1. Overview - why this matters now?
The Aged Care (Consequential and Transitional Provisions) Rules 2025 (Transitional Rules) allowed participants and providers 90 days from the date of the Services Australia determination regarding the participant’s contributions, to enter into a compliant service agreement. A new Support at Home agreement or a variation to an existing agreement is necessary to remain compliant because the new Aged Care Act 2024 requires that a provider have a service agreement that meets the specific requirements of the legislation in place in order to deliver funded aged care and in turn, claim for subsidy.
We understand that most participants were provided with their Services Australia determination on 3 November last year, meaning the 90 day transition period has now elapsed.
To continue lawfully delivering funded aged care services to participants, providers must ensure they have entered into a compliant agreement with each participant. Sending the participant a copy of the agreement (or variation letter) without them actually agreeing to its terms is not enough. While verbal consent is sufficient, providers must ensure there has been mutual consent to all terms of the agreement.
2. What happens at the end of the 90-day period?
If a provider has not entered into a compliant agreement with a participant at the end of the 90-day period, they will be in breach of the legislation. This has been publicly confirmed by the Commonwealth Department of Health, Disability and Aged Care (Department) which has stated:
“If a service agreement or variation has not been finalised after 90 days, the provider would be in breach of their registration conditions. The provider would then be able to cease services to the participant with a required notice period as per the Aged Care Rules 2025”.
Service agreements and the Aged Care (Consequential and Transitional Provisions) Rules 2025
Accordingly, where a participant has not entered into an agreement (or valid variation) by the end of the 90 day period:
- The provider may be considered to be operating without a compliant service agreement under the New Act. Continuing to provide services without a compliant agreement is a breach of the provider’s registration conditions, potentially exposing them to compliance action.
- Providers may be unable to claim for funded aged care services delivered after the deadline. Claims may be denied immediately or retrospectively if the Department later identifies that services were provided without a valid agreement.
What to do if you have not entered into an agreement in time?
The Transitional Rules allow providers to lawfully cease providing funded aged care services where a participant has not entered into a compliant agreement within the 90 day timeframe.
While ceasing services may be necessary, the provider must still comply with the security of tenure provisions, which requires 14 days’ written notice.
As part of this process, providers should retain evidence of attempts to negotiate and enter into an agreement with a participant. In particular, providers should have evidence that they engage with participants to begin finalising or varying their service agreement within 30 days of their individual contribution rate determination being made (as this was legally required).
If a provider wishes to continue to provide services but are unable to enter into an agreement, the Department has further clarified that:
“On that basis, if a provider cannot claim subsidy without a consented SaH service agreement, and a participant declines (or is unable) to consent within the 90-day period, the provider would be unable to continue delivering government-funded services. In that circumstance, the provider may offer services on a private fee-for-service basis (subject to the participant’s agreement)”.
Service agreements and the Aged Care (Consequential and Transitional Provisions) Rules 2025
How we can help
We have prepared a template “reminder” notice to participants that sets out that the provider will cease delivery of services if the agreement is not entered into. This letter encourages participants to enter into a new agreement as soon as possible. This template also includes a template termination notice to use in a situation where a participant does not enter into an agreement by the end of the transition period. We have also developed a template “termination notice” and “withdrawal” which can be used in the event that an agreement is reached during the 14 day notice period.
Please reach out if you need any assistance to Anita Courtney (acourtney@rk.com.au), Solomon Miller (smiller@rk.com.au), Victor Harcourt (vharcourt@rk.com.au), Johanna Heaven (jheaven@rk.com.au) or a member from Russell Kennedy's Aged Care Team.
If you would like to keep up to date with Alerts, News and Insights you can subscribe to our aged care mailing list here.
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.