Unspent home care funds a ‘self-imposed’ problem
The ‘scourge’ of unspent funds is self-imposed by providers who are failing to operate the home care program properly, an industry expert says.
The problem of unspent funds is self-imposed by providers who are failing to operate the home care program properly, an industry expert says.
Aged care consultant and managing director at e-Tools Software David Powis spoke about what he termed “the scourge of unspent funds” during an online presentation at the Leading Age Services Australia (LASA) Congress on Tuesday.
He also warned that the recovery of unspent funds by the government and the introduction of a new funding model would leave a significant number of providers financially damaged.
“Imagine if the department took back unspent funds, reduced future funds because of your history and insisted the full dollar value be provided to the consumer – potential disaster confronts you”.
Mr Powis said unspent funds, currently totalling more than $1 billion nationally, are the biggest threat facing the home care program.
“Ultimately the department will recover unspent funds and adjust the funding model which will result in a significant number of providers being financially damaged,” he said.
However, much of the problem is self-imposed, Mr Powis believes.
Mr Powis says providers are contributing to the problem by failing to ensure proper pricing, training and reporting.
The biggest contributors to unspent funds, he says, include services not being delivered because of poor care planning, consumers not taking up services, poor staff training, failure to reschedule cancelled services and failure to apply markups to third party services.
Many providers also don’t fully understand how home care funding works, and rely on anecdotal data rather than formalised pricing systems as well as failing to factor price increases into consumer agreements.
“Providers who are not operating the home care program correctly and as a result generating unspent funds are creating problems that will cause financial difficulty into the future,” he said.
While unspent funds contribute to a short term positive cashflow the benefit is illusiory.
Providers with unspent funds risk loss of government funding and consumer contributions, as well as paying tax on profit that doesn’t exist. Many providers will also find themselves under pressure not to charge full consumer contributions and income tested fees (ITF) – something Mr Powis warns can have severe long term ramifications for the provider.
“I have noticed recently a significant number of providers are deciding not to charge the full consumer contribution, if at all, and the full ITF if at all,” he said.
Unspent funds potentially represent a major loss of what Mr Powis estimates could be up to 50 per cent of a provider’s value.
He says it’s crucial for providers monitor unspent funds in real time and for care plans to make sure all funds are utilised.
Care also needs to be taken that on discharge, fees that aren’t actually unspent funds are not refunded Mr Powis said.
Mr Powis told Community Care Review that “naive and misguided” home care providers were their own worst enemy.
“They could clear the problem up before the government takes it back if they were smart.”
Comment on the story below. Follow Community Care Review on Facebook, Twitter and LinkedIn and sign up to our newsletter.
I agree with Mr Powis in that providers need to address their surplus funds, but what I found while Case Manager for a large aged care provider was that the assessment process for clients is very often way off in regard to the level package needed to fulfil the individual requirements for that person. I had numerous clients who were assessed to be level 4 but only required 2 hours per week of cleaning, which of course resulted in huge surpluses. Regular contact and explanation of why they were assessed at this level (assumed they needed this level of care) would not change their minds on the services required. I believe that automatic upgrades should also be looked at as some clients have told MAC that they do not require that level to be told that if they do not take it, they will not be offered again. It became very frustrating with top managers pushing CM’s on a daily basis to spend these funds. I also disagree with clients who only want a package to “save up” for something, with the provder not supplying front line services. My understanding is that this is what this money is for primarly.
Hi Kay, I totally accept the frustration that you are experiencing is as a result of what you say might be an incorrect assessment and also refusal by the Consumer to accept services. The system has however been established on the basis of checks and balances. The first being an independent assessment upon which the Provider and the Consumer can coordinate the appropriate care plan to meet the identified Consumer needs to assist them to remain at home as independently as possible for as long as possible. If the Consumer has genuinely been wrongly assessed then they can be reassessed. This is a complex issue and I am happy to discuss some ideas with you if you would like to. My number is 0438 648 176.
Hi David
I understand that there are checks and balances that need to be adhered to, but the first assessment is not with the provider and the consumer, it is either completed with ACAT/RAS. The consumer then choses their preferred service provider, with their level package set. There is usually a care plan provided (usually not very comprehensive), then CM’s will attend first meeting with consumer. Consumers can be reassessed, but once on a certain level package consumers will not accept a lower package level.
Well – I have to say – I completely disagree with Mr Powis. I can only speak with regard to my own Clients, but in almost all instances our Clients with significant unspent funds are in that position through clear choice. They have refused services which might help them, despite intensive case management interventions, and they have chosen to accumulate unspent funds – sometimes with a clear goal in mind – sometimes not – but the “bottom line” is that a Provider cannot force a Client to accept services. We also have a few cases – similar to those mentioned by Kay – where a Client has been given a Package at a higher level than they really need.
Mr Powis asks “imagine if the Department took back unspent funds?”
Where a Client consistently refuses services that would help them, or has been approved for a Package significantly higher than their real needs, I think that the Department should indeed do exactly that – reclaim the unspent funds. I can foresee some administrative complexity in achieving that, but the principle here should be “funding and care according to Client needs” and not – as Mr Powis seems to feel – Providers maximising value for themselves. (“Unspent funds potentially represent a major loss of what Mr Powis estimates could be up to 50 per cent of a provider’s value” and he criticises the “failure to apply markups to third party services.”)
A “use it or lose it” principle would certainly reduce the number of Clients who accumulate unspent funds by choice – though it would also have the perverse effect in some instances of Clients spending funds on services they do not necessarily need, while others need services well beyond their current HCP level and wait endlessly on the enormous and enormously disgraceful “national queue.”
Agree, also long term case manager. Several clients have over $100000 and will never use it because they do not need level 4. Very few items to be saved for, only expensive equipment as home modifications such as bathrooms to provide access to safe showering cannot be funded by package as viewed as capital improvement. With real reablement supposedly a pillar of CDC, surely a person should have package level reviewed down when they have clearly improved since original assessment, but this is not possible apparently
Hi,
Sounds like and investigation problem to me, firstly with the Consumer’s GP to find out why they referred their patient to ACAT for home care services, [what needs the GP felt needed to be met]. Then a check with ACAT to clarify the identified needs, then a great Care Plan to not only meet the needs but to maximise the Consumers opportunity to remain able to stay in their own home for as long as possible.
If all of that is consistent try and get the GP involved in convincing the Consumer of the need for specific services to be provided. Remember, the Consumer still remains the patient of their GP. Do you send a copy of your Care Plan to the GP for sign off?
Alternatively, if the investigation identifies an over classification, a new assessment can and should be requested. Also don’t forget the value of Allied Health Professional for support with sight, hearing, physio needs, dietary requirements etc.
A lot of professional have been and can be involved in the assessment/delivery process so the needs identified should not normally be that far out.
Either way, continuing to accumulate “unspent funds” will create a problem for your organisation if not addressed.
you can’t be serious about GPS? Many have no idea about a client’s home and living environment and never liaise with package providers. They make referrals without even bothering to check – the first we know is a call from ACAT advising client is not eligible for whatever GP has referred to MAC e.g. Physio because they are receiving a package! Duh, we know! and a simple call to provider by GP clinic was what should have occurred. A good GP who does liaise with case manager makes a huge difference, but unfortunately is not the norm.
ACAT – of course we have their comprehensive assessment, sometimes 12-30 months old by the time the approved level package is assigned .
Of course case managers use allied health professionals – extensively that’s why wait lists for an OT is 6-10 weeks – do you really think we have no idea? FYI, optometry & audiometry primary products (glasses and hearing aids) are excluded from package funding and sometimes their services as well if Medicare funded. And yes, we do know about other optical and audio options that support independence.
I agree that providers are generally under pricing management and services but we need to ‘stay competitive’ and are already harangued by clients and industry ‘experts’ for ‘ripping off clients with our outrageous fees’ so the norm is now case loads of 50-100.
Two of the biggest operational issues are: lack of quality support staff which has been worse this year than ever (understandably) but was a problem prior to pandemic; and the cost of travelling to provide services which can be more than the cost of the service being provided – $100+ shower anyone? The supplement to service rural clients doesn’t come close to the extra costs. Staff should be paid travel time between clients but generally are not, so poor conditions for support staff exacerbates the lack of staff problem.
Lots is issues, but cause of ‘Unspent funds’ is more likely due to the ‘fixed level’ funding model (as opposed to the NDIS model), rather than poor case management.
A bit of reality – the current competitive model discourages a case manager requesting a review of package level for down grade, as it will mean a potential loss of income to the provider, and a guaranteed loss of the client to a transfer!
Your passion for the topic is admirable and in large part I agree with your comments and share the passion.
The issues however remain, despite the comments you have made. As such, the industry either accepts those conditions as unchangeable, and accepts the inevitable consequences or providers can use their skills and their advisors support to determine a course of action that can change the outcome. Part of that is to take business risks and also to try and convince industry peers to join in a campaign for positive change.
A further part is to ensure they software delivers “real time” up-to-date information upon which decisions and interventions can be made in a timely manner.
At this stage, I think in fundamental part, the home care programme is not achieving the best outcomes possible that underpin the original plan to keep elderly recipient consumers at home for as long as possible and thus avoid or at least delay them being admitted to more formalised high level care facilities.
As for GPs and allied health professionals, as a person who interacts with a large number of providers, I am astonished about the lack of engagement and involvement by these key parties in programmes. GPs, in my view, have been allowed to “get off the hook”, for too long. They need to be actively engaged, on a regular basis, via communications, being asked for comment on care plans etc. GPs have a direct responsibility for their patients and inevitably, in my view, can be encouraged to be more engaged.
The misinterpretation of CDC has also become an issue where, from observation, I note that some Providers, rather than address the needs identified by ACAT, in lieu prefer to turn this into a scheme that asks the Consumer what they want and then goes about supplying that even if its relationship to the identified care needs, may be limited.
There is no question that this is a complex issue, and at no time have I suggested that change is easy, but if you look at the impact of not addressing change I think the effort to do so is not only justified, it is essential.
If the industry waits for a different pricing model just look at residential care as a guide. Each iteration of funding model, over the years, has put providers in a more difficult financial position with less funding, in real terms, more onerous controls and less management flexibility being put in place. That is not a pathway community care should want to follow, particularly as “unspent funds” plus many not charging a full Consumer Contribution and even ITFs sends a clear message that the programme appears to be over funded.
This makes good sense. Why should providers keep funds that are not needed or required by the client? The funds must be directed where the needs are greatest. Administration in funding needs scrutiny and needs to be addressed. Transparency in aged care is important.
Hi David, I am happy for people to have an alternative viewpoint, however from my point of view the only successful home care programme that is sustainable is one that meets the Consumers’ needs as well as supports a sustainable service delivery model for the Provider. Given the pricing mechanism if services are not delivered, it is a fact a portion of the service fee which is meant to recover operating costs and deliver a surplus to the Provider will not be received. Equally, if the care plan is professionally developed in response to the independent ACAT assessment then the level, the funding, the services [care plan] and the best outcome for Consumer and Provider should be able to be delivered. Unspent funds by definition indicate that both the Consumer and Provider are not having their needs met as planned by the programme.
Gone are the days when Case Managers were able to use their experience to “move” HCPs between clients.
I realise that the reforms were in part to ensure client choice of Service Provider , with which I agree, but unfortunately this has resulted in HCPs not being “flexable”
As a long time Case Manager with HCPs in the past I have been able to liase with clients who may not be using all the funding of their L3 or L4 HCP and transfer them to a L2 whilst retaining any unspent funds that they may have accrued. That then would free up a higher level package for someone who’s needs had increased and were at risk of using more funds for services than their package provided.
I dont really know what the solution is to this issue now that service providers do not ‘hold” the packages, but it is certainly a way of reducing HCPs with excess funds whilst insuring those that need increased services do not have such a lengthy wait time
Marion, that is a very good point, clearly with the Consumer controlling the package they may not agree to a reassessment etc., and the consequence of that, as you describe is that “hard to get” Level 4 packages can be tied up and mean long delays for other consumers who cannot get the much needed higher level packages. This is where I think the Consumer’s GP might be a helpful intermediary in those discussions to determine if the real needs of the Consumer are identified.
Unfortunately in this new environment Providers and their staff need to learn new skills, including negotiating and marketing. The environment has changed and the industry needs to adapt to that change, for both the Consumer to receive the best care and services to retain their independence in the community and the Provider to be able to maintain a financially viable service into the long term. Service excellence and professionalism is needed at all levels.
Staff also need to be able to fully explain to Consumers the details and particularly the purpose of the funding arrangement and dispel the often held misbelief that funding is like a bank account and that “funds saved” are not “funds earned”.
The new environment is more commercial in nature and competitive as a result. Providers need to be able to explain to Consumers how the proposed care plan contributes to Consumers’ maximising their opportunity to remain as independent as possible and obviously avoid the need to transition into more formal forms of care, for as long as possible. Clearly there is a requirement for staff training, supervision and more planning for Providers to be successful in this environment.
Failure by Providers to make the transition will deliver a less effective outcomes to Consumers, less funding from which to deliver goods and services, less viable providers and as a consequence a downgrading of the Home Care Programme overall.
Yet more clear evidence that “marketizing” home care doesn’t work. When will Government learn. How many more reviews , Royal Commisions etc do we need? It will never be a perfect market. We rejected a lvl 4 package for eldery parent to stay on CHSP. Saves us money (almost $10k pa) and no hassel about accounting for funds etc. Easier and Cheaper. If, as David Powis, suggests providers increasing prices to soak up excess is the solution or a part thereof, it does sound appealing to the HCP recipient or should I say “consumer”.
Hi,
As I have continued to clarify, I have not, nor would I suggest unjustified fees be charged. I do however totally support a formalised pricing mechanism that arrives at the correct pricing being calculated and charged.
Once the pricing is identified a provider has the option of whether they will apply that level of pricing or not. At that point, they may choose to change the pricing based on market forces. That is a commercial decision based on the Provider having access to sufficient information.
Whilst I can understand why you might prefer the CHSP programme to the home care programme, one needs to keep in mind that it is the intention of the Department to amalgamate the two programmes at some time in the foreseeable future. As such, the issues with eHCP still need to be addressed and even more so before the amalgamation occurs.
I believe there is a relatively simple but clear relationship in the funding model. The Department determines the funding model which requires a co-payment combining government subsidy + supplements with the Consumer Contribution.
This arrives at the maximum revenue to deliver the services required to meet consumer needs at the identified level. An independent body [ACAT] has been establish to assess the correct needs for each individual consumer. The Approved Provider is then responsible for delivering services [and sometimes goods] to meet those identified needs, in conjunction with the Consumer, to arrive at the best outcome.
On an ongoing basis the identified needs, which are linked to goals, need to be assessed to determine how successful the interventions are in achieving the goals and the care plan would then be adjusted accordingly.
As such, if the initial decision about funding per home care level is correct, the ACAT determines the correct needs and the Approved Provider delivers the required services at a price that meets the cost of delivering the services and good, plus provides a surplus to remain viable, then there should not be an significant “unspent funds” issue.
Unspent funds can only arise if that process is not being correctly administered in accordance with its design.
To David Powis:
I am appalled to hear additional fees should be charged to reduce Unspent funds. Fees charged are mostly already high, with clients complaining every day.
We are also competing with our fees in an open market. AND: The client is in control (rightfully so mind you)
I doubt you have ever worked in this environment. It is not all about the provider getting as much as possible out of Home Care packages, but actually to find a way that both clients and the providers have their requirements met.
Best would be if level changes are first discussed with the Home Care provider (by asking for the past few statements) to see if there is a need to go up. In many cases there is not.
Once again I would like to clearly state I am not suggesting unjustified additional fees being charged. I have however become aware that there is a general lack of understanding on how to actually calculate the correct level of fees required to deliver a sustainable quality service.
Once the correct pricing is established a provider needs to have a software management system that allows them to know interactively, and in real time, that the care plan being prepared is costed by service and is within the budget. That is the first step in ensuring that the consumer receives the best value from the package and the provider meets the budget allocated to deliver those services. That in turn should result in limited if any unspent funding.
My observations support the view that “unspent funds” by their very existence, have led to decisions which individually and collectively have led to a range of serious problems, most of which can be linked to incorrect pricing , poor communication, limited education of consumers and staff members making personal decisions, on behalf of the organisation, about what they feel is “fair” for the consumer. All these factor have a impact on the inevitable outcome.
Furthermore, these decisions cause a circular outcome. Underpricing, in contributing to the accumulation of unspent funds, in turn leads to some providers considering not charging the full consumer contribution and also ITFs. This in turn leads some providers to reduce the services to the lower lever of funding i.e. solely government subsidy and supplements. Such actions are detrimental to both the consumer and provider.
Hello David,
How can the HCP providers not charge the consumer contributions????
If a client is assessed as paying, let’s say, $5,000 contribution towards their L2 HCP and the government contributes $10, 000 and the HCP provider decides not to charge the contribution, instead they take the $5,000 out of the government $10, 000 leaving the client with $5,000 to pay for the services, admin and case management fees then the client will have little to no services provided. Is this legal? It certainly can’t be can it?
Dear Perplexed – when I was employed by a large NFP organization as a case manager for Home Care Packages we did offer the option of consumer contributions being either waived or reduced. We explained to the client at the time of negotiating the fees that if they didn’t contribute towards the fees that their amont of services (or purchases using HCP funds) would be reduced. I would generate examples of the budget to cover a number of different senarios – so that the clients were able to make an informed choice