RAC price guidelines

The government has released a discussion paper on the residential aged care pricing guidelines, which will come into effect July next year. Responses must be in by May 1.

By Natasha Egan

Room features including furnishings, fittings, entertainment options and the view, onsite health and recreation facilities and the value of the land are among factors providers will need to consider when determining residential aged care accommodation prices from July next year, according to a government discussion paper released yesterday. 

The Accommodation Pricing Guidelines discussion paper identifies room quality and privacy, quality and scope of common areas, the location of the facility and other features relevant to value as the key factors to use when setting prices.

The discussion paper expands on the broader regulatory framework Minister for Ageing Mark Butler announced on December 21, which outlined key aspects including the classification of accommodation prices into three levels.

It was announced then that Level 1 is up to the maximum government accommodation supplement, $50 per day in 2012 prices. Level 2 is priced between Level 1 and an upper limit of $85 per day (2012 prices), and Level 3 is for prices above that.

Stakeholders including Catholic Health Australia, Aged and Community Services Association (ACSA), Leading Age Services Australia and COTA Australia have said they are reviewing the guidelines and will submit a response to the discussion paper before the May 1 deadline.

See the response from two stakeholders below, who each have differing opinons on the section on complaints.

Other key guidelines

  • Room prices will need to be published on provider’s websites, in associated printed materials plus on the government’s My Aged Care website. 
  • Published prices will need to be shown as a daily accommodation payment plus a refundable accommodation deposit with at least two examples of combination payments. 
  • An accompanying key features statement describing each room type and a self assessment certification will also need to be published along with the prices. (An example is included at the back of the discussion paper.)
  • Prices charged cannot exceed the published prices but providers are permitted to agree on a price lower than the published amount.
  • Providers seeking Level 3 prices must get approval from the Aged Care Pricing Commissioner.
  • Level 3 applications must include a pricing plan justifying the proposed price for each type of room assessing each of the key consideration factors. But as the pricing plan may contain commercially sensitive information, it will not need to be published.
  • Regarding complaints, if a provider doesn’t comply with their obligations under the guidelines, for example not following the prescribed process and considering the essential factors outlined for setting prices, or not publishing prices as required, an individual could raise those concerns with the Aged Care Complaints Scheme or through the department. 
  • The complaint section further says the scheme or department would examine the complaint in that context but would not overturn prices.

Stakeholder response

ACSA CEO Adjunct Professor John Kelly said ACSA welcomed this as the next step in process. 

However, the guideline stating that providers could not offer to charge a higher price than the published prices is incompatible with the push for consumer choice, Prof Kelly said.

Based on an individual’s financial situation they may request to pay more because it offers them a tax break or part-pension benefit, he said.

“If it’s legal, you should be able to do it. But these guidelines don’t allow you to do it,” Prof Kelly said.

On a positive note, Prof Kelly said ACSA welcomed the clarification that complaints won’t affect a previously agreed price.

“We welcome that clarity that if somebody complains about a breach of disclosure obligations, it won’t go to anything on price,” he said.

On this note, seniors’ advocacy group COTA Australia CEO Ian Yates said the section dealing with complaints was the exception among otherwise reasonable guidelines.

“If a consumer says I think price is way too high for the type of facility and area, the defence will be, the provider has properly followed the process,” Mr Yates said.

“The department is not adjudicating the price.” 

COTA’s view is that under the relevant act there cannot be a price unless the due process has been followed so there would be no legal basis for a provider that has not followed the specified process to charge a price, Mr Yates said.

“Anyone who paid that price should be entitled to a refund,” he said.

The statement that the scheme or department would not overturn prices is illogical and indefensible, Mr Yates said.

“It says that providers who have broken the law will not be required to conform to the law. I am also of the view that the Australian Competition and Consumer Commission (ACCC) would have grounds for action, and individuals grounds for action through the ACCC,” he said.

Prof Kelly said: “In the absence of fraudulent misrepresentation we agree that the complaint process should only address obligation to meet the pricing disclosure framework, not to go to the price.”

Looking at the pricing guidelines more broadly, Prof Kelly said ACSA reiterates continuing concerns, which have been raised and acknowledged by the department, regarding the calculation of the refundable accommodation deposit.

ACSA’s main issue is with using the maximum permissible interest rate as a method of converting the daily accommodation payment into a refundable accommodation deposit amount, he said.

The provider sector thinks a better conversion method would be by a weighted average cost of capital, he said.

Discussion paper

This discussion paper is seeking comment on the implementation details outlined in these guidelines, not on the framework Minister Butler announced in December, which responded to recommendations made by the Aged Care Financing Authority (ACFA).

While most of ACFA’s recommendations were accepted, such as three levels of accommodation pricing, the upper threshold of Level 2 was set lower than the $105 per day (2012 prices) recommended. 

See the government’s full response to ACFA’s recommendations here

Link to pdf of the discussion paper: Accommodation pricing guidelines discussion paper

Tags: accommodation-pricing-guidelines, acfa, ian-yates, john-kelly,

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