Home Care Package pricing tool to assist provider transparency requirements

Providers will be able to publish accurate pricing schedules and full price lists for HCP utilising the new Pricing Tool, which is legally required since 1 July 2019 under the Federal Government’s pricing transparency rules for home care.

The aim of the transparency requirements was to allow older Australians and their families to better understand how much a HCP package can cost and allows for prices to be compared against different providers.

However, creating accurate pricing lists can be difficult, which is where the HCP Pricing Tool can help. 

LASA Chief Executive Officer (CEO), Sean Rooney says, “This unique tool has been designed to empower home care providers to understand their costs.

“Setting accurate prices to deliver quality, competitive services is a key strategy that can define business success.

“It offers a solid foundation for pricing and will simplify the new requirements to review pricing schedules annually and keep information up to date.”

By 1 July 2020,  all HCP providers have to ensure their current clients’ home care agreements have been reviewed and include a copy of their pricing schedule, as published on My Aged Care.

From the start of July, providers must charge the prices in the schedule, unless there is a different agreement, and cannot charge separate amounts for any business-related administrative costs. Any administration charges have to be reasonable and included in direct services prices.

Mr Rooney says that if providers do not comply with the changes, there has been indication that regulatory action will be taken. 

“The Aged Care Quality and Safety Commission audits of home care providers indicate they are asking for client financial statements and reviewing financial governance arrangements,” explains Mr Rooney.

“When reviewing applications to become an Approved Provider, the Commission is also requiring detailed financial metrics in business plans.

“The Department of Health has advised LASA that not all providers are meeting the full requirements relating to pricing transparency.” 

Some providers find it difficult to determine unit pricing since there are many factors that can influence it, including fixed and variable costs, service volumes, economies of scale and scope, plus the delivery of direct services or through subcontractors.

These prices need to be presented in dollar values, not percentages, and it can be a challenge for some providers when sorting case management, package management and administration costs.

“Pricing can be critical in a competitive marketplace, with around 950 approved providers who are all eager to expand service levels,” says Mr Rooney.

“That’s why the Pricing Tool is so useful because its framework is consistent with the legal requirements of the price publishing schedule and the specified care and services that are provided.”

Current subsidy rates for all four package levels are included in the tool, since they are adjusted regularly by the Department of Health, and purchasers will be provided with an updated tool to review their prices during those times.

Also included in the Pricing Tool are monthly and annual data sheets which can be used to analyse both time periods, including forecasting across a year.

HCP providers will be able to set key performance indicators (KPIs) for client numbers, profitability, care hours and expenditure on services.

The Government legislation around moving payment in advance to payment in arrears for Home Care Packages is temporarily on hold because of COVID-19, however, the Pricing Tool is designed to assist HCP providers to analyse the impact this change will have on their cash flow situation. 

The tool was created in collaboration with a consulting and advisory business, O’Connell Advisory.

To inquire about the new Home Care Package Pricing Tool, contact members@lasa.asn.au or 1300 111 636.