Private Members’ bill aims to cap admin fees on Home Care Packages

Ms Sharkie introduced the Bill into Parliament yesterday, the Aged Care Amendment (Making Aged Care Fees Fairer) Bill 2021, which would put guidelines in place for administration or management fees set by home care providers.

If the legislation is approved, it would stop home care providers from charging more than 25 percent in administration fees for a Level 1 or Level 2 Home Care Package and limit them to no more than 20 percent in administration fees for a Level 3 and Level 4 Home Care Package.

“The current system is not working. Senior Australians are not getting the care they really need to stay at home,” says Ms Sharkie.

“Existing legislation just says aged care providers have to keep their management fees and administration costs to a ‘reasonable’ amount but there are absolutely no guidelines about what ‘reasonable’ looks like.

“So-called competition is not keeping prices down, and some older Australians are paying more than 30 percent and even up to half their packages in administration fees, or the costs are hidden in inflated hourly rates.

“The Government needs to stop the rorting and introduce pricing caps.”

The Bill would also stop home care providers from charging exit fees and require home care providers to offer potential clients a comparative fee schedule for at least five other approved providers in the area. If there are less than five providers in the area, the schedule must show fees for all approved providers in the area.

Information and experiences from a home care survey of over 1,200 residents aged 75 and older in the electorate of Mayo, South Australia, has been used to inform the Bill from Ms Sharkie.

One in two respondents to the survey say they were unhappy or unsure about administration fees in their Home Care Packages and half of those with packages said there had been no change to their package over time and yet were still charged the same ‘management’ fee.

Ms Sharkie says, “The vast majority of survey respondents, some 94 percent, said they were unable to afford daily care which I find staggering. Many of those surveyed reported paying administration and management fees of up to 48 or 50 percent, including on packages that are very minimal.

“Some of these people were only able to afford one hour of cleaning or gardening a fortnight, and their care plans have hardly changed from one year to another, but they were still being charged up to 50 per cent in administration fees.

“I cannot fathom how such low value, static packages can continue to incur such ridiculously high administration and management fees. It’s outrageous and it needs to be stopped. My Bill will cap fees and it will make more funding available for actual care in the home.”

Industry peak body, Leading Aged Services Australia (LASA), has expressed disappointment at the private Member’s bill as care management services have been put in the same basket as administration fees despite serving a very important and different purpose.

Chief Executive Officer (CEO) of LASA, Sean Rooney, says, “Firstly, it’s disappointing to see care management lumped together with administration. Care management – which includes assessment, monitoring and care planning – is an essential home care service that is similar to the services GPs provide within the broader health system.

“Extensive research demonstrates the importance of effective care management in delivering good outcomes for older people in care.

“Secondly, it’s important to note that providers are already unable to charge separate administration fees for overhead costs such as marketing and rent. They can only charge package management fees that cover costs such as preparing statements and quality assurance.

“Thirdly, limiting the ability of providers to charge care management and package management fees as a proportion of overall service fees doesn’t actually change provider costs. Assessment, planning and quality assurance costs will continue.”

Mr Rooney believes the regulation would further force providers to bundle more of these costs into the service fees paid by clients that use a higher volume of services.

While Mr Rooney says this may seem fairer, he believes it involves shifting costs towards the people with the highest package utilisation, such as the people most likely to have been allocated less funding than they actually need.

LASA adds that administrative costs have been falling over the last several years, down from around 25 percent in March 2017 to about 22 percent in March 2021.

“If anything, the Bill would likely create further administrative costs by adding complexity to the system,” says Mr Rooney.

“LASA’s broader analysis of home care pricing also shows that the prices charged by providers are reasonable when compared with other markets such as disability and Commonwealth Home Support.

“We sympathise with consumers with regard to having a better understanding of home care pricing and agree that where pricing is unreasonable, measures should be taken to address the issue.

“However, solutions need to be carefully targeted and avoid perverse outcomes such as discouraging investment in quality monitoring and care management.”

Shadow Minister for Health and Ageing, Mark Butler, says the Opposition supports transparency and accountability in the aged care system and that they have raised this issue in the past around administration fees on Home Care Packages.

“Older Australians receiving home care packages rightly expect their package to provide value for money and not just be dwindled away by administration fees,” says Shadow Minister Butler.

“I have previously written to the Minister for Senior Australians and Aged Care Services regarding this issue. His response was older Australians should speak to their providers.

“Last year, Labor leader Anthony Albanese laid out Labor’s initial plan for addressing the massive failings of the system, which includes ensuring transparency and accountability of funding to support high quality care.”

Minister for Senior Australians and Aged Care Services, Richard Colbeck, says the Government, through the Department of Health, continue to carefully monitor Home Care Package administration charges.

“We have implemented a number of measures to put downward pressure on the home care pricing system. Since July last year, home care package providers are required to include pricing information in all home care agreements,” says Minister Colbeck.

“Median prices for services are also published on the Department of Health website. Additionally, the Government has also invested $18.4 million into measures, including improvements to the comparability of pricing information on My Aged Care, and program assurance reviews to ensure that senior Australians receive value for money and are not charged unreasonable or excessive administration fees.

“Further measures will be considered in the context of developing the Support at Home program, which will commence in 2023.

“Support at Home will look closely at funding and pricing models for home care, alongside the broader program and regulatory framework, to ensure government funding is going towards care, not excessive administrative charges. Any changes to pricing will need to consider all fees and charges, to ensure providers do not respond by increasing other fees to recover any loss in revenue.”