The 1 July 2020 deadline for transitioning pre-1 July 2019 consumers to the new pricing rules is fast approaching. If you have clients that have not yet transitioned, you should act quickly to ensure you meet the legislated timeframes.
What do home care providers have to do by 1 July 2020?
As home care providers know, since 1 July 2019, there has been a legislative requirement for providers to publish their Standard Pricing Schedule on the My Aged Care website and to include this in their agreements. There has also been a prohibition on charging a separate fee for business costs (more commonly referred to as an administration fee). Rather, providers are entitled to charge a “package management fee”.
Where a consumer is paying a different fee to the amounts in the Standard Pricing Schedule (whether higher or lower), the reason for this must be set out in their agreement.
For consumers who commenced prior to 1 July 2019, these requirements must be implemented by 1 July this year.
For existing clients, these changes must be implemented through a variation process that complies with the rules in the User Rights Principles 2014 which state variation can only occur “by mutual consent following adequate consultation”.
Some providers are also seeking to review their service fees prior to 1 July 2020. Unless those changes are in accordance with the terms of the client agreement (eg a CPI based increase), then these changes must also occur through a variation process.
What does a variation require?
It is not enough to simply notify clients of the changes by sending them a letter, consultation must occur. There is no requirement that the consultation take place in person, however there should at least be a phone discussion with the client to give them the opportunity to understand the changes and ask questions.
For example, one approach may be to:
- Write to the consumer, explaining the proposed changes to their fees and attach the price schedule.
- After an appropriate period, contact the client to discuss it with them. In this, we suggest using a checklist to ensure your staff cover the key points.
- Send a follow up letter or agreement that they can sign agreeing to the changes.
What if consumers refuse to sign?
Because the legislation says that the changes must be implemented by 1 July 2020, if consumers do not agree to the proposed variation to bring their agreement in line with the new rules, this will create compliance issues for the provider. It is unfortunate that the transitional provisions of the legislation do not allow for this. A provider faced with this issue will need to seek legal advice.
Russell Kennedy is currently assisting a number of providers in transitioning their pre 1 July 2019 consumers to the new Pricing Schedule as well as in negotiating other fee variations. If you require advice or assistance on the process of negotiating fee variations, please contact Anita Courtney or Solomon Miller.
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Here are some helpful resources:
Please contact us if you need any further advice or assistance with any of the above.