The home aged care sector should have an independent pricing authority to provide cost reviews and pricing and apply an ACFI-style funding model, the aged care royal commission has heard.
Asked by Counsel Assisting Peter Gray QC whether there should independent pricing for home care, ECH CEO David Panter said it was “part of the solution”.
“I think to have an independent body that’s looking at exactly what the cost and, therefore, reasonable price structure should be, is absolutely appropriate, and is consistent with what you see elsewhere in health,” he said citing the Independent Hospital Pricing Authority.
Dr Panter said there has been no significant change in funding levels for home care since the system began, which meant the dollar value for the amount of care that can be delivered had dropped.
“For both CHSP and Home Care Packages, essentially those dollars buy less now than they did when the original sums were conceived,” he told the hearing on finance, funding and prudential regulation on Tuesday.
“And that has an impact on the ability for someone to carry on living independently at home.”
Care recipient deposits
However, Home Instead’s CEO Martin Warner said with the growing mountain of unspent funds it was hard to describe home care as underfunded.
Rather, it was lacking in flexibility, he told the commission.
“There is a complexity here and the issue is that there is a problem of moving from one level of care to another level of care.
“I think it’s the funding flexibility of the system which is more important than the quantum amount.”
He said Home Instead took deposits from its private clients to ease cash flow problems, and this concept could be applied to home care packages in the form of a deposit from the government.
“What I’m suggesting to the commission is … the government pay a deposit to that provider that would perhaps last, say, up to six months, to enable that to cover the cash flow. Thereafter, it’s offset against ongoing fees.”
Applying ACFI funding model to home care
Meanwhile, Dr Panter said applying the ACFI model used in residential care could result in better funding outcomes for the home care sector.
He said an ECH study showed that applying an ACFI level of care component to 12 clients resulted in an additional $60 a day per client.
“We went through a process of taking people who were essentially on a Level 4 package and assessing their need using the ACFI formula for their care component had they been going into residential aged care,” Dr Panter said.
“What that showed is potentially up to $60 more per day for their care, if they’d been in residential, compared to being at home.
“It’s taking that ACFI funding, the formula that’s already there, but allowing it to be used for people receiving their care at home for that care component.”
He said ECH topped up their packages using its own funds and was able to demonstrate that the extra money made it possible for them stay at home for longer.
Tightening up reporting
Both CEOs supported the proposition that the prudential regulator APRA should be empowered to tighten up the reporting regime for home care.
Mr Gray said while reporting regime was focused on residential providers there was still a public interest in understanding the financial situation of whether home care providers.
“There is a public interest argument for more regular financial reporting by home care providers and to a greater level of detail than is currently provided … and that the prudential regulatory body to be empowered under statute to require providers to submit regular financial reports,” he said.
Dr Panter said he was comfortable with the proposition which would be in the interests of greater transparency, as long as it didn’t create unnecessary administrative costs.
“The financial health of an organisation will potentially have an impact, good or bad, on the quality of service and the quality of outcomes that that organisation is delivering for the client,” he said.
“So to have that transparency and greater transparency around the financials and the financial health of home care providers seems to me entirely appropriate.”
Mr Warner agreed on the proviso that the reporting was relevant.
“Anything that’s really relevant, absolutely, to improve the quality, I completely support it, but it just needs to be agreed as to what’s appropriate and what’s relevant,” he said.
Read what the CEOs told the Royal Commission about a new structure for home care service provision here.
This story first ran on Community Care Review.
View all our royal commission coverage here.