Further moving to user pays and consumer directed care in residential aged care will see providers become less reliant on government funding, argue Mark Sheldon-Stemm and Kay Horgan.
The current debate around the Aged Care Funding Instrument (ACFI) has once again led to calls for a cost of care study. A number of players are now calling for a review of ACFI changes as the industry feels the squeeze of yet another decrease in funding.
But is this anything new?
Aged care funding has never kept pace with cost increases, with annual ACFI reimbursement increases of around 1.5 per cent compared to wage and other cost increases of 3 to 5 per cent per annum. This disparity in funding the real costs of providing care has, in fact, been happening for nearly 20 years. It has led to the ‘ACFI game.’
At the first roll of the dice the government sets the business rules as to what providers can claim. Providers make their move. Some play by the rules and get smart about how to claim for care and increase their funding beyond the annual subsidy increase. Some don’t play smart and miss out on tens and even hundreds of thousands of dollars. The government sends their ACFI review teams out all over the country to check on how claims are being made. Some get caught red handed (perhaps pushing the boundaries a bit too far in their quest for income), others may get away with it. In many cases government teams claim dollars back. When government funding increases above its forward estimates, it claws back the funding by either freezing any increase or adjusting the ACFI.
The game continues. Many aged care providers employ experts to help them find more creative ways of claiming ACFI. This is followed by the inevitable cycle where the government reins in funding again. The ACFI game is distracting and a waste of resources. The outcome is that funding has been prescriptive leading to a limited menu of services. Residents get what they are given.
However, the future is clear and has been for some time. It is embodied in the recent government Aged Care Roadmap that sets out a pathway towards a deregulated residential care market. The trend to a market-based service has commenced in home care. Reality will set in when providers lose their home care packages in February next year. This will open the way for many other home care services, and for consumers to have a say in what they get, by whom and for what cost.
It follows that as consumers of home care services begin to enter residential care they will be more financially literate. They will expect to control the funds that influence the services they receive. Therefore, the market-based service model is creeping its way to residential care. The current funding model is no longer sustainable as the government has clearly indicated it does not have the funds for an increasingly aged population.
So why don’t we stop the AFCI game? Let’s acknowledge that a user pays system in residential care is already here – it commenced in July 2014 with means tested fees. The door has been opened to introduce consumer directed care (CDC) into residential care. Isn’t it time to do a reality check? To focus on giving the funding to customers? Here is an alternative to relying totally on government funding.
CDC is, or should be, about a level of openness and honesty with the consumer that has not been seen before. We feel happiest doing business when we know what we are getting and how much it costs. When you open your books to consumers and their families and show them where the money comes from and where it goes there is a surprising recognition by them of what services can be provided and who pays for them.
While anything new poses the threat of the unknown, embracing CDC in residential has its rewards. Greater clarity about specific costs provides the mechanism to enable a more realistic understanding of what is possible. It provides a way of setting clearer expectations with consumers about the services they receive from the outset. If consumers want more then they will pay for it, as they would any other service they purchase. Therefore, it is not about government funding or ACFI, but more about what contribution is made by each of the parties to the service. The government will make a contribution, as will the consumer, based on their ability to pay and the services they want.
Eventually the ACFI game, like all games, has to come to an end. The new market-based system has begun. There are new rules that require different thinking. Greater control will go to consumers, who will be choosing what services they receive, where, by whom and at what cost.
It is up to providers to prepare for a market-based service system. This will require a shift in focus. Less wishful thinking that government funding is the only way services can be provided. Those in the industry who believe there are no systems, or way of providing CDC in residential care, are sadly wrong.
Mark Sheldon-Stemm is principal of Research Analytics and Kay Horgan is principal of AgeWorks.
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