What will aged care look like under the Coalition Government?

| 05 Dec 2013
Aged care under a Coalition Government

Senior executives from Melbourne’s aged care community turned up in full force for Deloitte and iCareHealth’s first-ever aged care roundtable lunch, which appears set to become a regular knowledge sharing event for the aged care sector.

Held at the Deloitte offices in Melbourne last week, the lunch offered a wealth of valuable insights and learnings for senior aged care executives looking to navigate the new landscape and future-proof their businesses.

The discussion was led by Tapan Parekh, Deloitte’s National Leader for Senior Living. Tapan started the discussion by focussing largely on the implications of the 10-year plan for aged care reform ‘Living Longer Living Better’, under the Coalition Government.

He made immediate reference to the Department of Health and Ageing being renamed the Department of Health and the aged care portfolio transferring to the new Department of Social Services. He also mentioned the Coalition’s raft of measures intended to cut red tape across the sector, starting by simplifying the pricing system for residential aged care providers, which will begin next financial year.

Debra Ward, Executive Manager of Corporate Services at Vincent Care who attended the event, said the highly topical focus of Tapan’s introduction allowed the group to delve deeply into some of the more specific issues regarding the changes that have already started to come into effect.

“The opportunity to hear from Tapan Parekh, Deloitte’s National Leader of Senior Living led to an informative and thought-provoking discussion about how our own organisations, and the industry as a whole, will be affected by the proposed changes,” Debra said.

Some of the recurring issues and concerns about the sweeping aged care reforms that stood out throughout the succeeding discussion were:

Aged Care Funding Instrument

July 1, 2013 saw the introduction of a new series of changes to evidence-based requirements within the Aged Care Funding Instrument (ACFI) model. As a result, many agreed the ACFI model would become progressively more complex and continue to increase the pressure on aged care providers.

The premise of moving to the ACFI model was to reduce the amount of documentation and administration associated with funding. The major concern is that, aged care providers are under mounting pressure to provide sufficient clinical information to comply with more aggressive ACFI reviews, and assessors linking ACFI back to accreditation standards. As staff are forced to allocate more time to diligently maintaining these records, it reduces the time they have available to provide the essential services to residents. As a result, an increasing number of aged care providers are considering employing ACFI coordinators to manage ACFI appraisals.

Dementia and Severe Behaviours Supplement

Also taking effect from July 1 of this year was the new Dementia and Severe Behaviours Supplement funded through ACFI. The supplement was provided for eligible residents from 1 August, 2013 at a rate of $16.15 per day in recognition of the additional costs of providing care to these residents. There is concern amongst providers regarding rumours that applications for new claims will not be accepted from January 1, 2014.

Aged Care Financing Authority

Another hot issue that arose during the discussion related to the Aged Care Financing Authority (ACFA) and the role it may play under the Coalition Government. ACFA was set up by the previous Government to provide independent advice to the Government on pricing and financing issues, informed by consultation with consumers, and the aged care and finance sectors.

Daily Accommodation Payments and Refundable Accommodation Deposits

From July 1, 2014, residents entering aged care homes will have more flexibility and choice about how they pay for their accommodation costs. As an overview, residents will be able to choose to pay for accommodation as a Daily Accommodation Payment (DAP), an equivalent Refundable Accommodation Deposit (RAD), or a combination of both, and they will have up to 28 days from entering care to decide. It’s important to note, these changes will only affect residents who have the capacity to contribute to the cost of their accommodation.

However, concerns were expressed during the discussion, highlighting a number of issues relating to the DAP and RAD. These reflect the lack of certainty as to the impact of the proposed framework surrounding an accommodation payment or contribution, the use of the Maximum Permissible Interest Rate (MPIR) to convert DAPs to RADs, the potential impact of the 28 day cooling off period available to the resident which could have a significant impact on cash flow management for providers and the fact that a number of the arrangements relating to accommodation payments were interim in nature and therefore there were now questions as to Coalition’s approach on such arrangements may be on a longer-term basis. Additional issues raised by attendees included how providers would fund the capital required to improve the quality of the buildings and services they provide, without accommodation bonds and charges.

Removal of distinction between high care and low care

A number of Bills were passed as legislation in late June 2013 as part of the government’s aged care reforms. One of the Bills has removed the distinction between low level (low care) and high level (high care) residential care that operates under the current system. The elimination of low and high care distinctions has resulted in widespread uncertainty amongst the sector in regard to who will be funding the impact of the these changes. Currently, there are no detailed guidelines available.

Consumer Directed Care

Consumer Directed Care (CDC) is still another area of uncertainty for aged care providers. As of August 1, 2013, all new Home Care Packages (including all of the packages allocated to providers in the 2012-13 Aged Care Approvals Round), must be delivered on a CDC basis. In the longer term, all existing packages, including those in operation before 1 August 2013, must be delivered on a CDC basis from July 1, 2015.

CDC is being rolled out with the aim of providing care recipients and their carers with greater control and choice over the design and delivery of the services they receive while remaining in their own homes. However, what will be the impact for providers when CDC takes full effect in coming years? The future role of case management in particular is unclear and will be a real challenge to providers who typically provide support to care recipients through the development and ongoing review of care plans.

Additionally, how will providers meet the challenge of finding skilled staff with the required qualifications to deliver CDC? And how will contracted service providers cope with having to manage a budget allocation and the administrative overhead of direct communication with the CDC client? These questions are top of mind for providers but to a large extent, remain unanswered. However, there is overwhelming acknowledgement that CDC represents a progressive step forward in empowering the consumer, but as usual, the detail of exactly how this will work in a practical sense represents a fundamental change for aged care providers.

Industry consolidation and the corporatisation of aged care

The significant government reforms will place an increased burden of compliance-based record keeping and reporting, making it even more imperative that providers establish systems and deploy technology to ensure this is done as efficiently as possible. The cost and complexity of this will make it harder for smaller providers, and with an influx of private providers also entering the market, consolidation of providers is now considered a certainty.

Overall, the roundtable lunch provided an accurate, high level view on what aged care providers expect will happen as part of the Coalition Government’s aged care reform, what will occur as a consequence, and what the implications could be on the horizon for their organisations.

What are your own views on key developments in aged care reform that are likely to have significant medium to long-term impact for providers and the industry?

Tags: ACFA, ACFI, aged care, CDC, funding, government, residential aged care, technology

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The iCareHealth Team


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