and increased levels of self-management mean providers should take steps to minimise the risk of clients overspending their home care budgets, write Solomon Miller, Anita Courtney and Sophie Bolzonello.

One of the key objectives of consumer directed care is to give clients more control over who provides them with services and to increase the level of control they have over their package.

With more clients self-managing their package and engaging their own service providers including through online platforms, providers have less control over package expenditure. In some cases, clients are even engaging service providers directly without consulting their case manager.

This can place the approved provider managing the client’s package in the invidious position of having to pay for services rendered to the client without there being sufficient funds in the client’s package to cover those costs. This problem can be further exacerbated by the client failing to pay their fees.

While an approved provider is entitled to deduct service charges from a client’s package, the Quality of Care Principles 2014 state that home care fees are an excluded item; meaning a client’s package funds cannot be used to reimburse the provider for unpaid client fees.

At the same time, approved providers may have a contractual obligation to pay a supplier for the services even if they were not aware the services were being provided. For example, under many brokered service agreements, the approved provider is legally obliged to pay for services rendered, regardless of the client’s package balance. This is the case even if the approved provider did not request or authorise the services.

While a client is still with the provider, the provider can work with the client to bring their package back into a positive balance. The real difficulty arises if the client decides to change providers or leaves home care. Where a client’s package funds are in a negative amount or nil, the User Rights Principles 2014 stipulate that the unspent funds are to be taken as nil. This means that if a client with a deficit leaves home care or transfers their package, the approved provider has no ability to claim subsidies from Medicare to make up the shortfall.

Mitigating the risks of overspending

There are a number of ways that approved providers can mitigate the risk of clients overspending. For example:

  • Providers can include clauses in their client agreements to make clients personally responsible for overspent amounts. From a practical perspective, providers are unlikely to sue a client but having these clauses in the agreement may discourage clients from overspending, for example by directly engaging service providers without the approved provider’s authorisation.
  • Providers can proactively manage the client’s budget and identify any potential overspend to ensure services are covered by the client’s home care package funds. For example, where overspending does occur, it is prudent for providers to decrease non-critical services until the client’s package funds are back in surplus. Again, this should be reflected in the client agreement.
  • Providers should ensure their brokered service provider agreements contain provisions which make their payment obligations contingent on the service being authorised or approved by the approved provider.
  • Providers should also have clauses in their service provider agreements requiring the service provider to keep the approved provider informed of any services rendered.

Some providers also include clauses in their agreements which prevent a client from leaving their service with a negative balance. While there are no express restrictions on doing so, this is arguably inconsistent with the principles of consumer directed care and clients’ rights under the Charter of Care Recipients’ Rights and Responsibilities to change providers.

Solomon Miller is a principal, Anita Courtney is a senior associate and Sophie Bolzonello is a lawyer with Russell Kennedy Lawyers.

This article appears in the current Spring edition of Community Care Review magazine.

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Tags: budgets, cdc, home-care-packages, law, overspending, russell-kennedy,

1 thought on “Will you be on the hook for clients’ overspending?

  1. And this is will be the great failure of ‘self management’ and ruin the prospect of true self-determination and CDC for a lot of clients… Personally I could not foresee where a service provider (and have not seen it to date) would provide a service without consultation or authorisation from a case manager? How could they guarantee payment? Self management can be done well and clients regardless of their capabilities should be offered if they wish, and work in collaboration with their case manager where they become more in charge, and the case manager performs a more admin or advisory role than previously. However, in my experience, providers who fail to equip clients who wish to take up self management seem to be damned if they do, damned if they don’t as all the rights lie with the consumer, yet all the responsibilities fall on the provider. Co-design and co-production principles are only successful if clients are at the centre of designing their own services and taking responsibility.

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