Rebekha Sharkie (Mayo, Centre Alliance) Share this | Hansard source

The Royal Commission into Aged Care Quality and Safety observed in its interim report that a fundamental overhaul of the design objectives, regulation and funding of aged care in Australia is clearly required. This bill, the Aged Care Legislation Amendment (Improved Home Care Payment Administration No. 1) Bill 2020, will not address the issues raised by the royal commission. It will not decrease waiting times, improve affordability of home-care packages or make it easier for older Australians to take control of their own care needs. The purpose of this bill is to change the payment of home care package subsidies to approved providers from one month in advance to one month in arrears. This is a small change, but the broader policy proposal underlying the bill will have implications for both providers and recipients of home-care packages.

Under the current system, home-care providers use an online claiming system to report relevant information to the department, such as gaps in services, where the client has chosen not to receive assistance, due to holidays or alternative family arrangements, or when the client stops receiving home-care altogether as a consequence of a transition into aged-care hospitalisation or indeed passing away.

The system relies on the provider to accurately report on and reconcile funds advanced to them by the government for the care of their consumers and to disclose the unspent funds they hold on behalf of their client because, notwithstanding the limited funds available to consumers in receipt of home-care packages, there are instances where the funds allocated for the care of the client are not spent in their entirety. On these occasions, the funds remain in the approved provider's books to be drawn upon by the client as needed.

In recent years the reporting by providers has revealed a cache of unspent funds. The royal commission heard evidence that the average underspend per person per package was around $6,720 per annum across all four care package levels. They received evidence from leading aged-care services in Australia that in October 2018 a total of $34 million in unspent funds was held by just 17 providers managing just over 6,000 packages. Earlier this year, financial analyst StewartBrown revealed the results of their latest Aged Care Financial Performance Survey, incorporating data from over 34,700 home-care packages. The quarterly survey is a known benchmark of financial performance in the aged-care sector. Their analysis suggests that the biggest single issue of concern in the industry is the level of unspent funds, with the average amount of unspent funds per person now over $7,290, up from $6,720 a year ago. Their analysis also estimates that the total unspent funds on the books of providers across the country may grow to $900 million by the end of the year.

The true case of the unspent funds phenomenon is unclear. Accusations have been levelled at ACAT teams for allegedly assessing clients at a higher level than their genuine need on the premise that an individual is likely to wait 12 to 18 months for a package and, during that time, their health will possibly decline and their reliance on others to address their care needs will increase. Others have suggested it is a consequence of a lack of client awareness on how best to direct their funds or, indeed, a mistaken belief that the funds should be stored away for a rainy day.

The royal commission will consider the reasons behind the causes underlying the growth in unspent funds in their final report, but what concerns me most is the lack of transparency around how these funds are being used. Are clients going without care or with reduced care to enable some unscrupulous home-care providers to apply the subsidy to their own capital expenditure programs? We simply don't know. Whatever the cause or use of the unspent funds may be, the lengthy delays facing over 100,000 people currently awaiting their home-care packages is clear. On the government 's own quarterly report on the national prioritisation system, those in need of a level 4 package, the highest available, will face a wait of at least 12 months, with other reports, such as the Productivity Commission' report on government services, suggesting the wait will be possibly up to even three years.

This bill will not address the delays, but it will potentially improve transparency with respect to how and where these funds are being spent by providers. In the 2019-20 budget, the government indicated that the current reconciliation process was unsatisfactory and set out a suite of reforms to the home-care package system. The bill gives effect to the first stage of reforms, which the government says will improve payment administration arrangements for home-care packages and, in turn, improve financial integrity in aged care.

The reforms as announced form three parts. Part 1 is the bill before the House today which changes the payment of subsidies to providers in advance to arrears. Part 2 would require providers only be paid the subsidy for the goods and services they actually provide to the client rather than receiving the full monthly subsidy amount. Again, this could be paid in arrears rather than in advance, with any unspent package funds for the recipient to be held by the government on behalf of their client. Part 3 would provide for subsidy payments to providers to be reduced by a portion of the unspent package funds for that recipient. There would be no change to the amount paid to approved providers and nor would it change the amounts received by home-care package recipients.

At the request of the government, the Aged Care Financing Authority was tasked with examining the impact of these proposed reforms on the aged-care sector. With respect to part 1—the change from advance payments to arrears payments—the ACFA believes that most providers would likely absorb the short-term cashflow issues without difficulty; however, smaller providers operating in thin or difficult markets and under financial pressure may face challenges in dealing with the change in payment arrangements.

I've spoken to home-care providers in my electorate and am concerned that the transition to payments in arrears will place an undue burden on already struggling providers in locations in my electorate where they provide an essential service to a small number of people within a small community. These providers operate on narrow margins and, if they go under, we are unlikely to see larger providers move into the marketplace, simply because it's not profitable to do so. The profitability of some home-care providers is already in question, with both ACFA and StewartBrown noting that earnings of home-care providers fell by over 60 per cent in the 2018 year and that further declines continued in 2019.

While the government has established a business advisory service operating via PricewaterhouseCoopers that will provide managerial and accounting advice to home-care providers to assist in their transition, it relies on providers recognising that they may have an issue in the first place. I then query what assistance will be provided to those providers who, through no fault of their own, but rather as a consequence of the size or perhaps location of their services, are running on margins that will not manage the transition without some impact on the quality of care provided to their clients. In that instance, I support the recommendation of ACFA to extend short-term financial assistance to these providers. It may be that assistance provided to residential aged-care providers through the Business Improvement Fund could be extended to approved home-care package providers.

While noting that part 2 and part 3 of the reforms are not before the House today, the government must ensure a smooth transition for approved providers, which may require not only financial support but some additional time for providers to adjust to the new system. The government has stated that the proposed reforms will improve financial accountability and allow for better transparency over the actual use of funds for home-care service delivery, and, while I broadly support that statement, I echo the concerns of stakeholders in seeking to ensure that those providers, particularly in rural and regional areas, are provided with support throughout the transitional period. I look forward to working constructively with the Minister for Aged Care and Senior Australians to ensure measures are in place to identify and support these particular providers through the government's reforms.

Finally, the government's proposed reforms will, in theory, reduce the amount of unspent funds sitting in providers' accounts and, instead, those funds will remain in government coffers. But transferring from one account to another is hardly addressing the inefficiency in the system identified by the royal commission. Redirecting unspent funds back into the system would greatly assist those with unmet needs as a result of funding being assigned at a level at less than assessed need or those waiting for funds to be assigned.

I expect, and my community expects, that the government will reinvest the estimated $900 million per annum in unspent funds to address the delays in the national prioritisation queue while we await the recommendations from the royal commission and the government's subsequent response. The rationing of home-care packages must end, because care should not be based on the funding whims of a government but rather be provided in accordance with assessed need. This should be a basic entitlement for everyone in the aged-care system. I think of the elderly people I've met in my electorate, those in their 90s who have waited more than a year for their aged-care package, and one elderly gentleman saying to me, 'If I'm 93 and I've waited this long, my goodness, who does qualify for an urgent package?'

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