EXPLANATORY STATEMENT
AGED CARE ACT 1997
SECTION 52-1
AGED CARE (AMOUNT OF FLEXIBLE CARE SUBSIDY – MULTI-PURPOSE SERVICES) DETERMINATION 2006 (NO. 1)
Subsection 52-1(1) of the Aged Care Act 1997 provides that the Minister for Ageing may determine, in writing, the amount of the flexible care subsidy or a method that must be used to work out the amount of flexible care subsidy.
The Aged Care (Amount of flexible care subsidy – multi-purpose services) Determination 2006 (No 1) (the Determination) specifies the method for working out the rate of flexible care subsidy payable to multi-purpose services (MPS) from 1 July 2006.
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. MPS are funded on a ‘cashed-out’ basis, that is, allocated places are deemed to be occupied for the purposes of funding.
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 care 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. Conditional Adjustment Payment (CAP) that provides real growth, from which providers may wish to pay wage increases, is also factored into the flexible care subsidy payable to MPS.
The Determination provides for the total amount of flexible care subsidy payable for a MPS for a day. This total amount comprises the amount payable for a day in respect of the MPS high, low and community care places, and the respite supplement equivalent amount.
The amount of subsidy payable to MPS for high care places is based on:
- a basic subsidy equivalent amount, which is a proportion of Residential Classification Scale RCS3 (currently 98 percent) with a 5.25 percent loading for the CAP;
- a concessional resident equivalent amount (regional rates apply);
- a viability supplement equivalent amount, which is based on a proportion (currently 96 percent) of the viability supplement payable for residential aged care; and
- an adjusted subsidy reduction amount (where appropriate), which is based on a proportion (currently 98 percent) of the adjusted subsidy reduction for residential care.
The amount of subsidy payable to MPS for low care places is based on:
- a basic subsidy equivalent amount, which is a proportion of Residential Classification Scale RCS7 (currently 94 percent) with a 5.25 percent loading for the CAP;
- a concessional resident equivalent amount (regional rates apply); and
- a viability supplement equivalent amount, which is based on a proportion (currently 96 percent) of the viability supplement payable for residential aged care.
The amount of subsidy payable to MPS in respect of community care places is based on a proportion of the Community Care subsidy (currently 94 percent).
The Australian Government’s 2005-2006 Budget allocated $9.3 million over four years for an additional respite supplement for MPS that provide respite services for older Australians and their carers living in rural and remote areas. The respite supplement equivalent amount payable in respect of MPS for a day, is determined in accordance with a sliding scale of payments set out in section 12 of the Determination for the total number of high and low care places allocated to the MPS. The payments are indexed in the Determination.
In this Determination, Schedule 1 has been removed because the basic subsidy equivalent amount is the same for each State and Territory and therefore, the amount has been used in the definition of factor ‘B’ in subsection 10(3).
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 Determination.
This Determination revokes the Aged Care (Amount of flexible care subsidy – multi-purpose services) Determination 2005 (No.3), which is also cited as ACA Ch. 3 No. 24/2005.
This Determination is a “legislative instrument” for the purposes of the Legislative Instruments Act 2003. The Determination does not contravene subsection 12(2) of the Legislative Instruments Act 2003.
Overview
The Aged Care (Amount of Flexible Care Subsidy – Multi-Purpose Services) Determination 2006 (No. 1) was enacted to provide clarity and a structured approach to the calculation of the flexible care subsidy for multi-purpose services (MPS) under the Aged Care Act 1997. This legislation was introduced by the Minister for Ageing, in accordance with the authority provided by subsection 52-1(1) of the Aged Care Act 1997, to specify the method of calculating the rate of flexible care subsidy for MPS from 1 July 2006. The policy objective of this Determination is to ensure that the funding allocated to MPS, which provide a variety of aged, health, and community care services in rural areas, is indexed in line with residential care subsidy rates, incorporating movements in wage costs and non-wage costs, as well as the Conditional Adjustment Payment. This approach ensures that the flexible care subsidy is adjusted annually to reflect changes in the cost of providing care.
Scope and Application
The Aged Care (Amount of Flexible Care Subsidy – Multi-Purpose Services) Determination 2006 (No. 1) applies to multi-purpose services (MPS) that provide flexible care services in rural locations, offering a range of aged care, health care, and community care services. These services are funded on a ‘cashed-out’ basis, whereby allocated places are considered to be occupied for funding purposes. The Determination sets out the method for calculating the rate of flexible care subsidy payable to MPS, which is indexed in line with residential care subsidy rates to incorporate movements in wage costs and non-wage costs. The flexible care subsidy is calculated based on various factors, including a basic subsidy equivalent amount, concessional resident equivalent amounts, viability supplement equivalent amounts, and an adjusted subsidy reduction amount where applicable. Additionally, a respite supplement is payable to MPS providing respite services, calculated based on a sliding scale of payments determined in the Determination. The Determination applies nationally and replaces the previous Aged Care (Amount of Flexible Care Subsidy – Multi-Purpose Services) Determination 2005 (No. 3).
Key Provisions
The Aged Care (Amount of Flexible Care Subsidy – Multi-purpose Services) Determination 2006 (No. 1) (the Determination) (subsection 52-1(1)) outlines the method for calculating the flexible care subsidy payable to multi-purpose services (MPS) from 1 July 2006. This subsidy applies to services that provide aged care, health care, and community care in rural areas. Unlike residential care services, MPS are funded on a 'cashed-out' basis, meaning that allocated places are considered occupied for funding purposes. The flexible care subsidy for MPS is indexed annually in line with residential care subsidy rates, which incorporate wage and non-wage cost adjustments.
The Determination specifies the components of the total subsidy payable to MPS for a day, including amounts for high care, low care, and community care places, as well as a respite supplement equivalent amount. For high care places, the subsidy is based on a basic subsidy equivalent amount, which is a proportion of the Residential Classification Scale RCS3 (98 percent) with a 5.25 percent loading for the Conditional Adjustment Payment (CAP), a concessional resident equivalent amount, a viability supplement equivalent amount, and an adjusted subsidy reduction amount where appropriate. For low care places, the subsidy is based on a basic subsidy equivalent amount (94 percent of RCS7), a concessional resident equivalent amount, and a viability supplement equivalent amount. Community care places are funded based on a proportion of the Community Care subsidy (94 percent). Additionally, a respite supplement equivalent amount is payable to MPS that provide respite services, with payments indexed according to a sliding scale based on the total number of high and low care places.
Providers of MPS are obligated to adhere to the Determination in calculating the flexible care subsidy they receive. This involves using the specified rates and indices for each component of the subsidy, ensuring that the total amount is accurately computed and claimed. The Determination also revokes the previous Aged Care (Amount of Flexible Care Subsidy – Multi-purpose Services) Determination 2005 (No. 3), thereby updating the subsidy calculation method for the current financial year.
Failure to comply with the Determination could result in penalties or other civil or criminal consequences as outlined under the Aged Care Act 1997. While specific penalties are not detailed in the Determination, breaches of the Act generally may lead to fines, enforcement actions, or other corrective measures. The exact penalties depend on the nature and severity of the breach and are subject to the provisions of the Aged Care Act 1997 and other relevant legislation.