Home care caps: business as usual for some, big impact for others

Caps on home care fees will have a significant impact on providers who rely on that income to cover costs, an aged care expert has told CCR.

The incoming caps on home care fees will have a significant impact on providers who rely on that income to cover their costs, an aged care expert has told Community Care Review.

From 1 January 2023, home care management fees will be capped at 20 per cent and package management fees at 15 per cent.

“There are multiple providers that are well above that so they’re having to adjust their fees,” aged care consultant Lorraine Poulos told CCR. “That will be significant for some providers who are relying on that income to cover their infrastructure and their costs.”

The maximum amounts that home care providers can charge for services from the new year are as follows:

Source: Department of Health and Aged Care

“For some providers, it’s just business as usual,” said Ms Poulos. “For other providers, it’s a significant change to their business model.”

Those providers whose fees are higher than where the government benchmarks are set will be forced to recoup losses in revenue elsewhere, said Ms Poulos – managing director of care sector training consultancy firm Lorraine Poulos Associates.

For example, Ms Poulos told CCR that providers with higher package and care management fees may have low hourly rates instead. Being forced to lower their fees could, therefore, have a knock-on effect for clients, she said. “They’re going to put their hourly rates up and that could potentially impact consumers.”

Lorraine Poulos

There are also some home care providers who have not been charging for care management at all as a way of enticing consumers to their organisations, said Ms Poulos. “Now you have to provide care management – whether you charge for it or not. And if you are not charging for it, that’s not a very wise business decision.”

Ms Poulos is also concerned that the changes – which feature in the Aged Care Amendment Bill and became law in October – will be confusing for consumers.

Government recently released a document detailing the fees every home care provider in Australia will charge clients, Ms Poulos told CCR. “And it really was a dog’s breakfast – if you were a consumer, you would find it very difficult to understand.”

To help providers navigate the changes – which also include a ban on exit, brokerage and subcontracting fees – Ms Poulos has produced a checklist. Among the tips:

  • check if the package management or care management fees are higher than the government pricing update amounts
  • inform board and relevant management roles of legislative changes
  • consider any changes to model and structure to accommodate financial impact
  • seek legal advice regarding changes to home care agreements.

Perhaps, most importantly, Ms Poulos advises providers to: “Understand what your overheads are and use this change as a way of preparing for future reforms in home care, where providers more than likely will only be funded for the services they deliver.”

Caps welcome but timeframe tight

The legislative reform – recommended by the aged care royal commission – followed complaints that some providers were rorting clients and billing for unnecessary fees to lift profits.

Asked for her thoughts on the home care caps, general manager of BaptistCare at Home Sarah Newman told CCR that BaptistCare NSW & ACT welcomed the move.

Sarah Newman

“There were a small number of home care providers significantly overcharging and this initiative draws a line on the worst of this behaviour,” she said. “The caps are still ample and above what the vast majority of providers – including BaptistCare – are charging.”

Included in the set of changes, however, is an unanticipated directive regarding not charging package management in a month where no services are delivered, Ms Newman told CCR.

“This directive doesn’t recognise back-office package management functions are still undertaken to support that client even if no physical services are delivered for a period of time,” she said. “It appears no consultation has occurred with providers regarding the practicality and implementation of this particular change, and we are now driving to a tight timeframe of 1 January on this.”

Similarly, the timeframe for changes to additional fees for third-party services is proving challenging for providers who have these charges, added Ms Newman.

“While BaptistCare has never imposed these extra fees, providers who do so have received contradictory guidance from government regarding the appropriate handling of these charges and are being provided with very little time – at a difficult time of year – to make the appropriate changes and communicate these to clients.”

While supporting the changes “that genuinely improve the reasonableness and transparency of home care pricing,” Ms Newman said: “We also encourage greater opportunities to work collaboratively with government to ensure the practicality of the changes and the timeframes expected.”

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Tags: baptistcare NSW & NSW, caps, featured, home care fees, Lorraine Poulos, sarah newman,

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