It is important to sort out home care pricing concerns by looking at the evidence, write Tim Hicks and Troy Speirs.

Lots of people are worried about the cost of home care.

It’s one of the most common complaints – both to providers and to the Aged Care Quality and Safety Commission.

Government recently commenced a program to check that home care provider prices are reasonable and justified. This follows 2019 regulation requiring home care providers to publish a standardised schedule of hourly service prices and package fees.

Meanwhile home care providers are frustrated that people compare prices for delivering highly regulated care to vulnerable people with the prices charged by private cleaners and gardeners that have no regulation, no responsibility for care and are often cash-in-hand arrangements.

Tim Hicks

With major reform on the horizon, it is important to get to the bottom of home care pricing concerns by looking at the evidence.

Leading Age Services Australia recently published a report on home care pricing, which shows that for the vast majority of services, home care prices are similar to the National Disability Insurance Scheme (NDIS) and Commonwealth Home Support Programme (CHSP) prices – which are determined by Government.

Between 85 and 91 percent of home care package prices (depending on the service type) fell within the lower and upper price limits for CHSP. Similarly, there was little difference between home care and NDIS prices for the key high volume service types like personal care and domestic assistance.

Unfortunately, there isn’t much information available to consumers measuring quality in home care.

For most service types, median hourly prices for home care services remained relatively steady over the last 18 months, with the fastest growth occurring in gardening, which rose 6.2 per cent.

Troy Speirs

For personal care the difference in prices between the lowest and highest quartile was only about $8. Variation for nursing services was higher, likely reflecting differences in the qualifications and experience of the staff delivering the service.

The important point for providers with outlier prices is being able to explain and justify their point of difference. This goes for low-cost providers too. If prices are very low, a prudent consumer should investigate whether the lower fee means a difference in the quality of the service received.

Of course, many complaints about home care prices related to administration fees rather than hourly service costs.

Providers are also allowed to charge care management fees separately, but this shouldn’t be seen as an administration fee.  

In relation to administration fees, it’s important to be clear that since 2019 providers have been restricted from charging separate administration fees for things like marketing and rent. Instead, these fees are bundled up into hourly prices – which as noted above are comparable to other service types.

What a provider can charge is a package management fee to reflect costs such as quality assurance, issuing invoices and managing funds – the things that providers need to do for each client regardless of the number of hours of care a person actually receives.

Providers are also allowed to charge care management fees separately, but this shouldn’t be seen as an administration fee.  

Care management is an important service that delivers the same sort of advice, assessment, monitoring and planning for home care needs that doctors offer in response to health care needs. The role of care management is a key issue that deserves separate consideration. 

If we really want to understand how much home care funding goes to administration, its best to look at provider financial reports.

The data here shows that providers are spending about 30 per cent of income on administration and care management. Given 17 per cent is care management and 13 per cent is package management this looks comparable to administration cost benchmarks in other industries, including health and government.

To really know if home care is expensive, we need to know what outcomes are being delivered to consumers of these services and that information just isn’t available.

Overall, with package management added to hourly rates some, but not all, home care packages prices are a little more expensive than other types of care.

However, this mostly seems driven by the complexity of the administrative and compliance arrangements, including handling fees for brokered services. For example, recent changes to payment rules may have cost more than $100m to implement, if we extrapolate out the cost of recent changes to payment systems across all providers.

But what’s also missing in all this discussion of costs, is a focus on service quality. Some providers do charge more. Some doctors and a range of other industry professionals also charge more than their peers in the context of market-driven pricing.

These price differences are okay as long as value is being delivered and can be demonstrated to support consumer purchasing and decision-making in accessing care.

Unfortunately, there isn’t much information available to consumers measuring quality in home care.

To really know if home care is expensive, we need to know what outcomes are being delivered to consumers of these services and that information just isn’t available – something that desperately needs to be fixed as part of the home care reform agenda.

Tim Hicks is general manager of policy and Troy Speirs is senior policy advisor at Leading Age Services Australia

Access LASA’s report on home care pricing Home Care Price Regulation and Market Stewardship

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Troy Speirs

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