Aged
Care Amendment Bill 2004
Date Introduced:
2 June 2004
House:
House of Representatives
Portfolio:
Health and Ageing
Commencement:
1 July 2004. If the Bill is not enacted until after 1 July
2004, it will still operate
This Bill seeks to make two amendments
to the Aged Care Act 1997, which regulates residential aged care
in Australia. The first amendment seeks to simplify the aged care assessment
process and the second seeks to impose ongoing accommodation charges
for certain residents in high care residential facilities (formerly
called nursing homes).
The amendments arise out of recommendations from the
recently released Review of Pricing Arrangements in Residential Aged
Care by W.P. Hogan(1) (the Hogan Report). This comprehensive
report contained many recommendations, including the call for additional
funding for residential aged care. Many of the recommendations were
addressed in the context of the 2004-05 Budget.
Both of the amendments in the Bill are essentially
minor but the second one, relating to accommodation charges, will have
an adverse financial impact on certain elderly people who enter high
care residential facilities on or after 1 July 2004.
Before anyone is eligible to enter a Commonwealth funded
residential aged care facility they must be assessed by an Aged Care
Assessment Team (ACAT) as needing either high level (nursing home) or
low level (hostel) care. Residents are classified into 1 of 8 categories
on the so called Residential Classification Scale (RCS) – with categories
1 to 4 being classed as high care and categories 5 to 8 being classed
as low care. The level of Commonwealth recurrent funding that the residential
aged care facility receives largely depends on the RCS rating for each
resident. The higher the RCS classification, the greater the level of
funding from the Commonwealth.
Assessment of residents by an ACAT team is given before
entry into a facility and the assessment remains effective for 12 months
or until the resident leaves the facility. Under current arrangements,
an ACAT must reassess a resident before they can move from low level
care to high level care in the same facility.
The Hogan Report argued that there would be ‘greater
clarity and better delineation of the relative responsibilities’ if
ACATs ‘focused primarily on initial entry to care’ and if the relevant
Departmental and accreditation systems concentrated on monitoring the
appropriateness or otherwise of any change in classification from low
to high care.(2) The Department operates a Residential Classification
review program which monitors resident classifications. Other measures,
such as auditing, would also be relevant to monitoring changes in classification.
The proposed amendment in this Bill would see, from
1 July 2004, the removal of the requirement for an ACAT assessment before
a resident can move from low level care to high level care in the same
facility.
Residents in residential aged care facilities can be
asked to pay two sets of fees, one to help cover ongoing costs (daily
care fees) and one to help cover capital costs (accommodation payments).
Accommodation payments are called accommodation bonds (when applied
to low level or hostel care) or accommodation charges (when applied
to high level or nursing home care). These payments are designed to
help ensure that residential aged care facilities have enough funding
to meet their various capital needs including expansions, upgrading
and maintenance.
The second amendment in this Bill relates to accommodation
charges that are paid by certain residents in high level care. Residents
who do not have to pay an accommodation charge include - those with
assets worth less than $29,000; users of respite care; those who were
living in a nursing home prior to 30 September 1997 and those receiving
care on an extra service basis. All other residents must pay an accommodation
charge, the amount of which varies according to the value of assets
that they own. People with assets between $29,000 and $54,386 pay an
accommodation charge that is based on a sliding scale, according to
the margin of assets above $29,000. At present, the maximum accommodation
charge payable is $13.91 per day (or about $5,080 a year) and applies
to residents who have assets of $54,386 or more. However, as announced
in the 2004-05 Budget the maximum accommodation charge payable is to
be increased to $16.25 per day for all new residents entering high level
care from 1 July 2004. This change does not take effect as a result
of this Bill.
Also included under the current arrangements is the
provision that the accommodation charge is limited to a 5 year period.
The second amendment in this Bill removes the 5 year limit so that new
residents entering high level care on or after 1 July 2004 will pay
the accommodation charge for the whole time they are in the aged care
facility. This change was also recommended in the Hogan Report.
It should be noted that, apart from the accommodation
charge changes mentioned above, there have been other funding changes
as a result of the recent Federal Budget. The residential aged care
industry has been arguing for many years that they do not receive enough
capital funding, from either the Commonwealth or via resident contributions,
to meet their needs. In recognition of this the Government, in the 2004-05
Budget, has allocated additional capital funding to the sector, including
$438.6million for increases in the level of the concessional resident
supplement and the respite supplement and a one-off payment to aged
care providers of $3,500 per resident, totalling $513.3 million.
The effect of item 1 of Schedule 1 is to remove
the requirement for an ACAT assessment where an approved provider has
notified the Secretary that a resident’s care needs have increased.
The effect of item 3 of Schedule 1 is to remove
those provisions that impose a five-year limit on the requirement to
pay an accommodation charge.
Item 4 of Schedule 1 provides that the removal
of the five-year limit on the requirement to pay an accommodation charge
will only apply to persons who first enter residential care on or after
1 July 2004.
A possible concern with the removal of the requirement
for a further ACAT assessment before a resident can move from low level
care to high level care in the same facility is the fact that some aged
care providers may inappropriately classify residents into more highly
subsidised RCS classifications and thereby receive additional funding
from the Commonwealth. However, in the Explanatory Memorandum it is
contended that this ‘risk’ will be managed by additional resourcing
of the Residential Classification review program which will ‘ensure
that the classifications based on those appraisals are correct’.(3)
If passed, the second amendment will mean that certain
long term residents who enter aged care facilities after 1 July 2004
will have to pay substantially more for their care. For those residents
who stay more than 5 years and who pay the maximum daily accommodation
charge ($16.25 from 1 July 2004) it will mean an additional impost of
$5,915 ($16.25 x 7 x 52) per year after the first 5 years of care. It
is unclear just how many potential residents may be affected by this
change but the Hogan Report did note a recent tendency for residents
to stay longer in residential aged care facilities. The Report stated
that the proportion of residents staying more than 5 years rose from
13.6% in 1999 to 14.6% in 2002.(4)
Increased accommodation charges resulting from this
amendment will not begin to flow to residential aged care facilities
until 1 July 2009. There will be no direct impact from this amendment
on the funding provided by the Commonwealth to the aged care sector.
If this Bill is not enacted until after 1 July 2004,
it will have retrospective effect from that date until the date of Royal
Assent.
-
WP Hogan Review of Residential Pricing Arrangements in Residential
Aged Care Report (presented to the Hon Julie Bishop, Minister
for Ageing, 5 April 2004).
http://www.health.gov.au/investinginagedcare/report/index.htm
(site visited 9 June 2004).
-
ibid. p. 173.
-
Explanatory Memorandum Aged Care Amendment Bill 2004 p. 2.
-
op.cit. n. 1 p. 156.
This paper has been prepared for general distribution to Senators and
Members of the Australian Parliament. While great care is taken to ensure
that the paper is accurate and balanced, the paper is written using information
publicly available at the time of production. The views expressed are
those of the author and should not be attributed to the Information and
Research Services (IRS). Advice on legislation or legal policy issues
contained in this paper is provided for use in parliamentary debate and
for related parliamentary purposes. This paper is not professional legal
opinion. Readers are reminded that the paper is not an official parliamentary
or Australian government document.
Published by the Parliamentary Library, 2004.
