ACFA sees ‘merit’ in proposed home care funding overhaul

Analysts have found ‘merit’ in the government’s planned overhaul of home care funding.

Home care providers will be paid after services are delivered instead of receiving a lump monthly payment in advance under a planned commonwealth overhaul of the home care system.

Senator Richard Colbeck

The proposed a “payment in arrears” model, contained in last year’s budget, is an attempt to slow the accumulation of unspent funds, which now amount to $800 million nationally.

It’s planned that the new system will be phased in from June this year.

From March 2021, unspent funds will be “proportionally” returned to the government and held for future drawdown by the client if required.

By April 2021 providers will only be paid for services provided, with the balance to be held by the government for redraw.

The government says the system will address the unspent funds issue while bringing home care into alignment with the NDIS and modern business practices.

ACFA sees ‘merit’ in proposal

In a report on the proposed handed to aged care minister Richard Colbeck on December 11, the Aged Care Financing Authority (ACFA) gives the proposal a thumbs-up, albeit with some concerns.

“With some exceptions, there is general acceptance and support amongst providers and peak bodies that there is merit in the Government’s decision to pay home care subsidies in arrears and for DHS to retain unspent funds,” the report says.

It says most home care providers should be able to absorb the impact of the change from payment in advance to arrears,however some smaller providers in thin markets could face initial challenges, and short-term financial assistance should be available in these cases.

It also says the ultimate change to payment for services only presents a potential risk to both providers and the government because of new system requirements for both providers and DHS to deal with the changes, and the timeframe may need to be reviewed.

ACFA warns the new system could also involve additional administrative costs that will be passed on to consumers, who may experience a reduction in care available under their package.

It says the proposed proportional return of unspent funds will be complex and costly for providers and DHS, and advises against going down that path, saying all unspent funds should either be returned, or kept until the recipient leaves home care.

‘Minimum risk’ to providers

David Sinclair

An analysis by accounting firm StewartBrown says the proposed changes could result in short-term cash shortfalls, negative margins, diminished working capital and vulnerability to interruptions in cash flow.

“The other major impact on approved providers that may cause financial impacts would be additional costs associated with any additional administrative burden due to changes to the claiming and reconciliation process,” the report says.

However, it concludes that the overall financial performance of providers “will not be materially impacted by the proposed changes to funding arrangements”.

StewartBrown partner David Sinclair says the changes are “inevitable and a good idea”.

“This will utilise the funds that currently aren’t utilised for one reason or another and allow the government to create more packages,” he told Community Care Review.

Any risk to providers would be minimal, Mr Sinclair said, and the only major risk would be if the new payment system wasn’t up to scratch or was poorly implemented.

Sector gives in principal support

Leading Age Services Australia Acting Chief Advocate Tim Hicks says LASA supports the proposal in principal, and that the changes could deliver a one-off saving worth hundreds of millions of dollars.

But he says all savings from the plan must go directly to reducing the nation’s “unacceptable” home care queue, with the latest government figure showing more than 112,000 older Australians are waiting for their assigned package.

“LASA supports the payment administration changes in-principle, as long as all savings are used to boost home care packages,” he said.

However he said LASA remained concerned about the ability of some providers to transition into the new arrangements without safeguards.

He said a survey of LASA members showed 80 per cent considered cash flow issues could make the transition difficult to achieve.

LASA recommends:

  • Short term grants or loans, and free financial advice during the transition
  • Special consideration for vulnerable providers
  • A trial period
  • Retention of unspent funds until recipients leave home care

Read the full LASA submission here.

Comment has been sought from Senator Colbeck.

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Tags: david sinclair, home-care-funding, lasa, news-ccr-1, slider, stewartbrown, unspent-funds,

5 thoughts on “ACFA sees ‘merit’ in proposed home care funding overhaul

  1. So if you need a wheelchair costing upwards of $23,000.00 or like me was able to have mods to my chair, unsafe floor replaced ramps replaced cost approx $25,000.00 that I had saved for just this purpose now I have zilch left how does that work in future I am on a level 4 package..not happy about this…and we have seen how successful the the NDIS has been in allocating funding people die….without receiving services..

  2. By centralising funds back with the Commonwealth has any thought whatsoever been given to the impact this is going to have on the immediacy of service providers being able to respond to the client needs? For example, are you seriously expecting service providers ‘to carry’ the cost of a client purchasing a mobile scooter from their accumulated funds? Are you seriously expecting service providers ‘to carry’ the cost of a client purchasing a hearing aid from their package? And on and on it goes. The Commonwealth is taking away any flexibility the service provider organisation, especially small service provider organisations, has and I cannot believe this proposal by the Commonwealth was supported. Where has this new approach been explained to CLIENTS? Where has the impact of this change been explained to clients?

  3. Before this decision was made by the Government and supported by peak bodies and Stewart Brown, there should have been rigorous qualitative research to determine why recipients of home care packages are not spending their monthly entitlement. My research (commissioned by the Hon Ken Wyatt when he was the Minister for Senior Australians and Aged Care) highlighted the following reasons: (1) recipient being unable to spend their home care package because the provider did not supply the required services; (2) recipient not using the services because they were unhappy with the quality of the services delivered; and (3) recipient saving their money for a later date when they would require equipment or house renovations.

  4. I have concerns being: –

    1) When a provider purchases a Capital Item, will there be a risk of DHS choosing not to refund the provider, as the supply is deemed not appropriate? If so, will proposed capital purchases need to be pre-approved prior to purchase?

    2) What proportion of services provided will be paid? Will DHS presume that the Maximum Basic Daily Fee is paid by the Client, and then the service provided paid in that proportion? If so, then this issue will be further complicated by Means Tested Care Fees, especially when DHS backdates this daily amount, causing the proportion to change, meaning adjustments to prior amounts paid would occur.

    Overall, I don’t believe the detail has been fully considered, and a genuine practical trial would result in a better outcome for the clients, as the above complexities simply uses up funds intended for clients to utilise.

  5. As an experienced aged care and disability health professional, I have been working with the constant and ongoing changes in both sectors. The issues related to the unspent funds can be due to the level of experience the under-qualified case managers offer thier clients. Their inexperience often means they do not offer advice for services that assist a person to remain in the community. Since the change to client-directed care, we have been expected to fulfil the requests of the client or thier family (mostly daughter and daughters-in-law) at all costs!

    This has involved a lot of capital expenses.
    Examples I have been exposed to are expensive large white goods eg.
    Double door fridges, washer-dryer combos, large dishwashers, entertainment units; $4000.00 plus for king size beds, security units and Foxtel subscriptions to name a few. Added to this I have seen money spent of landscape gardening, swimming pool maintenance and cleaning of the whole home, that is often not required. In many cases, this type of spending is all they use, from the package then when they need more care there is not enough in their budget.

    On the other hand, there are the clients who believe the funding is theirs to spend on what they want such as large bathroom renovations so they hang on to the money as if it is theirs. I often direct the client and thier family to the State no-interest loans as many are able to access this type of funding. These services are not promoted to clients as the first option to allow them to remain in thier homes. When it comes to home renovation there is often not enough funds to support the renovation so the money remains unspent.

    All the different requests should be referred to a central area and processed by people who specialise in recommending the basic equipment that will do the job required to support the client’s needs. If clients want to contribute to a different product they can at their expense. It is no wonder that the client believes the money is theirs and they are saving for so another thing that they feel they need!

    Rules should apply to this form of spending basic white goods if there are no other options for hygiene. Medical equipment only; beds, chairs, with physio and OT input only. Home modifications should be basic to allow for safe living and access. Use family and government-funded loans for larger renovations with OT input only.

    The majority of funds should be used for direct care if required.
    The Cleaning should be done by cleaners on lower rates and not charged at the Support Worker rate. This is often the first thing people ask for and often the most complaints regarding the service. Take cleaning away from Support Workers and use cheaper cleaners with thier own cleaning items and equipment no doubt doing a better job

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