Announcement date
18 November 2022
Link to announcement
Reducing admin and manager costs for aged care at home | Health and Aged Care Portfolio Ministers
Problem being addressed
The Home Care Packages (HCP) Program supports older people with complex care needs to live independently in their own home, using a consumer-directed care approach. Excessive administration and management charges by providers under the HCP Program are adversely affecting the care and services HCP recipients receive – the more providers charge for administration and management, the less funding is available to meet the needs of care recipients. The lack of transparency with what is included in providers’ published pricing also adversely affects older people’s ability to understand costs and compare market information to make informed choices.
Proposal
The Australian Government (the Government) has committed to cap administration and management charges in the Home Care Packages (HCP) Program. The proposed changes outlined in the Impact Analysis (IA) (formerly known as Regulation Impact Statement (RIS)) include:
a) capping care management at 20 per cent of the package level, update definition and require all providers to charge separately for this as a mandatory service;
b) capping package management at 15 per cent of the package level, update definition and continue to allow providers to roll into direct service costs;
c) eliminating the ability for providers to charge package management where the care recipient receives no services (other than care management) in a month;
d) specify that providers may charge 25 per cent of the agreed price for care management when a care recipient receives no other services in a month;
e) eliminating charges for brokerage and subcontracting of third-party services; and
f) once implemented, considering the need for additional caps to apply from July 2023.
The Government agreed to all of the above, except for d).
Assessed IA outcome
Adequate
Assessment comments
To be assessed as good practice as per the Australian Government Guide to Regulatory Impact Analysis, a version of the IA, containing depth of analysis proportionate to the stage of the policy development process and assessed by the Office of Impact Analysis (OIA) - formerly known as the Office of Best Practice Regulation (OBPR) - would need to have been provided to the decision maker prior to each major decision point. In addition, the IA would have benefited from further analysis on the flow-on impacts of unintended pricing behaviours (e.g., providers cost shifting and increasing prices to caps) on care recipients, particularly those in thin markets with limited choice of aged care providers.
Regulatory burden
The IA estimates there to be a one-off regulatory cost of $4.7 million across 661 HCP providers to implement pricing changes, with no on-going regulatory costs.
For any accessibility enquiries, please contact the Department of Health and Aged Care.