Pricing Commissioner role in the firing line

December 15, 2016

Provider groups tell the government’s review into aged care reform that accommodation prices should be determined by the market and they call for the role of the pricing commissioner to be reviewed and possibly abolished.

Stakeholders have praised the reforms aimed at increasing transparency and competition through the publication of accommodation prices and choice of payment modes.

But most provider groups do not agree with having to seek approval from the Aged Care Pricing Commissioner for accommodation deposits greater than $550,000, citing unnecessary red tape and differing land prices among reasons, according to submissions to the Aged Care Legislated Review.

Consistent with the proposals in the Aged Care Roadmap, Aged and Community Services Australia said it supported an approach where the market determined price and government intervened in areas where there was insufficient market response, such as in rural and remote areas.

It said general consumer protections such as contract and consumer law should operate instead of additional regulation and called for the role of the pricing commissioner to be reviewed.

“ACSA does not see the need for government to regulate to protect wealthy older people, as currently occurs, via the requirement to seek Aged Care Pricing Commissioner approval of RADs above $550,000.”

Leading Age Services Australia called the introduction of a pricing commissioner an unnecessary component of the reforms and said the role should be abolished along with the accommodation pricing threshold.

It said the apparent intent of approving accommodation prices above an arbitrary $550,000 was to provide some level of consumer protection but it only served to introduce unnecessary red tape.

In light of the high rate of approval of higher accommodation price applications, LASA questioned the value in paying for the role and suggested any savings go toward enhancing residential subsidies.

LASA also raised concerns over the 28-day decision period for a resident to determine whether they paid by deposit, daily payment or both. It said the rule compromised a provider’s decision-making process on whether they offered a place and added an unnecessary layer of risk to financial planning.

The Aged Care Guild said a consumer-driven market should not involve the current level of pricing regulation and that pricing should instead be determined by what consumers were willing and able to pay.

It said applying to the pricing commissioner presented a cumbersome process that would become increasingly unnecessary and inconsistent with consumer-driven arrangements and that other factors in place ensured consumers were protected.

The maximum allowable bonds did not reflect the reality of land costs in major cities, the guild also argued in its submission.

“The commissioner adds another level of risk and uncertainty to investment decisions which is an impediment to land purchases, given the cost of land in metropolitan areas.”

UnitingCare Australia also argued that the nationally applicable cap on deposits did not reflect significant variations in property values across regions or over time.

It said this was a key example of inconsistency in the government’s aged care policies that impacted on the operation of the market for services.

“The current situation is creating extra bureaucratic processes for limited benefit to the industry or consumers. The market is sufficiently competitive to manage the accommodation deposits levied by providers,” UnitingCare Australia said.

Support for capped pricing

However, Catholic Health Australia argued there was a case for continuing with the role of the commissioner until the supply of aged care services was uncapped under a consumer-driven market-based system.

In the meantime it suggested indexing the current threshold above which deposit require the commissioner’s approval.

In contrast, dementia specialist HammondCare added its support to the arrangements for price regulation of aged care accommodation.

It said the role of the pricing commissioner ensured residents could be confident that higher prices had a fair and reasonable justification while providers with differentiated residential aged care offerings were able to set prices that reflected that difference.



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