Home care caps: business as usual for some, big impact for others
Caps on home care fees will have a significant impact on providers who rely on the income to cover costs, says an industry expert.
The incoming caps on home care fees will have a significant impact on providers who rely on that income to cover their costs, an aged care expert has told Australian Ageing Agenda.
From 1 January 2023, home care management fees will be capped at 20 per cent and package management fees at 15 per cent.
“There are multiple providers that are well above that so they’re having to adjust their fees,” aged care consultant Lorraine Poulos told AAA. “That will be significant for some providers who are relying on that income to cover their infrastructure and their costs.”
The maximum amounts that home care providers can charge for services from the new year are as follows:
“For some providers, it’s just business as usual,” said Ms Poulos. “For other providers, it’s a significant change to their business model.”
Those providers whose fees are higher than where the government benchmarks are set will be forced to recoup losses in revenue elsewhere, said Ms Poulos – managing director of care sector training consultancy firm Lorraine Poulos Associates.
For example, Ms Poulos told AAA that providers with higher package and care management fees may have low hourly rates instead. Being forced to lower their fees could, therefore, have a knock-on effect for clients, she said. “They’re going to put their hourly rates up and that could potentially impact consumers.”
There are also some home care providers who have not been charging for care management at all as a way of enticing consumers to their organisations, said Ms Poulos. “Now you have to provide care management – whether you charge for it or not. And if you are not charging for it, that’s not a very wise business decision.”
Ms Poulos is also concerned that the changes – which feature in the Aged Care Amendment Bill and became law in October – will be confusing for consumers.
Government recently released a document detailing the fees every home care provider in Australia will charge clients, Ms Poulos told AAA. “And it really was a dog’s breakfast – if you were a consumer, you would find it very difficult to understand.”
To help providers navigate the changes – which also include a ban on exit, brokerage and subcontracting fees – Ms Poulos has produced a checklist. Among the tips:
- check if the package management or care management fees are higher than the government pricing update amounts
- inform board and relevant management roles of legislative changes
- consider any changes to model and structure to accommodate financial impact
- seek legal advice regarding changes to home care agreements.
Perhaps, most importantly, Ms Poulos advises providers to: “Understand what your overheads are and use this change as a way of preparing for future reforms in home care, where providers more than likely will only be funded for the services they deliver.”
Caps welcome but timeframe tight
The legislative reform – recommended by the aged care royal commission – followed complaints that some providers were rorting clients and billing for unnecessary fees to lift profits.
Asked for her thoughts on the home care caps, general manager of BaptistCare at Home Sarah Newman told AAA that BaptistCare NSW & ACT welcomed the move.
“There were a small number of home care providers significantly overcharging and this initiative draws a line on the worst of this behaviour,” she said. “The caps are still ample and above what the vast majority of providers – including BaptistCare – are charging.”
Included in the set of changes, however, is an unanticipated directive regarding not charging package management in a month where no services are delivered, Ms Newman told AAA.
“This directive doesn’t recognise back-office package management functions are still undertaken to support that client even if no physical services are delivered for a period of time,” she said. “It appears no consultation has occurred with providers regarding the practicality and implementation of this particular change, and we are now driving to a tight timeframe of 1 January on this.”
Similarly, the timeframe for changes to additional fees for third-party services is proving challenging for providers who have these charges, added Ms Newman.
“While BaptistCare has never imposed these extra fees, providers who do so have received contradictory guidance from government regarding the appropriate handling of these charges and are being provided with very little time – at a difficult time of year – to make the appropriate changes and communicate these to clients.”
While supporting the changes “that genuinely improve the reasonableness and transparency of home care pricing,” Ms Newman said: “We also encourage greater opportunities to work collaboratively with government to ensure the practicality of the changes and the timeframes expected.”
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I am the CEO Comm Care and we are an in home care provider only. We have in place a business model based around a user pays model wherein if an external purchase is made we charge a handling fee of 15 % which works fine for us. Our Package management fee is 13% and our care management is at 15%, well below what the Caps are. If we cannot charge the handling fee then I will have to put up those fees to the maximum in order to cover the gap left by not charging the handling fee. The effect this will have is that other Consumers who do not have any external purchases will be subsidising those that do have external purchases.
In relation to the non charge of package management fees where no services have been provided, then those particular Consumers will not receive a statement for that month as the package management fee also covers the costs associated with the accounting, collating and also preparation of monthly statements.
I can only say that this has not been thought out very well by the Department and there hasn’t been any consultation whatsoever.
Preparing a statement would cost a company around 15 mins of admin time so above point is irrelevant. How about markup on front line staff wages and on kms for transport – lots of hidden costs on statements which are often hard to decipher. I would like to see perks for management in NFP looked at and reduced and I welcome thousands of dollars on purchases no longer being charged for what might take admin 1/2 hour of admin time.