Home care providers to be hit with major funding change from June

More than 900 home care providers will receive their final payment in advance in May ahead of  the introduction of major changes to the payment system.

Peak industry organisation Leading Age Services Australia says there’s too much uncertainty around the changes and is  demanding support for home care providers, in the form of transitional grants, as they transition to the new payment system which comes into effect in June.

As reported by Community Care Review in January, the aged care funding instrument ACFA has greenlighted the funding overhaul, which is designed to stem the accumulation of unspent funds which now amount to more than $800 million nationally.

The changes mean providers will be paid in arrears instead of receiving a monthly payment in advance, and will eventually only be able to claim for services delivered rather than getting a lump sum.

The government flagged the changes in last year’s budget saying the new model would align home care with other government funded programs where providers are only paid for services once they have been delivered.

In a memo to providers last week the health department confirmed the changes will commence on June 1.

Providers will get their final advance payment at the start of May and thereafter they’ll get it at the end of each month once they have lodged a claim.

The second phase of reforms, set to come in by a yet-to-be determined date, will see providers only being paid for services delivered rather than receiving a lump sum.

More information is available here.

Concerns about rushed implementation

But LASA CEO Sean Rooney says the rapid implementation of the changes will impose additional administrative burdens on providers and cause cash flow problems that could threaten their viability.

“Why is there such a rush on the legislation, when it could put people at risk of missed care?” he said.

“With the proposed June 2020 commencement date only confirmed last week, providers are being asked to adapt to a significant change in payment terms at short notice.”

LASA’s submission to ACFA’s review of the changes indicated over 80 per cent of LASA’s home care members expected the first phase of the changes would be at least ‘somewhat’ financially challenging, Mr Rooney said.

He said the legislation was unclear about whether transitional grants or loans, and special consideration for regional and remote providers, would be on the table.

There was also a lack of clarity about phase two of the changes, he said.

“We need clarification on a trial period for the new system to minimise disruption and whether or not providers can retain current unspent funds until each recipient leaves home care.”

Mr Rooney said the reforms would move the last payment of the 2019-20 financial year into the following budget period, and expressed concerns this would be used to boost the government’s underlying cash balance.

LASA was seeking a commitment from the government that the hundreds of millions potentially involved would be used to fund more home care packages, Mr Rooney said.

The changes will affect over 900 providers, LASA says.