EXPLANATORY STATEMENT
Issued by the authority of the Minister for Ageing
AGED CARE ACT 1997
Subsection 44-29(8)
Aged Care (Residential Care Subsidy – Amount of Viability Supplement)
Determination 2005 (No. 3)
The Aged Care Act 1997 (“the Act”) provides for the funding of aged care services. Persons who are approved under the Act to provide residential aged care services can be eligible to receive residential care subsidy payments in respect of the care they provide to approved care recipients.
The residential care subsidy which is payable in a particular case includes a basic amount and can also include various supplements, which are intended to deal with particular circumstances. One such supplement is the viability supplement, which is available to eligible rural and remote providers of aged care services in recognition of the cost pressures due to isolation and small size. The viability supplement primarily benefits small services operating in rural, remote and isolated areas.
Subsection 44-29(8) of the Act provides that the viability supplement for a particular day is the amount determined by the Minister in writing or worked out in accordance with a method determined by the Minister in writing. Subsection 44-29(9) of the Act provides that the Minister may determine different amounts based upon certain matters, including the number of places in services, the degree of isolation of the services and any other matters determined by the Minister in writing.
Viability supplement is available to eligible residential care services in rural and remote areas in recognition of the particular difficulties faced by such services as a result of their isolation, small size, characteristics of the majority of their residents, and consequentially higher cost structures. In essence, there are three viability supplement schemes (the 1997 scheme, the 2001 scheme and the 2005 scheme), which run in parallel. Each scheme has its own criteria for payment and each pays different amounts of viability supplement, depending on the circumstances of the residential care service. For example, the 2005 scheme provides increased assistance to the more rural and remote residential care services.
This is the third Ministerial Determination made in 2005 pursuant to section 44-29(8) of the Act, which sets the amount of the viability supplement which is payable to services determined by the Secretary to be eligible under each of these three schemes. The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 1) (the Determination No. 1) was made on 23 June 2005, registered on the Federal Register of Legislative Instruments (FRLI) on 28 June 2005 and covered the amount of viability supplement payable from 1 January 2005 to 30 June 2005. The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 2) (the Determination No. 2) was also made on 23 June 2005 and registered on 28 June 2005 but covered the amount of viability supplement payable from 1 July 2005.
This Ministerial Determination, Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 3) (the Determination No. 3) seeks to ensure there is no disadvantage for aged care services under the Determination No. 1 and to provide additional funding for certain services under the Determination No. 2.
The Determination No. 1 sets out a method for working out the amount of viability supplement for a particular day in the period 1 January 2005 to 30 June 2005. It was expressed to have commenced on 1 January 2005 and the intention of the Government’s changes were that no aged care service currently receiving viability supplement would be disadvantaged, as all services could continue to be paid under their previous arrangements, or paid at a higher rate under the 2005 scheme.
Part 14 of the Residential Care Subsidy Principles 1997, made under subsection
96-1(1) of the Aged Care Act 1997, provides that if a residential care service on the 1997 or 2001 schemes would receive more viability supplement under the 2005 scheme, then it is a 2005 scheme service.
However, this provision has created an unintended consequence which had the potential to disadvantage some services, either on a particular day or days or for the whole period. In certain limited circumstances, the rates of viability supplement for the 2005 service set out under section 7 of the Determination No. 1 will pay less than the rates of viability supplement payable under the other two schemes to residential care services with the same circumstances.
As a result, the Determination No. 1 did not comply with the Government’s intention that no service would be disadvantaged. It is also arguable that the Determination No. 1 does not meet the requirements of subsection 12(2) of the Legislative Instruments Act 2003 and is of no effect.
The Determination No. 3 revives and amends the Determination No. 1 to remove any potential disadvantage. The amendments will provide, in the period 1 January 2005 to 30 June 2005 that a residential care service which has “transferred” to the 2005 scheme will be paid the higher of the amount calculated under either its previous scheme or the 2005 scheme.
The Determination No. 3 also amends the Determination No. 2. From 1 July 2005, a small number of residential care services “transferring” to the 2005 scheme may, under certain circumstances, receive less in viability supplement than they would have if they had stayed under their previous scheme. The Determination No. 3 increases the amount of subsidy payable to these services by putting in place a “safety net” amount for services which fall below 50 points under the 2005 scheme. A 1997 or 2001 scheme service that has become a 2005 scheme service and scores 40 or 45 points under the 2005 scheme scoring system will receive $1.28 (rather than $0.00).
The Determination No. 3 is expressed to come into force on 1 January 2005 in respect of sections 1, 2, 3 and Schedule 1, and on 1 July 2005 in respect of section 4 and Schedule 2. 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 sections 1, 2, 3 and Schedule 1 of the Determination No. 3 does not contravene subsection 12(2) of the Legislative Instruments Act 2003 because it seeks to remove a potential disadvantage to providers which would have been imposed by the Determination No. 1 with effect from 1 January 2005. No Approved Provider will have their supplement reduced due to the commencement of these new arrangements on 1 January 2005. In addition, the retrospective commencement of section 4 and Schedule 2 of the Determination No. 3 does not contravene subsection 12(2) of the Legislative Instruments Act 2003 because it imposes a beneficial “safety net” for certain providers who would otherwise cease to qualify for the 2005 scheme by scoring below the minimum 50 points.
Industry was consulted 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 which led to the amendments to the viability supplement and the introduction of the 2005 viability scheme. However, as the amendments contained in the Determination No. 3 seek only to remove disadvantage for certain services which was imposed inadvertently, no additional consultation has been undertaken on the Determination No. 3.
The Office of Regulation Review has advised that no Regulation Impact Statement is required for the changes to the viability supplement.
This Determination is a “legislative instrument” for the purposes of the Legislative Instruments Act 2003.
Details of this Ministerial Determination are set out in the Attachment.
ATTACHMENT
NOTES ON CLAUSES
Clause 1 sets out the title of the Determination.
Clause 2 sets out the commencement date for the Determination. Sections 1, 2, 3 and Schedule 1 are taken to have commenced on 1 January 2005. Section 4 and Schedule 2 are taken to have commenced on 1 July 2005.
Clause 3 provides that Schedule 1 to the Determination amends the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.1) - a previous Ministerial Determination which set amounts under section 44-29(8).
Clause 4 provides that Schedule 2 to the Determination amends the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.2) – the current Ministerial Determination which set amounts under section 44-29(8). It also revives the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.1) in consequence of the amendment of the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.2).
Schedule 1 – Item 1 substitutes new sections 7, 8 and 9 for the current section 7 of the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.1). New section 7 is subject to new sections 8 and 9. Section 8 provides a safety net for services that were at one time 1997 scheme services but, because of subsection 21.35C(3) of the Residential Care Subsidy Principles 1997, became 2005 scheme services. This occurs when the amount of viability supplement payable in respect of the service for a day is greater under the 2005 scheme than it is under the 1997 scheme. The safety net provides that if on any subsequent day, the amount of viability supplement payable as a 2005 service, is less than that the service would have received on that day as a 1997 service, it will be paid the amount of viability supplement it would have received as a 1997 service. Section 9 provides an identical safety net for services that were at one time 2001 scheme services but, because of subsection 21.35C(4) of the Residential Care Subsidy Principles 1997, became 2005 scheme services.
Schedule 2 – Item 1 substitutes a new section 3 for the current section 3 of the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.2). New section 3 revokes the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.1), which was revived by section 4 of this Determination.
Schedule 2 – Item 2 inserts a new section 8 for the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No.2). This section creates a safety net from 1 July 2005 for former 1997 or 2001 scheme services which, because of subsection 21.35C (3) or subsection 21.35C (4), became 2005 scheme services. If these services score 40 or 45 points, they will be eligible for an amount of viability supplement of $1.28 per day per resident. They would currently receive nothing.
Attachment E
Proposed Effect of the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 3)
This Attachment sets out the proposed amendments to the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 3) (“Determination No.3).
Determination No. 3 contains amendments to both the Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2005 (No. 1) related to the period
1 January 2005 to 30 June 2005 and the Aged Care (Residential Care Subsidy- Amount of Viability Supplement) 2005 Determination (No.2) covering the period from 1 July 2005 to 30 June 2006.
The effect of the amendment will be to insert a protection for services that transfer to the 2005 viability supplement scheme and then subsequently lose points because their circumstances change.
Amendments to Determination No. 1
Determination No. 1 operates from 1 January 2005 to 30 June 2005. Determination No. 1 will be amended to provide a “safety net” for former 1997 scheme services and former 2001 scheme services, which become 2005 scheme services. The “safety net” will ensure that a 1997 or 2001 scheme service will receive at least the amount it would have previously received if it had remained a 1997 or 2001 service.
A service which transfers to the 2005 scheme from either the 1997 scheme or the 2001 scheme will be assessed against both the 2005 scheme and its former scheme. For the period 1 January 2005 to 30 June 2005, the service will receive the amount of viability supplement that would be payable under either the 2005 or its former scheme, whichever is the greater.
This will remove any possibility of any disadvantage to approved providers through their service receiving less in viability supplement than it would have prior to the making of Determination No. 1.
Amendments to the No. 2 Determination
Determination No.2 operates from 1 July 2005. Determination No. 2 will also be amended to provide a “safety net” for former 1997 and 2001 scheme services which become 2005 scheme services. The amendments have been drafted to operate from 1 July 2005.
The “safety net” operating from 1 July 2005 will cover those services which transfer to the 2005 scheme and which subsequently fall below 50 points under the 2005 scheme. If these services score 40 or 45 points under the 2005 scheme, they will receive a “safety net” amount of $1.28 under the 2005 scheme. This is the same amount as they would receive if they scored 40 points under the 2001 scheme. If the service scores less than 40 points under the 2005 scheme, they will not receive any viability supplement (again, this is consistent with the 2001 scheme).
The amendments to Determination No. 2 will ensure that there is no need to assess any service against more than one viability scheme.
If a service has never received viability supplement under either the 1997 or 2001 scheme, it cannot receive ‘safety net’ payments.
However from 1 July 2005 a very small number of services which transfer to the 2005 scheme may, on a particular day, receive less in viability supplement than they would on the same day if they had stayed in their previous scheme. These services would score over 50 points under the 2005 scheme but, because of the differences in scoring between the 1997, 2001 and 2005 schemes (reflecting the shifting emphasis to more rural and remote services); they may not receive as much or more viability supplement. It must be emphasised that these services will only be disadvantaged if:
- they were formerly 1997 or 2001 services which transferred to the 2005 scheme;
- after transferring to the 2005 scheme, their circumstances revert to their previous situation; and
- they still score more than 50 points under the 2005 scheme.
For example, a 2001 scheme service in an accessible location, with more than 50% of its residents with special needs, increases its number of places from 19 to 20. It would score 60 points under the 2005 scheme and 60 points under the 2001 scheme. As the rates of viability supplement are higher under the 2005 scheme, it would receive more supplement under the 2005 scheme and would “transfer” to the 2005 scheme.
The next day, it reduces its number of places from 20 to 19. It scores 65 points under the 2005 scheme. However, it would score 70 points under the 2001 scheme for the same circumstances. The rate of viability supplement for 70 points under the 2001 scheme is higher than the rate of viability supplement for 65 points under the 2005 scheme. After 1 July 2005, the service would only be entitled to receive the viability supplement under the 2005 scheme.
It should be emphasised that the number of services affected is small. In addition, these services will eventually receive more supplement than they would have been entitled under their previous scheme, because of the higher rates applicable under the 2005 scheme and because there are more incremental point scores under the 2005 scheme.