Dodgy providers should be “weeded out” through new home care fee caps

The Federal Government will set a cap on how much providers can charge on administrative and management fees in the Home Care Packages (HCP) Program in the new year.

From January 1, 2023, care management prices will be capped at 20% of the package level and package management prices will be capped at 15% of the package level.

This announcement follows recent legislation that passed Parliament in late October, the Aged Care Amendment (Implementing Care Reform) Bill 2022, which included HCP caps and 24/7 nursing mandates.

Under these newly announced changes from the Government, providers will not be able to charge for package management in a calendar month where no services other than care management were delivered, except for the first month of care.

Providers will also not be able to charge separately for third party services including brokerage, handling and subcontracting charges, or charge exit amounts.

Aged care peak bodies have called this move a win for older Australians and have said these caps will give them and their families confidence that their money will go exactly where it needs to. 

Council on the Ageing (COTA) Australia Chief Executive, Ian Yates, said quality home care is vital for older Australians and this announcement is an important step in improving care and boosting accountability and transparency in the sector.

“Older Australians deserve to have their Home Care Package funds going directly to the care they need and deserve – not being used up on things like higher than average profits or inefficient management and administration,” he said.

“The issue isn’t just about price gouging or excess profits, it’s also about inefficiencies in how some providers operate. 

“The Government needs to be awake to this and make sure we’re weeding out inefficient operators who refuse to move with the times.”

Chief Executive Officer of National Seniors Australia, Professor John McCallum, agreed and said that the high demand for home care services posed no incentive for providers to keep costs competitive and that some older Australians have been paying up to 50% of their Home Care Package in administration and management fees.

Chief Executive Officer of Aged & Community Care Providers Association (ACCPA), Tom Symondson, said most home care providers won’t be impacted by these change as they already charge less than the caps, but will work with the Government to implement them smoothly.

“These caps also recognise the important role of the providers and allow them enough leeway to pay for the delivery of these important services,” he said.

Back in August, Aged Care Minister, Anika Wells, said that a review into home care found some recipients were paying up to 60% for care management or 30% for package management, and some providers charged fees for recipients exiting their package or processing invoices – which was unacceptable.

Ms McCallum explained, “The Royal Commission into Aged Care Quality and Safety found action was required to address home care charges, because some providers were overcharging.

“[Those administration and management fees are] not affordable or sustainable and is simply wrong.

“Excessive fees can restrict people’s access to services which can not only compromise their wellbeing and safety at home but also lead to premature entry into residential aged care.”

Mr Yates noted that while these changes are a big step forward, it is critical the Government monitors the system to ensure this reform is delivering on its aims, that services are priced fairly and that providers are complying.

While the caps set the maximum amount a provider can charge, he said they are not the target price for these services or an indicator of what is considered a ‘reasonable’ price, so the Government will need to consider the need for additional or lower caps in the near future.

The Government has clarified that care management is a mandatory support service and that all prices must be reasonable.

“We need full pricing transparency, and it must be compulsory for every provider, with penalties for non-compliance. Too many providers are still ignoring this obligation,” said Mr Yates.

“The Government must also ensure its pricing for services is adequate, with the assistance of the new Independent Health and Aged Care Pricing Authority, so providers are receiving the level of subsidy that’s needed to deliver services that meet independently assessed needs.”

Ms Wells told Guardian Australian that these fee cap changes would give recipients better value for money and more power to “shop around” for packages.

“We will support providers to adjust their pricing and set reasonable and competitive charges,” she said.

“I encourage providers to start planning for and talking to their care recipients about these changes now.”

From July 2024, under changes to home care, the Federal Government will combine home care services into a new streamlined ‘Support at Home’ program which will see them set home care prices.