Home care funding reform to begin next year
Major reforms to home care funding, which will see the move to a payment in arrears system, will be implemented from next year.
Major reforms to home care funding, which will see the move to a payment in arrears and invoicing system, will be implemented from next year.
Under the reforms, providers will be paid after services have been delivered, rather than being given a lump sum in advance, which has been blamed as a factor in the accumulation of more than $1.1 billion in unspent funds.
Community Care Review understands that in an email to providers on Wednesday the health department said the first phase of the new new system will be implemented from February 1, with the second phase, where providers will need to invoice for services provided, to kick in from September.
The announcement caught some commentators by surprise, after budget papers released on Tuesday said $21 million would be provided over four years to delay the implementation of payment in arrears and on invoice for home care, to provide transition support to providers.
Community Care Review has sought clarification from the department.
More than 900 home care providers were set to receive their final payment in advance last May.
But aged care minister Richard Colbeck announced in March that the plans, which were originally announced in the 2019 budget, had been put on hold while the government responded to COVID-19.
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, like the NDIS.
Aged care economists say the change is welcome and believe the measure will help put a lid on unspent funds.
“This should have a direct consequence on the growing level of unspent funds which, in effect, is unutilised funding that could be allocated for further additional packages,” consultants StewartBrown said in an analysis of this week’s federal budget.
However the analysis says while the budget commitment to provide 23,000 new home care packages over the next four years is welcome, it won’t address the problem of unspent funds, which currently average $8,000 per client.
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I run a relatively small but highly successful regional HCP Approved Provider. It makes total sense to me for the Commonwealth to end up holding Client Unspent Funds – they can put the money to use and it is doing no good sitting with Providers. I certainly don’t need or want it on my Balance Sheet. However I totally disagree that this will in some miraculous fashion “reduce” Client Unspent Funds. We do everything we can to persuade Clients to spend the bulk of their HCP. The Clients with a large Unspent Funds balance are in that situation because they are personally determined to save up a large Unspent Funds amount, and under Consumer Directed Care principles there is nothing we can really do about that. Moving the cash from the Provider to the Commonwealth will not change Client behaviour. We are very happy for the Feds to hold the cash, but my prediction is that unspent funds will continue to grow because the growth in unspent funds is a function of Client responses to the CDC principles.
From a practical standpoint, Providers will need to know:
– What detail is required for Invoicing to the Commonwealth and what system will be used?
– How long will we have to wait for payment/what level of cash flow burden do we have to carry?
– If the Feds hold the $$$$, will they take responsibility for sending out the monthly Budget Statements?
The Commonwealth does not have a stellar history with new IT systems, in terms of delivery on time (or on budget) and actual “does it work” functionality. It will be very interesting to see if they can get the system for this up and running in the 11 months remaining …….
If the Government’s record for setting up the NDIS payment system is anything to go by, then Providers have a right to be skeptical. However, the way that the NDIS system works now, enables NDIS Providers (of Plan Management services) to pay direct service providers within 3 business days and to manage cash flow for their own fees within a similar turnaround period from billing. It is imperative that Providers channel payments on behalf of Clients to direct service providers through a separate clearing bank account from their own operating bank account. Only Providers’ fees (for Care Management etc.) should be paid into the Providers’ operating bank account.
I am concerned about bigger ticket items that the provider will need to fund, what if the dept later turns around and says we don’t approve that. the provider will wear the cost? and will therefore not take that risk to themselves and consumers will ultimately miss out. Wendy
Perhaps, delivery of goods/services shouldn’t take place until payment has been received? Just a thought.
Are the aged care surpluses amounts accumulated still going to be there for the package holder to be used in future if needed after February 2021