Greater transparency, better protections

Come 2014 and aged care providers will have to ask residents before increasing facility charges over a set level, following a new federal goverment ruling to improve consumer protections embedded in the aged care system.

By Yasmin Noone

Aged care providers will soon be required to seek a resident’s approval before they charge fees over and above a pre-determined level, in a sweeping new move by the federal government to improve consumer protections in the aged care system.

Just prior to Christmas 2012, the Minister for Mental Health and Ageing announced that for the first time ever, providers will have to publish their accommodation prices and seek approval for charging amounts excessive amounts.

The changes, which will take effect at the turn of 2014/15 financial year, will require providers who want to charge residents more than $50 a day to justify their actions.

And providers who want to charge over $85 a day will also need to seek approval from the government under a new set of guidelines.

“Importantly, all prices will be published on the government’s MyAgedCare website making the system more transparent and open to scrutiny,” Minister Butler said.

“This will set clearer boundaries and protect older people and their families from being overcharged or being asked to pay exorbitant fees without genuine justification.”

Mr Butler said the changes will be complemented by a new ‘Choice of Payment Method Period’.

“After agreeing on a price with an aged care home, new residents will have 28 days after moving in to decide whether to make accommodation payments via a Daily Accommodation Payment (DAP), a Refundable Accommodation Deposit (RAD) or a combination of both.”

The changes follow recommendations to the government by the Aged Care Financing Authority after public consultations.

In another major step forward in implementing the package, Mr Butler announced that aged care homes that significantly upgrade their facilities will be eligible to share more than $480 million in extra funding from 2014.

“This funding is designed to encourage growth and expansion in the aged care industry and follows recommendations made by the Aged Care Financing Authority on how ‘significant refurbishment’ should be defined,” he said.

“The refurbishments can be made from 20 April 2012 and must substantially benefit Australia’s 167,000 government-supported aged care residents.”

As a result of the new funding, aged care homes will be rewarded by an increased maximum accommodation supplement from the government, which rises by 62 per cent – from a maximum $32.58 per resident, per day, to $52.84 from 1 July 2014.

“Residents will be the winners from these considerable incentives,” Mr Butler said.

“They will result in alterations, updates, upgrades and other improvements to residential care facilities, including bedrooms and common areas.”

Resident advocates react

Consumer advocacy groups were quick to react after the government announcement, with media statements denoting widespread support for an aged care system that will become “more transparent” as a result of the accommodation charges move.

National Seniors Australia said it believes the change will help consumers better navigate the minefield of entering aged care.

The organisation’s CEO, Michael O’Neill, said the requirement to publish charges would help to better balance the respective market power of consumers and providers.

“Aged care is a minefield to navigate and what we see is many residents and their families facing real stress because they don’t have the knowledge and access to information to navigate this complex area,’’ Mr O’Neill said.

“Transparency is the key to good consumer decision making.

“The government has recognised that accommodation charges must be presented in a more transparent manner so that residents and their families better understand the information and are able to see the rationale behind the charges,’’ he said.

“It’s good that government has responded to the consumer voice but we need to continue to make sure consumer protection remains a priority.”

COTA Australia – a peak policy development, advocacy and representation organisation for older Australians – said the announcement provides greater transparency in aged care and a win for older Australians.

CEO of COTA Australia, Ian Yates, said older people had been calling for changes to residential care payment arrangements for a long time.

“Most Australians don’t encounter the complexities of residential aged care until they are in a situation where their mum, dad or grandparent’s health declines and they can’t be cared for at home anymore,” Mr Yates said.

“This can be a traumatic time for both the older person and their family, which is made consistently worse when they enter the maze that is our current aged care system.

“Trying to find the right home at the right price is stressful and time consuming and currently families can end up paying more than they should.

“For the first time people will be able to compare charges for different aged care facilities in their area and make informed choices about the right accommodation for them.
“Service providers will also need to set charges that better reflect the accommodation value they provide rather than the current system where consumers are often forced to negotiate a bond based on the value of their assets.

“This means no more deals behind closed doors where people can be  charged vastly different amounts for the same accommodation, and older people will be able to raise concerns if they think they are being overcharged.”

Details of the changes to accommodation payments and the higher accommodation supplement are at Living Longer. Living Better.

For more information, contact the Minister’s Office on 02 6277 7280

Tags: accomodation, charges, cota-australia, living-longer-living-better, minister-for-health-and-ageing, myagedcare, national-seniors, protection, residential,

5 thoughts on “Greater transparency, better protections

  1. From a provider’s perspective I can tell you these measures will result in a massive leakage away from bonds into daily payments, put the brakes on new investment and probably send many charities and community providers into receivership. This article does not mention that Butler said the choice of payment is at the “ultimate discretion of the resident”. There is no other industry where the buyer decides how they’ll pay 28 days after they have possession of the goods. This measure is extreme in the Labor tradition covered in the red of socialism. Bjelke Petersen was right. The Aged Care Financing Authority misled the government by recommending the 7.6% MPIR as the “interest rate” to equate a daily payment to a bond. Butler, would you build and operate a nursing home for a 7.6% return?

  2. Typical Labor government – price controls and giving the consumer the utmost discretion on how they pay. Here is the scenario – provider used to get $300,000 bonds but now forced to offer $300,000 or $62 per day or maybe just $50 per day. After moving in 28 days ago the resident says “mmm I’ll go for the $50 per day”. Provider defaults on bank borrowings through lack of cash flow. Residents now in a facility in receivership. Change of government. New government says big problem providers going broke and no new beds being built. Policy reverts to just price transparency but no price controls. For analysis of what this really means and how these price caps will stop investment in aged care facilities in its tracks, refer to this article by Derek McMillan, CEO of Australian Unity.

  3. This is great news for the clients that have to enter residential care. The interesting statement made by Mr Yates is that families are faced with frustrations and issues when the the time arives for entry.
    What we need to be doing is educating our communities so that they have a underpinning knowlege of what it is they have to prepare for.

    Residential care facilities have there place in our society and in actual fact for many it is a more dignified and supported passage into the end of life. Its always the money end of the deal that causes the confusion and pain. prior preperation and planning is the key to getting the needs met. providing care to high end frail and vulnerable people is expensive complex work. Someone has to pay, money that is not peanuts, as all the peanuts are being used to pay the staff that provide the frontline care.

    I am an advocate for the clients rights, but there has to be a real enphasis on educating people about what to expect and how to plan. This is also the responsibility of the primary health care providers and local clinics etc.
    As the waves get bigger and the tsunami arrives, those who actually can not afford high level care need to protected, but we can not all cry poor.

  4. It’s not the whole of what needs to happen but it is a worthwhile start. Empowering consumers by the introduction of some transparency (in place of supplier manipulation – be it well or otherwise intentioned) is central to the reform agenda. Not the end of the story but a positive beginning.

  5. Transparency is crucial to a fair and just transaction – of that there can be no doubt. The magical numbers being floated by Minister Butler are interesting – but will these decisions provide the outcome of more choice and a stronger aged care sector to meet the growing needs of the Australian society? The Government, which has absolutely no financial stake in this outcome says yes – those who carry the fiscal and compliance risk may have other responses. Of course COTA and NSA support such a decision – they like many service providers are advocates for the consumer – but again the issue is just who carries the risk and therefore the can when Government price controls fall foul of real costs? We see it already with care subsidies that have fallen in real terms since the 1997 reforms at an alarming rate in the face of escalating costs. Now capital investment faces the same precipice. An interesting legacy to refect upon for the Minister in a few years time when he will be safely ensconced in opposition and able to criticise the outcome as a problem for the then Government – or alternatively provide a fellow Minister sage advice from the safety of the caucus room. A fundamental observation on such policies – on one hand advocating consumer choice – and on the other seeking to control every aspect of that relationship (policy reflections of the 1950’s) will never adequately balance supply and demand.

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