The combination of unspent home care funds and a competitive service market has created a “perverse incentive” for providers to spend the money inappropriately, the Royal Commission has heard.
The latest figures show that home care providers are currently accumulating about $6,000 of unspent funds per client a year, leaving them with up to $400 million laying idle.
The topic of unspent funds was raised during evidence before the Royal Commission into Aged Care Quality and Safety last week.
Nick Mersiades, director of Catholic Health Australia and deputy chair of ACFI, told the commission the number of home care packages is expected to increase from about 90,000 to 150,000 over the next three years.
“Unless consumer behaviour alters, the amount of money which is sitting with providers doing nothing is going to be upwards of half a billion dollars,” he said.
Mr Mersiades said the stockpile of cash was creating an incentive for the funds to be used “in a way that is not material to someone’s real needs.”
“In a competitive service environment …. one provider will be asked, ‘well, I want you to do this landscaping or put in a new fridge for me’ and the provider says ‘no, I can’t do that’.
“And they say, ‘well, the one down the road will do it for me, why can’t you do it?’”
He says the system is also creating a liability for the Commonwealth, which stands to lose the funds if a provider goes under.
A debit card payments mooted
Mr Mersiades suggested that one way to get around the problem of unspent funds could be through the introduction of a debit card system to make payments for services included a package.
He said a debit system would address the problem of providers being left with huge piles of unspent funds which they had to account for and keep secure– all of which involves extra regulatory processes and related costs .
“Again, that is eating into moneys which could be available for direct care delivery,” he said.
He added it would also reduce the cost of interest on money the commonwealth had to borrow.
“In many respects the unspent money sitting in providers’ bank account creates the same financial risks as an accommodation bond or a lump sum deposit,” he said.
Mr Mersiades also told the commission the government determines the availability of home care because it dictates ratios. The home care target was 45 places per 1000 people over 70, but at the moment the figure was 32.
Asked by counsel assisting if this meant there was a “substantial element of central control”, where the balance of the care type was being determined by the government rather than the consumer, he replied “yes”.
CDC reveals extent of waiting lists
Mr Mersiades said the government’s “rationing” of services and service types – residential or home care – has created waiting lists.
The introduction of consumer directed care had made the extent of these lists clear for the first time.
“We’ve always assumed there were waiting lists or queues but we didn’t know (the size of them).
“The policy reform around home care packages, with funding following the consumers for the first time, made that transparent, which I think took most people by surprise at the extent of it.
Mr Mersiades said it’s appropriate to allow consumers to use their budget flexibility, however this has caused practical problems, including unspent funds.
“Obviously something is going on and people are not wanting to use all those resources …. perhaps we should have more levels or should allow people to choose to work with a package lower than the assessed level, because people have got different levels of resilience, they’ve got different levels of informal support.”
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