Home Care Changes – A Practical Perspective – Unspent Funds
The next chapter in the reform of the Home Care Packages Programme has begun with laws now passed to implement Stage 1 of the reforms. These changes will begin on 27 February 2017 and will take the Home Care industry a step closer to a market based system driven by supply and demand rather than government quotas. There are more changes to come with the Government aiming to integrate the Home Care Packages Programme and Commonwealth Home Support Programme from July 2018.
In this series of articles we will examine how the changes will impact on providers from a practical perspective. This edition looks at the new requirements for dealing with unspent funds.
The Current Position
When a consumer leaves a provider, any care fees paid in advance (or overpaid fees) must be refunded to the consumer but any excess funds that have accumulated from the consumer’s home care budget, regardless of whether it is unspent fees or subsidy, including any contingency that has accumulated, can be retained by the provider.
The cautionary note is that the Home Care Agreement between the provider and consumer should state that any amount of home care fees paid by the consumer that has not been spent and that is not refundable under the Aged Care Act will not be refunded if the provider ceases to provide home care to the consumer.
February 2017
There will be significant changes to how providers must deal with unspent funds:
Care fees paid in advance or overpaid must be refunded to the consumer;
Unspent fees must be refunded to the consumer; and
Unspent subsidy must be refunded to the government.
This means that it will no longer be possible for providers to retain unspent accumulated contingency amounts.
Unpaid Invoices
However, this does not mean that all cash held for a consumer will have to be refunded. For example, if there are invoices from other care or service providers that have not been received or have been received but not paid, the funds required to pay those bills can be retained.
Administration Fees
It will also be possible for providers to charge an administration fee or exit fee to cover the cost of undertaking a final reconciliation of funds and distributing the surplus to either the consumer (or the consumer’s estate) or the government. Any such fee must be:
disclosed to the consumer prior to services commencing;
included in the Home Care Agreement; and
paid from unspent funds. The Government’s position is that if there are no funds to reconcile, there is no basis for the fee to be charged.
Arrears
Providers will not be able to use any unspent subsidy to fund unpaid care fees or the exit fee. If a consumer is in arrears when he/she leaves the provider, the provider will have to attempt to recover those arrears from the consumer or the consumer’s estate.
Key Points
From 27 February 2017:
Unspent funds must be returned to either the consumer or government; and
Any fee payable for reconciling unspent funds must be disclosed.
Accurate financial reporting will become even more critical than it is now to ensure that:
Timely and accurate reconciliation of funds can occur;
Consumers with fees in arrears are closely managed to avoid bad debts; and
All service providers are paid before any funds are refunded.
For more information on these issues please contact Joanne O’Brien.