EXPLANATORY STATEMENT
AGED CARE ACT 1997
SECTION 52-1
AGED CARE (FLEXIBLE CARE SUBSIDY – AMOUNT OF SUBSIDY IN RESPECT OF MULTI-PURPOSE SERVICES) DETERMINATION 2005 (NO.1)
Subsection 52-1(1) of the Aged Care Act 1997 provides that the Minister may determine in writing the amount of the flexible care subsidy or determine a method which must be used to work out the amount of flexible care subsidy .
This determination specifies the method for working out the rate of flexible care subsidy payable to multi-purpose services (MPS) from 1 January 2005.
MPS are flexible care services in rural locations that deliver a number of different forms of aged care, health care and community care. MPS are not funded on the same basis as residential services under the Aged Care Act 1997. These services are funded on a ‘cashed-out’ basis, i.e. allocated places are deemed to be occupied for the purposes of funding.
The rate of flexible care subsidy that is payable is dependant on whether the place type allocated is the equivalent of high level residential care, low level residential care, or community care.
The amount of subsidy for each high care place is based on:
- a basic subsidy equivalent amount which is a proportion of Residential Classification Scale RCS3 (currently 98%) with a 1.75% loading for the conditional adjustment payment;
- a concessional resident equivalent amount – regional rates apply;
- a viability supplement equivalent amount which is based on a proportion (currently 96%) of the viability supplement payable for residential aged care;
- an adjusted subsidy reduction amount (where appropriate) which is based on a proportion (currently 98%) of the adjusted subsidy reduction for residential care.
The amount of subsidy for each low care place is based on:
- a basic subsidy equivalent amount which is a proportion of Residential Classification Scale RCS7 (currently 94%) with a 1.75% loading for the conditional adjustment payment;
- a concessional resident equivalent amount – regional rates apply;
- a viability supplement equivalent amount which is based on a proportion (currently 96%) of the viability supplement payable for residential aged care.
The amount of subsidy for each community care place is based on a proportion of the Community Care subsidy (currently 94%).
The methods for calculating the total amount of flexible care subsidies for MPS for high and low care incorporate a component based on the viability supplement. The viability supplement under Part 14 of the Residential Care Subsidy Principles has recently been reviewed, with previous disincentives for growth in services and redistribution of the funding towards relatively more remote services being removed with effect from 1 January 2005.
Industry has been consulted regarding the changes to the viability supplement through the Minister’s Implementation Taskforce for implementation of recommendations arising from the Review of Pricing Arrangements in Residential Aged Care, an Industry Reference Group including the Rural Health Alliance, and with State and Territory Governments (through the Victorian State Government). Additionally, a small number of submissions were received.
This Determination incorporates the changes to the viability supplement with effect from 1 January 2005. Subsection 12(2) of the Legislative Instruments Act 2003 provides that if a legislative instrument is expressed to take effect from a time before it is registered, but the instrument would adversely affect the rights of, or impose liabilities on a person at a time before the instrument is registered, the instrument has no such effect in relation to the period before the instrument is registered.
The retrospective commencement of the Determination does not contravene subsection 12(2) of the Legislative Instruments Act 2003 because the amount of viability supplement included in the above methods for calculating flexible care subsidy in respect of MPS since 1 January 2005 has been based on the pre-January 2005 criteria. Any additional payments will be backdated to 1 January 2005. No Approved Provider will have their flexible care subsidy reduced due to the commencement of these new arrangements on 1 January 2005. However, some MPS will receive an increase in the flexible care subsidy for which they are eligible, backdated to 1 January 2005, due to the changes in the viability supplement.
The Determination also seeks to more clearly indicate which MPS include high care places which are subject to the ‘adjusted subsidy reduction amount’. These places were formerly residential care places run by State/Territory Governments and used to receive a reduced subsidy (due to the effect of the “Adjusted Subsidy Reduction”). When these places were transferred to the current MPS, they did so on the understanding that a reduction in subsidy as determined by the Minister would continue to apply.
In all other respects, however, the methods for calculating the rate of flexible care subsidy in respect of MPS are the same as those previously set out in the Determination number ACA Ch. 3 No. 17/2004.
The Office of Regulation Review has advised that no Regulation Impact Statement is required (ORR ID Number 7362).
This Determination is a “legislative instrument” for the purposes of the Legislative Instruments Act 2003.