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Aged Care Alert: New governance and accountability requirements for approved providers

Victor Harcourt, Solomon Miller, Anita Courtney, Connor Farrell

As part of the federal government’s response to the Aged Care Royal Commission, a second update of legislative amendments have been proposed. The Aged Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill 2021 (the Bill), which passed through the House of Representatives last year, will make changes to eight key areas, including the governance of approved providers (APs), the screening of aged care workers and governing persons of APs, a new code of conduct, and the extension of incident management and reporting.

While the Bill, if passed, will make changes to a wide range of areas, this article focuses only on the proposed changes to the governance requirements relating to the governing bodies and key personnel of APs as well as new powers of the Aged Care Quality and Safety Commissioner (Commissioner) to request information relating to refundable deposits or accommodation bonds (RADs) used to make loans.

Current timing status

  • The Bill was recently read for a second time in the Senate and will be debated soon. Most of the new governance requirements are proposed to commence on 1 March 2022.
  • However, for APs who are already in existence on this date, the requirements relating to governing bodies and the constitutions of APs will apply from 1 March 2023 onwards.

The new rules proposed

The new rules described below reflect the Bill in its current form however, amendments may be made before the Bill becomes legislation.


Proposed changes

Governing bodies of APs

There will be new rules relating to the governing bodies of APs, provided they are not State/Territory or local government authorities. These are likely to include:

Members of governing bodies

  • APs must ensure that a majority of members of their governing body are independent non-executive members and that at least one member of the governing body has experience in the provision of clinical care. This will not apply to APs who have both fewer than five members in their governing body and who provide care to less than 40 care recipients. APs will be able to apply for an exemption from these responsibilities.

Quality care advisory body

  • APs must establish, and continue in existence, a quality care advisory body which will, every six months, give a report to the governing body of the AP about the quality of aged care being provided. The governing body must consider these reports when making decisions in relation to the quality of aged care provided, and advise in writing how such consideration was done.

Consumer advisory body

  • APs must offer, at least once every 12 months, consumers the opportunity to establish a consumer advisory body to give the governing body feedback about the quality of aged care provided. If such a body is established, the AP must require its governing body to consider any such feedback when making decisions relating to the quality of care provided and advise in writing how the feedback was considered.

Appropriately qualified/skilled staff

  • APs must require their governing bodies to ensure that staff members have appropriate qualifications, skills or experience to provide the care or other services the AP provides. Staff members must also be given opportunities to develop their capability to provide that care or other services.

Annual statements

  • APs must provide an annual statement which will be made publicly available on My Aged Care, which is designed to provide consumers, and their families with clear, timely and meaningful information about the quality of services. The Accountability Principles will specify the information to be included in the annual statement (which is proposed to include details of key personnel, financial information and complaints etc.).

Constitution requirements

  • If the AP is a body corporate, has a constitution and is a wholly owned subsidiary of a holding company (that is not also an AP), then the AP’s constitution must not authorise a director to act in good faith in the interests of the holding company.

Key personnel of APs

There will also be new rules relating to the key personnel of APs:

Notification for changes of key personnel

  • APs will need to notify the Commissioner within 14 days if an individual becomes or ceases to be one of their key personnel. Failing to do so will be an offence and attract a fine of 30 penalty units (currently $6,660). APs will also need to provide reasons why a person has ceased being one of their key personnel.

APs considering suitability matters

  • At least once every 12 months, APs will need to consider suitability matters in relation to their key personnel and keep a record of such consideration. Failure to comply will also be an offence and attracts a penalty units.

Key personnel to notify of changes in suitability matters

  • Key personnel of APs that are corporations will have a personal obligation to notify the AP if they become aware of a change of circumstances relating to suitability matters. Failure to comply will also be an offence and attract a penalty. This new rule places extra responsibilities on key personnel, rather than APs.

Commissioner’s new powers

  • The Commissioner will also have new powers to request that an AP give information relevant to the suitability of their key personnel and determine that key personnel of certain APs are not suitable to be involved in the provision of aged care.

Commissioner’s new power to request information relating to RADs used for loans

  • The Commissioner will have new powers to request specified information when APs have used RADs to make loans. If an AP has the certain information in its possession, it must provide it.  Information that the Commissioner can request includes:
    • A copy of the agreement;
    • Details of any security in respect of the loan;
    • Evidence that the rate of interest payable on the loan has been set on a commercial basis;
    • Details of any review of the loan that must or may be conducted;
    • Details of the commercial basis of the loan; and
    • Any other information or documents relating to the loan.

These categories of information inadvertently articulate what may need to be on a loan agreement to meet the disclosure requirement.

Purpose of new rules proposed

The new rules above are being proposed in an effort to ensure that the governing bodies of APs have the right mix of skills, experience and expertise to fulfil their duties. They also aim to improve transparency and accountability.

How we can help

Please contact Solomon Miller, Victor Harcourt, Anita Courtney or any member of our Aged Care Team for assistance.

If you would like to keep up to date with Alerts, news and Insights from our aged care team, you can subscribe to our mailing list here.

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