Chapter 3

Home care

3.1        As outlined in Chapter 1, the Australian Government announced a series of reforms to aged care, known as 'Living Longer Living Better' package, in April 2012. One of the key features of the package is a significant expansion in home care to assist people to remain living at home for as long as possible, and the introduction of more choice and flexibility for people receiving care at home.[1]

3.2      Proposed changes include a new system of home care packages, government subsidy structure, care recipient fee structure, supplements, hardship provisions and access to the Community Visitors Scheme (CVS). The government also intends to move to Consumer Directed Care (CDC), allowing consumers and their carers to have greater control over their own lives by providing for choices about the types of care  accessed and the delivery of those services, including who would deliver the services, and when.[2]

3.3      Many submitters were broadly supportive of the increased focus on home care and consumer directed care, and these views were from across the sector:

We also support the increased emphasis on community based Home Care compared to residential aged care from 1 July 2013. The enhanced number and levels of packages will assist older Australians to stay in their own home for longer. The focus on consumer directed care will allow the consumer greater choice and control over who will provide which services other than providers controlling access to the care packages.[3]

...

[The Attendant Care Industry Association] is strongly supportive of the LLLB reforms, especially the focus on providing more opportunity for support to be delivered to people in their own homes, enabling them to age in place and to provide many more alternatives to residential aged care. ACiA also endorses the principles of consumer directed care, as our membership has witnessed the profound and positive effect this has had on Service Users (recipients) with disability, including the aged, in various funded programs who have exercised their choices to ensure the support they receive leads to tangible achievements in their community. The reforms as a whole, therefore, are supported by ACiA as we believe they constitute a positive and constructive move in the right direction, so people who are ageing can look forward to remaining in their own home connected to their family, friends and community, even as they may experience a decline in their health and functional abilities.[4]

[Southern Cross Care (Vic)] agrees with the broad reform proposals contained in "Living Longer, Living Better" including greater consumer choice, control and easier access to services. SCC (Vic) is specifically supportive of the significant increase in supply of approved places for home care packages and the removal of the distinction between low and high care in the Aged care Act.[5]

3.4        As the package of bills would introduce many major changes to home care, submitters sought clarification around a range of issues and raised some concern about how the new system would operate. It is to those that the committee now turns.

Home Care Packages Program

3.5        Should the bills pass, from 1 July 2013 a new type of care, home care, will replace community care (Community Aged Care Packages (CACP)) and some forms of flexible care delivered in a person’s home (Extended Aged Care at Home (EACH) and Extended Aged Care at Home – Dementia (EACHD)).[6]

Home care is defined as care consisting of a package of personal care services and other personal assistance provided to a person not being provided with residential care.[7]  Four levels of home care packages would be established to cover a continuum of home care options from basic home care through to complex home care.[8] The submission from the Department of Health and Ageing (the department) outlined the levels of care as follows:[9]               

LEVEL	Description
1	Basic care package
2	Low level care package
3	Intermediate level care package
4	High level care package

3.6        Home Care Levels 1 and 2 would cover the same types of care currently available under a CACP, plus other services required to maintain a person at home. The key difference between Level 1 and Level 2 would be the amount or quantum of services that can be provided. Similarly, Home Care Levels 3 and 4 would cover the same types of care as the current EACH package, plus other services required to maintain a person at home. Higher levels of service would be reflected in higher subsidies.[10]

3.7        The total number of home care packages is expected to increase from around 60 000 to almost 100 000 over the next five years with each home care package being required to be delivered on a CDC basis by 1 July 2015.[11] Under CDC, Home Care Packages will have the following key design and operational elements:

a) An individualised and transparent budget;

b) A control and decision making framework; and

c) An ongoing management and communication approach.[12]

3.8        Under CDC, consumers would access a Home Care Package in a similar way to the previous CACP, EACH and EACHD packages. People will need to be assessed and approved as eligible for Home Care by an ACAT (or known as Aged Care Assessment Service in Victoria), and then offered a Home Care Package by an approved provider.[13]

3.9        The contrast between CDC and non-CDC Home Care Packages is illustrated by the department in the following flowchart[14]

3.10      All new ACAT approvals would be broadbanded at two assessment points (Level 1 and 2, and Level 3 and 4) which means consumers could  move between levels 1 and 2 or between levels 3 and 4 without requiring a new ACAT assessment. Additionally all ACAT assessments (unless specifically stated) would no longer lapse after 12 months, although a consumer or provider would retain the ability to request a new assessment at any time should their needs change.[15]

3.11      Whilst there was broad support for the principles of CDC it was noted by the Council of Social Services New South Wales (NCOSS) 'that many service providers are unsure about the process of implementation of self-directed approaches.'[16] Consequently NCOSS recommended that:

...some core principles relating to Consumer Directed approaches needs (sic) to be given legislative effect in the Aged Care Act as well as through the Principles and Determinations in relation to the Act.[17]

3.12      A number of submitters[18] raised the issue that in areas with very few providers, particularly those in rural and remote Australia, offering a choice of providers to consumers under the CDC model was not practicable. On this issue the National Rural Health Alliance drew the committee's attention to the 2011 report of the Productivity Commission Inquiry into Aged Care, which found that:

...rural and remote areas generally do not have the population density or demand to sustain many types of aged care services that are available in urban areas. The Commission's proposed reforms to increase choice may have limited applicability in rural and remote areas where there are relatively small target populations and it is generally only feasible for one or two service providers to operate.[19]

3.13      Anglicare shared this concern and urged the government to take this into consideration when determining funding arrangements in the delegated legislation:

We understand that the needs of people living in remote communities will be recognised in some of the Principles. We stress that one size does not fit all and there needs to be consideration on how services can be accessed especially in relation to consumer directed care.[20]

3.14      There were also concerns from some providers[21] and peak bodies[22] that the current version of the Allocation Principles, in addition to the fixed ratios of home care places, effectively rationed the number and types of packages for which providers could qualify. Kincare argued that the capping of places under the Aged Care Approvals Rounds (ACAR) would continue to create a 'mismatch' between the supply of, and demand for, the levels of home care packages needed in many areas.[23]

3.15      It was also argued that some care recipients would be forced to change care providers, or even move into residential care, in order to access higher levels of care if their current provider could not offer the service or did not have the required place available. This raised concerns for a number of submitters in terms of continuity of care and the impact a change of provider may have on health and welfare.[24] COTA and the National Aged Care Alliance (NACA), in particular, were concerned that 'consumers will not have an entitlement, based on assessed need, to the services and support they need'[25] and recommended changes to reflect the Productivity Commission Report and the NACA Blueprint in that the 'number and mix of places for residential care and home care should cease to be controlled.'[26]

3.16      It was observed by the Aegis Aged Care Group[27] that the move to encourage care recipients to stay in their own home may cause people to delay entering residential care until they required high care and that this would increase the proportion of high care residents in residential care facilities. This claim was echoed by National Seniors Australia:

The shift to provide extended care in clients’ own homes will raise further the age at which most residents enter facilities, with a likely increase in demand for higher levels of clinical care and dementia services.[28]

3.17      The committee heard that, when the Government was approached about the continued rationing under the ACAR systems their response to COTA was 'that the continued rationing, and the subsequent lack of entitlement for consumers, was in response to the immaturity of the aged care system at present.'[29] As noted earlier in this report the government has recognised that further reforms may be needed, and that the 'Living Longer, Living Better' package is intended to facilitate this.

3.18      The department acknowledged in their submission that:

Generally, it can be more challenging to establish services in smaller, rural areas, where providers have a smaller pool of prospective residents and are therefore vulnerable to fluctuation in occupancy levels. Additionally access to an appropriately trained workforce can limit the type of services that providers can offer.[30]

3.19      The government is addressing these issues in a number of ways. The classification of rural and remote areas as a special needs group is being maintained and viability supplements would continue under the reforms. The Multi-Purpose Service Program, designed for rural and remote areas, will also continue to operate. The workforce supplement would make working in the sector more attractive across all locations.

Committee view

3.20      The committee supports the improved degree of choice offered in the home care packages program. Most of the concerns raised by submitters do not relate to the reforms within the bills, but rather reflect existing challenges in the provision of aged care, and often in the provision of community services more generally.

3.21      The committee acknowledges that changing providers can present challenges, and choice is not always available, particularly in regional and remote areas. However the committee believes that the significant expansion in home care places, together with the continuation of special recognition of rural and remote areas, should lead to substantial improvement to the availability of aged care in the home.

Supplements

3.22      The primary supplements that are currently available for home care recipients include the oxygen supplement and the enteral feeding supplement. The provision of these services to care recipients is based on clinical need.[31]

3.23      From 1 July 2013 approved providers who deliver home care at any of the four home care package levels would be able to receive a new dementia supplement or veterans’ supplement if the care recipient meets certain eligibility requirements. An additional workforce supplement would also become available from this date in order to support providers to attract and retain sufficient numbers of skilled and trained workers.[32] Existing viability supplements in relation to geographical isolation in rural and regional areas would continue.[33]

3.24      Submitters broadly welcomed the introduction of the new supplements, however many believed that the introduction of a homeless supplement, CALD Supplement, and a People with Disability supplement would also be useful and justified.[34] These are further discussed in Chapter 6. Concerns regarding the workforce supplement and its effect on fees, subsidies and providers are discussed in Chapter 7.

Fees

3.25      From 1 July 2014 there would be changes to the calculation of the home care subsidy and fees for care recipients who enter home care on or after that date. Changes would include requiring some care recipients with greater means to contribute more to the cost of their care through an income tested care fee.[35] However, there would be no asset test for home care.

3.26      Government funding for community care packages is currently provided through subsidies and supplements paid in respect of individuals, with the level of the care subsidy determined by the type of community care package. These supplements are not means tested. Care recipients can be asked by the provider to contribute to the cost of the care services they receive up to a maximum level set by the Government. Care recipients may pay up to 17.5 per cent of the basic pension ($3,240 per annum). In addition, they may also be asked to pay up to 50 per cent of the care recipient’s income above the pension. These contributions do not change the subsidy paid by the Government. Very few care recipients are currently charged the additional income tested fee and, on average, providers charge residents a Basic Fee of $1,800 per annum for all types of community care packages (or 10 per cent of the basic pension).[36]

3.27      The proposed scheme would mean that a care recipient, entering care from 1 July 2014, may be asked to pay one or more of the following components toward the cost of their care:[37]

• A basic daily fee (Basic Care Fee). Consistent with current arrangements, care recipients may be asked to pay a basic daily fee. This is an amount that is negotiated between the care recipient and the approved provider, and can be up to 17.5 per cent of the basic single age pension amount.
• An income tested care fee (Income Tested Care Fee). This is an amount based on an income test (conducted by the Department of Human Services), which a care recipient with sufficient income can be asked to pay toward the cost of their care.
• Any other amounts agreed between the care recipient and the approved provider.

3.28      The Government’s contributions to home care costs would be comprised of three parts:[38]

• The basic daily subsidy amount (Government Subsidy). The amount of subsidy would depend on the type of home care package provided.
• Any primary supplements (Primary Supplements). For example, the oxygen supplement and the enteral feeding supplement.
• Any other supplements (Other Supplements) such as the viability supplement and the hardship supplement.

3.29      Under the proposed scheme the amount of income tested fee paid by the care recipient would reduce what the Government pays in subsidy and primary supplements. For every dollar of income a person earns above the income free area, the Government would reduce its contribution by 50 cents. This would be known as the care subsidy reduction.[39] An approved provider would be able to recoup this reduction in subsidy by charging the care recipient an income tested care fee of up to the same amount.[40]

3.30      The scheme is structured so that, should it be implemented:[41]

• no full rate pensioner will pay an income tested care fee for home care;
• no care recipient will be asked to contribute more than the cost of their care;
• no care recipient's home or other assets will be included in assessing their capacity to pay an income tested care fee for home care;
• no care recipient will be asked to pay more per year in income tested fees than their annual cap; and
• no care recipient will be asked to pay more income tested care fees than the lifetime cap.

Annual and lifetime caps

3.31      New annual and lifetime caps on income tested care fees would apply from 1 July 2014.[42] The annual cap on income tested care fees in home care would be specified in a determination, however the following estimates have been announced by Government: [43]

Annual caps

• $5,000 (indexed annually) for part-pensioners or those with annual income greater than $22,701 but not greater than $43,186 (March 2012 prices); and
• $10,000 (indexed annually) for self-funded retirees with annual income greater than $43,186 (March 2012 prices).

Lifetime cap

• the lifetime cap of $60,000 (indexed).[44]

3.32      If a care recipient moves from home care to residential care, the income tested care fees the care recipient paid in home care would count towards both the residential care annual cap and the lifetime cap. Likewise, if a person moves from residential care to home care, any means tested care fees that the person paid in residential care would be taken into account in determining whether the person meets the annual and lifetime caps on the income tested fees for home care.[45]

3.33      Once a care recipient reaches the annual cap, they would not be asked to pay any more income tested care fees until their next anniversary date. Similarly, once a care recipient reaches the lifetime cap they would not be asked to pay an income tested (or means tested) care fee for the rest of their life. However, in both cases they could still be asked to pay the basic fee which would not count toward the caps.[46]

3.34      The Department of Human Services will administer the annual and lifetime caps for each care recipient, with the payment system automatically increasing the Government subsidy and primary supplements once a care recipient reaches their respective cap.[47]

3.35      COTA articulated their support for caps on payments by care recipients indicating that 'Annual and Lifetime caps on what people pay for aged care are an essential part of the new user contributions regime'.[48]

3.36      Despite also being clear in their support of an annual and a lifetime cap on fees  the Council of Social Service of New South Wales (NCOSS) articulated their concerns about the financial implications to care recipients of not including in the caps fees paid for services provided by services such as the Home and Community Care Program (HACC) and the proposed Commonwealth Home Support Program:

We are deeply concerned that not including those fees in the annual lifetime cap might create a deterrent to people accessing home care packages where there needs might escalate.[49]

3.37      NCOSS were also concerned about the issue of indexation requesting that the:

...level of indexation needs to be specified in the Act, to ensure that the annual and lifetime caps escalate appropriately. NCOSS recommends that the caps be escalated in line with the Consumer Price Index.[50]

3.38      Consumer groups such as National Seniors Australia (NSA) and COTA were cautious but generally supportive of the change in user fees and charges for care, with COTA indicating that:

User contributions are an important part of the future sustainability of aged care and are a key component of a market based system. It is vital to start changing the culture and expectations now but user contributions must be affordable and equitable.[51]

3.39      However both COTA and NSA specifically emphasised the need for close monitoring of these changes:

...the equity, efficacy and impact on access of the new user charges, in particular in relation to in home and community (home support) care and support services, needs to be monitored closely by the sector and the ACRIC from 1 July 2014, not waiting until the 2016 review. If there are serious problems in terms of disadvantage then government will need to address them early.[52]

NSA were particularly concerned with the need to evaluate and review the impact of income tested fees on part pensioners and people just above the upper thresholds to ensure that recipients of aged care services are not adversely or inequitably affected by the means testing arrangements.[53]

3.40      Whilst the department indicated that the Consumer Price Index is a factor considered in calculating the rate of indexation across Government expenditure in aged care, it indicated that many other factors including the minimum wage decisions of the Fair Work Commission are also considered. They have stated that, with regard to the annual and lifetime caps:

The caps will be set in determinations and will be subject to indexation. The expectation is that the caps will be indexed annually in line with the indexation of the basic subsidy, primary and other supplements. Consistent with the broader practice of the Department, the indexation parameters are not published. There is also no single rate of indexation that applies to all Australian Government expenditure on aged care. Subsidies and supplements are indexed differently according to the underlying cost drivers of each payment type (e.g. the proportion of wage and non-wage costs within the total cost).[54]

Committee view

3.41      The committee supports the implementation of annual and lifetime caps and agree with the comments by COTA that the caps are 'a key way of protecting the overall affordability for individual consumers'.[55]

Income testing

3.42      Income testing would be performed by the Department of Human Services using the income test fee calculator. Providers would be advised of the maximum income tested fee they can charge each care recipient.[56]

3.43      Safeguards are built into the calculator to limit the amount of income tested care fees a care recipient could be asked to pay (the first cap and the second cap). The first cap would apply to those on a part pension or equivalent income and the second cap to those who are not eligible for any age pension. In addition, the lifetime cap may also limit the amount that could be paid.[57]

3.44      The Income tested care fee calculator would be structured as follows:[58]

Step 1. Work out the care recipient’s total assessable income on a yearly basis using section 44-24 of the Act. This is the definition of income that is currently used for residential care.

Step 2. Work out the care recipient’s total assessable income free area using section 44-26 of the Act. For a single, this is $22,700.60 in March 2012 rates.

Step 3. If the care recipient’s total assessable income does not exceed the care recipient’s total assessable income free area, the care recipient cannot be asked to pay an income tested care fee.

Step 4. If the care recipient’s total assessable income exceeds the income free area but not the income threshold ($43,186 for a single), the income tested care fee is equal to the lowest of the following:

(a) the sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient;

(b) 50% of the amount by which the care recipient’s total assessable income exceeds the income free area (worked out on a per day basis); and

(c) the first cap (ie $5,000 per year or $13.74 per day).

Step 5. If the care recipient’s total assessable income exceeds the income threshold ($43,186 for a single), the income tested care fee is equal to the lowest of the following:

(a) the sum of the basic subsidy amount for the care recipient and all primary supplements for the care recipient;

(b) 50% of the amount by which the care recipient’s total assessable income exceeds the income threshold (worked out on a per day basis) plus the amount of the first cap (ie $13.74 per day);

(c) the second cap (ie $10,000 per year or $27.47 per day).

3.45      Other submitters[59] shared the NSA's concerns about the potential impact of this model of income testing on people with low to moderate incomes. In particular, concerns were raised that this cohort appears to be paying a higher percentage of their income on care fees. UnitingCare Australia submitted that:

We acknowledge that care recipients who can contribute to their cost of care should do so. However, we are concerned that the level of co-contribution may be prohibitive for many people and that the scaling of fees for part-pensioner is too aggressive. ... While the proposed methodology is based on income, it does not seem to take account of any additional costs of living at home, including for people with a disability or chronic condition.[60]

3.46      UnitingCare Australia provided the committee with information highlighting what they considered to be the disproportionate contribution towards fees, in the proposed model, by those at the lower end of the income threshold. The graphs supplied by UnitingCare Australia also suggested an alternative scaling approach which they believe would result in a fairer outcome for those on low incomes.[61]

The following table highlighted the percentage fees to income at different levels of income:[62]

Annual total income	$23,543	$32,864	$35,000	$43,186	$50,000	$55,952	$81,952
Basic fee	$3,163	$3,163	$3,163	$3,163	$3,163	$3,163	$3,163
Care fee	$0	$4,661	$5,000	$5,000	$8,407	$10,000	$10,000
Total fee	$3,163	$7,824	$8,163	$8,163	$11,570	$13,163	$13,163
% income	13%	24%	23%	19%	23%	24%	16%

The following graphs gave a visual representation of the tabled data and presented UnitingCare Australia's alternative proposal:[63]

3.47      The position taken by UnitingCare Australia was supported by NCOSS, The National Presbyterian Aged Care (NPAC) Network and echoed by ECH Inc., Eldercare Inc. and Resthaven Inc who stated:

We believe the taper rate and income threshold for part pensioners is inequitable in that it discriminates against those part pensioners on the lower end of the income threshold. Specifically, all part pensioners with incomes between $32,701 and $43,186 will pay the maximum of $5,000 a year as an income tested home care fee. We believe this is unfair to part pensioners on lower incomes.[64]

3.48      Whilst not directly disputing UnitingCare Australia's modelling of the proposed income testing arrangements the department suggested that using the average basic fee ($1,800) rather than the maximum potential basic fee ($3,163) would provide a more accurate representation of costs faced by low to moderate income earners. They suggested that Uniting Care Australia's table highlighting the percentage fees to income at different levels of income could be represented in the following way:[65]

Annual total income	$23,543	$32,864	$35,000	$43,186	$50,000	$55,952	$81,952
Basic fee	$1,800	$1,800	$1,800	$1,800	$1,800	$1,800	$1,800
Care fee	$0	$4,661	$5,000	$5,000	$8,407	$10,000	$10,000
Total fee	$1,800	$6,461	$6,800	$6,800	$10,207	$11,800	$11,800
% income	8%	20%	19%	16%	20%	21%	14%
Remaining	$21,743	$26,403	$28,200	$36,386	$39,793	$44152	$70,152

3.49      The department also suggested that the concern about issues such as the cost of living pressures may be 'better considered' by focusing on the remaining income after the fees have been paid as opposed to fees as a proportion of total income. 

The income testing arrangements are designed such that for each additional dollar of income a care recipient earns, the care recipient has more remaining income after fees have been paid, than they had not earned that extra dollar.[66]

3.50      The department indicated that the lower taper rate modelled by Uniting Care would mean that:

The Government would reduce its contribution by 25 cents (rather than by 50 cents). This would lower the care recipient's contribution to their care coast but would also accordingly come with a substantial cost to the Government.[67]

Committee view

3.51      The committee notes that there was agreement by many submitters that home care recipients who can afford to contribute towards their care should do so.

3.52      The committee expects that that the government will monitor closely the effects of the reforms on affordability, balanced with the need for a more equitable system. The committee notes that the thresholds can be varied by regulation as required.

3.53      The committee is of the view that the proposed model for income testing will provide more equity, in that different care recipients with the same incomes and receiving the same care will no longer be charged different fees. It notes that the combination of proposed thresholds, tapering and scaling appears to create the potential for some low to moderate income earners to pay a higher proportion of their income on fees than some higher income earners, however it notes that this effect is modest in scope.

3.54      The effects of changes to fees and the financing of aged care are potentially significant, and the need for vigilance during the transition is discussed in more detail in the next chapter, on residential care. The committee concluded that it is important for monitoring of, and response to, financial changes in the situation of providers to take place continuously following the reforms, and not to be left until the statutory review three years after the key provisions commence.

Recommendation 1

3.55      The committee recommends that, as part of the arrangements for ACFA monitoring of the reforms that are recommended by the committee in chapter 4, evidence be sought on any impacts of the design of the fee scales on care recipient welfare.

Implications of income fees on decisions about care

3.56      Concerns were also raised by a number of submitters[68] about the impact of the proposed income test fee on care recipients in terms of their decisions about care. The primary concern expressed was that many home care recipients may be forced because of financial limitations to accept a lower care level, rely more heavily on the hospital system, or choose not to receive care at all.

Consumers who are not capable of making basic fee and care fee payments according to the schedules proposed may be unable or unwilling to gain access to aged care services as their care needs would otherwise require.[69]

We share the concerns of some other not-for-profit home care providers that the phase-in of these fees for part-pensioners may prove difficult for some older people to afford. They may also create problems in encouraging people to move from Home and Community Care services with much lower fees onto Home Care Packages, which may be more appropriate for their needs.[70]

Often, the higher fees for community packaged care are a deterrent to people using a more appropriate level of support. NCOSS is concerned that the additional supports available to community packaged care users, particularly case management, is not being made available due to the additional financial burden this would impose.[71]

3.57      Aged and Community Services Australia (ACSA) thought that care recipients were being asked to pay too much:

ACSA finds the level of co-contribution to be excessive and the scaling of fees for part pensioners too uncompromising which will result in consumers being unable or unwilling to access community care and therefore refuse services...If consumers refuse services they will often require greater assistance via the acute health care services (at an average cost of $1500 per day) or required admission to a RACF sooner.[72]

3.58      NCOSS was concerned that the fee schedule could encourage more people to seek HACC care rather than more appropriate home care:

NCOSS is concerned that the implementation of a higher fee schedule and means testing arrangements would create a further deterrent for older people who require a higher level of support, and would, in turn, result in further demands on HACC services (which will, after 2015, become part of the Home Support Program).[73]

3.59      Pensioners and Superannuants Association of New South Wales Inc. echoed this sentiment in their evidence before the committee:

...the way the fee structure operates is that clients will have an incentive to take a lower level care package because they simply cannot afford the higher level care packages, particularly if they are not eligible for financial hardship reductions in fees.[74]

Committee view

3.60      Clearly the committee, like the government, wants to ensure that older Australians obtain care most suitable to their circumstances. While the committee understands the nature of the issue raised by submitters, there did not appear to be concrete evidence that the levels of proposed co-contributions would cause people to seek cheaper care that would not be appropriate to their circumstances. Between the modest level of contribution being sought, and the existence of hardship supplement provisions,[75] it seems unlikely that this will be a significant issue. The committee also believes that overwhelmingly people will seek out the right level of care rather than cheap but inappropriate care.

3.61      The committee notes that under consumer-directed care, there is also some scope for enhanced competition amongst service providers to encourage price-based competition and to ensure the provision of services is as efficient as possible.

3.62      The committee recognises that those seeking care who have incomes greater than the pension will be asked to make a larger contribution to the cost of care. It believes that these reforms are fair and will ensure greater access to home care on an equitable basis.

3.63      The take up of the packages will need to be closely monitored, as will the effects on HACC programs.

Recommendation 2

3.64      The committee recommends that the government closely monitor the take up of home care packages and any signs of changes to demand for HACC-type packages.

Economic Risk for Providers

3.65      Kincare and Uniting Care raised concerns about what could occur should a consumer fail to make a necessary co-contribution under the new arrangements. The legislation[76] would require providers to deliver services regardless of people's ability to pay, raising the prospect of providers being obliged to continue to provide services and bear the costs whilst pursuing payment options, moving to reduce services, or awaiting possible hardship supplements. In these circumstances many providers feel they are carrying too great an economic risk as these processes may take some time.[77]

It just creates a whole lot of new dilemmas for providers, restructuring the system in that way – potentially losing quite a lot of income but also having to make those sorts of decisions about continuing to provide care to people or not.[78]

3.66      The possibility that, in these circumstances, a hardship payment would be denied, elicited great concern. The perception of some providers[79] is that, under the proposed system, the provider would be forced to take on an increasing debt collector role in order to recover costs. This may have flow-on effects through providers seeking to reduce their exposure to such risks:

Implementation of means-testing, without an adequate subsidy level that meets the true cost of services, is likely to reduce the incentive for Home Care package providers to accept clients with a low income.[80]

3.67      Kincare provided the committee with examples of potential issues a provider might face as a result of non-payment.[81]

Example 1

Joseph has signed a contract with his provider. He has been means tested and understands he will be paying $27.47 per day towards the cost of his care. However, Joseph has a gambling problem. Within 3 months of commencing his package, Joseph defaults on his payments and admits he is no longer able to honour his contract.

Providers are unable to view the details governing the hardship subsidy. Would Joseph qualify? How long will it take for Joseph’s financial situation to be reviewed? How should the provider support Joseph in the meantime? KinCare currently carries a bad debtor as consumers who are financially disadvantaged are not denied a service. What is a fair process? Who bears the financial risk if a care recipient is unable to pay?

Example 2

Joseph has been advised he needs to contribute $27.47 per day to the cost of his care. Joseph has advised his service provider that he will organise unpaid carers to support him in all activities that would otherwise be financed by his $27.47 per day. Joseph does not want to pay any money to his provider.

Will Joseph still be entitled to receive the total amount of his care subsidy from the government, even though he is not contributing any money himself? It is difficult to gauge full impact of proposed changes without understanding eligibility and implementation.

3.68      The committee received no specific evidence to suggest hardship payments would be denied in relevant cases, and remained unclear as to why some service providers were expressing anxiety about this being something that would present a qualitatively different issue in the new system compared to the existing one.

3.69      Furthermore, the fundamental responsibility to pay fees will not change. Under the existing User Rights Principles 1997, a community care service user has the responsibility:

(a)  to pay any fees as specified in the agreement or negotiate an alternative arrangement with the provider if any changes occur in his or her financial circumstances

(b)  to provide enough information for the approved provider to determine an appropriate level of fees[82]

3.70      The committee notes that the principles are proposed to be revised under the new system:

...clarifying that a recipient of home care may place his or her security of tenure at risk if they do not meet the responsibilities of a care recipient set out in the Charter of rights and responsibilities for home care, for example, if they do not pay their care fees for a reason that is within their control, or they do not allow safe and reasonable access for care workers.[83]

Conclusion

3.71      The Living Longer Living Better aged care reforms respond to known issues in the aged care sector: the challenges of increased numbers needing care, falling numbers of informal carers, low wages and staff retention problems, and the preference expressed by most people to stay in their homes for as long as is practical. All of these factors require an expansion of home care and a strengthening of the financial base on which it occurs. Put simply, there needs to be more home care, and more money to pay for it.

3.72      The committee believes that the Living Longer Living Better reforms represent a key step in delivering more and better home care, while acknowledging there may need to be both fine tuning of these reforms as they are implemented, and possibly future reform as the sector matures and develops.

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