34. Recent policy initiatives

The residential aged care structural reform package

In its 1996 Budget, the Commonwealth Government announced major restructuring of the residential aged care system. It recognises and builds on the strengths in the existing system and is designed to address pressures, putting the system on a sustainable footing for the future. It will bring the focus back to individuals by giving service providers the funding and flexibility to meet the changing needs of consumers in a way that encourages quality and excellence. Strong protections of access and care for people who are financially disadvantaged are built into the system. The reforms will be implemented in the latter half of 1997. New legislation, the Aged Care Bill 1997, has been tabled in Parliament, to provide for the reforms.

Unifying the system The Commonwealth Government pays a subsidy to service providers, based on the assessed dependency levels of individual residents. A new resident classification scale will assess the dependency of residents irrespective of their location in a nursing home or hostel. This will ensure that residents are funded according to their care needs no matter what kind of facility they are in and will allow facilities to meet residents' care needs as they change over time. The classification scale improves on assessment of the particular care needs of people with dementia and increases funding by over 30% for hostel residents with dementia.

Income testing The introduction of income-tested fees will ensure that nursing home and hostel residents make a fair and reasonable contribution to their daily living costs. The income test arrangements will be equitable, with a graduated scale so that fees will be set according to the capacity of each resident to pay. The standard fee for all residents will be set at 85% of the full rate age pension (currently $21.10 per day) for pensioners and part pensioners. Non-pensioners will pay a set rate of (currently) $26.40 per day. In addition, residents with an income in excess of the pension free area (currently $49 per week) will pay an income-tested fee of 25 cents in the dollar up to a maximum of three times the pensioner daily rate or the cost of care, whichever is the lower. Commonwealth funding will be on a per occupied place day basis using the new resident classification scale. The total cost of care of a resident will be met by a combination of Commonwealth subsidy plus standard fee plus income-tested fee if applicable, with the government subsidy reducing by the amount of any income-tested fee.

Accommodation bonds Accommodation bond arrangements were introduced for hostels 10 years ago and have worked well in enabling the hostel sector to maintain and improve the quality of hostel accommodation. This arrangement is being improved and extended to nursing homes. Residential aged care service providers who meet prescribed building and care standards will be able to charge accommodation bonds. The quantum and timing of the bond will be agreed between the service provider and resident at the time of entry.

Service providers will be able to draw down $2,600 per year from the bond for a maximum of five years and retain interest earned on the principal. The money raised will be used to meet the cost of acquiring funds to improve and upgrade facilities with the aim of creating an environment close to the standard of living that many people are accustomed to. The legislation requires that the retention amount must be used for the purpose of providing aged care services. Specifically the pool of funds created by the payment of bonds is intended for use in maintaining, upgrading or replacing building stock. The pool has a target amount of $130 million per year, to be reached in four years. Prudential arrangements will ensure the security of residents' funds in the event of a provider becoming insolvent.

Resident protections The legislation provides strong protections for residents to ensure that their access to appropriate care is based on need, not on ability to pay. Facilities will be required to set aside a proportion of places for concessional (financially disadvantaged) residents. Concessional residents will not be required to pay an accommodation bond and the Commonwealth Government will pay a higher subsidy on their behalf.

Accommodation bond arrangements will require that a resident be left with a minimum equivalent to 2.5 times the age pension (currently $22,500) in assets after paying. For incoming residents who leave a spouse, close family member or long-term carer in the family home, the home will be exempt from consideration as an asset. Residents will have a range of options in paying the bond. They may pay a lump sum up front, make periodic payments, or a combination of both. They will have a seven day 'cooling off' period after entry and six months in which to make the first payment.

The Commonwealth Government will also provide up to $10 million per year for capital upgrading and new facilities in circumstances where there is limited capacity to raise accommodation bonds, including in rural and remote areas of Australia. This will particularly benefit Aboriginal and Torres Strait Islander communities.

Quality assurance The quality of residential aged care in Australia will be improved by the introduction of a quality assurance system based on accreditation, from January 1998. A three-year transition period will be allowed for all facilities to become accredited. Accreditation will be a requirement for funding and to become accredited facilities will be assessed against an agreed set of standards covering four categories: health and personal care; resident lifestyle; safe practice and physical environment; and management systems, staffing and organisational development.

The accreditation arrangements will be overseen by an Aged Care Standards Agency, a partnership between the Commonwealth Government, the aged care industry and consumers. Previously, quality of care in nursing homes and hostels was monitored by Commonwealth-funded standards monitoring teams, against national outcome standards.

Community care

User charges In the Home and Community Care program, the Commonwealth Government is maintaining real growth and announced an increase of over 6% for 1996 - 97. In a context where user charges varied considerably from region to region and among service types as well as different service providers, the Commonwealth Government announced in 1996 that a national fees policy would be implemented in consultation with State and Territory Governments. The policy will ensure fair and consistent treatment of HACC clients across Australia and protect people on low incomes and those who need a number of services. The increased user charges will contribute to future growth in the program, which will be maintained at 6% per year.

Quality assurance The Commonwealth Government in conjunction with State and Territory Governments is currently testing a system of quality appraisal for use in HACC agencies. The method appraises performance against the nationally agreed HACC Service Standards, and incorporates both agency reporting and consumer feedback.

Prepared by the Department of Health and Family Services