User-pay central to taskforce report

Aged care funding reform recommendations rely heavily on older people with means paying more for accommodation, living expenses and some home care services.

The federal government should continue to be the major funder of aged care costs but older people who can afford it ought to contribute more towards things like accommodation, living expenses and some home care services.

That’s according to the much-anticipated Final report of the Aged Care Taskforce, which – released by the government today – contains 23 recommendations linked to seven funding principles that aim to support ageing in place, equitable and sustainable funding, quality, innovation and transparency.

Among them are proposals for aged care providers and residents to be able to negotiate higher prices for better services, the move to rental-style accommodation fees only in residential care and clearly defined service lists and more consistent and equitable fees for home care.

“For providers, the recommendations support more predictable and sustainable funding in home care, and increased capacity to cover the costs of delivering services in residential care. More broadly, this would help to strengthen the financial viability of the residential care sector to encourage different forms of investment,” say the authors of the 64-page report.

The Aged Care Taskforce – which was established last June to advise on aged care funding arrangements – deemed the current mix of consumer and government funding neither optimal nor fair. Currently the government funds around 75 per cent of total residential aged care costs and 95 per cent of home care costs.

But unlike the aged care royal commissioners, the taskforce has stated a new tax or levy to fund aged care is not recommended. Instead it favours a stronger user-pay approach in response to superannuation and other prosperity trends including the family home that increasingly mean older people have wealth and income streams when they need to access aged care services.

“It is appropriate older people make a fair co-contribution to the cost of their aged care based on their means,” recommends the report, which equally calls for a “strong safety net for low means participants to meet aged care costs.”

The 64-page report includes 23 recommendations to improve funding sustainability

The taskforce also highlighted that current co-contributions are complex and called for fees to be fairer, simpler and more transparent so people could understand the costs they will incur if they access aged care.

Also on transparency is a call to review and streamline financial reporting to government to ensure it is about “genuinely enhancing transparency”.

These and the other recommendations of the 16-member taskforce address key issues it identified including:

  • a growing demand for aged care services
  • increasing expectations of minimum quality of care
  • poor financial viability of providers due to structural problems
  • comparatively wealthier older people than previous generations coupled with a declining taxpayer base.

The report highlights that for most people aged 65 and over, the family home is their largest asset but also that wealthier households hold a much larger share of their wealth outside the home including in their superannuation and other property investements.

In its response to the release of the report, the government also riterated today it will not impose increased taxes or a new levy to fund aged care costs nor change the means testing treatment of the family home. But it has not responded in any other way to the recommendations.

Source: Final Report of the Aged Care Taskforce

Minister for Aged Care and taskforce chair Anika Wells said all Australians had a stake in a sustainable, high-quality and dignified aged care sector.

“Australia’s aged care system is under stress. There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve,” she said.

Home care highlights

The taskforce has called for an overhaul of home care programs to address current issues such as inconsistencies across assessments, access to services and fees, and confusion between providers and participants about what is and isn’t funded. The report highlights that while some wait to access services, others can leave significant funds unspent – an issue totalling $2.3 billion at 30 June 2022.

Among its proposals, the taskforce recommends the Support at Home Program:

  • be underpinned with inclusion and exclusion principles and clearly defined service lists
  • establish a fee-for-service model that ensures participants only pay a co‑contribution for services received
  • introduce co-contributions that vary based on the type of service accessed.
Proposed inclusion and exclusion principles for home care Source: Final Report of the Aged Care Taskforce

Residential care proposals

For residential aged care, the taskforce says reform across the three fee categories – means-tested care fees, the Basic Daily Fee and accommodation costs – together is essential.

It recommends government focus its funding on care costs while co-contributions take “a significant role” for non-care components. The government should also consider fully funding care – as recommended by the royal commission – which would simplify contributions for older people and reduce administration costs for providers related to collecting the means-tested care fee and debt management.

At the same time, funding for daily living needs to cover the full cost of providing these services. The taskforce recommends this occur via the Basic Daily Fee plus a supplement that equals the gap between the fee and actual costs. It should be largely paid for by greater resident co-contributions with continued government assistance for those with lower means.

Residents and providers should also be able to negotiate better or more daily living services for a higher fee, subject to requirements including published price lists and a cooling off period.

10-year plan to remove RADs

As part of measures to modernise accommodation funding, improve viability, and increase fairness, the taskforce proposes phasing out Refundable Accommodation Deposits and moving to a rental only model.

However, it sets a deadline of 2035 – 10 years later than the “not realistic” timeframe of the royal commission to do similar – and only if an independent review finds improved financial sustainability, diversified and adequate sources of capital to meet future demand and residential aged care is affordable for consumers.

In the meantime, the taskforce recommends providers retain a portion of the RAD to make an immediate improvement to the sector’s financial sustainability. The amount should be based on length of stay, with a cap on the number of years a RAD is subject to retention to protect residents who stay for a long time.

The report also calls for a review of the Accommodation Supplement for supported residents including better incentives to meet the accommodation design principle. Plus the development of a package of measures to improve accommodation funding, equity between residents and transparency in the short-term.

“This will help place accommodation income on a long-term sustainable footing and position the sector for the ultimate phase out of RADs,” according to the report.

Recommendations aim to respond to increase in demand for care Source: Final Report of the Aged Care Taskforce

Innovation support

Innovation also gets a mention in the report with the taskforce saying that current viability issues are creating a barrier to innovation including where it would allow providers to improve quality and revenue.

Viability and sustainability “are a necessary pre-condition” to a culture of innovation, which the report highlights can take many forms, such as monitoring systems, best-practice design of physical environments, and rostering platforms.

To improve the situation, the taskforce recommends the government consider how to encourage providers to develop and scale innovative care models, invest in technology, and conduct research into best practices.

It suggests doing this through the report’s recommendations to improve sector viability and tasking the Aged Care Quality and Safety Commission with supporting innovation by identifying innovative practices and promoting these across the sector.

Support for thin markets

On supporting thin markets, the taskforce recommends the government:

  • consider the appropriateness of the current remoteness classification system
  • continue block funding where appropriate and necessary
  • consider any other supports necessary to ensure access to care in under-serviced markets.

Planning and transparency

To improve consumer planning, the report recommends raising awareness of existing financial products that enable older people to utilise their wealth in retirement and coming up with advice on how to encourage people to consider their future aged care needs at an appropriate stage of life.

In addition to the review of financial reporting to government, the taskforce recommends government improve communications between the Independent Health and Aged Care Pricing Authority and providers and participants regarding its pricing advice and decisions.

It calls on IHACPA to undertake:

  • a review of its pricing in rural and remote areas
  • costing of the supplement for everyday living.

Government still considering report

Anika Wells

Despite receiving the report months ago, the government has not finalised its response. Ms Wells said the government would continue to analyse the report ahead of finalising its response to all recommendations.

“As we consider the taskforce report and continue to implement the reforms of the royal commission, our focus will always be ensuring dignity and respect for older Australians.”

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Tags: aged care taskforce, aged care taskforce report, Anika Wells, financial viability,

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