Almost 40 per cent of home care budgets eaten up by fees

Providers are taking almost half of clients’ home care expenditure to pay for administration and case management.

Public policy think tank Grattan Institute says the Federal Government needs to spend an additional $9.8 billion a year on recommended aged care reform measures.

Almost 40 per cent of what older people receiving a home care package are spending is being eaten up by administration and case management fees, an investigation of budget expenditure shows.

The research, by a team from Flinders and Sydney University, involved 150 people in South Australia and NSW who were receiving community aged care services from not-for-profit providers.

Professor Julie Ratcliffe

It was undertaken in 2016 during the early stages of the transition to CDC to examine expenditure on community aged care services.

CDC entered Australia’s aged care sector following a federal government review in 2010 with the aim of supporting people to remain in their homes for longer by more closely aligning community aged care services to their needs.

The study found that on average, only 53 per cent of expenditure was allocated to care services, while 20 per cent went administration costs and 17 per cent to case management. The remainder when to other expenses and brokered services.

“It was evident that, regardless of the HCP level, administration and case co-ordination/care management fees accounted for a significant proportion of total expenditure: nearly 40 per cent for the total sample, 41 per cent for HCP level 1/2 and 38 per cent for level 3/4,” the study said.

The main drivers for expenditure on care were equipment, transport, home maintenance and supplies.

Researcher surprised by findings

Julie Ratcliffe, Professor of health economics at Flinders University said the “relatively high proportion” of HCP expenditure that went towards fees surprised her.

“I think there is an element of understanding that it would need to be a reasonable proportion in order for people to have high quality care co-ordination because you need quality coordination in the era of CDC and you need to pay the care coordinators,” she told Community Care Review.

“But I’m still not sure that you could really argue that it’s up to essentially half the package in fees.”

Professor Ratcliffe also said the research highlighted the need for standardisation of income and expenditure statements, which she says even the economists involved in the study struggled to understand.

“We had different aged care organisations and each organisation had a different way of reporting the data,” she said.

“So one of the big messages we took from that research was we really should be moving towards standardisation across the sector in the way we report these statements for consumers, so that they can actually understand them.”

The study was published in the Australasian Journal on Ageing in August and researchers say further research is needed to investigate the longer-term budgetary impacts of the transition to CDC.

Read the full report here.

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Tags: australasian-journal-on-ageing, cdc, community-care-review-slider, consumer-directed-care, flinders-university, home care package, home-care-fees, income-and-expenditure, julie-ratcliffe,

12 thoughts on “Almost 40 per cent of home care budgets eaten up by fees

  1. Unfortunately this is arising from the Department previously setting benchmarks of 30% for both admin & case management and 10% for contingency. This was a benchmark set by the Department for providers some years ago when the CDC model was first introduced and of course providers followed this advice and guidance.
    However since Feb 2017 and with the deregulation of the Home Care Package environment more scrutiny is on providers surrounding these fee structures and a lot of providers have reduced these percentages.
    I feel that the 40% fees charged are directly attributable to the Departments recommendations they originally advised of and we are slowing moving away from these percentages as the deregulation was only February 2017.
    Also as from 1 July 2019 with publishing the fees in a more transparent format on My Aged Care it gives the consumer an easier method of evaluating best options and comparing pricing structures.

  2. Costs always need to be taken into account when the provision of services is assessed.

    What we have not examined is how many recipients actually pay the $9.44 to $10.54 per day.

    Govt receives only 3.7% user co-contributions from recipients towards home care. We should require home care providers to mandate the payment contribution

  3. Why should there be a copayment at all especially for those with profound disabilities who are so disadvantaged in funding and supports in comparison with persons with same disabilities covered by the NDIS totally wrong.

  4. I agree Peter. In this competitive day and age, quite often the entire service provision is reliant on the Government funding alone with no contribution by the consumer – these days even the ITF is being waived.

    Where do unspent funds sit?

    On the increase is this expectation of a ‘free’ bucket of money from the Government to enable you to stay at home – no wonder the queue keeps growing!

    Unlike Residential Care where providers are painted as unscrupulous Lamborghini drivers lining their pockets with resident funds.

    No wonder I want a package – the Government pays me to stay at home – if I go into care I have to pay. See the difference here?

  5. I think that the research is interesting but, being 3 years old, needs to be updated to reflect the current transparent pricing required from 1 July 2019.

  6. CDC model appears to be based on the premise that the recipient of a HCP is alert, well, and with energy and ability to conduct a high level of administration.

    I received government supplied services 30 years ago due to a chronic immuno-neurolohical condition The doctor organised it as an alternative to going to a nursing home. I was far to sick to have any input to the organisation or administration.

    Fast track 30 years to 2 and half years ago. I became recipient of HCP. Now aged 74 it has been an administrative nightmare.

    Only recently have I become aware of the difference between CDC and the previous model I had experienced.

    I received no statements for 2 years. Then found out I was being charge $300+ admin and $200 case management/planning.

    I had never had a plan done and no idea of my entitlement.

    I had zero case management and zero planning.

    There has to be a better way to distribute Government paid services.

    We should remove the word “care” from the industry. There is NO care. They are selling services paid for by the government via an incompetent business model.

  7. For Home Care Packages, with all the changes in Feb 2017 for transferring and exiting clients as well as the new standards and pricing structure changes in Jul 2019, Providers are constantly being required to make changes every time the department makes a change. The department does not provide any additional funding to support providers with this. Changes may include updates to internal policies, procedures, finance reporting requirements, finance claiming, training of staff, educating clients, changing / updating software systems etc. On top of that, Providers also have the day to day requirements to work with disconnected government systems that cannot be integrated into their own internal systems including updating my aged care, manually downloading new referrals from my aged care to enter into their own systems, training staff on my aged care, manually entering events on Medicare online for claims, reconciling claims, processing adjustments when Medicare processes an incorrect claim or the system fails.

    Providers also have to educate clients when these changes take effect, provide updated Service Agreements (which generally have to go through Legal bodies to confirm information is accurate and correct to go to clients) and provide clients with additional information (generally sending a coordinator in person to visit the client) and request them to sign a new service agreement due to the changes.

    The department expects Providers to do all of these things with less and then when providers structure their fees to cater for all these services they are providing and continue to have to provide, Providers are highlighted in the media as charging enormous overhead fees to manage changes all whilst having to keep direct service prices competitive to compete with new providers coming into the market who do not have any existing systems in place that need to be changed.

    The new pricing structure still allows for inconsistency as some providers can identify up front that they do not charge Care Management, Package Management or Exit Fees so this may sway clients to join one provider over another, however, in the fine print (the PDF Price list uploaded to My Aged Care) there may be hidden costs that are not as easy to understand and may confuse older clients.

    Some Providers also highlight that they do not charge Basic Daily Care Fees which means that those clients receive less care which to me, goes against the principle of providing quality aged care.

    In mentioning all of this above just for Home Care Packages, it is also forgotten that some of these providers provide CHSP, NDIS and DVA services (just to name a few). They are also required to manage any changes outlined to them for these programs (e.g. updating grandfathered clients to DEX and updating NDIS pricelists with only a few days’ notice before 1 July). All of these things puts a massive strain on providers who have the same administration, management and finance staff managing these programs and they are not provided additional funding to make these changes or educate their staff on the new changes.

    I agree that there are some providers out there who may be taking additional fees from clients to fill their own pockets but the majority of the providers are doing the right thing and are trying to be as efficient as possible in terms of administration even though the department does not support them and provides very little notice of changes and little to no detail around how the department expects changes to be implemented in the business.

    When CDC was initially implemented, some client’s actually remained with HACC (CHSP) services because they were able to receive more services than if moved to a package. CDC really moved providers away from delivering “quality care” to just being fund managers on behalf of the department.

    It could definitely work better if the department and providers took a different approach at how to fund services based on a person’s actual care needs rather than categorising them into a level as every client is different and has different care needs. This would definitely align with providing quality care and individualised care to clients which I understood to be the whole purpose of a Consumer Directed Care Home Care Package.

    Maybe Providers and the Department should look at a different model based on what they know from HCP, CHSP and NDIS. Maybe the Department could allocate a certain number of hours per service type for all older Australian’s with a cap per service type per client based on their assessed identified needs. Providers could use the DEX to submit claims and monitor hours delivered. Providers could be paid per hour based on a suitable rate to cover all costs (not like NDIS where some providers are having to leave the market as the hourly rate does not cover the cost of a service). Clients could just be provided with a statement that shows Care Hours received per month removing all the complexity of $$ and Service types on a statement. Maybe in this model, clients should have a standard deduction taken from their aged pension (minimising administrative costs for Provider’s finance and billing teams to invoice and then chase fees that the government has suggested client’s pay which sometimes get written down or off when a client does not pay) and self-funded retirees are required to pay an Income Tested Care Fee towards their care? Just a thought….

    Sorry for the legnthy response. I just feel Providers are always targeted but it really should be redirected back to the department to review.

  8. I don’t think putting all care workers in that bracket is fare. We carers get an agreed rate, and have to fight for the tenders put out, as it comes down to the last cent to who’s rate gets the job,i have been a carer for 19 years and it comes down to the cost not EXPERIENCE for we can give our clients .

  9. Why is it so difficult to understand the cost of being a provider? Have a look at the regulations and standards – it costs money to be compliant! A lot! You can fail an audit if you don’t have fire and evacuation training annually! This isn’t free and is one of many requirements that clients have no idea exist. Organisations must have HR, finance, quality, training, contractor management (a full time job to manage hundreds of external contractors and suppliers) areas. We don’t just send staff in isolation to all the hundreds of regulations and compliance standards. We charge 15% for Organization costs (admin). For client advice/case management we also charge 15%, that’s $89 per fortnight for a level 2 package, which funds one hour of a case managers time. So 26 hours per year. The annual review accounts for around 5-6 hours of that, leaving one hour every 2.5 weeks for service coordination. Sounds pretty reasonable to me. Govt and clients want quality but don’t want to pay for it. Most clients do not contribute one cent to their packages, but bitch about package charges and cost is services. Statements can be hard to understand – we have to send the statements for the month prior to receiving the invoices from suppliers – of course they are going to have lots of adjustments! We then can spend hours on phone with clients querying every charge and service. All CDC has done is create an unrealistic, non viable and poorer service than before. Double the number of providers has stretched providers to areas they did not previously cover incurring more costs, and stretching the care workers into more and more providers who are all struggling now to supply staff. Packages are now also being used by about 10% of clients to renovate home, garden and replace white goods. And lastly, stressed staff with lower job satisfaction (not that we count). I know it is still ‘early days’ for CDC, but further regulation is not going to improve the current mess. We wanted competition, we have it, you can’t have an open market and then tell market what it can charge!

  10. A lot has changed since 2016, how unfortunate that we are confronted with headlines that may no longer be an accurate reflection of current practice.

  11. We have been supporting our community for several decades via aged care packages and now ‘Home Care’ (stupid name). At last survey 100% of our consumers felt they received value for money. Around 75% of these people choose to purchase ‘case management’ as a model of support. It is NOT a fee. It is a choice to purchase a service. The only ‘fee’ is an administrative cost. For those choosing case management the total available for direct care (e.g. personal care etc) is only 60% which may validate the research but we need to understand the high value of good case management (care management) as against basic care coordination (service booking) or self-directed care. Consumers should all get a choice about the level of supports they require to manage their assessed level of package.

  12. I think Researchers and Economist probably never run a small, medium size or large organisation and are not aware of the different levels of costs involved in running one according to size .
    Cost of salary. rental, insurances case management which is an important service for the client especially for the CALD”s specific cohort where languages and cultures and other items are to be consider. Case management involve most of the time long session with the clients and family and this will influence the cost price per hour.
    thus the size of the organisation would influence the cost of care as well …the volume create the surplus and lower price can be offered.
    but then other issue will arise which is the equity and access issue meaning specialised boutique organisation like ours that provide services to clients from more the 17 languages background would not be able to survive.

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