EXPLANATORY STATEMENT
AGED CARE ACT 1997
SUBSECTION 52-1(1)
AGED CARE (AMOUNT OF FLEXIBLE CARE SUBSIDY – MULTI-PURPOSE SERVICES) DETERMINATION 2007 (NO. 1)
(ACA Ch.3 No. 21/2007)
Subsection 52-1(1) of the Aged Care Act 1997 (the Act) 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.
In accordance with paragraph 52-1(1)(b) of the Act, the Aged Care (Amount of flexible care subsidy – multi-purpose services) Determination 2007 (No 1) (ACA Ch. 3 No. 4/2007) (the Determination) specifies the method for working out the amount of flexible care subsidy payable to a multi-purpose service (MPS) under section 51-1 of the Act.
The Determination applies from 1 July 2007 and, from that date, revokes the Aged Care (Amount of flexible care subsidy – multi-purpose services) Determination 2007 (No 1) (ACA Ch. 3 No. 4/2007).
An MPS is a flexible care service in rural locations that delivers a number of different forms of aged care, health care and community care. An MPS is not funded on the same basis as a residential service under the Act . An MPS is funded on a ‘cashed-out’ basis, that is, allocated places are deemed to be occupied for the purposes of funding.
The Determination provides for the total amount of flexible care subsidy payable for an MPS for a day. This total amount comprises the amount payable for a day in respect of the MPS’s high, low and community care places, and the respite supplement equivalent amount.
The amount of subsidy payable to an 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 7 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 7 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).
Section 13 provides for an additional daily amount of community care subsidy to be paid in respect of each community care place allocated to an MPS under the Act if the MPS is in a rural or remote location that has an ARIA score of more than 3.51. The Department will verify the location of an MPS by reference to the postcode of the suburb or town in which the MPS is located. Subsection 7(2) of the Determination provides that a moderately accessible location, a remote location and a very remote location (as those terms are defined in the Determination) all have an ARIA score of more than 3.51.
Under the Accessibility/Remoteness Index of Australia (ARIA), each suburb and town in Australia is allocated an ARIA score based on its accessibility and remoteness. ARIA scores for all Australian locations are contained in the document entitled Viability Funding — ARIA scores for locations as at 30 July 1999, published by the Commonwealth Department of Health and Ageing.
The additional amount of community care subsidy, if any, payable to an MPS for a day in respect of a community care place is set out in the table in section 13 of the Determination. The more remote the MPS’s location, the higher the MPS’s ARIA score and the higher the additional amount of community care subsidy payable to the MPS. This approach reflects the higher costs involved in operating an MPS in rural and remote areas, including the higher costs associated with attracting and retaining staff. If the ARIA score for an MPS that provides community care is less than 3.52 no additional daily amount of community care subsidy is payable in respect of the MPS.
All residential care subsidy rates are indexed on 1 July each year. The index incorporates movements in wage costs and non-wage costs. The wage costs component is calculated using the annualised dollar figure of the October 2006 Federal Minimum Wage decision of the Australian Fair Pay Commission expressed as a proportion of the (latest available) Average Weekly Ordinary Time Earnings at the time of the AFPC decision. 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.
Consultation
As the indexation of this supplement used an established formula for indexation, no specific consultation with industry was undertaken with respect to making this new determination. current determination.