Bills Digest No. 135 2004–05
Aged Care Amendment (Transition Care and Assets Testing)
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
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Contact Officer & Copyright Details
Amendment (Transition Care and Assets Testing) Bill
House: House of Representatives
Portfolio: Health and Ageing
The measures commence on
the date of Royal Assent except for Schedule 2 which commences
on 1 July 2005 or on the date of Royal assent, whichever is the
The aim of the amendments to the
Aged Care Act 1997 contained in this Bill are twofold. The
first set of amendments are designed to allow for more flexible
care arrangements for older Australians who have been in hospital
and who may be more appropriately placed in transition care
arrangements (which could include, for example, intensive
rehabilitation) before returning to a home environment or to a
residential care environment. The second set of amendments will
see, from 1 July 2005, the transfer of assets testing of residents
or prospective residents in residential aged care to Centrelink,
and for veterans, to the Department of Veterans Affairs. Currently,
assets testing of residents or prospective residents is done by
residential care providers.
Both these amendments arise from recommendations contained in
the recent Review of Pricing Arrangements in Residential Aged
Care: the so called Hogan Report or Hogan
The Commonwealth provides a range of support to
older Australians in terms of their residential and community care
Residential care includes the provision of high care beds
(formerly called nursing homes) and low care beds (formerly called
hostels). Substantial Commonwealth funding is provided to approved
residential care providers to help them care for older Australians
in these residential settings. In 2003-04, 10.4% of people aged
over 70 years of age (equating to 189,929 older Australians) were
in permanent residential care(2).
The two main types of community care are Community Aged Care
Packages (CACPs) and the Home and Community Care Program (HACC).
The former is solely funded by the Commonwealth and the latter is a
joint Commonwealth-State funded program. CACPs are designed to keep
older people who have been designated for a low care residential
place in their own home or family setting for as long as possible.
This is done by bringing a range of support services to them (for
example, nursing support, meals, domestic help) thereby enabling
them to stay in their own homes. The Home and Community Care
Program (HACC) also provides similar services to a number of older
Australians, but unlike CACPs which are specifically designed to
mesh in with the residential care system, the HACC Program is a
much broader program which helps a wide range of people in need,
most notably people with some form of disability.
In 2003-04, almost 40,000 people received care via a Community
Aged Care Package(3) and approximately 707,000 people
received some form of support from the Home and Community Care
As well as residential and community care there is a category of
care for older people that aims to provide maximum flexibility and
offer additional options for care that may not exist in the
mainstream residential system. The three main types of flexible
care are Extended Aged Care at Home (EACH) packages, Multipurpose
Service places (MPSs) and Innovative Care Places.
The EACH program is similar to the CACP program but in this case
it provides in-home services to people who would otherwise be in a
high care place in a residential care facility. As at June 2004,
there were 928 EACH packages across Australia(5). The
MPSs program is a joint Commonwealth-State initiative that delivers
a mix of aged care, health and community services in small remote
communities. Often these communities are not big enough to provide
separate stand alone services in these areas and MPSs enable them
to combine services in the one location. In June 2004 there were 88
MPSs across Australia(6).
Innovative Care Services provide a range of flexible and
alternative care options essentially by trialling various care
options through time limited pilot programs. The Transition Care
Program which is being established by the first set of amendments
in this Bill, comes following successful pilot projects covering
the care of older Australians who have left hospital but who are
not yet ready to go home.
In effect, the new Transition Care Program builds on what has
been happening with some of the trials being undertaken in
Innovation Care Services. This Bill will allow for the provision of
2000 new transition care places over three years for people who
have been in hospital and who are seeking more time and support
before returning to the community or to residential aged care. The
aim of the new places is to provide more appropriate care settings
and better integrate hospital and aged care services. Additional
and better rehabilitation and therapeutic services should be
available to older people who access these new transition
Currently, a number of older people face the risk of needing a
higher level of care when they leave hospital if they are not able
to access appropriate rehabilitation services.
The Bill ensures that leave arrangements are available to
existing residents in aged care facilities so that they can have
access to transition care following a stay in hospital. It will
also mean that such residents will be able keep their place in the
care system and, for example, go back to their bed in a residential
facility following their time in transition care. According to the
The Transition Care Program will assist people to
return to their homes or to lower levels of residential aged care
by providing a mixture of time-limited aged care supports and
therapeutic care, such as rehabilitation.
The need for more flexible care arrangements in aged care was
highlighted in the Hogan Review on aspects of the aged care system.
In the main, the current planning arrangements for
the release of new aged care places are not able to respond as
flexibly as is desirable for the development of new care approaches
or to encourage innovation in service delivery. This has been
addressed to an extent by the introduction of the Innovative Pool
of flexible care places, which has trialled services linked to the
acute care-aged care interface, the disability-aged care interface
and dementia care. These opportunities should be
The second set of amendments contained in the Bill were also
recommended in the Hogan Review. Currently, the assets testing of
people in residential aged care is carried out by the aged care
providers themselves. Providers of residential aged care need to do
this testing to ascertain whether they can claim a concessional
resident supplement or an assisted resident supplement from the
Commonwealth. These supplements are based on the assets information
provided by the resident prior to entry into residential aged
The Hogan Review considered that Centrelink was in a better
position to carry out assets testing of residents in aged care.
According to the Review
Assessment of residents or prospective residents
income and assets should be the responsibility of the Australian
Government and carried out by Centrelink and not the aged care
provider, preferably prior to entry into care(8)
The Bill allows assets testing to be done both prior and after
entry into residential care. By having Centrelink (and in the case
of veterans, the Department of Veterans Affairs) undertake the
assets testing of all new residents a significant administrative
burden should be taken away from the providers of residential aged
care. The new testing arrangements are due to commence on 1 July
2005 and existing residents in aged care facilities are not
The 2004-05 Commonwealth Budget provided a total of $19.7
million over four years to enable the transfer of assets testing to
Centrelink and the Department of Veterans Affairs.
The Bill also provides for an extension to the current seven day
period after a person enters an aged care facility, in which they
must enter into an accommodation bond (for low level or hostel
care) or accommodation charge (high level or nursing home care).
Residents, according to this Bill, would now have twenty one days
to enter into such an agreement.
Item 1 of Schedule 1 creates a new category of
leave from residential care for those receiving flexible care.
Item 3 of Schedule 1 provides for the reduction
of residential care subsidy when a care recipient is on flexible
care leave for at least 30 days.
Item 7 of Schedule 2 adds new sections
44-8AA and 44-8AB to the Aged Care Act 1997. The
new section allows the Secretary of the Department of Health and
Ageing to make determinations of a person s eligibility for
concessional or assisted resident status after the value of their
assets has been determined.
Items 24 to 26 of Schedule 2 allow the
Secretary to delegate to the CEO of Centrelink or to the Secretary
of the Department of Veterans Affairs the power to perform the
functions given in new section 44-8AA and
W.P. Hogan, Review of Pricing Arrangements in Residential
Aged Care: Final Report, 2004.
Department of Health and Ageing, 2003-04 Report on
the Operation of the Aged Care Act 1997, p. 5.
Ibid., p. 5.
Productivity Commission, Report on Government Services
2005 Aged Care Services p. 12.18.
Department of Health and Ageing, 2003-04 Report on the
Operation of the Aged Care Act 1997, p. 15.
Ibid., p. 15.
W.P. Hogan, Review of Pricing Arrangements in Residential
Aged Care: Final Report, 2004, p. 277.
Ibid., p. 288.
Greg McIntosh and Dale Daniels
16 March 2005
Bills Digest Service
Information and Research Services
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