EXPLANATORY STATEMENT
AGED CARE ACT 1997 SUBSECTION 44-29(8)
AGED CARE (RESIDENTIAL CARE SUBSIDY – AMOUNT OF VIABILITY SUPPLEMENT) DETERMINATION 2008
(ACA Ch. 3 No 17/2008)
VIABILITY SUPPLEMENT
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.
A Viability Supplement is paid to eligible aged care homes to help them operate in circumstances which might otherwise be financially non- viable for a provider, for example, remote and isolated homes, homes caring largely for financially disadvantaged people or Aboriginal or Torres Strait Islander communities and other groups with special needs.
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 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. 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.
In essence, there are three viability supplement schemes – the 1997 scheme (which was put in place when the Act commenced operation); a modified scheme which was put in place in 2001; and a new scheme which commenced operation on 1 January 2005 – 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 Determination is made 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. Details of this Determination are set out in the Attachment.
Consultation
Many aged 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.
As the indexation of this subsidy uses a well-established formula for indexation, no specific consultation with industry was undertaken with respect to this instrument.
ATTACHMENT
NOTES ON CLAUSES
Clauses 1 and 2 set out the title of the Determination and its commencement date of 1 July 2008.
Clause 3 revokes previous the previous determination which set amounts under
section 44-29(8) of the Act.
Clause 4 defines the concepts of “1997 scheme service”, “2001 scheme service” and “2005 scheme service” by reference to section 21.34 in the Residential Care Subsidy Principles 1997. Essentially, each concept refers to services which are subsidised in accordance with the terms of the points test set out in the relevant scheme.
Clause 4 also defines “Principles” as the Residential Care Subsidy Principles 1997.
Clause 5 sets out the amount of viability supplement payable under the 1997 scheme.
Clause 6 sets out the amount of viability supplement payable under the 2001 scheme.
Clause 7 sets out the amount of viability supplement payable under the 2005 scheme.
Clause 8 sets out the amount of supplement payable to former 1997 or 2001 scheme services where the score attained by the services on the day under the scoring system set out in the table in subsection 21.35C (1) of the Residential Care Subsidy Principles 1997 is 40 or 45.
Overview
The Aged Care Act 1997, enacted by the Commonwealth Parliament, aims to provide a framework for the funding of aged care services in Australia. One of the critical issues the Act addresses is the financial viability of aged care homes, particularly those in remote and isolated areas, which often face higher operational costs. To address this, the Act includes provisions for a Viability Supplement, a payment designed to assist aged care homes in operating under financially challenging circumstances, such as those serving predominantly financially disadvantaged or Aboriginal and Torres Strait Islander communities. This supplement recognises the unique difficulties these services encounter due to their isolation, small size, and higher cost structures. The policy objective is to ensure that residential aged care services can continue to operate effectively, providing necessary care to the elderly despite the financial challenges they face. The Viability Supplement is one of several supplements intended to address specific circumstances, ensuring a more equitable distribution of resources across the aged care sector.
Scope and Application
The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2008 applies to entities providing residential aged care services under the Aged Care Act 1997. These entities include aged care homes that are approved to deliver residential care to eligible recipients, and they can receive residential care subsidy payments for the care provided. The Act covers a broad range of entities, including both for-profit and not-for-profit organisations, as well as services provided by local governments or Aboriginal or Torres Strait Islander communities. The Determination specifically addresses the viability supplement, a financial aid intended to assist aged care homes that operate in challenging financial circumstances, such as those in remote or isolated locations, or those that predominantly serve financially disadvantaged individuals or special needs groups. The supplement aims to support these services by recognising the higher costs associated with their unique operational contexts. The Act's jurisdictional reach is nationwide, encompassing all states and territories of Australia. The supplement amounts are determined by the Minister and are subject to change based on factors such as the number of places in the service, the degree of isolation, and other considerations deemed relevant by the Minister. This Determination is a specific implementation of the Act, setting out the viability supplement amounts for services operating under the 1997, 2001, and 2005 schemes. Each scheme has distinct criteria and payment levels, with the 2005 scheme providing increased assistance to more rural and remote residential care services. The Determination also includes provisions for indexation, which adjusts the subsidy rates annually based on wage and non-wage cost changes.
Key Provisions
The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2008 provides specific details on the viability supplement payable to eligible residential care services under the Aged Care Act 1997. Section 44-29(8) of the Act allows the Minister to determine the amount of the viability supplement, with the current Determination setting these amounts. Under subsection 44-29(9), the Minister can adjust the amount based on factors such as the number of places in the service, the degree of isolation, and other criteria specified in writing by the Minister. This Determination establishes different viability supplement amounts for services eligible under three schemes: the 1997 scheme, the 2001 modified scheme, and the 2005 scheme. Each scheme has distinct criteria and payment amounts, with the 2005 scheme providing increased assistance to more rural and remote services. Clauses 1 and 2 of the Determination specify the title and commencement date of 1 July 2008. Clause 3 revokes any previous Determination on the viability supplement amount, while Clause 4 defines the terms “1997 scheme service,” “2001 scheme service,” and “2005 scheme service” based on the Residential Care Subsidy Principles 1997. Clauses 5, 6, and 7 detail the specific amounts payable under each scheme, with Clause 8 providing for supplements to former 1997 or 2001 scheme services under certain scoring conditions.
The Determination imposes specific obligations on aged care providers eligible for the viability supplement. Providers must ensure they meet the criteria for the respective 1997, 2001, or 2005 schemes to qualify for the supplement. This involves maintaining the necessary documentation and records to demonstrate eligibility, such as proof of location, service characteristics, and resident demographics. Additionally, providers must comply with any changes or updates to the criteria set out in the Residential Care Subsidy Principles 1997. Failure to meet the criteria or provide accurate information can result in the denial or reduction of the viability supplement. Providers are also required to submit any relevant data or information requested by the Minister to determine their eligibility and the appropriate supplement amount.
There are no specific offences or penalties outlined in the Determination itself, as it primarily deals with the administrative aspects of the viability supplement. However, the Aged Care Act 1997 and related regulations may impose penalties for breaches of other provisions, such as providing false or misleading information. Under section 178 of the Act, a person who contravenes a provision of the Act may be liable for a civil penalty of up to $11,000 for individuals and $55,000 for bodies corporate. Criminal penalties may also apply for more serious offences, with maximum fines and imprisonment terms varying based on the severity of the breach. The Act also allows for the recovery of any overpayments made to providers who were not eligible for the viability supplement, with interest accruing on the amount owed.