Aged Care Legislation Amendment (Subsidies—Residential Care Support Supplement) Instrument 2021

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Senior Australians and Aged Care Services

Aged Care Act 1997

Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021

The Aged Care Act 1997 (Act) and the Aged Care (Transitional Provisions) Act 1997 (TP Act) provide for the Commonwealth to give financial support through payment of subsidies for the provision of aged care.

Persons who are approved under the Act to provide aged care services (approved providers) may be eligible to receive subsidy payments under the Act. Approved providers may also be eligible to receive subsidy payments under the TP Act in respect of the care they provide to continuing care recipients. Continuing care recipients are those who entered an aged care service before 1 July 2014 and since that time have not left the service for a continuous period of more than 28 days (other than because the person is on leave), or before moving to another service, have not made a written choice to be subject to new rules relating to fees and payments that came into effect on 1 July 2014.

Both the Act and the TP Act provides that for each type of aged care, the Minister may determine the amount of subsidy and supplement payable to an approved provider for the provision of that type of aged care.

Purpose

The Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021 (Amending Instrument) amends the Aged Care (Subsidy, Fees and Payments) Determination 2014; the Aged Care (Transitional Provisions) Principles 2014; the Aged Care (Transitional Provisions) (Subsidy and Other Measures) Determination 2014; and the Subsidy Principles 2014 (Subsidy Principles).

The Act and the TP Act provide that an amount of residential care subsidy may include the amount of any relevant ‘other supplements’ (section 44‑2 of the Act). Section 44‑27 of the Act provides that the other supplements for a care recipient under the residential care subsidy calculator are any of the supplements prescribed in the section (for example, the hardship supplement), if applicable to the care recipient in respect of a payment period.

Paragraph 44‑27(1)(c) of the Act provides that other supplements may be set out in the Subsidy Principles. Subsection 44‑27(2) provides that the Subsidy Principles may specify the circumstances in which another supplement set out for the purposes of paragraph 44‑27(1)(c) will apply for a care recipient in respect of a payment period. Subsection 44‑27(3) provides that the Minister may determine the amount, or the way in which the amount of the supplement is to be worked out, of any other supplements set out for the purposes of paragraph 44‑27(1)(c).

Section 52‑1 of the Act provides that the amount of flexible care subsidy payable in respect of a day is the amount determined, or worked out in accordance with a method determined, by the Minister by legislative instrument. This includes providing for or incorporating any other supplement set out in the Subsidy Principles.

Section 96‑1 of the Act provides that the Minister has the power to make instruments providing for matters required or permitted, or necessary or convenient, in order to give effect to the relevant Part or section of the Act.

These provisions are mirrored in the equivalent sections in the TP Act.

The purpose of the Amending Instrument is to prescribe a new ‘other supplement’ for the purposes of sections 44‑27 and 52‑1 of the Act and sections 44‑27 and 52‑1 of the TP Act.

This new ‘other supplement’ is the residential care support supplement, which is payable for each day in February 2021 that a care recipient was being provided care by their approved provider. This will enable approved providers to receive the residential care support supplement as a lump sum payment after they lodge their claims for subsidy in April 2021.

The Amending Instrument is a legislative instrument for the purposes of the Legislation Act 2003.

Background

The Amending Instrument gives effect to a measure announced on 1 March 2021 by the Prime Minister as part of an aged care support package totalling $452 million.

Residential aged care is a key component of the Australian aged care system. On 26 February 2021 the Royal Commission into Aged Care Quality and Safety (Royal Commission) provided its Final Report. It is a priority to increase funding to the aged care sector and raise the quality of care in the sector.

The additional funding that will be provided to approved providers of residential aged care by the payment of the residential care support supplement is part of the Australian Government’s initial response to the Royal Commission’s Final Report.

Aged care services can be categorised as being in either metropolitan or non-metropolitan areas using the Modified Monash Model (MMM) classification system rating of the street location of the service.

The MMM classification system is a geographical classification system developed by the Department of Health for categorising metropolitan, regional, rural and remote locations. This system is based on both geographical remoteness and population size using population data published by the Australian Bureau of Statistics, as that system exists on 1 January 2017 (section 4 of the Subsidy Principles).

The MMM classification system classifies major city metropolitan areas in Australia as MMM1. The remaining classifications from MMM2 through to MMM7 are non‑metropolitan regional, rural or remote areas. This information is available on the Department of Health website via this URL/link: https://www.health.gov.au/health-workforce/health-workforce-classifications/modified-monash-model.

Residential care subsidies and supplements are paid on a per care recipient per day basis for a payment period of a calendar month. The number of care recipients can fluctuate as residents enter and leave residential aged care.

The calculation of the amount of the residential care support supplement to be paid to residential care approved providers is based on the number of days of residential care and residential respite care they provided to approved care recipients during February 2021. Using a particular month of data is consistent with how claims and payments are made as part of the normal payment cycle to providers. February 2021 is the month immediately prior to the Prime Minister’s announcement and provides a recent stable month of data to be used in the calculation of the payment and facilitates payments being made in a timely manner.

Flexible care subsidies and supplements are paid on a per allocated place per day basis. The calculation of the amount of residential care support supplement for flexible care approved providers takes into account the number of residential care places allocated to multi‑purpose services and flexible care services during February 2021.

The residential care support supplement funding provided by these measures is as follows:

• $27.25 per day for residential and flexible care services located in metropolitan areas (MMM1) for both permanent and respite care recipients; and
• $40.88 per day for residential and flexible care services located in areas other than metropolitan areas (MMM2 to MMM7) for both permanent and respite care recipients.

The amount of the residential care support supplement is higher in non‑metropolitan areas in recognition of the additional costs experienced by approved providers of residential and flexible aged care in regional, rural and remote areas of Australia.

These payment rates provide a lump sum payment of about $760 per resident for a residential care service in a MMM1 metropolitan location and about $1,145 per resident for regional, rural and remote locations over the 28 days of February 2021.

The amendments introduced by Schedule 1 apply in respect of a retrospective payment period, however, these amendments are beneficial because they will provide for additional funding to be distributed to approved providers after they have lodged their claims for subsidy on or after 1 April 2021. The additional funding provided by the residential care support supplement payment helps ensure the viability of residential and flexible care providers.

Authority

The Act and the TP Act both provide that for each type of aged care, the Minister may determine the amount of subsidy and supplement payable to an approved provider for the provision of that type of aged care.

The authority for making specific determinations in the Amending Instrument is set out in the following tables:

Section 96-1 of the Aged Care Act provides that the Minister has the power to make instruments providing for matters required or permitted, or necessary or convenient, in order to give effect to the relevant Part or section of the Aged Care Act. The Subsidy Principles are made under section 96-1 of the Aged Care Act, and set out matters for the purposes of Parts 3.1, 3.2 and 3.3 of the Act.

Reliance on subsection 33(3) of the Acts Interpretation Act 1901

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

Consultation

On 26 February 2021 the Royal Commission into Aged Care Quality and Safety provided its Final Report. As part of the Government’s initial response, on 1 March 2021 the Prime Minister announced an additional funding package to drive improvements in residential aged care that will provide stability and maintain services while the government considers the recommendations of the Royal Commission’s Final Report. The residential care support supplement implemented by this Amending Instrument is part of that package and no specific consultation was undertaken with respect to the supplement.

Commencement

The Amending Instrument commences the day after it is registered on the Federal Register of Legislation.

ATTACHMENT

Details of the Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021

Section 1 states that the name of the Amending Instrument is the Aged Care Legislation Amendment (Subsidies—Residential Care Support Supplement) Instrument 2021.

Section 2 states that the instrument commences the day after this instrument is registered.

Section 3 provides that the authority for the making of this instrument is the Aged Care Act 1997 and the Aged Care (Transitional Provisions) Act 1997.

Section 4 provides that each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

Schedule 1 amends the following four legislative instruments:

• The Aged Care (Subsidy, Fees and Payments) Determination 2014 (Subsidy, Fees and Payments Determination);
• The Aged Care (Transitional Provisions) Principles 2014 (Transitional Provisions Principles);
• The Aged Care (Transitional Provisions) (Subsidy and Other Measures) Determination 2014 (Transitional Provisions Determination); and
• The Subsidy Principles 2014 (Subsidy Principles).

The amendments to the Subsidy Principles and the Subsidy, Fees and Payments Determination apply to care recipients under the Act.

The amendments to the Transitional Provisions Principles and the Transitional Provisions Determination apply to continuing care recipients under the TP Act.

Schedule 1 – Amendments

Aged Care (Subsidy, Fees and Payments) Determination 2014

Item 1 – At the end of Part 4 of Chapter 2

Item 1 inserts new Division 7—Residential care support supplement (for February 2021 payment period), which consists of new section 64C and new section 64D.

New section 64C sets out that the purpose of Division 7 is to set out the amount of the residential care support supplement for a day for a care recipient. New section 64C also provides that the residential care support supplement is the residential care support supplement set out in Subdivision G of Division 5 of Part 3 of Chapter 2 of the Subsidy Principles (see item 7 below).

New section 64D sets out that the amount of residential care support supplement for a day in respect of a care recipient provided with residential care through a residential care service during the February 2021 payment period is based on the MMM classification of the street address of the residential care service. For residential care services with a street address that has a MMM classification of MMM1, the amount is $27.25. For residential care services with a street address that has a MMM classification of MMM2 through to MMM7, the amount is $40.88.

Item 2 – After section 91A

This item inserts new section 91B after section 91A. Section 91B sets out the residential care support supplement equivalent amount for a day in respect of flexible care that is provided through a multi-purpose service in the period between 1 February 2021 and 28 February 2021. The amount is calculated by multiplying the residential care support supplement equivalent amount for the multi-purpose service based on the MMM classification of the street address of the multi-purpose service and the number of high care places and low care places allocated in respect of the multi-purpose service. For multi-purpose services with a street address that has a MMM classification of MMM1, the amount is $27.25. For multi-purpose services with a street address that has a MMM classification of MMM2 through to MMM7, the amount is $40.88.

The residential care support supplement for flexible care subsidy applies to continuing care recipients under the TP Act through Chapter 3A of the Transitional Provisions Principles.

Aged Care (Transitional Provisions) Principles 2014

Item 3 – At the end of paragraph 17(h)

This item adds new sub‑paragraph 17(h)(iv) to section 17, which sets out the purpose of Part 3 of the Transitional Provisions Principles. New sub‑paragraph 17(h)(iv) provides that the residential care support supplement is another supplement that may apply to a care recipient.

Item 4 – At the end of Division 8 of Part 3 of Chapter 2

This item adds new Subdivision F—Residential care support supplement (for February 2021 payment period) at the end of Division 8 of Part 3 of Chapter 2. Subdivision F consists of section 64A.

New section 64A sets out that the residential care support supplement for a care recipient in respect of the payment period beginning on 1 February 2021 is the sum of all the residential care support supplements for the days during the period on which the care recipient was provided with residential care through the residential care service in question.

Aged Care (Transitional Provisions) (Subsidy and Other Measures) Determination 2014

Item 5 – At the end of Part 4 of Chapter 2 

This item adds new Division 7—Residential care support supplement (for February 2021 payment period), which consists of new section 79C and new section 79D.

New section 79C sets out that the purpose of Division 7 is to set out the residential care support supplement amount for a day for a care recipient. New section 79C also provides that the residential care support supplement is the residential care support supplement set out in Subdivision F of Division 8 of Part 3 of Chapter 2 of the Transitional Provisions Principles (see Item 4 above).

New section 79D sets out that the amount of residential care support supplement for a day in respect of a care recipient provided with residential care during the February 2021 payment period is based on the MMM classification of the street address of the residential care service. For residential care services with a street address that has a MMM classification of MMM1, the amount is $27.25. For residential care services with a street address that has a MMM classification of MMM2 through to MMM7, the amount is $40.88.

Subsidy Principles 2014

Item 6 – At the end of paragraph 20(e)

This item adds new sub‑paragraph 20(e)(v) to section 20, which sets out the purpose of Part 3 of the Subsidy Principles. New sub‑paragraph 20(e)(v) provides that the residential care support supplement is another supplement that may apply to a care recipient.

Item 7 – At the end of Division 5 of Part 3 of Chapter 2

This item adds new Subdivision G—Residential care support supplement (for February 2021 payment period) at the end of Division 5 of Part 3 of Chapter 2. Subdivision G consists of new section 70AC and new section 70AD.

New section 70AC sets out that the residential care support supplement for a care recipient in respect of the payment period beginning on 1 February 2021 is the sum of all the residential care support supplements for the days during the period on which the care recipient was provided with residential care through the residential care service in question and the care recipient was eligible for a residential care support supplement under section 70AD.

New section 70AD sets out that a care recipient is eligible for a residential care support supplement on a day if they are being provided with residential care other than respite care.

New section 70AD also sets out that a care recipient who is being provided with residential care as respite care is eligible for a residential care support supplement on a day if the amount of respite care basic subsidy for the care recipient is not nil under Division 2 of Part 1 of Chapter 2 of the Subsidy, Fees and Payments Determination.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Humans Rights (Parliamentary Scrutiny) Act 2011

Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021
 

The Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny Act) Act 2011.

Overview of Legislative Instrument

The Aged Care Legislation Amendment (Subsidies-Residential Care Support Supplement) Instrument 2021 (Amending Instrument) amends the Aged Care (Subsidy, Fees and Payments) Determination 2014; the Aged Care (Transitional Provisions) Principles 2014; the Aged Care (Transitional Provisions) (Subsidy and Other Measures) Determination 2014; and the Subsidy Principles 2014.

The purpose of Schedule 1 of the Amending Instrument is to make a residential care support supplement payment for each day in February 2021 that a care recipient was being provided residential care by their approved provider. Approved providers will receive the residential care support supplement as a lump sum after they lodge their claims for subsidy in April 2021. 

Human Rights Implications

The Amending Instrument engages the following human rights as contained in article 11(1) and article 12(1) of the International Convention on Economic, Social and Cultural Rights and articles 25 and 28 of the Convention of the Rights of Persons with Disabilities:

• the right to an adequate standard of living, including with respect to food, clothing and housing, and to the continuous improvement of living conditions; and
• the right to the enjoyment of the highest attainable standard of physical and mental health.

Residential aged care is a key component of the Australian aged care system. The Final Report of the Royal Commission into Aged Care Quality and Safety has made various recommendations including about improving the amount of funding of residential aged care.

A new residential aged care funding model is under development and additional funding is required in the interim to address the significant financial challenges currently affecting the sector. This will provide a stable funding platform before any decision of the Australian Government to implement a new funding model.

The Amending Instrument gives effect to a measure announced on 1 March 2021 by the Prime Minister as part of an aged care support package totalling $452 million. As part of that aged care support package, additional funding will be provided to approved providers of residential aged care through the payment of the residential care support supplement.

The residential care support supplement is paid at a higher rate to services in regional, rural and remote areas in recognition of the higher costs involved in providing care in those areas.

The Amending Instrument increases the amount of funding payable to approved providers for the provision of care and services to people with a condition of frailty or disability who require assistance to achieve and maintain the highest attainable standard of physical and mental health. The additional funding will assist approved providers to provide care to their care recipients in accordance with an adequate standard of living and the right to the enjoyment of the highest attainable standard of physical and mental health.

The additional aged care funding provided by this legislative instrument is part of the Australian Government’s initial response to the Final Report of the Royal Commission into Aged Care Quality and Safety and supports the viability of the residential and flexible aged care sectors in providing care to their care recipients.

Legislation requires government-subsidised aged care homes meet standards to ensure that quality care and services are provided to all residents. The Australian Government’s spending on aged care will protect residential aged care recipient’s rights to an adequate standard of living.

Conclusion

This legislative instrument is compatible with human rights as it promotes the human right to an adequate standard of living and the highest attainable standard of physical and mental health.

Senator the Hon Richard Colbeck

Minister for Senior Australians and Aged Care Services