A survey has found home care providers are charging more for administration than they were before the introduction of the new pricing transparency regime, and care management costs are going up as well.
The pricing transparency changes, introduced last April, meant administration costs could no longer be charged separately but needed to be factored into prices for care and services.
Instead, providers are able to charge for package management, which can include preparing monthly statements, managing funds and meeting compliance and quality assurance standards. They can also charge for care management, which can take in plan reviews and scheduling of services.
This is somewhat surprising given that if anything, package management would be expected to decline as a result of the pricing transparency system.
A report prepared for the health department by accounting firm StewartBrown says that across all package levels care management and administration averaged 28 per cent of package costs in 2018-19.
Package management charges increase
But based on the data collected from the September 2019 quarter, after the new transparency rules were introduced there had been a general increase in the amount charged for package management compared to charges for what were called administration costs in FY 2018-19.
In the 2018-19 financial year the average charge per package per fortnight for admin was $153.04, compared to $162.37 for package management in the September quarter.
“This is somewhat surprising given that if anything, package management would be expected to decline as a result of the pricing transparency system,” the report says.
It says the effects could take some time to filter through as clients are transitioned onto the new pricing arrangements and the market adjusts.
It also says that based on the pricing transparency data as of January this year, care management charges are likely to increase across all package levels as compared to the costs charged in FY 2018-19 and the September 2019 quarter.
In 2018-19 providers charged an average of $135.63 for care management, compared to $169.91 in January.
The survey, which includes data from 416 providers, also shows that while unspent funds averaged $7,521 across all package levels in 2018-19, most consumers had unspent fund balances below the average.
Average balances range from $2,098 for a level 1 package to $15,182 for a level 4.
However 90 per cent of unspent balances are under $2,500.
Two per cent of level 4 unspent fund balances are over $50,000; 11 per cent are between $20,000 and $29,000; and 16 per cent are between $10,000 and $15,000.
The report says these figures need to be considered against the pending changes to payment arrangements for home care providers which will see the government hold the balance of unspent funds with providers reimbursed for their services after delivery, instead of in advance as is currently the case.
At September there were 118,050 people in a package and 926 providers. The number of providers that had packages at June 2019 totalled 812.
Not-for-profit providers continue to provide the largest share of the available packages, although that share has declined in the past two years from 82 per cent to 72 per cent.
Around 43 per cent of care recipients live alone although this appears to decline slightly for those care recipients in a Level 4 package (37 per cent). The remainder live with a partner, family or friends.
This story first ran in Community Care Review.