Aged Care Amendment (Residential Care) Bill 2007
THE INQUIRY
1.1
The Aged Care Amendment (Residential Care) Bill 2007 (the Bill) was
introduced into the House of Representatives on 21 March 2007. On 29 March 2007, the Senate, on the recommendation of the Selection of Bills
Committee (Report No. 5 of 2007), referred the provisions of the Bill to the Community
Affairs Committee (the Committee) for report on 17 May 2007.
1.2
The Committee received 6 submissions relating to the Bill and these are
listed at Appendix 1. The Committee considered the Bill at a public hearing in Canberra
on 1 May 2007. Details of the public hearing are referred to in
Appendix 2. The submissions and Hansard transcript of evidence may be
accessed through the Committee’s website at https://www.aph.gov.au/senate_ca .
THE BILL
1.3
The purpose of the Bill is to amend the Aged Care Act 1997 (the
Act) to introduce a new arrangement for allocating subsidy in residential aged
care. Schedule 1 to the Bill amends the Act to support proposed amendments
to the Classification Principles 1997 (the Principles) to replace the
Resident Classification Scale (RCS) with the Aged Care Funding Instrument
(ACFI) as the means for allocating subsidy to providers of residential aged
care.
1.4
The Bill also proposes the following amendments:
- change the way in which classifications expire to avoid
unnecessary classifications;
- allow the Secretary of the Department of Health and Ageing (the
Secretary) to define the type and form of records that the approved provider
must keep in order to support the classification made for a resident;
- allow an approved provider to choose to accept a resident's
current classification, when a resident moves from one aged home to another,
rather than being required to submit a new appraisal;
- remove a provision allowing more than one aged care home to be
paid a subsidy for the same resident when a person is on High Dependency Care
Leave; and
- allow the Secretary to stay the suspension of a provider from
failing to conduct appraisals or reappraisals for funding purposes if the
provider meets certain obligations such as undergoing training or seeking
advice.[1]
1.5
The amendments to the Classification Principles 2007 will contain
most of the substance within the Bill and have not yet been made. The
Commonwealth has released a policy paper giving some details of the intended
amendments.
1.6
The Commonwealth has also announced that it will provide an additional
$393.5 million over four years to assist homes manage the change to the ACFI.[2]
1.7
The financial impact of the Bill is:
Year |
Total resourcing |
2006-07 |
$0.
m |
2007-08 |
$18.3
m |
2008-09 |
$122.0
m |
2009-10 |
$135.3
m |
2010-11 |
$118.0
m |
Scrutiny of Bills
1.8
The Senate Scrutiny of Bills Committee has the responsibility for examining
all legislation that comes before the Senate. Its terms of reference include
matters relating to rights and liberties and also parliamentary scrutiny. The
Scrutiny of Bills Committee identified the following three concerns with the Bill:
- item 2 in the table to subclause 2 (1) allows for a delay in the
commencement of more than six months;
- proposed subsection 27-2 (6) authorises amendment of the Act by
delegated legislation without explanation; and
- proposed subsection 25-4D(1) allows the Secretary to require
further information to be provided within a short period of 14 days.[3]
1.9
The Scrutiny of Bills Committee has requested the Minister's advice as
to the reason for these provisions and also sought explanation and further
detail in the Explanatory Memorandum.
BACKGROUND
1.10
In response to recommendations from the Review of Pricing
Arrangements in Residential Aged Care released in May 2004 and the RCS
Review (2002-2003), the Commonwealth Government announced in the 2004 Budget
that it would, after trialling the funding instrument and consulting with
relevant parties, implement a new funding system for residential aged care.
Following the 2004 Budget announcements, the Department of Health and Ageing
(the Department) commissioned Applied Aged Care Solutions to undertake a major
study to identify and assess structural options for the new funding model. The
study was completed in December 2004 and the final report describes the
principles behind the development of the new funding model and the ACFI.[4]
1.11
In August 2004, the (then) Minister for Health and Ageing established
the Aged Care Funding Instrument Reference Group to provide a forum for
discussion and advice to the Department in relation to the development and
implementation of the new funding model and the administration of the current
RCS.
1.12
A national trial of the ACFI was conducted in 2005. All Australian
Government funded homes were invited to participate and 678 homes participated
in the data collection phase. Based on trial data and participant feedback,
amendments were made to the version of the ACFI used in the national trial.[5]
ISSUES
1.13
Most of the submissions received were broadly supportive of the
provisions within the Bill and the new ACFI. However, some areas of concern
were identified:
- the Secretary's power to limit the approval of a person;
- six-monthly reviews after hospitalisation;
- removal of High Dependency Care Leave;
- ministerial discretion to determine a lower basic subsidy amount;
- external assessments;
- absence of detail on the proposed Classification Amendment
Principles 2007;
- funding amounts attached to the ACFI;
- the impact on smaller aged care facilities;
- implementation date of 20 March 2008; and
- the need for a formal review.
Secretary's power to limit the approval of a person
1.14
Items 1 and 2 amend the provisions to allow the Secretary to limit an
approval of a person as a residential care recipient to a low level of
residential care under the new ACFI rather than the existing subsection which
details care levels applicable under the RCS.[6]
1.15
Catholic Health Australia (CHA) commented that this provision should not
be necessary once the ACFI is implemented and emphasised that the level of care
determination has implications that relate to specified care and the payment of
accommodation bonds. CHA stated:
The concern that we have is that the level of care of a care
recipient should be determined by the aged-care funding instrument rather than
the secretary having specific powers to limit the care to a particular level...The
difference between the aged-care funding instrument and the existing RCS is
that the aged-care funding instrument will assess the care that is needed by
the person as opposed to the RCS, which determines the level of care that is
provided.[7]
1.16
The Department responded that this provision is duplicating the current
situation and is intended as a 'control'. Subsections 22-2(3) and 22-6(2)(c)
allow for a re-examination of a resident who may have been assessed as low care
by the initial ACAT assessment and subsequently assessed as high care by the aged
care provider. The Department explained:
It is assumed that although there is some discrepancy between
ACAT assessments and assessments by facilities that where an ACAT did not
assess a person as eligible for high care there ought to be a re-examination
rather than simply accepting the home’s appraisal. In other words, there ought
to be an occasion for a review, if you like, if there is a discrepancy between
the two. It is a brake on the possible over classification of people on entry.[8]
Six-monthly reviews after hospitalisation
1.17
Item 22, new subsection 27-2 (1), specifies the circumstances when a
particular classification will expire and when the expiry date occurs. The
concerns raised by witnesses related to the requirement to reappraise a
resident six months after an inpatient hospital episode or extended hospital
leave.
1.18
Aged and Community Services Australia (ACSA) commented that this
provision does not provide an 'incentive structure for good care' and suggested
that this provision be monitored for a period and a sunset clause applied. ACSA
stated:
I have suggested a sunset provision here to make sure that there
is a review and it may well be the case that there is no need to review the
classification of people admitted from hospital after six months. If the aged
care home has worked hard to improve the level of functioning of that person
and made them more independent, should they be effectively penalised for doing
so or should they be rewarded?[9]
1.19
The Department explained that the requirement to reappraise a resident
six months after a hospital stay identifies the possibility that a resident's
'care needs may well have changed because the aftermath of the hospital episode
is behind them, and therefore there ought to be a trigger to reassess'. The
Department further commented:
...it is a balance between trying to reduce the assessment burden,
through things like not having the classification expire and not requiring it
on transfer, and ensuring that the classification really does reflect the
person’s needs. At this point we think this is required to ensure that latter
requirement.[10]
Removal of High Dependency Care Leave
1.20
Item 27 repeals subsection 42-1(4) which allowed more than one
residential care service to be paid a subsidy for the same resident. This
provision would remove the ability of an aged care facility to continue to
receive a low care service subsidy for a permanent resident while that resident
is temporarily requiring a high level of residential care in another facility.[11]
1.21
The Aged Care Association Australia (ACAA) argued against the rationale
underlying this change and stated:
The rationale for this is that it is no longer necessary since
the changes to allow residents to 'age in place'. This assumes that all
facilities are embracing 'ageing in place'. In fact many facilities are not
able to embrace 'ageing in place' and still confine their care to the lower categories
of care and ask residents to relocate when high care needs become apparent.
This amendment adversely affects the residents as the only option now is to
transfer the resident to hospital. It also promotes cost shifting.[12]
1.22
The Department responded to concerns raised and indicated that the
number of facilities using this provision was very small and that the ACFI
Industry Reference Group had supported the removal of this leave type. The
Department explained:
A review of utilisation of the High Dependency Care Leave
provisions indicates that over the past few years only a small number of homes
(around 20 in any given year) had accessed the arrangements and that in six out
of the eight states and territories, the provisions were not used at all.[13]
1.23
The Department, during the public hearing, hypothetically discussed
situations in which this provision may be required but also emphasised that the
review they undertook did not indicate any of these hypothetical situations
actually existed. The Department also stated that the review indicated that in
'a number of instances it [the Care Leave] probably wasn’t applicable' and
could also result in the potential of 'a double payment from government' and a
'double charging of users'.[14]
Ministerial discretion to determine a lower basic subsidy amount
1.24
Many submitters commented on the absence of information on Items 28, 29,
31 and 32 which allow the Minister to determine a lower basic subsidy level
where a resident is receiving extended care in hospital.[15]
The ACAA highlighted the impact of Item 32 which repeals section 44-4 which
specified the effect on classification levels of long periods spent by a care
recipient in hospital:
The amendment to paragraph 44-3(3)(c) states that the Minister
may determine a different subsidy amount in respect of extended hospital leave
and the repealing of section 44-4 means that the existing system of having a
two category reduction during an extended period of hospital leave no longer
applies.
The section provides no information as to what funding will in
future apply to hospital leave and apparently leaves it totally at the
discretion of the Minister.[16]
External assessments
1.25
The Australian Nursing Federation (ANF) commented on external
assessments and stated 'our understanding is that there is certainly a move
away from that [external assessments], the department is tending towards
allowing the facilities to make their own assessment internally'. The ANF
commented that 'in an ideal situation, we would like to see the ACATs perform
the assessment before the patient is admitted to the residential facility'.[17]
1.26
The Department explained that it had considered this issue and that the
national trial had included ACATs performing assessments. A problem arising
from the results of the national trial was that '...we [the Department] had
insufficient data, quite literally, to understand the extent to which the
external assessments tallied with people's assessments on entry'. The
Department indicated that it is still interested in trying to develop an understanding
of how well external assessment would work and that it needs to 'do some work
on the conceptual side of how it might work, and that might lead to some
further work in cooperation with the industry around the possibilities for
external assessment'.[18]
Absence of detail for Classification Amendment Principles 2007
1.27
Most of the substance of the Bill will be contained in the Principles,
which are yet to be amended. The Minister for Ageing tabled a policy paper
outlining the changes to the Principles with the Second Reading Speech for the Bill.
However, 'since some important definitions and substantive issues raised by
this Bill will be contained in the proposed amendments to the Classification
Principles', the ability to usefully analyse the extent and effect of the
proposed amendments is restricted.[19]
1.28
ACAA explained the importance of the aged care sector understanding the
differentiation between High Care and Low Care, the definitions of which will
be contained in the Principles. ACAA stated:
These comments apply to items 47 and 48 in the explanatory
memorandum and are of fundamental importance to the future capital capability
of the residential aged care industry. These sections of the Bill state that
high/low level of residential care has the meaning given by the classification
principles. As previously stated the classification principles are not
available to the Industry and therefore the Industry is uncertain as to the
impact that this section or the revisions to the classification principles may
have.[20]
1.29
Many submitters requested reassurance that 'adequate time for
consultation and consideration of these amendments should be made available to
the aged care sector in due course'.[21]
Funding amounts attached to the ACFI
1.30
Many submitters called for the Department to release information which
would allow approved providers to anticipate the level of funding attached to
the ACFI. CHA explained why providers need this information:
An example is if the aged-care funding instrument with respect
to new residents coming in is going to impact adversely simply because there
will be insufficient funding to support certain levels of residents into that
facility, and that currently is an important catchment for them in terms of new
residents, then they will have to think about how they will adjust their
resident profile and also their staffing mix to match the expected levels of
residents and levels of income that will flow to them under the ACFI.[22]
1.31
The Health Services Union (HSU) reiterated the need for aged care
facilities to be able to assess the implications of ACFI for their own facility
and stated 'there is little publicly available information on all of the
funding levels'. HSU recommended the immediate public release of more detailed
funding information including any modelling undertaken by the Department.[23]
1.32
The Department indicated that it would release indicative figures
shortly and noted that this is because prices will be determined by ministerial
determination prior to their introduction.[24]
The Department will conduct workshops beginning mid-May 2007 to the early part
of June 2007 around the nation to assist people to better understand elements
of the future package and indicated that the ACFI indicative prices will form
part of the workshop information.[25]
1.33
The Department also stated that 'the government is also making available
a pool of financial advisers who will be able to work with individual providers
to help them to better understand the incentives that are available under this
package'.[26]
Impact on smaller aged care facilities
1.34
Witnesses expressed concern for smaller aged care facilities that have a
predominant mix of low care services and questioned whether the implementation
of the ACFI would impact on their future viability and funding levels. CHA
provided the following example of a Melbourne facility:
A classic example is Corpus Christi out at Greenvale, an outer
suburb of Melbourne. It has 84 beds and caters exclusively for homeless alcoholic
men. They are, generally speaking, 5s, 6s and 7s under the RCS. So if the ACFI
is going to result in it being uneconomic to provide new residents coming in
with the level of care that they need then that is going to impact adversely on
that facility. They will be protected in the short term, with the
grandparenting, but the impact will be as new residents come in.[27]
1.35
The Department responded to these concerns and stated that 'how this
[the ACFI] will affect a particular home will depend on the mix of residents
that they have, the mix of new residents that they have coming in and so on
under ACFI and how they are classified'.[28]
The Department further cautioned that they would be very wary about making
assumptions on the effect as the ACFI is a multidimensional instrument and
provides for assessment of activities of daily living, health care needs and
behavioural challenges. After the implementation of the ACFI, 'it is quite
possible that somebody who at the moment is classified as low might score more
than people might expect, particularly under behavioural challenge'.[29]
Implementation date of 20 March 2008
1.36
The original implementation date was 1 July 2007 which was pushed back until 20 March 2008 to allow detailed financial analysis, the
development of software for aged care providers and to implement the ACFI at
the same time as other related changes to aged care payments. Both CHA and ACSA
requested that the ACFI not be implemented mid-month and suggested the option
of 1 July 2008.[30]
1.37
The Department indicated that that the 20 March 2008 implementation date was chosen 'because the rescheduling occurred as part of a larger package,
which includes a number of changes to funding arrangements'. The Department
stated that it would be 'best if the ACFI were done sooner rather than later'
and provided the following explanation for aged care facilities concerned about
beginning the ACFI mid month in a financial reporting cycle:
...it is not as though there is an intensive burst of activity. In
addition, the outcomes will not affect the revenue of a home except at the
margin. By far, the bulk of residents in any home will still be on the RCS by
the end of that financial year. So, in a sense, it gives homes a taste of the
changes and it gives the capacity to start working with them but in a time
frame that means for that financial year it will have, at most, a marginal
impact on their overall revenues. I think that is a good balance.[31]
Need for a formal review
1.38
The majority of submitters called for a formal review of the ACFI some
time after implementation.[32]
The ACSA expressed why a review is needed:
...our overall conclusion is that we are broadly supportive of the
introduction of the ACFI but it is a very big and complicated system, and
changing something as big and complicated as the whole funding system for
residential aged care is hard to assess all at once and all in a piece. For
that reason we have argued that one of the things we should do is make
provision for a fairly robust review 12 months down the track. There was in
fact a fairly robust review of the RCS about a year after its introduction, and
a number of changes were made. I think we are foreshadowing signalling the things
that, if they pan out as they were designed, will be absolutely fine, but it
would probably be unrealistic to expect that to occur in 100 per cent of the
cases.[33]
Conclusion and recommendations
1.39
The Committee supports the measures being introduced in the Aged Care
Amendment (Residential Care) Bill 2007 and recognises the broad support for the
Bill from the aged care sector. The Committee acknowledges the extent of
consultation the Department has undertaken with the sector to ensure a level of
understanding and engagement on the issues.
1.40
The Committee notes that the provision allowing more than one
residential care service to be paid a subsidy for the same resident will be
repealed and that the Department has indicated that only a small number of aged
care facilities use this provision and in some cases it was not applicable in
the circumstances. However, the Committee considers that circumstances may
arise where it is appropriate and fair that a subsidy be paid temporarily in
both aged care facilities and therefore recommends the omission of Item 27 of
the Bill and the monitoring of the use of the provision.
Recommendation 1
1.41
That the Bill be amended to omit Item 27 repealing subsection 42-1(4) of
the Aged Care Act 1997 and that the Department of Health and Ageing
monitor the use of this subsection by aged care facilities to ensure the it is
used appropriately.
1.42
The Committee has considered the evidence received requesting a change
to the 20 March 2008 implementation date of the ACFI. However, the Committee is
unconvinced that there is merit in recommending another date which would delay
the implementation of the ACFI.
1.43
The Committee acknowledges the comments from witnesses on the lack of
detail on Items 28, 29, 31 which allow the Minister to determine a lower basic
subsidy level where a resident is receiving extended care in hospital and also Item
32 which removes the existing provision in section 44-4 outlining the possible
reduction in a classification level under the RCS. Questions were raised by the
aged care sector with regard to the minimum amount of the new basic subsidy
level and the basis for these determinations. The Committee recommends that the
Minister ensure that the lower basic subsidy level is reasonable and a minimum
level of subsidy other than 'nil' be implemented as a safeguard.
Recommendation 2
1.44
That the Bill be amended to ensure that determinations made by the
Minister under items 28, 29 and 31 are reasonable and a safeguard similar to
that in section 44-4, which item 32 repeals, be implemented under the new ACFI
to determine a minimum lower basic subsidy level.
1.45
The Committee notes that the aged care sector, at this time, does not
have the full details of the proposed amendments to the Classification
Principles 1997. The Committee is satisfied that the Department has consulted
extensively with the aged care sector in formulating this Bill and the development
of the ACFI. The Committee would recommend that this high level of consultation
continue as amendments to the Principles are drafted.
Recommendation 3
1.46
That the Department of Health and Ageing ensure that the aged care
sector is consulted and has adequate time to consider the amendments to the Classification
Principles 1997.
1.47
The Committee recognises that this Bill represents major change to the
aged care sector and has the potential to impact on the funding available to
aged care facilities. The Committee is reassured by the Department's comments
that it will monitor the changes as soon as they are implemented. However, the
Committee considers that a full and robust review of the ACFI eighteen months
post implementation is required.
Recommendation 4
1.48
That a review of the new Aged Care Funding Instrument (ACFI) be
undertaken eighteen months after implementation to assess the implications to
all aged care service providers and ensure that stated benefits are achieved.
Recommendation 5
1.49
That subject to the above recommendations, the Committee recommends that
the Senate pass the Bill.
Senator Gary
Humphries
Chairman
May 2007
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