Top Menu

Unspent home funds creating a ‘perverse incentive’


The combination of unspent home care funds and a competitive service market has created a “perverse incentive” for providers to spend the money inappropriately, the Royal Commission has heard.

The latest figures show that home care providers are currently accumulating about $6,000 of unspent funds per client a year, leaving them with up to $400 million laying idle.

Nick Mersiades

The topic of unspent funds was raised during evidence before the Royal Commission into Aged Care Quality and Safety last week.

Nick Mersiades, director of Catholic Health Australia and deputy chair of ACFI, told the commission the number of home care packages is expected to increase from about 90,000 to 150,000 over the next three years.

“Unless consumer behaviour alters, the amount of money which is sitting with providers doing nothing is going to be upwards of half a billion dollars,” he said.

Mr Mersiades said the stockpile of cash was creating an incentive for the funds to be used “in a way that is not material to someone’s real needs.”

“In a competitive service environment …. one provider will be asked, ‘well, I want you to do this landscaping or put in a new fridge for me’ and the provider says ‘no, I can’t do that’.

“And they say, ‘well, the one down the road will do it for me, why can’t you do it?’”

He says the system is also creating a liability for the Commonwealth, which stands to lose the funds if a provider goes under.

A debit card payments mooted

Mr Mersiades suggested that one way to get around the problem of unspent funds could be through the introduction of a debit card system to make payments for services included a package.

He said a debit system would address the problem of providers being left with huge piles of unspent funds which they had to account for and keep secure– all of which involves extra regulatory processes and related costs .

“Again, that is eating into moneys which could be available for direct care delivery,” he said.

He added it would also reduce the cost of interest on money the commonwealth had to borrow.

“In many respects the unspent money sitting in providers’ bank account creates the same financial risks as an accommodation bond or a lump sum deposit,” he said.

Mr Mersiades also told the commission the government determines the availability of home care because it dictates ratios. The home care target was 45 places per 1000 people over 70, but at the moment the figure was 32.

Asked by counsel assisting if this meant there was a “substantial element of central control”, where the balance of the care type was being determined by the government rather than the consumer, he replied “yes”.

CDC reveals extent of waiting lists

Mr Mersiades said the government’s “rationing” of services and service types – residential or home care –  has created waiting lists.

The introduction of consumer directed care had made the extent of these lists clear for the first time.

“We’ve always assumed there were waiting lists or queues but we didn’t know (the size of them).

“The policy reform around home care packages, with funding following the consumers for the first time, made that transparent, which I think took most people by surprise at the extent of it.

Mr Mersiades said it’s appropriate to allow consumers to use their budget flexibility, however this has caused practical problems, including unspent funds.

“Obviously something is going on and people are not wanting to use all those resources …. perhaps we should have more levels or should allow people to choose to work with a package lower than the assessed level, because people have got different levels of resilience, they’ve got different levels of informal support.”

Read more

Home care sector faces tough times

Providers sitting on $329m in unspent funds

Subscribe to Community Care Review

To stay up to date on the latest about the Royal Commission into Aged Care and Quality go to our special coverage. We will also be issuing regular Royal Commission Roundup reports which you’ll receive in addition to your weekly e-newsletters.

Subscribe to Australian Ageing Agenda magazine and sign up to the AAA newsletter

Subscribe to Community Care Review



, , , , , , ,

12 Responses to Unspent home funds creating a ‘perverse incentive’

  1. W Sullivan February 27, 2019 at 12:12 pm #

    Mr Merciades wants HCP recipients to spend their funds his way not their way. That’s an odd interpretation of CDC. Dare one suggest there might be a vested interest here? Using funds for cleaning and lawn mowing instead of saving up for a replacement wheelchair means the provider has a regular income stream by skimming a percentage each time the service is delivered. Hmmm. Just wondering.

  2. B. Arnott February 28, 2019 at 10:10 am #

    Why are Home Care Packages seen as some sort of Holy Grail?
    Fund the services that people need, in this way there is no surplus in peoples packages and those who need some extra services above what a package would pay for are able to get the extra service and remain at home.

  3. Dina Ranieri February 28, 2019 at 6:11 pm #

    It could easily be managed by placing a percentage of a package spent on equipment, this would give the message to the consumer that the package is for care services to maintain the consumer living at home for as long as possible instead of not using any services whatsoever and banking the funds to buy a “lift”. It is difficult for a provider to refer consumer to the Aged Care Act, they are not interested in hearing any of that, they just want what they want, if they don’t get it they they go to the Aged Care Complaints Commissioner. there has been a considerable increase in these types of complaints and none for any particular care issue. Why isn’t the government making a decision in placing a maximum amount a consumer can have for unspent funds on a yearly basis or at any one time? this would allow the unspent funds to be used for other new packages for many that are waiting in line. The other option is for an actual allocation for equipment on a yearly basis.

  4. Brenda Hickson February 28, 2019 at 7:11 pm #

    I’m an aged woman – a member of the O.B.E (Over Bloody Eighty) group – I receive a Level

    2 HCP and I am not spending all of it. Why? I would love to use my HCP funds to enhance

    and enrich my life.

    When Mr Mersiades (and others) speculate about why – consider this fact.

    We are not given information and advice in sufficient detail about the kind of goods and

    services we can pay for with HCP funds.

    How can I choose to buy things that I am unaware are sitting there – “on the market shelf”-

    so to speak? If “service providers (I’ve had 3 different orgs.) would explain, with detailed

    lists, what is permitted by official definitions as O.K. goods and services to purchase – I’m

    sure I would be one among many hundreds of senior citizens to spend all the funds in their HCP!

  5. Jade March 11, 2019 at 12:40 pm #

    Two points to clarify.

    I do hope an assumption will not be made from the Govt or other power policy driven agendas (Business profit over diverse needs enabling services = empowering) along the lines of ‘So The Royal Commission found …unspent a funds therefore no need for so much money in HCP’ for client/ consumer.

    Yes HCP services need to be explained in simple clear language. Interpreter if required. So less assumptions please as ‘Unmet needs need to be identified’ so services enable clients/consumers informed decision making and dignity (Valuing diverse cultures and / or groups). Biomedical model and psychosocial services are needed (Mind, body, well-being and Community access to services).

    Unfortunately economic policy driven government does not reflect an understanding of the complexities of Aged Care (Dementia (Older and young people) rates in the nxt 10 to 20 years).

    We need a new model of Aged Care (Not window dressing) honouring diverse individuals dignity and values.

  6. Jade March 11, 2019 at 12:42 pm #

    Great comment Brenda Hickson. Spot on! 👏👏🏼👏🏾

  7. Kerry March 12, 2019 at 10:58 am #

    Unspent funds are generated for several reasons.

    1. The clients were assessed as a higher level package then need be. These clients have no way of downsizing their HCP.

    2. Client is assessed as high need there fore a higher level package is granted. However client can become well and again there is no scope for having the package reduced to accommodate their current needs.

    3. Client wants to save some money in their package for emergency episodes.

    There needs to be a policy in place where clients who have had a higher need at one time have the ability of reducing the level of their HCP. For this to happen though the existing HCP level needs to remain as an approved level so that if in time the client needs to access services greater then the lower level packages this can be done.

    This will mean that the Dept will then hold the unspent funds and not providers.

  8. Pat March 12, 2019 at 1:10 pm #

    Brenda Hickson , I am one of the over eighties and also on a level 2 HCP. I find it annoying that providers will not explain why they are increasing administration fees by $200 per month when the admin staff are making errors, which I pick up from statement and request an answer. When my shower broke i was told firmly that NO they would not help, so I called home maintenance. The fees charged for annual summary is exorbitant. I hope the Royal Commission can find what providers spend the funds on as my net balance is low and I have not asked provider for any items.

  9. Maria March 12, 2019 at 4:21 pm #

    Client is assessed as needing a level of care – package is approved and suddenly family are there to provide the care – oh hang on a minute mum now needs a brand new fridge with iced water and a high tech security system. If family can provide care then the assigned level of package is not required.

  10. P.J. March 13, 2019 at 10:53 pm #

    Maria, unfortunately it is almost impossible for families to care for the aged, with both partners working. Like many, my family took care of elderly parents who lived with us for years, but women could afford to stay at home then. The Govt. was not called to provide packages and residential care was almost unheard of. Living costs were lower as one family car was the norm, not like today where so many families have 3 cars in order to get to work. Good, regular public transport could cut costs of a car for each family member. I have never heard of consumers being able to use package funds to purchase items for the home. I purchased a new fridge last month, with no help from Govt. or family. It means I have to watch bank balance carefully for some time. I miss the time when a family was able and willing to care for the elderly.

  11. Ted Wards March 14, 2019 at 11:19 am #

    I am sitting here kind of chuckling, not at anyone but at this issue. In 2012/13 we in the aged care industry went to the then HACC regional meetings where this wonderful model was first talked about. Once the ummm presentation was finished every point that was raised against this system has come about. Not surprisingly the Gov reps doing the talk were not really interested in listening to the feedback. Then at a later meeting the same reps informed us that this was based on the UK system which was supposed to be working very well. Then someone in the audience quoted that the system had in fact not worked in the UK. This is the same system there is now a class action against the gov because of the deaths and neglect.

    I’ve worked in aged care for 35 years and I can see what the problem is. Its they way we view older people. We are seen as a problem to be fixed. Unfortunately growing older is a privilege denied many but being enjoyed by more. This system should in theory work, giving consumers the right to make decisions about what assistance they need, should be a good thing. The issue is also about aged care organisations who have been around a very long time, have in theory moved to the CDC focus, however most of them still offer the same services in exactly the same way under the HACC system. The service providers who show innovation are in actual fact the ones who are applying the system as it should be applied.

    Less than 5% of the population go into residential care meaning that 95% stay living in the community. Why then is there a call for more funding for residential care? If 95% stay living at home then should that not be reflected in the funding for CHSp & HCP?

    The system should be changed to reflect that there are a wide range of things that older people need and yes those in their own homes should be able to access some of their budgets for minor house repairs, after all it is their home and they are saving the gov millions in residential care.

    The other issue is our politicians have no experience in their portfolio areas. They literally have no clue. They are advised by advisors who also have no clue. So its not surprising that all the gov led systems are being investigated!

  12. Vanessa Moodley March 14, 2019 at 12:02 pm #

    Love your response, Brenda Hickson. That’s just elementary information that should absolutely be provided to you as the client.

    And Dina Renieri, I like the idea of the government placing a cap on the funds so that the funding can be used for others in the now 128 000 strong queue.

    Kerry, your points are spot on. I know the lack of a mechanism to downgrade is problematic for many service providers

Leave a Reply