Bills Digest No. 183 2004–05
Aged Care Amendment (Extra Service) Bill 2005
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 & Copyright Details
Passage History
Aged Care Amendment
(Extra Service) Bill 2005
Date
Introduced: 26 May
2005
House: Representatives
Portfolio: Ageing
Commencement:
1 July 2005
This Bill proposes to amend the
Aged Care Act 1997 to remove the requirement for providers
of aged care extra services (that is, hotel-type services) to
re-apply for extra service status every five years. The amendment
is designed to enable expansion of the extra service segment of the
aged care sector by:
-
removing the red tape associated with the extra service
reapplication process, and
-
providing greater certainty to extra service providers,
particularly in relation to their capital-raising requirements.
The Bill gives legislative effect to a measure announced in the
2005-06 Budget.
Residential care services can be broadly defined as
accommodation and support for people who can no longer live at home
.(1)
Residential aged care is the second most commonly used aged care
service after home and community-based services (provided under the
Home and Community Care program).(2) According to the
Australian Institute of Health and Welfare, in 2002, 52 out of
every 1000 people aged 65 and over (or 5 per cent of this age
group) were permanent aged care residents.(3)
There are two main levels of residential care provided in
Australia: low level (hostel) services and high level (nursing
home) services. Providers of high level care are expected to
provide ongoing 24 hour nursing care, as well as meals, laundry,
cleaning and personal care. Residents in low level care services
are essentially independent, though are able to access help with
meals and laundry, and personal care like dressing and
bathing.(4)
Over time, the care needs of permanent residents have gradually
shifted towards higher levels of care.(5)
The Aged Care Act 1997 (the
Act) allows the Department of Health and Ageing to approve 'extra
service' status for a residential aged care home, or a distinct
part of a home.
Under extra service care, for an
additional fee, residents are provided with what can be described
as hotel type services that is, a significantly higher standard of
accommodation, food and services than is provided in non-extra
service facilities. According to the Department of Health and
Ageing, extra service homes enable residents in aged care services
to enjoy a superior level of comfort and choice , through:
-
a physical environment that offers high quality personal
accommodation and furnishings, and enhanced choices of recreational
and communal spaces,
-
food and meal services that offer a wide range of choice and
enhanced enjoyment of the dining experience,
-
variety and choice in lifestyle, recreational and personal
services that are responsive to the changing interests and needs of
residents,
-
a culture of service.(6)
The Minister for Ageing, Julie
Bishop, further explains that these additional services may include
an a-la-carte menu at every meal, cable or satellite television
connection in recreational areas or residents rooms, hair dressing
salons and beauty treatments .(7)
In order for a home to be approved
for extra service status by the Department of Health and Ageing, a
provider must meet a set of benchmarks which set out the
'significantly higher' standards of accommodation, food and
services expected of eligible extra service providers. Details of
these benchmarks can be accessed from the Department of Health and
Ageing
website. Under existing arrangements, these benchmarks apply
both to new applications and applications for the renewal of extra
service status.
According to the Department of Health and Ageing, residents who
pay for extra service do not receive a higher level of
care than other aged care residents, since under the Act
providers are required to meet designated care standards for all
residents .(8) Rather, they are provided with an extra
level of service of the kind described above. Further,
according to the Minister, the ability of those who cannot afford
extra services or choose not to purchase them to access aged care
places will not be affected by this Bill.(9) This is
because the government intends to retain the current arrangements
under which no more than 15 per cent of total aged care places in
each state or territory may be extra service status.
Residential aged care is funded mainly
through a combination of federal government subsidies and user
charges.
The amount a resident has to pay will differ depending upon two
key factors:
There are also several different types of fees charged to
users.
Daily care fees are charged as a contribution to the daily
living costs of a resident. These include a basic daily care fee
for all residents plus an additional income-tested amount for
residents who have private income over a certain amount. Residents
of aged care facilities may also be charged an accommodation
payment (either an accommodation bond or an accommodation charge
depending upon whether they are high care or low care residents)
depending on the extent of their assets.
Service providers are required to keep a
number of places for people who cannot afford to pay an
accommodation payment.(10)
As noted above,
residents are required to pay an additional fee if they wish to
have access to extra services. They may also be required to pay a
bond for either high care or low care accommodation, depending on
the extent of their assets.
Federal
government funding for residential aged care is mainly in the form
of care subsidies and supplements. The Residential Care Subsidy
(RCS) is paid directly to aged care providers and varies according
to the care needs of the resident.
Currently, extra service places account for only about four per
cent of all residential aged care places.(11) However,
in recent years there has been an increasing move towards the extra
service sector among private operators seeking a greater return on
investment. For example, according to one recent report, around 20
per cent of aged care beds provided by emerging corporate aged care
providers such as DCA and Regis are classed as extra
service.(12) Further, the managing director of private
healthcare provider Ramsay Health has stated that his company s
interest in the aged care sector is limited to the more profitable
extra services market:
If you re in the part of the market where you rely
on government funds, it is a very small margin business. That is
not where we want to go. The area we want is where the user
pays.(13)
As such, the extra services area is likely to feature
prominently in what some observers suggest is the inevitable move
towards increased corporate involvement in the aged care sector in
coming years.(14)
The Minister for Ageing, Julie Bishop, has argued that this Bill
will remove a significant impediment to expansion of the Extra
Service program in aged care by removing some of the red tape
involved .(15) According to the Minister:
Aged care providers have long felt that the high
level of Government regulation of the Extra Service Program has
stymied its expansion. In particular, they have singled out the
requirement that they have to reapply for Extra Service status
every five years notwithstanding that during those five years they
may have had no complaints and no problems with compliance. The
process of reapplying for Extra Service status is not only
time-consuming and expensive, because it involves looking at each
and every extra service which is offered by the particular home,
but prevents long term planning in relation to the capital needs of
the home and may act as a deterrent to financiers and other
investors.(16)
The government therefore views the measure as a way of
facilitating the expansion of the extra service sector by removing
barriers to future investment by current and potential providers of
extra service care.
The government has further argued that the expansion of the
extra service sector will be beneficial for two reasons.
First, the government suggests that the measure is part of its
strong commitment to ensuring a robust and viable aged care sector
for the future .(17) As such, the government makes a
specific link between the continuing need for capital funding
within the residential aged care sector and what it argues is the
potential for capital-raising as a result of this Bill:
Considerable investment in infrastructure is
needed over the next decade to ensure the supply and quality of
aged care homes grows in line with the increase in the number of
older Australians who need care. The Australian Government
recognises that over the next decade there will be a continuing
need for capital funding so that existing homes can be well
maintained, new homes built and existing facilities refurbished
Aged care providers have argued that a lack of access to capital
has been an impediment to the expansion of the Extra Service
program. As well as building new homes, capital can be used to
upgrade existing aged care homes to better provide quality
buildings, furniture, fittings and equipment that enhance the
comfort and amenity of residents (18)
Second, the government argues that the measure will increase the
opportunity for consumer choice in residential aged care
.(19)
The Bill has not attracted a significant degree of commentary
from interest groups in the aged care sector. It appears that the
only interest group to declare a position on the Bill is the body
representing aged care providers, the Aged Care Association
Australia (ACAA). The ACAA has been calling for the removal of the
requirement to re-apply for extra service status for some time and
so was supportive of the measure when it was announced in the
budget.(20) However, it is noteworthy that both the ACAA
and Catholic Health Australia (CHA) (representing a large number of
providers of aged care services) were both critical of what they
regard as the missed opportunity of this budget in delivering more
fundamental structural reforms and directly investing in
capital.(21)
The Labor Party has indicated that it regards the Bill as
non-controversial, particularly as they believe that it will not
affect disadvantaged older Australians, because the current maximum
of 15 per cent of extra service places in each state and territory
will remain .(22)
The Australian Democrats, the Australian Greens, and independent
Members and Senators do not appear to have announced positions on
the measure proposed by the Bill.
Item 4 proposes to repeal the section providing
for extra service status to expire on the expiry date (section
33-2). This means that, following initial approval of a provider,
extra service will continue unless it lapses under section 33-3, is
revoked or suspended under section 33-4 or Part 4.4, or if an event
specified in the extra service principles occurs.
Items 2, 3 and
5 propose to repeal parts of the Act providing for
the continuation of extra service status in limited circumstances
after it has expired (section 31-2), the reference to extra service
expiring under section 33-2 (paragraph 33-1(a)) and the renewal of
extra service status (Division 34), respectively. Each of these is
to be made redundant by Item 4.
Items 1, 6, and 7 propose consequential
amendments to remove references to Division 34 (made redundant by
Item 5).
Item 8 proposes to replace paragraph 63-1(1)(i)
with a paragraph that does not refer to the renewal of extra
service status.
Item 9 proposes a consequential amendment that
repeals an item related to the review of a decision to extend extra
service status under subsection 31-2(1) (Item 32 of the table in
Section 85-1). Section 31-2 is to be repealed under Item
2.
Item 10 removes the references to the expiry
date in the Dictionary in Schedule 1 of the Act (made redundant by
Item 4).
Item 11 proposes to protect the rights of
certain aged care residents through transitional arrangements to
ensure that if extra service had been continued under section 31-2,
it will not cease due to the repeal of section 31-2 under
Item 2.
Concluding Comments
As discussed above, this Bill can be considered relatively
non-controversial in the sense that it has attracted support from
the peak aged care provider body, the ACAA, and does not appear to
have attracted criticism from other stakeholder groups or
non-government parties. The only notable criticism has come from
the ACAA and CHA, which have argued that the government has not
taken its reforms of the aged care sector far enough.
-
Australian Institute of Health and Welfare (AIHW), Australia
s Welfare 2003, AIHW, Canberra, p. 307.
-
ibid., p. 325.
-
ibid.
-
Department of Health and Ageing website:
http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ageing-help-glossar2.htm#h,
accessed 1 June 2005.
-
AIHW, op. cit., p. 325.
-
Department of Health and Ageing website;
http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ageing-rescare-ess-index.htm,
accessed 1 June 2005.
-
The Hon. Julie Bishop,
Ageing Fact Sheet 4 Enhancing quality care for older
Australians, Ageing Budget 2005-06, Department of Health
and Ageing, 2005.
-
Department of Health and Ageing website;
http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ageing-rescare-ess-index.htm,
accessed 1 June 2005.
-
[1] Hon. Julie Bishop, Aged Care Amendment (Extra Service) Bill
2005 : Second Reading Speech, House of Representatives, Debates, 26
May 2005 .
-
Department of Health and Ageing website;
http://www.health.gov.au/internet/wcms/publishing.nsf/Content/ageing-rescare-costs.htm,
accessed 1 June 2005.
-
The Hon. Julie Bishop, op. cit.
-
Beth Quinlivan, Grey expectations , Business Review Weekly, 1
April, 2005, p. 45 6.
-
ibid., p. 46.
-
See for example, David Vaux of DCA Group, cited in ibid., p.
47.
-
The Hon. Julie Bishop, Aged Care Amendment (Extra Service) Bill
2005 : Second Reading Speech, op. cit.
-
ibid.
-
ibid.
-
ibid.
-
ibid.
-
Aged Care Association Australia, Aged care budget opportunity
lost , media release, 10 May 2005.
-
Catholic Health Australia, Missed opportunities for aged care ,
media release, 10 May 2005.
-
Julia Gillard, Aged Care Amendment (Extra Service) Bill 2005 :
Second Reading Speech, House of Representatives, Debates, 2 June
2005 .
Luke Buckmaster
14 June 2005
Bills Digest Service
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ISSN 1328-8091
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