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. 2)
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 July 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%).
All residential care subsidy rates are indexed on 1 July each year. The rate of flexible care subsidy for MPS has been indexed in line with residential cares subsidy rates. The index incorporates movements in wage costs and non-wage costs. The wage costs index is based on the Safety Net Adjustment determined by the Australian Industrial Relations Commission as a proportion of Average Weekly Ordinary Time Earnings. The non-wage costs index is based on the Consumer Price Index exclusive of the impact of A New Tax System consistent with a whole of government decision.
As the indexation of this rate of subsidy uses a well-established formula for indexation, no specific consultation with industry was undertaken with respect to this instrument.
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.
Overview
The Aged Care (Flexible Care Subsidy – Amount of Subsidy in Respect of Multi-Purpose Services) Determination 2005 (No. 2) was enacted to specify the method for calculating the rate of flexible care subsidy payable to multi-purpose services (MPS) from 1 July 2005, in accordance with Subsection 52-1(1) of the Aged Care Act 1997. This legislation was introduced to address the need for a clear and consistent method for determining subsidies for services that provide a variety of aged, health, and community care in rural areas, which are funded differently from residential services. The determination was made by the Minister and is a legislative instrument under the Legislative Instruments Act 2003. The policy objective of this determination is to ensure that MPS are funded appropriately based on the type of care provided, with rates indexed annually to reflect changes in wage and non-wage costs.
Scope and Application
The Aged Care (Flexible Care Subsidy – Amount of Subsidy in Respect of Multi-Purpose Services) Determination 2005 (No. 2) applies to the flexible care subsidy rates for multi-purpose services (MPS) under the Aged Care Act 1997. MPS, which provide various forms of aged, health, and community care in rural areas, receive their funding on a 'cashed-out' basis, unlike residential services. This determination outlines the method for calculating the rate of flexible care subsidy for MPS from 1 July 2005, specifying different rates based on the type of care provided: high level residential care, low level residential care, or community care. The rates are determined by various factors including the Residential Classification Scale, concessional resident equivalent amounts, viability supplement equivalent amounts, and an adjusted subsidy reduction amount where applicable. These rates are subject to annual indexation to reflect changes in wage and non-wage costs. Although the indexation formula is well-established, no specific consultation with the industry was required for this determination. Furthermore, the Office of Regulation Review has determined that a Regulation Impact Statement is not necessary for this legislative instrument.
Key Provisions
The Aged Care (Flexible Care Subsidy – Amount of Subsidy in Respect of Multi-Purpose Services) Determination 2005 (No. 2) (the Determination) sets out the method for calculating the flexible care subsidy payable to Multi-Purpose Services (MPS) under subsection 52-1(1) of the Aged Care Act 1997. This method is applicable from 1 July 2005 and is tailored to the nature of MPS, which provide a range of aged care, health care, and community care services in rural areas. These services are funded on a 'cashed-out' basis, meaning that allocated places are considered occupied for funding purposes. The rate of subsidy varies depending on the type of care provided, categorised as high level residential care, low level residential care, or community care.
Under the Determination, the subsidy for high care places is calculated based on a basic subsidy equivalent amount, which is a proportion of the Residential Classification Scale RCS3 (currently 98%) with a 1.75% loading for the conditional adjustment payment. Additionally, it includes a concessional resident equivalent amount based on regional rates, a viability supplement equivalent amount (based on a proportion of the viability supplement for residential aged care), and an adjusted subsidy reduction amount (based on a proportion of the adjusted subsidy reduction for residential care). For low care places, the calculation includes a basic subsidy equivalent amount, a concessional resident equivalent amount, and a viability supplement equivalent amount. Community care places are based on a proportion of the Community Care subsidy.
The Determination also outlines that all residential care subsidy rates are indexed on 1 July each year. The flexible care subsidy for MPS is indexed in line with residential care subsidy rates, incorporating movements in wage costs and non-wage costs. The wage costs index is based on the Safety Net Adjustment determined by the Australian Industrial Relations Commission, while the non-wage costs index is based on the Consumer Price Index, excluding the impact of A New Tax System. This well-established formula for indexation did not necessitate specific consultation with the industry for this instrument.
Regarding obligations and requirements, the Determination mandates that the flexible care subsidy for MPS be calculated according to the specified method. This requirement applies to all entities providing multi-purpose services that are eligible for the subsidy under the Aged Care Act 1997. Failure to comply with the Determination may result in penalties, although specific civil or criminal consequences are not detailed within the text of the Determination itself. However, penalties for breaches of the Aged Care Act 1997 can be significant, reflecting the importance of adhering to the prescribed methods and requirements for subsidy calculations.