Opportunity to Improve the Draft Rules
With the delay to the commencement of the Act, the Government have an opportunity to address some of the more problematic aspects of the draft Rules. One of these is the section that regulates how providers advertise their pricing.
Current Pricing Requirements Under the Act
Home care providers are familiar with the current Act’s requirements for providers to publish their prices for a small list of “common services” being nursing, personal care, respite care, domestic assistance and gardening. This is uncontroversial and consistent with consumers’ rights to transparency and to enable them to compare providers.
New Draft Rules: A Shift in Approach
However, the requirements in the draft Rules are very different and will cause confusion for consumers, as well as being unnecessarily administratively burdensome for providers. The key provision is section 155-80 of the Aged Care Rules which requires provider to:
(2)... publish on the registered provider’s website the most common price that the registered provider charges individuals for each service in the following service types:
(a) allied health and therapy;
(b) care management;
(c) domestic assistance;
(d) home maintenance and repairs;
(e) home or community general respite;
(f) meals;
(g) nursing care;
(h) personal care;
(i) restorative care management;
(j) social support and community engagement;
(k) therapeutic service for independent living;
(l) transport.
(3) The pricing information published for the purposes of subsection (2) of this section must:
(a) align to the unit type specified in the service list for the applicable service; and
(b) specify the most common price for delivery of the service during standard business hours; and
(c) specify the most common price for delivery of the service on weekdays outside standard business hours; and
(d) specify the most common price for delivery of the service on Saturdays; and
(e) specify the most common price for delivery of the service on Sundays; and
(f) specify the most common price for delivery of the service on public holidays.
Historical Pricing vs. Intended Pricing
At first glance, this appears similar to the current requirement for providers to publish their prices for “common services”. However, rather than allowing providers to advertise their intended prices, the definition of “common price” is defined as:
“the price for a service that the registered provider has most frequently charged during the previous 2 calendar months, calculated at the end of the following: (a) August; (b) October; (c) December; (d) February; (e) April; (f) June.”
In other words, providers must publish historical pricing that may not reflect what they actually intend to charge participants.
Risks of Misleading Pricing Information
This is problematic for various reasons. For one thing, providers have legitimate reasons to put up their prices routinely. For example, the prices that providers charge from 1 November this year will be higher than their “common price” for September and October. Forcing providers to publish the price they have charged in the prior to 2 months is like a retailer advertising the price they charged for a product last week, not the price they would charge if you buy today. This would be an obvious breach of the Australian Consumer Law.
Distortions in “Most Frequently Charged” Pricing
The requirement to publish pricing based on the price “most frequently charged” in the last 2 months also doesn’t allow for situations where the price may be significantly distorted by given circumstances. For example, a price may look unusually high in circumstances where a provider was forced to outsource a service in a given month. In other words, there may be a significant difference between the most “frequently” charged price versus the median and average prices.
This is also vulnerable to distortion where a service is infrequently provided. For example, there may be insufficient data pricing for the delivery of physiotherapy services on a Sunday for the “common price” to be meaningful.
Limitations of a Single Published Price
Another issue is that providers can only publish one price. As such, it doesn’t allow the price list to reflect other likely variables, such as:
- Variation in contractors’ pricing; and
- Variation between metro and regional services. Importantly, the legislation requires that each provider publish only one price; and doesn’t allow for distinction between areas, or the “service delivery branch”. Again, for a participant in a rural area, the price that a provider charges for a service in the city is meaningless.
A Better Approach to Transparency
In RK’s view, these Rules are flawed. While we can see the case for requiring providers to monitor and report on the prices they actually charge, that objective can be met by requiring providers to report on the prices they have charged to the System Governor as required by s 166-1505.
However, for ensuring transparency and to ensure participants are provided with meaningful information, providers need to be required to publish the prices that they intend them to pay for services if they engage the provider.
How can we help?
Please reach out if you need any assistance to Victor Harcourt (vharcourt@rk.com.au), Anita Courtney (acourtney@rk.com.au), Solomon Miller (smiller@rk.com.au) or a member from Russell Kennedy's Aged Care Team.
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Disclaimer
The information contained in this Alert is intended as general commentary only and should not be regarded as legal advice. Should you require specific advice on the topics discussed, please contact the firm directly.