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Federal Budget raises concerns for aged care sector

Victor Harcourt, Solomon Miller, Libby Pallot, Rosemary Southgate, Gareth Kerr, Johanna Heaven

The Australian Government announced as part of the 2021-2022 Federal Budget, that it would invest $17.7 billion over five years into the aged care sector with a promise of $7.8 billion to reform residential aged care and a $6.5 billion boost to home care. This announcement coincided with the release of the Governments initial response to the recommendations in the Aged Care Royal Commission into Quality and Safety Final Report (the Report). The news comes at a time when the financial strain on providers is overwhelming. The past year has been extremely difficult for the entire aged care industry. The sector has faced novel challenges during the COVID-19 pandemic which are still ongoing.

The Report criticised the sector for neglect, mistreatment and poor quality services. The Report found that the scheme implemented in the Aged Care Act 1997 is flawed and needs considerable change. In light of this, the Royal Commission called for rights-based legislation, reform in the regulators’ processes and further funding across the 148 recommendations. Significantly, the government announced that it is adopting most of the Royal Commission’s recommendations, with the recommendations of Commissioner Briggs being primarily adopted. This involves substantial legislative change, and as such a new rights-based Act will be developed (via adoption of recommendations 1-3 of the Report).

We outline some key areas that providers should be aware of with respect to the recent announcements.

The 2021 - 2022 Federal Budget – Residential Aged Care

The key areas of reform arising from the budget are:

  • reforming the care provided in residential aged care facilities;
  • further funding for home care;
  • improved access to care;
  • increasing the skill of workers in the sector; and
  • governance.

Reforming the sector - A new Aged Care Act

To implement the changes announced in the budget the Government has accepted the Royal Commission’s recommendation to implement a new Aged Care Act. One of the key reform recommendations (recommendation 14) is the adoption of a new general, positive and non‚Äźdelegable statutory duty on any approved provider to ensure that the personal care or nursing care they provide is of a high and safe standard so far is reasonable, having regard to:

  1. the wishes of any person for whom the provider provides, or is engaged to provide, that care;
  2. any reasonably foreseeable risks to any person to whom the provider provides, or is engaged to provide, that care; and
  3. any other relevant circumstances.

This will likely apply to all key personnel (including Board members) meaning that individuals can be held accountable when things go wrong.

Duty of Care

Further to this, any entity which facilitates the provision of funded aged care services will have a duty to ensure that any worker whom it makes available to perform personal care work has the experience, qualifications, skills and training to perform the particular personal care or nursing care work the person is being asked to perform.

A ‘non-delegable duty’ in this context means that an approved provider cannot delegate the duty to another person or entity, i.e. an approved provider who is subject to the duty is liable for its breach whether the breach was committed by an employee or an independent contractor.

Penalties for breaching your Duty of Care

The Royal Commission recommended that there should be a civil penalty for the breach of this new duty if:

  • the act, omission or conduct giving rise to the breach also gives rise to a failure to comply with one or more of the Aged Care Quality Standards, and
  • the breach gives rise to harm, or a reasonably foreseeable risk of harm, to a person to whom the provider is providing care or engaged under a contract or understanding to provide.

Additionally, it was recommended that the Act should also provide that such a contravention attracts accessorial liability for key personnel who:

  1. aids, abets, counsels or procures the approved provider to commit the contravention, or
  2. is in any other way, directly or indirectly, knowingly concerned in, or party to, the contravention by the approved provider.

Who is responsible for the Duty of Care?

Key personnel includes those who have authority or responsibility for, or significant influence over, planning, directing or controlling the activities of the approved provider at that time; as well as any person who is responsible for the nursing services provided by the service and who holds a recognised qualification in nursing; and any person who is responsible for the day to day operations of the service; whether or not the person is employed by the entity.

We are of the opinion that if this recommendation is implemented “as is” then the duty will apply to most management of an approved provider. Approved providers will need to ensure that their staff are adequately trained to minimise the risk of breaching any such duty, given the penalties which may be involved. These penalties will likely extend to Board members given that they would likely fall under the definition of “key personnel”. It is therefore imperative that providers ensure their governance system is effective and in line with best practice.

Residential Care Funding

The Government announced it will increase the residential care funding base through a new Government-funded Basic Daily Fee supplement increase of $10.00 per resident per day (which was recommended by the Royal Commission). This is a significant increase however unlikely to suffice given the Government is proposing to require residential care facilities to deliver, amongst other things, an average of 200 care minutes per resident per day from 1 October 2023, 40 of those minutes being time with a registered nurse.

Reporting Requirements

The Government stated that from 1 July 2022 residential providers will be required to report and publish care staffing minutes as well as provide this information to residents and representatives. The Government has also adopted the recommendation that providers must have a registered nurse onsite for 16 hours per day (Recommendation 86). These requirements will be codified in the new Aged Care Act and therefore to breach them would likely result in sanctions or under the new statutory duty, a civil penalty.

Compliance and regulation – how will this work?

The Government has promised to fund these additional minutes, however, there has been no guidance provided from the Government yet as to how providers are expected to comply with this new requirement. Providers already face significant challenges to provide enough skilled staff to cover the current arrangements, it is not clear how providers will be able to staff more shifts. In our view, this will likely result in scrutiny by the regulators and sanctions as a result of non-compliance given the limited funding available and high expectations of minutes of care provided. It is unclear how this will be regulated i.e. whether it is an average of care minutes or a resident by resident calculation, however it is clear that the reporting requirements will give the regulators clear evidence to impose sanctions where this is not fulfilled.

Much work is yet to be done in this space, for example the Government has not commented on how rural and remote providers are expected to have a registered nurse on site for most of the day while some are already struggling without the extra required hours.

In our experience, the regulators have been very harsh on providers who they perceive are not providing enough staff. The focus has been on consumer and staff feedback rather than evidence provided by the provider. We look forward to a more objective approach being implemented that will provide the regulator and providers with a concrete benchmark.

A new Funding Model

The Government has announced that the funding model will change, including:

  • Changes in relation to Independent pricing;
  • The AN-ACC funding tool will be introduced in 2022; and
  • ACAR is being dropped and instead funding will be allocated to the individual.

The Government has stated that the shift to the AN-ACC model aims to:

  • “make funding for residential aged care fairer and more stable;
  • improve the assessment process for funding so it is more accurate and nationally consistent; and
  • remove the paperwork burden on aged care providers and their workers so they can spend more time on providing safe and effective care.”

The shift began this past April with the Government rolling out AN-ACC assessments in all government funded resident aged care facilities. This will continue for 12 months and is aimed at ensuring the transition is as smooth as possible. During this time there will be no change to the ACFI funding system.

To access the Government’s publication on this clickhere.

The 2021 – 2022 Federal Budget – Home care

The Government has announced funding for an additional 80,000 Home Care Packages. Whilst this is positive for the sector, the Royal Commission noted that in 2020 nearly 103,000 people were still on the wait list for a Home Care Package. Note that the recent “improved payment arrangements for home care” legislation has also come with a promise of available funding for further packages through reducing unspent funds, despite this we fear people will still remain on waiting lists.

The Government has adopted a number of recommendations surrounding home care but has not provided any clear outline of what the “new” care at home program will look like. It is likely that this will include greater funding for carers who look after their aged loved ones as well as greater access to respite care.

Resourcing shortages in home care workforces

Although very welcome, providers already have significant resourcing shortages and as such significant work will need to be done to ensure the workforce is able to provide services for these new packages. It is all well and good to fund the packages, but there must be assurances that these packages can be serviced by providers. We hope the plans to increase and upskill the workforce will address the increase of package.

Greater funding for home care purchases outside current scope of services

Interestingly, the Government has adopted the recommendation that there be more funding for purchases outside the scope of the current permitted items under the Quality of Care Principles 2014 such as home modifications. Given the regulators stringent approach to this area in recent times, we welcome further clarity from the Government about what home care funding can be used for and how it will fit into the new streamlined.

We are here to help

Contact one of our expert team members to ensure that you are compliant and best placed to make the most of the new regime: Victor Harcourt, Solomon Miller, Libby Pallot, Rosemary Southgate, Gareth Kerr, Johanna Heaven.

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. We also have a broad range of standard and tailored template aged care agreements, policies and other documents you can find more information about here.

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