The long-running dispute between the Federal Government and aged care providers over budget blowouts in the Aged Care Funding Instrument has intensified, with the minister announcing almost half a billion in reduced subsidies and tough new fines for incorrect claiming.
In yesterday’s Mid-Year Economic and Fiscal Outlook (MYEFO) the government revealed it was cutting subsidies on certain claims in the ‘complex health care’ domain of ACFI to save $472 million over the forward estimates.
In a media release this morning Minister for Aged Care Sussan Ley said these claims were “consistently higher than expected and not consistent with claiming practices in other ACFI areas.”
She announced “a stronger compliance regime” including fines of $10,800 per offence for aged care providers “caught making repeated false claims under the ACFI.”
Ms Ley said figures showed as many as one-in-eight of 20,000 ACFI claims audited in 2014-15 were deemed to be incorrect or false. “This figure is already tracking even higher at one-in-seven in 2015-16,” she said.
“Unfortunately we’ve seen a concerning number of incorrect claims and unaccounted-for growth in spending in complex health care creeping into the system in recent years,” Ms Ley said.
The government referred to a “sharp practice” which it described as a claim that “may be legitimate when assessed strictly against funding guidelines, but takes advantage of ambiguities in the rules for maximum financial gain.”
The minister’s press release prompted a wave of mainstream media reports this morning of rorting among aged care providers, with one newspaper reporting facilities “overmedicating patients in order to extract more government subsidies.”
In addition to the fines, Ms Ley said there would be “new measures to ensure closer scrutiny of claims, including stronger auditing and IT system updates, as well as better education for aged care provider claiming requirements.”
This was intended to ensure fines were restricted to those providers who “had been caught making multiple, deliberate false claims, not genuine one-off mistakes,” she said.
The measures in the MYEFO come amidst ongoing talks between provider peaks and the Department of Health over ACFI claiming issues.
Two weeks ago the four national peak bodies representing aged care providers had sought assurances from the government that it would not act to reduce ACFI expenditure, after the funding instrument was found to have exceeded its 2014-15 budget by around $150 million.
It was the second time in three years that the ACFI has blown its budget, prompting another departmental review.
In a letter to Ms Ley dated 3 December, the CEOs of Aged and Community Services Australia, Catholic Health Australia, the Aged Care Guild and Leading Age Services Australia said their investigations with the Department of Health had identified a number of possible reasons for the growth in ACFI expenditure, “but none of the scenarios adequately make the case that the growth is not justified.”
They argued that downgrade statistics through the validation processes suggested that providers were “administering the ACFI reasonably.”
“We consider there is sufficient evidence to suggest the ACFI and ACFI processes are inherently flawed and/or the forecasting methods used to determine the expenditure envelope do not adequately factor in the environment of growing acuity, complex co-morbidity and longevity,” the peaks said.
Dispute over increasing ‘frailty’
In today’s statement Ms Ley said that claims by some in the sector that an increase in frailty in older Australians was to blame for the unexpected increase in ACFI claims was “not consistent with government data on claims for other ACFI-funded services, which had not increased anywhere near the same amount, despite also being affected by increasing frailty.”
A sharp increase in one year was also not consistent with genuine frailty growth, Ms Ley said.
Retraction from minister sought
Aged and Community Services Australia (ACSA) said that data had never been provided to the sector by the government to support the alleged misuse where it was occurring.
The peak said it was “appalled to see media reports of aged care providers allegedly ‘rorting’ or even being labelled ‘fraudulent’ in aged care subsidy claiming in the media today.”
ACSA said it would be contacting Ms Ley’s office to express its “very extreme concern” over the matter and asking that her office “provide a retraction to the media so the record can be corrected.”
The peak said it welcomed the government’s “more intense” regime as it knew the vast majority of aged care providers complied faithfully with the funding instrument.
Leading Age Services Australia said the announcement that further funding would be “ripped from aged care when growth in costs are three times what government recognises is extremely disappointing.”
CEO Patrick Reid said the peak body had warned government that ACFI growth was occurring faster than its projections because of significant increases in cost of care and an increase in people with higher care needs.
“Together these are creating a double-whammy effect which have not been adequately factored into the department’s forecast modelling.”
“Simply trying to curb expenditure by tinkering with the existing instrument does not address the real issue, it just transfers the increasing financial burden of higher care costs on to age service providers and pensioners,” said Mr Reid.
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