Louise Biti
Aged care featured as a centrepiece of the 2021-22 Federal Budget handed down by Government on 11 May. The Budget outlined a 5-year aged care reform plan, at a cost of $17.7 billion.
This Budget followed the release of the final report from the Royal Commission into Aged Care Quality and Safety earlier this year, which highlighted the need for significant reforms and funding injections to bring aged care standards up to community expectations. Of the 148 recommendations in that report, the Government has:
- Accepted fully, or in principle, 126 recommendations
- Suggested alternatives for 4 recommendations
- Flagged 12 recommendations as requiring further consideration and consultation, and
- Not accepted 6 recommendations. Interestingly, at this stage, the focus of reforms is on improving the system, with no changes to consumer funding obligations for either home care or residential care. Increased costs are proposed (for now) to be funded in full by the Government. The Government has not taken up the Royal Commission recommendations to increase tax to cover the increased costs.[1]
1. The plan for reform
With an ageing population and baby boomers heading towards care years, the Budget included a major focus on aged care aimed at restoring consumer confidence and increasing the quality of care.
Today over 1.3 million people access aged care services. The number of people over age 65 is expected to double to more than 7 million people by mid-century. This provides a great opportunity (and need) for financial planners to focus on supporting clients with aged care needs and discussions.
Key to successful reform, is the need to create an aged care system that has quality and safety of older Australians at its core. It needs to become a system in which consumers have confidence to provide the care services that they want and need. Quality of living services as well as quality of care are high priorities going forward.
The Government has responded quickly to the Royal Commissioner report, with plans to follow a five-year reform plan covering the five pillars of:
- Home care
- Residential care services and sustainability
- Residential care quality and safety
- Workforce
- Governance.
The Budget announcements are the first step in this process to reform.[2]
2. Home care
More home care packages
Demand for government-funded home care packages is increasing but the wait for a package to be allocated is long. The Royal Commission highlighted this as a key problem and recommended clearing the waiting list as an urgent priority.
There are currently around 100,000 people on the waiting list, but some of these people have declined support and many others are receiving care at a lower level than approved. Therefore, the true waiting list is possibly smaller.
The Government has announced an additional 80,000 home care packages to be released over the next four years (at a cost of $6.5 billion), with half to be released in 2021/22 and the other half in 2022/23. By June 2023, this will bring the total home care packages to 275,598 – an increase of 160,000 packages since the 2018 Budget.
Proposed rollout: From 1 July 2021
Merging home care programs
It has been an objective of the Government for several years to combine the home care programs, and this commitment has been renewed with a target date of July 2023.
The aim is to combine the Commonwealth Home Support Program (CHSP), Home Care packages and respite services into one program. Further industry consultation is required in relation to design principles, with the objectives to:
- Improve assessment
- Modernise funding
- Increase choice of providers
- Reduce red tape and administration to minimise administration fees
- Simplify understanding and access.
Proposed commencement: July 2023[3]
3. Residential care
A key reform for aged care is the need for a funding boost. The government currently spends around $23 billion on aged care, but analysts have been recommending that at least $7 billion further injections were needed as a starting point.
Increase in Basic Daily Fee
More than half of residential care providers are reported to be running operational losses. In particular, the cost of “hotel services” such as food, linen, cleaning and electricity are reportedly more than the basic daily fee which is supposed to cover these services.
The Government announced a $10 increase in the basic daily fee, to be paid by the Government as an additional supplement to providers. To receive this amount, care providers will need to meet reporting requirements on daily living services.
Proposed commencement: 1 July 2021[4]
New care funding model
The Government has been working for several years to develop a new funding model to determine the cost of care for aged care residents. This has been based on findings from a University of Wollongong report released in 2017.
The current Aged Care Funding Instrument (ACFI) model will be replaced by the Australian National Aged Care Classification (AN-ACC) model from 1 October 2022.
Currently the ACFI assessment is undertaken by the care provider staff after the person moves into care. The assessment process will move to independent assessors to free up the time of care staff as well as to create a more consistent approach. The assessors will be the same team that conduct the entry assessments for residents (replacing the current RAS and ACAT assessments).
Proposed commencement: 1 October 2022.[5]
Mandating personal care times
The new Aged Care Act will mandate minimum personal care times for residents in residential care. Providers will need to ensure that each resident is provided with an average of 200 minutes of care time per day, including an average of 40 minutes from a Registered Nurse.
Residential care services will also need to have a registered nurse on site for a minimum of 16 hours per day.
The cost of this extra time will be accounted for in the new AN-ACC funding model that sets the level of government subsidies and the client’s cost of care.
Care providers will have the following reporting requirements:
- From July 2021 – annual reporting to the Department of Health will need to report on overall staffing minutes
- From July 2022 – a monthly care statement will need to be provided to residents and their families and care staffing minutes will need to be published on MyAgedCare
- From December 2022 – data will be used for recording a staffing star rating
- From October 2023 – the mandated minutes per day must be provided.
Proposed commencement: October 2023
Refundable accommodation deposits (RADs)
Some providers experienced higher than normal Refundable Accommodation Deposit (RAD) outflows since the start of the COVID outbreak. The Government has proposed a zerointerest loan program to help providers with limited liquidity to meet their refund obligations.
From 1 July 2024, new design standards will be implemented to encourage more innovation in the design of residential care premises, including encouraging smaller group homes and more dementia-friendly services.
The Government has also indicated an intention to consult with the aged care sector on the use of RADs to investigate alternative ways to raise capital for property investment and development. This may develop options to encourage providers to move away from a reliance on RADs.[6]
4. Workforce
One of the greatest challenges for aged care is workforce. By 2050, the aged care workforce is expected to grow to over 1 million workers. Over the next two years, an additional 3,600 registered nurses and 34,200 personal care workers will need to be attracted into the aged care workforce.
Measures announced in the Budget aim to address training, recruitment and pay issues for care workers, with measures including:
- Bonuses over a two-year period to eligible care workers
- Scholarships to attract new workers
- Increased training programs (including in dementia support), and
- Recruitment programs.
The Government also proposed establishing a single register of aged care workers to help aged care providers with employing appropriate and qualified workers.
5. Governance and aged care system
Measures announced in the Budget aim to create more transparent and independent oversight of aged care, in line with Royal Commission recommendations.
New Aged Care Act
The existing Aged Care Act was implemented in 1997 and focussed on rules for funding aged care. A new Act was recommended by the Royal Commission and the Government has committed to rewriting the Act, with focus on person-centred care, governance and quality.
Proposed commencement: mid-2023
New Governance and advisory structures
New governance standards will apply from 2022 to lift the leadership and skills of aged care boards. Quality standards will also be reviewed with a focus on governance, dementia needs and nutrition.
The following governance and advisory structures will be established:
- National Aged Care Advisory Council – to provide guidance to government on a range of aged care issues
- Council of Elders – giving older people a direct voice to government
- Inspector General of Aged Care – an independent oversight body.
Decentralisation of some Department of Health staff will be undertaken to get more localised understanding and support to people accessing care services.
Proposed commencement: mid-2021
The independent Hospital Pricing Authority will be expanded to become the Hospital and Aged Care Pricing Authority with responsibility for reviewing the funding levels for aged care and the conduct of costing studies.
This will feed through to the level of Government subsidies and aged care fees.
The Aged Care Quality and Safety Commission will be boosted to strengthen its capacity to regulate and review the aged care sector, including home care.
Proposed commencement: 1 July 2023
6. Assessment and access to care
Information services
The aged care system is confusing and difficult to navigate. In a previous Budget, the Government funded an Aged Care Navigator system to help fund information services to help consumers with basic information.
The complexity continues to be a problem, as was evidenced in the Royal Commission findings. The Government announced funding to provide the following face-to-face services for people accessing aged care services who need:
- Minor help – located in 325 Services Australia centres to provide basic information and help with accessing online services
- Extra help – Aged Care Specialist officers in 70 Services Australia centres to provide information and help with connections to local services, financial information services, social workers and advocacy support
- Specialist help (vulnerable persons) – 500 Community Care Finders.
Proposed commencement: 2023
Assessment and access to care
Under current rules, aged care providers need to apply for bed licenses to create subsidised aged care places in residential care. Application is made through the Aged Care Approval Rounds which make available new or reassigned bed licenses.
In an attempt to increase competition and better reflect consumer demands, this application process will be disbanded from 1 July 2024. Instead, places will be attached to the client when that person receives approval for residential care.
A single assessment process will be established from October 2022 to replace the current:
- Regional Assessment Service (RAS) for CHSP approvals
- Aged Care Assessment Team/Service (ACAT/ACAS) for home care package and residential care approvals (including respite care)
- Care workers who conduct the ACFI funding assessments (which is to be replaced by AN-ACC).
Proposed commencement: October 2022
Greater support will be provided to people diagnosed with dementia to help them access services required to maintain health, wellbeing and independence. Primary Health Networks will develop local dementia care pathways to support General Practitioners (GPs) to refer clients to support services. GPs will also be provided with additional dementia training.
The National Dementia Support Program and the National Dementia Helpline will both receive boosts to help connect people living with dementia with services and access supports such as counselling, education and support groups. This includes support for the carers.
Star-rating systems
Aged care star ratings will be introduced to help clients assess and evaluate aged care providers to make more informed choices. The Government will develop an Aged Care Mandatory Quality Indicator program and the star ratings will be published on MyAgedCare.
Proposed commencement: end 2022
7. Pension Loan Scheme
Many retirees are asset-rich and income-poor, particularly with rises in house values.
The Pension Loan Scheme is an equity release loan offered by the Government which helps retirees turn equity in their home into a regular income stream. This income could be used to meet living expenses or pay for services such as home care.
The current scheme allows part-pensioners and some self-funded retirees to borrow regular fortnightly payments up to 150% of the maximum pension entitlement (less the pension amounts they receive). For example, a single person who receives a part-age pension of $400 per fortnight could borrow up to $1,029 per fortnight ($26,755 per year) to bring their payments up to 150% of the maximum single age pension.
The scheme is proposed to be extended, so that from 1 July 2022, retirees will have the option of accessing up to two lump sum advances (within any 12-month period). These lump sum advances will be capped at 50% of the maximum annual rate of age pension and count towards the 150% overall cap.
Based on current rates, this would allow a single person to receive lump sum payments up to $12,380 per year and $18,670 combined for a couple.
The Government also introduced a ‘no negative equity guarantee’ to ensure the loan balance repayable cannot exceed the market value of the secured property.
Proposed commencement: 1 July 2022[7]
By Louise Biti, Director
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