Bills Digest 132 1996-97 Aged Care Bill 1997

Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

• Passage History
• Purpose
• Background
• Main Provisions
• Concluding Comments
• Endnotes
• Contact Officer and Copyright Details

Passage History

Aged Care Bill 1997

Date Introduced: 26 March 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: If the Act receives the Royal Assent by 1 July 1997, it commences on 1 July 1997. If not, it commences on a day to be fixed by Proclamation. If it has not been proclaimed to commence within 6 months after the date of Royal Assent, it commences on the first day after that period.

Purpose

The purpose of this Bill is to:

• enable the Commonwealth government to reduce its capital funding involvement in the aged care industry
• align the classification and funding arrangements for nursing homes and hostels with a view to improving the standard of accommodation and care, particularly in respect of nursing homes
• place a greater onus on older people with higher income and assets to make a greater contribution to the cost of their care.This is achieved, at least to a large extent, by:
  • imposing income testing on all people who receive residential care, and
  • allowing residential care services to negotiate with care recipients for the payment of accommodation bonds by recipients
• establish an accreditation system for residential care facilities.

Background

The present aged care funding regime differs as between nursing homes and hostels.

Since the 1950's hostel operators have been permitted to levy charges on intending residents upon their entry into approved hostel accommodation.This has resulted ingenerally well maintained accommodation and services for hostel residents.

Nursing homes have not had the same opportunities to generate sufficient funds to make capital alterations to premises.Government funding and resident contributions provide little more than is necessary to cover the daily cost of providing care.

Readers are referred to the Parliamentary Library's Current Issues Brief No.27 of 1996 97, entitled Proposed changes to Institutional Residential Aged Care in Australia for a comprehensive explanation of the background to this Bill.

It is worth noting that an exposure draft of this Bill was circulated on 10 February 1997.

Main Provisions

This bill consists of 7 Chapters.Chapter 1 is an Introduction.Chapters 2 to 5 are the substantive provisions dealing with subsidies, grants and the responsibilities of approved providers of aged care.Chapters 6 and 7 are administration and miscellaneous provisions.

The Bill makes provision for the creation of 23 set of principles which will provide further detail in respect of the matters contained in the Bill(1)An exposure draft of a number of the principles has been released and comments on that draft may be made until 15 May 1997.

The Bill uses the basic age pension amount in a number of formulae; for example the maximum amount of an accomodation bond.For reference purposes the current basic age pension amount is $347.80 per fortnight or $9,042.80 per year.

Chapter 2 - Preliminary matters relating to subsidies

There are a number of concepts which are fundamental to the scheme of the legislation.They are:

• 'approved provider' - is a person approved under Part 2.1 as an approved provider of aged care services.
• 'place' - a capacity of an aged care service to provide care to an individual.Places are allocated under Part 2.2 and a subsidy can only be paid under Chapter 3 where an approved provider provides aged care services in respect of a place which has been allocated.
• 'care recipient' - a person who receives aged care services.Care recipients must be approved under Part 2.3 before an approved provider can be paid certain subsidies for providing care.

The Bill contemplates 3 types of care:

• Residential Care - personal care or nursing care or both provided in a residential facility in which the person is provided with accommodation and meals (clause 41-3).
• Community Care - personal care and assistance provided to a person who is not being provided with residential care
• Flexible Care - care provided in a residential or community setting through an aged care service that addresses the needs of care recipients in alternative ways to the care provided through residential care services and community care services.

Part 2.1 - Approval of providers

Regardless of what types of aged care is to be provided, approval is a precondition to receiving a subsidy under Chapter 3 (clauses 7-1, 42-1, 46-1 and 50-1).

A corporation (not an individual) may apply to be approved as a provider of aged care (clause 8-2).The Secretary (of the Department of Health and Family Services) must approve the application if he/she is satisfied the applicant is suitable to provide aged care (clause 8-1).

In deciding whether an applicant is suitable to provide aged care the Secretary must consider:

• the suitability and experience of the applicant's key personnel
• the applicant's ability to provide and experience in providing aged care
• the applicant's ability to meet relevant standards for the provision of aged care (under Part 4.1)
• the applicant's commitment to the rights of the recipients of aged care
• the applicant's record of financial management
• if the applicant has been a provider of aged care - its conduct as a provider, and its compliance with its responsibilities as a provider and its obligations arising from the receipt of any payments from the Commonwealth for providing that aged care.

An applicant may be approved in respect of all types of aged care or may be limited to specified types of aged care or aged care services.The period during which the approval is in force may or may not be limited (clause 8-1).

Approved providers are obliged to:

• notify the Secretary, within 28 days, of any change of circumstances that materially affects the approved provider's suitability as a provider of aged care and of any change to the approved provider's key personnel (clause 9-1)
• provide the Secretary, within 28 days of the request, with specified information relevant to the approved provider's suitability as a provider of aged care.

Failure to notify or provide information on request is an offence (punishable by 30 penalty units) and may result in sanctions being imposed under clause 66-1.

An approval will lapse if the approved provider does not provide any aged care during a continuous period of 6 months (clause 10-2).The Secretary must revoke an approval if satisfied the approved provider has ceased to be suitable for approval.However, before revoking approval, the Secretary must ensure that appropriate arrangements are made for the continuation of care for the care recipients of the approved provider (clause 10-3).

Part 2.2 - Allocation of Places

As is mentioned above, a subsidy can only be paid under Chapter 3 where an approved provider provides aged care services in respect of a place which has been allocated.

Planning

The Minister determines, for each financial year, how many places are available for allocation in each State or Territory (clause 12-3).The Secretary then distributes those places among the regions within the State or Territory (clause 12-4).The Secretary must also determine, for the places available for allocation, the proportion of care to be provided to (clause 12-5):

• people with special needs (i.e. Aboriginal and Torres Strait Islander communities, people from non-English speaking backgrounds, people in rural and remote areas and people who are financially or socially disadvantaged)
• concessional residents and assisted residents
• recipients of respite care
• people needing a particular level of care.

The Secretary may establish Aged Care Planning Advisory Committees and may request advice from a Committee about the distribution of places among regions and the making of determinations under clause 12-5.

Making Allocations

Where places are available for allocation for a financial year and have been distributed to a region, the Secretary may invite applications for allocations of those places (clause 13-2).The invitation must specify the regions and types of subsidy in respect of which allocations will be considered, the number of places available in respect of each types of subsidy and the proportion of care available for allocation that must be provided to:

• people with special needs
• concessional resident and assisted residents
• recipients of respite care
• people needing a particular level of care.

A person may apply in writing for an allocation of places in response to an invitation (clause 13-1).

The Secretary may allocate places to an approved provider, in respect of a particular type of subsidy, to provide aged care services for a region.The allocation must be one that the Secretary is satisfied would best meet the needs of the aged care community in the region (clause 14-1).In deciding which allocation would best meet the needs of the aged care community, the Secretary must consider (clause 14-2):

• the expertise and experience of the people who manage the aged care service
• whether the premises used to provide the care are suitably planned and located
• the ability of the applicant to provide the appropriate level of care
• the measures to protect the rights of care recipients
• the provision of appropriate care for care recipients who are people with special needs.

The allocation is made subject to such conditions as the Secretary specifies in writing.Those conditions may include:

• the proportion of care to be provided to people with special needs, concessional and assisted residents, recipients of respite care, and people needing a particular level of care
• the period within which the aged care service is to be operational
• the professional planning of the aged care service.

The allocation is also subject to such conditions as are from time to time determined by the Secretary in writing.

The Secretary may make allocations of places in situations of emergency (clause 14-9).

Allocations take effect when the Secretary determines that the approved provider is in a position to provide care.If an allocation is made without such a determination being made at the same time, the allocation is a provisional allocation.A subsidy cannot be paid on a provisional allocation (clause 15-1).

Places may be transferred with the approval of the Secretary.However, the transferee must be an approved provider and the transfer must not have the effect of the care to which the place relates being provided in a different State or Territory (clause 16-1).

An allocation of a place ceases to have effect when the place is relinquished by the approved provider or when the place is revoked.A place can be revoked in 2 circumstances:

• where care has not been provided in respect of the place for a continuous period of 12 months (clause 18-5)
• by way of a sanction for failure to fulfil a responsibility (clause 66-1).

Part 2.3 - Approval of Care Recipients

Care recipients must be approved under this Part before an approved provider can be paid a residential care subsidy or community care subsidy for providing care to the recipient.The recipient of flexible care must be approved under this Part or fall within a class of people who, under the Flexible Care Subsidy Principles, do not need approval before an approved provider can be paid a flexible care subsidy for providing care to the recipient (clause 20-1).

A person is eligible to be approved as a care recipient of a certain type of care if the person is eligible to receive that type of care (clause 21-1).

A person is eligible to receive residential care if (clause 21-2):

• the person has physical, medical, social or psychological needs that require the provision of care
• those needs cannot be met more appropriately through non-residential care services, and
• the person meets the criteria specified in the Approval of Care Recipients Principles.

A person is eligible to receive community care if (clause 21-3):

• the person has physical, social or psychological needs that require the provision of care
• those needs can be met appropriately through non-residential care services, and
• the person meets the criteria specified in the Approval of Care Recipient Principles.

A person is eligible to receive flexible care if (clause 21-4):

• the person has physical, social or psychological needs that require the provision of care
• those needs can be met appropriately through flexible care, and
• the person meets the criteria specified in the Approval of Care Recipient Principles.

The Secretary must approve a person as a care recipient if an application is made and the Secretary is satisfied the person is eligible to receive that type of aged care (clause 22-1).

Before a person can be approved, the care needs of the person must be assessed unless there are exceptional circumstances which justify making a decision without an assessment (clause 22-4).

The Secretary may limit the approval to a particular kind of aged care service, respite care or care for a specified period (clause 22-2).Where the approval is for residential care, approval may be limited to one or more levels of care corresponding to the classification levels (see below).

An approval ceases to have effect when it expires (where approval was granted for a specified period), lapses (if the person is not provided with care within 12 months of approval) or is revoked (the person has ceased to be eligible to receive aged care) (clauses 23-1 to 23-4).

Part 2.4 - Classification of care recipients

Care recipients approved under Part 2.3 for residential care, or for some kinds of flexible care, are classified according to the level of care they need.The classifications may affect the amounts of subsidy payable to the approved provider for providing care.

Clause 25-3 obliges the approved provider to appraise the level of care needed by a care recipient relative to the needs of other care recipients. The Classification Principles specify the criteria, in respect of each classification level for determining which level applies to the care recipient.The types of criteria which may be specified are:

• a care recipient's clinical needs
• the assistance a care recipient requires with the activities of daily living
• the assistance a care recipient requires with personal care
• the assistance a care recipient requires with communication or sensory processes
• the care recipient's needs for social or emotional support.

The appraisal must be over a minimum period of 21 days and must be in a form approved by the Secretary.If (clause 25-4):

• an approved provider gives false, misleading or inaccurate information in a substantial number of appraisals,
• the classifications made in connection with those appraisals were changed, and
• after those classifications were changed, the approved provider continued to give false, misleading or inaccurate information in other appraisals,

the Secretary may suspend the provider from making appraisals and authorise another person to make appraisals of the care recipients to whom the approved provider provides care.

Upon receipt of the classification, the Secretary must classify the care recipient (clause 25-1).

A classification ceases to have effect on its expiry date (12 months after it took effect) unless it is renewed.

Classifications are renewed by the approved provider notifying the Secretary of a reappraisal of the level of care needed by the care recipient.If the care needs of the care recipient change significantly during the period during which the classification has effect, the reappraisal may be made at any time during that period (clause 28-2).

Part 2.5 - Extra service places

Extra service places are places in respect of which a significantly higher standard of accommodation, food and services are provided to care recipients.Extra service places can attract higher resident fees, but a lower amount of residential care subsidy is payable.

Extra service places, if provided, must be provided in a distinct part of the residential care service which must include separate living space (clause 30-3).

A place is an extra service place where:

• the place is included in a residential care service or a distinct part of a residential care service which has extra service status
• an extra service fee is in force for the place
• residential care is provided to a care recipient on an extra service basis, and
• the place meets any other requirements set out in the Extra Service Principles.

The Secretary invites applications for extra service status by regions (as with the allocation of places).To be granted extra service status, the applicant must already have an allocation of places or have applied for an allocation (clauses 32-1 to 32-3).

The Secretary must be satisfied of the following before granting an application:

• granting the extra service status would not unreasonably reduce access to residential care by people living in the region concerned who:
  • are concessional residents, or
  • are included in a class of people specified in the Extra Service Principles
• the proposed standard of accommodation, services and food in respect of each place will be significantly higher than the average standard in residential care services that do not have extra service status
• if the applicant has been a provider of aged care - the applicant has a very good record of conduct as such a provider and compliance with its responsibilities
• if, at the time of the application, residential care is being provided through the residential care service -the service is certified and the service meets its accreditation requirements.

Where the total number of extra service places applied for exceeds the number available, the Secretary must give preference to those applications that best meet the criteria above and must have regard to the level of extra service fees proposed in each application (clause 32-5).

Conditions attached to the grant of extra service status are found in 3 places:

• the Bill - clause 32-8 provides the grant of extra service status is subject to meeting any standards set out in the Extra Service Principles.It also provides that residential care can only be provided on an extra service basis through the service or the distinct part of it except where the care recipient was being provided with residential care through the service or distinct part before extra service status was granted
• the Extra Service Principles may set out conditions
• the notice granting extra service status may set out further conditions.Clause 32-8(5) provides that these conditions may relate to:
  • minimum standards of food, accommodation and services
  • entering into an agreement relating to capital repayment deductions (see below)
  • agreement with care recipients setting out the terms on which they will receive care on an extra service basis
  • the level of the extra service fee.

Fees charged in respect of extra service places must be approved by the Secretary under clause 35-1.The extra service fee, when calculated on a daily basis, must be at least $10 per day or such other amount as is specified in the Extra Service Principles.

New fees can not be approved more than once each year (clause 35-3).

For residential care to be provided on an extra service basis, there must be an extra service agreement between the care recipient and the approved provider.Such an agreement must not be entered into in circumstances under which the care recipient is subject to duress, misrepresentation or threat of disadvantage or detriment (which includes a threat to cease to provide care to an existing resident unless the recipient signs an extra service agreement). An extra service agreement must set out (clause 36-3):

• the level of the extra service amount in respect of the place concerned (i.e. the extra service fee plus 25%)
• how the extra service amount may be varied
• the standard of accommodation, services and food to be provided to the care recipient.

Part 2.6 - Certification of residential care services

An approved provider cannot charge accommodation bonds (see below) or receive concessional resident supplements if the service has not been certified under this Part.

An application for certification is made to the Secretary (clause 38-1).In considering the application the Secretary must consider:

• the standard of buildings and equipment used by the residential care service
• the standard of residential care being provided by the residential care service, and
• if the applicant has been a provider of aged care - its conduct as such a provider.

The Secretary can require an assessment of the residential care service by a person or body authorised by the Secretary (clause 38-4).

A certification ceases to have effect when it:

• lapses - as a result of a change in location at which the residential care is provided
• is revoked - as a result of the Secretary being satisfied that the service has ceased to be suitable for certification (clause 39-3) or a request from the approved provider (clause 39-5), or
• is revoked or suspendedunder clause 66-1 - as a result of a failure to fulfil one or more of the responsibilities of an approved provider.

The Secretary is empowered to review the certification of a residential care service at any time and the Secretary may require an assessment upon such a review (clause 39-4).

Chapter 3 - Subsidies

There is a different subsidy for each type of care, i.e. residential, community and flexible.

Part 3.1 - Residential care subsidy

Eligibility for a Residential Care Subsidy

An approved provider is eligible for a residential care subsidy in respect of a day, where during that day:

• the approved provider holds an allocation of places for a residential care subsidy
• the approved provider provides residential care to an approved residential care recipient (a care recipient can be taken to be provided with residential care while he or she is on leave from that care - see below), and
• the residential care service meets its accreditation requirement (see below).

A care recipient is taken to be provided with residential care when the recipient is attending a hospital to receive treatment (no limit on the number of days) and for up to 52 days each financial year (i.e. recreation leave).

For a residential care service to meet its accreditation requirement:

• it must, before 1 January 2000, apply to an accreditation body for accreditation of the service
• there must be in force an accreditation of the service or a determination that the service is taken to meet its accreditation requirement by 1 January 2001 (or another day specified in the Residential Care Subsidy Principles)

Amount of the Residential Care Subsidy (clause 44-2)

Amount= Basic Subsidy Amount+ Primary Supplements - Reductions In Subsidy - Income Test Reductions + Other Supplements The basic subsidy amount (clause 44-3) is the amount determined by the Minister.Different amounts can be determined based on:

• the classification levels of care recipients
• whether the residential care is respite care
• the times at which the recipient entered the residential care service
• the State or Territory in which the service is located.

For the purpose of calculating the basic subsidy amount, a patient's classification level is reduced when the patient is on extended hospital leave (i.e. 30 days or more) (clause 44-4).

Primary supplements are such of the following supplements that apply to the care recipient:

• concessional resident supplement - the amount is determined by the Minister and different amounts can be set based on a number of factors (clause 44-6(5)).A care recipient is eligible for this supplement where:
  • the recipient's classification level is not the lowest classification level
  • the care service is certified (see above at Part 2.6)
  • the care recipient is a concessional resident (i.e. receiving an income support payment, not a homeowner for 2 years or owns a home occupied by long term carer eligible for income support, partner or dependent, and assets worth less than 2.5 times the basic age pension) or an assisted resident (i.e. concessional resident but assets can be up to 4 times the basic age pension)
  • care provided is not on an extra service basis
• respite supplement - the amount is determined by the Minister and different amounts can be set based on a number of factors (clause 44-12(4)).A care recipient is eligible for this supplement where:
  • they were provided with respite care
  • the recipients approval was not limited so as to preclude the provision of respite care
  • the number of days that the recipient has been provided with respite care does not exceed the maximum set under the Residential Care Subsidy Principles
• oxygen supplement (clause 44-13) - the amount is determined by the Minister.It is for the Secretary to determine whether the care recipient is eligible for this supplement having regard to any matters specified in the Residential Care Subsidy Principles.
• enteral feeding(2) supplement (clause 44-14) - the amount is determined by the Minister.It is for the Secretary to determine whether the care recipient is eligible for this supplement having regard to any matters specified in the Residential Care Subsidy Principles.
• additional primary supplements (clause 44-16) - the Residential Care Subsidy Principles may provide for additional primary supplements.The amount of each supplement is to be determined by the Minister.

There are 3 types of reductions in subsidy:

• extra service reduction (clause 44-18) - this reduction applies for every day on which care is provided in respect of a place that is an extra service place.The reduction is an amount equal to 25% of the daily rate of the extra service fee approved under clause 35-1 (see Part 2.5- Extra Service Places above).
• adjusted subsidy reduction (clause 44-19) - this reduction applies where the Minister has determined in writing (presumably published in the Gazette) that the residential care service through which the care is provided is an adjusted subsidy residential care service.
• compensation payment reduction (clause 44-20) - this reduction applies for every day which is covered by a compensation entitlement.A day is covered by a compensation entitlement where the care recipient is entitled to compensation and the compensation

• takes into account the costs of providing residential care (provided the total compensation payment reductions do not already exceed the part of the compensation that relates to residential care).

The income test reduction (clauses 44-21 to 44-26) is calculated as the sum of the income tested reductions for each day of the payment period.The daily income tested reductions are calculated as follows:

• calculate the recipient's ordinary income
• calculate the recipient's ordinary income free area
• if the recipient's ordinary income does not exceed their ordinary income free area, the income tested reduction is zero
• if the recipient's ordinary incomes exceeds their ordinary income free area, the smallest of the following amounts is the daily income tested reduction:
  • an amount equal to 25% of the excess
  • (3 x standard pensioner contribution (i.e. 85% of the basic pension)) less recipient's standard resident contribution ($26.40 or 85% of the basic pension - clause 58-3)
  • the amount calculated by adding the basic subsidy amount and primary supplements and subtracting the reductions in subsidy.

The other supplements (clause 44-27) are such of the following supplements as apply to the care recipient:

• pensioner supplement -the amount of this supplement is determined by the Minister.A recipient is eligible for a pensioner supplement on a particular day if the recipient was receiving an income support payment, had a dependent child or was included in a class of people specified in the Residential Care Subsidy Principles
• The pensioner supplement is not payable where the recipient paid an accommodation bond (see below) of more than 10 times the basic age pension, unless the recipient has a dependent child
• viability supplement - the amount of this supplement is determined by the Minister and different amounts may be determined based upon a number of factors (clause 44-29(9)).A viability supplement is payable in respect of a recipient where the Secretary has made a determination under the section, in accordance with the Residential Care Subsidy Principles, having regard to the size of the service, the population it serves and the degree of isolation of the service's location.
• hardship supplement (clause 44-30) - The amount of this supplement is determined by the Minister and different amount may be determined based on any matters determined by the Minister.A recipient is eligible for this supplement where:
  • they fall within a class of recipients specified in the Residential Care Subsidy Principles as recipients for whom paying the maximum daily amount of resident fees would cause financial hardship, or
  • the recipient is determined under clause 44-31 by the Secretary to be a recipient for whom paying the maximum daily amount of resident fees would cause financial hardship.

Part 3.2 - Community Care Subsidy

An approved provider is eligible for a community care subsidy in respect of a day, where during that day:

• the approved provider holds an allocation of places for community care subsidy
• the care recipient is approved in respect of community care
• a community care agreement is in force under which the care recipient is to be provided with community care
• the approved provider provides the care recipient with community care as is required under the community care agreement.

A care recipient can request the approved provider to suspend, on a temporary basis, the provision of community care (clause 46-2).The approved provider is taken to provide community care:

• on each day that the recipient attends a hospital for treatment
• on each day on which the recipient is provided with care, other than by the approved provider, of a type and at a level specified in the Community Care Subsidy principles
• on each day that the Community Care Subsidy Principles provide that care is taken to be provided.

The Community Care Subsidy Principles may specify a maximum number of days for which a recipient may be taken to have been provided with community care.

The amount of community care subsidy that is payable in respect of a day is determined by the Minister (clause 48-1).

Part 3.3 - Flexible Care Subsidy

An approved provider is eligible for a flexible care subsidy in respect of a day, where during that day (clause 50-1):

• the approved provider holds an allocation of places for flexible care subsidy
• the care recipient is approved in respect of flexible care or is included in a class of people who, under the Flexible Care Subsidy Principles, do not need approval
• the flexible care is of a kind for which flexible care subsidy is payable

The kinds of care for which the flexible care subsidy will be payable are to be specified in the Flexible Care Subsidy Principles (clause 50-2).The notes to clause 50-2 recite the following examples:

• care of people with special needs
• care provided in small or rural communities
• care provided through a pilot program for alternative means of providing care
• care provided as part of coordinated service and accommodation arrangement directed at meeting several health and community service needs.

The amount of flexible care subsidy is determined by the Minister (clause 52-1).

Chapter 4 - Responsibilities of Approved Providers

The responsibilities of approved providers relate to:

• quality of care
• user rights for people to whom the care is provided
• accountability for the care that is provided.

Part 4.1 - Quality of Care

• (Note: Quality of care will also be dealt with in the Quality of Care Principles)

The responsibilities of an approved provider in relation to the quality of aged care are(clause 54-1):

• provide such care and services as specified in the Quality of Care Principles
• maintain an adequate number of appropriately trained staff to ensure care needs are met
• provide care and services of a quality consistent with rights and responsibilities of care recipients specified in the User Rights Principles
• if the care is residential care, comply with Accreditation Standards (as set out in the Quality of Care Principles - see clause 54-2) or Residential Care Standards (as set out in the Quality of Care Principles - see clause 54-3) as appropriate
• if the care is community care or flexible care, comply with the Community Care Standards(as set out in the Quality of Care Principles - see clause 54-4) or Flexible Care Standards respectively (as set out in the Quality of Care Principles - see clause 54-5)
• such other responsibilities as specified in the Quality of Care Principles.

These responsibilities only apply in respect of persons to whom care is provided through an aged care service where:

• subsidy is payable for the provision of the care, or
• the person is approved as a care recipient of the type of aged care provided to them.

Part 4.2 - User Rights

The responsibilities of an approved provider to a residential care recipient are to (clause 56-1):

• comply with the requirements in relation to accommodation bonds (see below)
• charge no more than the permitted amount for the provision of care (see below)
• charge no more than the permitted amount under the User Rights Principles by way of a booking fee for respite care
• charge no more for any other care or service than an amount agreed beforehand
• to provide such security of tenure as is specified in the User Rights Principles
• to offer to enter into a resident agreement with the care recipient.

The responsibilities of an approved provider to a community care recipient are (clause 56-2):

• not to charge for the care recipient's entry to the service
• to charge no more than the amount permitted for the provision of care
• charge no more for any other care or service than an amount agreed beforehand
• to provide such security of tenure as is specified in the User Rights Principles
• to offer to enter into a community care agreement with the care recipient.

The responsibilities of an approved provider to a flexiblecare recipient are (clause 56-3):

• comply with the requirements of the User Rights Principles in relation to an accommodation bond charged for the recipient's entry to the flexible care service
• charge no more than the permitted amount for the provision of care (see below)
• charge no more for any other care or service than an amount agreed beforehand
• to provide such security of tenure as is specified in the User Rights Principles
• to comply with any requirements of the User Rights Principles relating to offering to enter into an agreement with the care recipient in relation to the provision of care.

Approved providers must establish a complaints resolution mechanism for an aged care service under clause 56-4.

Accommodation Bonds

Basic Rules (clause 57-2)

The rules relating to charging an accommodation bond for the entry into a residential care service are:

• the residential care service must be certified (see Part 2.6 above)
• entry must not be for the provision of respite care
• the approved provider must comply with the prudential requirements (there are general prudential requirements which are set out in the User Rights Principles and specific prudential requirements approved in relation to an approved provider (clause 57-3 to 57-6))
• the approved provider must have entered into an accommodation bond agreement with the care recipient within 7 days after the recipient enters the service
• another person cannot be required to pay the accommodation bond as a condition of the care recipient entering the service
• the accommodation bond cannot exceed the maximum amount determined (see below)
• the accommodation bond cannot be charged if a determination is in force under clause 57-14 that its payment would cause financial hardship to the recipient
• the approved provider is entitled to income derived from investing the accommodation bond balance
• amounts must not be deducted from the accommodation bond balance except in accordance the Act (see below).

Accommodation Bond Agreements (clauses 57-9 to 57-11)

An agreement is an accommodation bond agreement if it sets out the following:

• the amount of the accommodation bond
• the care recipient's date of entry to the service
• how the accommodation bond is to be paid
• when the accommodation bond is payable
• the amount of each retention that will be deducted from the accommodation bond balance
• when retention amounts are to be deducted
• whether agreeing to pay the accommodation bond entitles the recipient to specific accommodation or additional services
• any additional resident fees payable as a result of the amount of accommodation bond disqualifying the care recipient from a pensioner supplement
• any financial hardship provisions that apply to the recipient
• the circumstances in which the accommodation bond balance must be refunded.

Amounts of Accommodation Bonds (clause 57-12)

The maximum amount of the accommodation bond is the lowest of the following:

• the amount specified in the accommodation bond agreement (i.e. agreed by negotiation)
• the amount equal to the value of the recipient's assets less 2.5 times the basic age pension amount
• the amount specified in, or worked out in accordance with the User Rights Principles.

If an accommodation bond is paid by a recipient and the recipient moves to another care facility, the recipient cannot be required to pay more, in respect of entry to the new service, than the accommodation bond balance refunded to the recipient.However, this only applies where the recipient enters the new service within 28 days after leaving the first (clause 57-13).

A recipient cannot be required to pay an accommodation bond before the end of the period specified in the User Rights Principles or, if no period is specified, before the end of 6 months after entering the care service (clause 57-16).However, amounts representing income derived and retention amounts are payable from the date of entry into the service (clause 57-18(2)).

The accommodation bond can be paid in whole or in part by periodic payments, at the election of the recipient (clause 57-17).

Rights of Approved Providers in Respect of Accommodation Bonds

Approved providers are entitled to retain income derived from the investment of accommodation bond balances (clause 57-18).

If the care recipient is provided with care for 2 months or less he or she can be required to pay the amount the approved provider could have derived through investing the accommodation bond balance for 3 months, unless the user rights principles specify a lesser amount.

A retention amount may be deducted from an accommodation bond balance each month or part of month during which the care recipient is provided with care.The amount of the retention must not exceed the amount specified in the UserRights Principles (clause 57-20).

Retention amounts may only be deducted for a period of 5 years commencing on the date on which the recipient entered the care service.The periods during which retentions are made in respect of the recipient are accumulated when the recipient moves from one service to another (clause 57-20 and note 57-13).

Refunds

Accommodation bond balances must be refunded when:

• the care recipient dies
• the care recipient ceased to be provided with residential care by a residential care service conducted by the approved provider (other than because the care recipient is on leave)
• the residential care service ceases to be certified.

Resident Fees

The resident fee in respect of any day must not exceed the sum of the maximum amount calculated under clause 58-2(see below) and such other amounts as are specified in the User Rights Principles.

The maximum amount calculated under clause 58-2 is as follows:

• the standard resident contribution - an amount of $26.40 (indexed) for those:

1. not receiving an income support payment, or
2. receiving an income support payment, with no dependent children and:

   a) who paid an accommodation bond of more than 10 times the basic age pension;

   or

   b) who elected not to supply information for the purpose of determining ordinary income for the purpose of calculating the income test reduction (see above).

For those not receiving an income support payment who do not fall within 2), the amount is 85% of the standard age pension (clauses 58-3 and 58-4).

• Add the compensation payment reduction - see calculation of the residential care subsidy, specifically the reductions in subsidy (clause 44-20).
• Add the daily income tested reduction - see calculation of the residential care subsidy, specifically the income test reduction (clauses 44-21 to 44-26)
• Subtract the amount of any hardship supplement - see calculation of residential care subsidy, specifically the other supplements (clause 44-30)
• Add any other amount agreed between the care recipient and the approved provider in accordance with the User Rights Principles
• If the place in respect of which the residential care is provided has extra service status, Addthe extra service amount - which is the extra service fee approved under clause 35-1 (see Part 2.5- Extra Service Places above) plus 25% of that fee (clause 58-5).

Where a recipient is absent from his or her residential care service, is not attending a hospital for treatment and has exceeded the limit of 52 days (during which a residential care subsidy is payable notwithstanding the absence), the recipient can agree to pay a fee to the approved provider to reserve the recipient's place in the service.The amount of that fee is limited by clause 58-6 to the sum of:

• the amount that would have been payable if the recipient had been provided with care (as calculated above), and
• the amount that would have been the residential care subsidy under clause 44-2 (see above) had the recipient been provided with care.

A care recipient cannot be required to pay resident fees more than one month in advance and any fees paid in advance must be refunded upon the death or departure of the recipient from the service.

Community Care Fees (clauses 60-1 and 60-2)

The maximum daily amount of community care fees are specified in or determined in accordance with the User Rights Principles.The User Rights Principles may specify different levels of fees having regard to:

• the recipient's income
• the nature and level of the care and service to which the fee relates
• reduced levels of community care fees for a recipient who would suffer financial hardship if required to pay the full amount.

A care recipient cannot be required to pay fees more than one month in advance and any fees paid in advance must be refunded upon the death of the recipient or the cessation of care.

Part 4.3 - Accountability

Clause 63-1 sets out a list of responsibilities of approved providers.None of the responsibilities listed are 'new', i.e. they all appear as obligations elsewhere in the Bill.The significance of them appearing as a collective list is that clause 65-1 (see below) operates so that non-compliance with any of the listed responsibilities can attract a sanction under clause 66-1.

Part 4.4 - Consequences of non-compliance

Clause 65-1 provides that the Secretary may impose a sanction on an approved provider who fails to comply with one or more of its responsibilities under Part 4.1 (Quality of care), Part 4.2 (User rights) or Part 4.3 (Accountability).

In deciding whether it is appropriate to impose a sanction, the Secretary must consider:

The types of sanctions that may be imposed include (clause 66-1):

• revoking or suspending the approved provider's approval
• restricting the approved provider's approval to aged care services being conducted at the time the sanction is imposed
• restricting the approved provider's approval as a provider of aged care services to care recipients to whom care is being provided at the time the sanction is imposed
• revoking or suspending the allocation of some or all of the places allocated to the approved provider or varying the conditions attaching to the approved provider's places
• prohibiting the further allocation of places
• revoking, suspending or prohibiting the grant of extra service status
• revoking or suspending the certification of a residential care service
• prohibiting the charging of accommodation bonds
• requiring the repayment of some or all of the grants paid under Chapter 5 (below) in respect of which the approved provider has not complied with its responsibilities.

The Secretary is obliged to follow certain steps before imposing a sanction.These are set out in clause 67-1.

Chapter 5 - Grants

There are 6 specific types of grants;

• residential care grants
• community care grants
• assessment grants
• accreditation grants
• advocacy grants
• community visitors grants.

There is also provision for the Secretary to make other grants, which in his or her opinion, further the objects of the Act.

Part 5.1 - Residential Care Grants

The Secretary may invite applications for the allocation of residential care grants.Application for grants can only be made in response to such an invitation (clauses 71-1 and 71-2).

The allocation must:

• meet the criteria for allocations.These are (clause 72-2):
  • a majority of care recipients who receive, or who will receive, the care to which the grant relates must be either concessional residents (i.e. receiving an income support payment, not a homeowner for 2 years or owns a home occupied by long term carer eligible for income support, partner or dependent, and assets worth less than 2.5 times the basic age pension) or assisted residents (i.e. concessional resident but assets can be up to 4 times the basic age pension)
  • a majority of care recipients who receive, or who will receive, that care must be people with special needs or people of a kind specified in the Residential Care Grant Principles
  • such other criteria as specified in the Residential Care Grant Principles.
• be the one that best meets the needs of people with special needs.In deciding this, the Secretary must consider the following (clause 72-3):
  • the proportion of care recipients, to whom the care to which the grant would relate, who are concessional residents or assisted residents
  • whether the service to which the grant would relate is located in a rural or remote area
  • the availability of other aged care services in the area
  • the need for the grant in order to assist in establishing or upgrading the service, particularly the building or upgrading of premises
  • whether there is an urgent need for the grant because of unforeseen circumstances.

The grant is not payable until the approved provider enters into an agreement with the Commonwealth under which the approved provider agrees to comply with the conditions to which the grant is subject (clause 73-1).Clause 73-2 sets out a number of examples of the types of conditions to which the grant may be subject.

The amount of the grant is calculated in accordance with the Residential Care Grant Principles.

Part 5.2 - Community Care Grants

Community care grants may be allocated for:

• establishing a new community care service
• extending an existing community care service to cover additional areas.

The criteria for allocations which must be met are:

• whether there is a need for the community care service
• whether the grant would assist people in rural or remote areas or Aboriginal and Torres Strait Islander communities
• such other criteria as are specified in the Community Care Grant Principles.

The grant is not payable unless the approved provider enters into an agreement with the Commonwealth under which the approved provider agrees to comply with the conditions to which the grant is subject (clause 77-1).Clause 77-2 sets out examples of the types of conditions to which a grant may be subject.

The amount of the community care grant is the amount specified in, or worked out in accordance with, the Community Care Grant Principles (clause 78-1).The Principles limit grants to $50,000 per grant and set out a number of matters for the Secretary to consider in determining the amount of the grant.

Part 5.3 - Assessment Grants

The Minister may make a grant to a State, Territory or another body for the purpose of (clause 79-1):

• assessment of the care needs of people seeking approval as a recipient of residential care, community care or flexible care
• helping people to obtain the types of care and service that best meet their needs
• monitoring an evaluating the effectiveness of the assessment service that are provided
• conducting research relevant to the care needs of people and the approval of people as recipients of care.

Such a grant is an assessment grant.

Part 5.4 - Accreditation Grants

The Secretary may enter a written agreement with a body corporate under which a grant is made for the following purposes (clause 80-1):

• accreditation of residential care services in accordance with the Accreditation Grant Principles
• any other purposes specified in the Accreditation Grant Principles, including the performance of any of the functions of the Secretary under this Act that are specified in the Accreditation Grant Principles.

Such a grant is an accreditation grant.

Part 5.5 - Advocacy Grants

The Secretary may enter a written agreement with a body corporate under which a grant is made for the following purposes (clause 81-1):

• encouraging understanding of and knowledge about the rights of recipients and potential recipients of aged care services on the part of people who are, or may become:
  • care recipients
  • people caring for care recipients, or
• people who provide aged care services
• enabling care recipients to exercise those rights
• providing free, independent and confidential advocacy services in relation to the rights of those people who are care recipients or representatives of care recipients.

Such a grant is an advocacy grant.

Part 5.6 - Community Visitors Grants

The Secretary may enter a written agreement with a body corporate under which a grant is made for the following purposes (clause 82-1):

• facilitating frequent and regular contact with the community by care recipients to whom residential care is provided
• helping care recipients to maintain independence through contract with people in the community
• assisting such care recipients from particular linguistic or cultural backgrounds to maintain contact with people from similar backgrounds.

Such a grant is a community visitors grant.

Part 5.7 - Other Grants

The Secretary may enter into an agreement with a body corporate for the payment of a grant to that body for the purposes specified in the agreement (clause 83-1).

Chapter 6 - Administration

Part 6.1 - Reconsideration and review of decisions

This Part sets out a consolidated list of the 61 reviewable decisions which can be made under the Bill.

The Secretary may reconsider a reviewable decision of his or her own initiative (i.e. without being requested to do so) if he or she is satisfied that there is sufficient reason to do so (clause 85-4).

A person whose interests are affected by a reviewable decision is entitled to request the Secretary to reconsider the decision (clause 85-5).The Secretary must reconsider the decision and either confirm, vary or set the decision aside and substitute a new decision (clause 85-5).

An application may be made to the Administrative Appeals Tribunal for the review of a reviewable decision that has been confirmed, varied or set aside under clause 85-4 or 85-5.

Part 6.2 - Protection of information

This Part prohibits the disclosure of personal information and information relating to the affairs of an approved provider in certain circumstances (clause 86-2).It also contains a number of exceptions, being circumstances in which the Secretary may disclose that information (clause 86-3).

Part 6.3 - Record keeping

Approved providers must keep records that enable claims for payments of subsidy to be properly verified and proper assessments to be made of whether the approved provider has complied with its responsibilities.Those records must be kept for 3 years after the 30 June of the year in which they were made (clause 88-1).

Part 6.4 - Powers of officers

This Part sets out the powers of authorised officers to monitor compliance with the Act.Certain powers can only be exercised with the consent of the occupier, whilst others can be exercised without consent where a warrant is obtained.

Chapter 7 - Miscellaneous

Clause 96-1 empowers the Minister to make the 23 sets of Principles contemplated by the Bill.Those principles are disallowable instruments for the purposes of the Acts Interpretation Act 1901.

Concluding Comments

Notwithstanding its length, the Bill provides a bare outline of the intended scheme for aged care. The 23 sets of principles will contain the details of the scheme.

One writer has sought to identify some possible concerns as to the constitutionality of some aspects of the Bill.In particular the possibility of:

• the appropriation of income and retentions from accommodation bonds being regarded as a tax
• the appropriation of income and retentions from accommodation bonds being regarded as a acquisition of property otherwise than on just terms in contravention of section 51(xxxi)
• discrimination occurring between states or parts of states in contravention of sections 51(ii) or 99 of the Constitution(3).

Those sponsoring the Bill, however, appear to have taken the view that none of the proposed fees or charges is a compulsory exaction by the Commonwealth.Similarly, it is possible to argue that the issue of discrimination does not arise because the Bill itself does not discriminate between States or parts of States.Any discriminatory treatment is endemic in the demographics of the aged population(4).

The Senate Community Affairs Committee is presently inquiring into aged care funding.Public hearings were held on 17 and 18 April 1997 and the Committee's report is due on 15 May 1997.A few of the issues raised at the hearing are as follows:

• it was expressed that there should be greater prescription of the number of nursing staff and nursing hours given that acquittal of funding is no longer required ('acquittal' refers to a nursing home accounting for the expenditure of a subsidy to ensure that all of the subsidy is spent on providing care)
• there is no obligation on approved providers to apply income or retentions from accommodation bonds to capital renovations
• Community Services Australia (CSA) - a division of the Uniting Church (Rev. Harry Herbert) emphasised the significance of the percentage of concessional residents which a nursing home will be required to take.If this level is set too low, concessional residents could find themselves waiting longer for a place than a resident who could afford to pay an accommodation bond and could also find themselves being forced to move a considerable distance from their community as a result of an unequal distribution of available places.
• CSA speculated that a likely accommodation bond would be about $88,000 to be sufficient to generate income to replace current funding.
• Concern was expressed by the Council of the Ageing, that the minimum level of assets after paying an accommodation bond, i.e. about $22,500, was too low.

Endnotes

1. Accountability Principle

   Accreditation Grant Principle

   Advocacy Grant Principle

   Allocation Principle

   Approval of Care Recipients Principle

   Approved Provider Principle

   Assessment Grant Principle

   Certification Principle

   Classification Principle

   Committee Principle

   Community Care Grant Principle

   Community Care Subsidy Principle

   Community Visitors Grant Principle

   Extra Service Principle

   Flexible Care Subsidy Principle

   Information Principle

   Other Grants Principle

   Quality of Care Principle

   Records Principle

   Residential Care Grant Principle

   Residential Care Subsidy Principle

   Sanctions Principle

   User Rights Principles

2. Enteral feeding is a method of feeding the appropriate formula to a patient by means of a tube passed into the stomach from the nasal passage. It is used for patients who for some reason are unwilling or unable to masticate or swallow food.
3. Pulle, B. Proposed Changes to Financing Aged Care - Some Tax and Constitutional Issues, Current Issues Brief No.28 of 1996 97.
4. Western Australia v. The Commonwealth (Native Title Act Case) (1994 95)183 CLR 373 at 478

Contact Officer and Copyright Details

Lee Jones
5 May 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 8 May 1997


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