Federal Register of Legislation - Australian Government

Primary content

A Bill for an Act to amend the Aged Care Act 1997, and for related purposes
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Introduced HR 02 Jun 2004

Aged Care Amendment Bill 2004

Download RTF

2002-2003-2004

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

AGED CARE AMENDMENT BILL 2004

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Ageing, the Hon Ms Julie Bishop, MP)

AGED CARE AMENDMENT BILL 2004

Outline

The provisions that are to be amended fall within the Aged Care Act 1997 ("the Act"). There is an amendment to Division 28 and amendments to Division 57A of the Act.

These amendments result from the government's response to the Review of Pricing Arrangements in Residential Aged Care and announced improvements to the aged care regime set out in the Act.

The bill will, by repealing paragraph 28-1(3)(b), simplify the process involved in changing the classification of persons who are receiving care in residential aged care services.

Persons in residential aged care services have differing needs for care; in order to pay an appropriate level of subsidy the care needs of persons are assessed and broken into one of eight groups. This is known as applying a classification under the Act. As people age, it is common for their care needs to increase and therefore for their classification to change.

However, before persons can enter a residential aged care service, they have to be approved as needing care under the Act. This approval process follows a visit by an Aged Care Assessment Team ("ACAT"). The ACAT approval may be limited to low care, which tallies with care being provided at the classification levels identified as 5, 6, 7 and 8, or high care, which tallies with classification levels 1, 2, 3 and 4.

The bill will repeal the provision in the Act that has the effect of requiring another assessment by an ACAT before a person's classification level can move into the high care range of classifications while the person is living in the same aged care home.

The bill will also amend circumstances in Division 57A where, when persons enter high care residential aged care services, some people are assessed as being eligible to pay an accommodation charge to the approved provider who runs that residential aged care service. Currently, the Act limits the period that the resident can be charged to a maximum of five years. These amendments will allow the provider to levy an accommodation charge for the entire period that a person who is eligible to pay a charge lives in that facility. The Bill will only apply to people who enter the system from 1 July 2004.

However, the amendments will not impose a new requirement on persons assessed as being concessional residents. These persons will still be protected from having to pay a charge.

Financial Impact Statement

Division 28 Amendment

With this new measure, there is a fiscal risk to the Australian Government, as providers will have a greater input into the classification of residents, and hence to the cost borne by the Australian Government. This risk will be managed through an increase in the Resident Classification Scale review program, through which a risk-rated sample of the appraisals of residents are independently reviewed to ensure that the classifications based on those appraisals are correct. This increase in review activity should not significantly impact on aged care providers as the documentation that is reviewed, care plans etc, is already produced as part of caring for residents.

There may be a slight increase in the costs to the Budget which will arise by virtue of removing any delays to the flow of payment to approved providers which arise from the time taken for ACATs to conduct their reassessments of residents. However, the significant increase in resources provided to ACATs in the 2004-05 Budget to improve the timeliness of assessments should reduce the cost on the Budget.

Division 57A Amendments

This is a charge to the resident and this therefore has no financial implications for Australian Government outlays in the forward estimate period.

Regulation Impact Statement


Back to Top

Background

Provided they meet certain other conditions, approved providers of residential aged care are eligible for Australian Government subsidy for residents who are approved for residential care by the Secretary of the Department of Health and Ageing (or their delegate). This approval power is delegated to, among others, ACATs. Such approvals can be limited to a particular level of care, for example low or high level care.

The level of subsidy paid to an approved provider in respect of an aged care resident depends upon their classification by the Secretary against the eight-level Resident Classification Scale. Levels 5 to 8 of the scale correspond to low care and levels 1 to 4 correspond to high care. Sections 25-1(3)(b) and 28-1(3)(b) of the Aged Care Act 1997 prevent the Secretary from classifying a resident as level 1 to 4 if their approval is limited to low care.

The Secretary's classification of the resident is informed by an appraisal conducted by the approved provider.

If the care needs of a resident whose approval is limited to low care increases to the extent that they require a high level of care then it is necessary for them to be reapproved before they can be reclassified at high level care. The requirement for reapproval before reclassification is not consistent. Different rules obtain for reclassifications that cross the low care/high care divide to those for reclassifications within low care ranges or within high care ranges.

Problem

As people age, it is common for their care needs to increase. When this occurs, for a resident who is approved for low care, an approved provider can seek a reclassification of the resident to a higher level. If that higher level is also a low care level (that is level 5 to 8), then the resident can be reclassified without reference to an ACAT. However, if a resident's care needs increase while in the same aged care home to the extent that they now require high care, then the resident must be reassessed by an ACAT before the approved provider can receive funding at the higher rate associated with a high care classification.

This can impact on the financial viability of aged care providers as they may commence providing care at a higher level (and at higher cost) before they are guaranteed of receiving a higher level of payment. The average cost per week for the provider of a delay in reapproval for a resident currently classified at level 5 who is reclassified at level 4 is about $178.

Objectives

The objective of the proposed amendment to the Aged Care Act 1997 is to facilitate services providing the appropriate level of care to residents whose care needs increase while they remain in the same aged care home.

Proposed Action

In relation to this objective, two options are considered:

•       to make no change to the current arrangements;

•       to repeal s.28-1(3)(b) of the Aged Care Act 1997 so that a reassessment by an ACAT is no longer required when a resident whose approval is limited to low care is reclassified from low level to high level care.

Impact analysis

Affected parties

Affected parties include older Australians and their families, their care providers and the Australian Government.

Option (a): to make no change to the current regulatory arrangements

Retaining the existing framework would require no change to the existing regulatory arrangements, and would not alter the current roles of regulators.

However, the existing regime applies inconsistently with different rules for reclassifications that cross the low care/high care divide to those for other reclassifications. Moreover, the current arrangements can impact on the financial viability of aged care services because the higher rate of subsidy is not payable until the ACAT assessment is approved. Providers must either delay providing residents with a higher level of care until an ACAT can reassess the resident or begin providing a higher level of care before they are guaranteed of being paid at the higher rate.

Option (b): to repeal s.28-1(3)(b)

This option involves repeal of s.28-1(3)(b) of the Aged Care Act 1997.

It improves the financial security of aged care providers as they can be guaranteed payment at a higher rate if they provide appropriate higher level care. It also ensures there is no delay in residents receiving care at the level they require and makes the legislative treatment of all reclassifications identical.

This option involves a fiscal risk to the Australian Government, as providers

Back to Top

will have a greater input into the classification of residents, and hence to the cost borne by the Australian Government. This risk will be managed through an increase in the Resident Classification Scale review program, through which a risk-rated sample of the appraisals of residents are independently reviewed to ensure that the classifications based on those appraisals are correct. This increase in review activity should not significantly impact on aged care providers as the documentation that is reviewed, care plans etc, is already produced as part of caring for residents.

Consultation

The change has been requested by aged care providers and their peak bodies. It was recommended by the independent Review of Pricing Arrangements in Residential Aged Care following extensive consultation with aged care providers and the community.

CONCLUSION AND RECOMMENDED OPTION

Option (a) is to make no change to the current regime. This option does not address the Government's objective.

Option (b) achieves the Government's objective with minimal fiscal risk to the Australian Government.

Option (b) is recommended as it ensures legislative consistency. Option (a) is not recommended because it lacks regulatory flexibility.

IMPLEMENTATION AND REVIEW

Option (b) is legislatively simple to implement and involves repealing s.28-1(3)(b) of the Aged Care Act 1997.

The impact of the amendment on the reclassification of residents will be monitored and the introduction of measures such as a requirement for independent appraisal will be considered if it appears necessary.

AGED CARE AMENDMENT BILL 2004

NOTES ON CLAUSES

Clause 1: Short Title

1.       Clause 1 is a formal provision specifying the short title of the Bill.

Clause 2: Commencement

2.       The Bill will commence or be taken to have commenced on 1 July 2004.

Clause 3: Schedule

3.       Clause 3 is a formal provision specifying that amendments or repeals are made to the provisions set out in the Items in the Schedule.

Schedule 1: Amendments to the Aged Care Act 1997

Item 1.       Paragraph 28-1(3)(b) is repealed.

By repealing this paragraph there will no longer be a requirement that an ACAT visit and assess a person as now requiring "high care" before that rate of subsidy can be paid for that person. This applies only where the person remains in the same residential aged care service.

Items 2 & 3.       Paragraph 57A-2(1)(h) is amended and subsections 57A-7(2), (3) and (4) are repealed.

Division 57A of the Aged Care Act 1997 allows that some residents may pay an accommodation charge to the residential aged care service in which they live. These amendments are necessary to remove the five-year limitation and allow for payment of that accommodation charge to continue while a person lives in a residential aged care service.

Item 4.       Application of amendments.

The changes to the rules relating to Division 57A of the Aged Care Act 1997, that will allow residents to pay accommodation charge as long as they live in a residential aged care service, will apply only in accordance with this provision. The amendments do not apply to persons who first entered any residential care service as a care recipient (other than as a recipient of respite care) before the date the amendments commence, 1 July 2004.