EXPLANATORY STATEMENT
AGED CARE ACT 1997 SECTION 44-3
AGED CARE (RESIDENTIAL CARE SUBSIDY – BASIC SUBSIDY AMOUNT) DETERMINATION 2008 (No.2)
(ACA Ch. 3 No. 11/2008)
BASIC SUBSIDY
Subsection 44-3(2) of the Aged Care Act 1997 (the Act) provides that the Minister for Ageing may determine, in writing, the amount of the basic subsidy in respect of a day.
The Aged Care (Residential Care Subsidy – Basic Subsidy Amount) Determination 2008 (No. 2) (ACA Ch. 3 No. 11/2008) specifies the indexed rates of basic subsidy that apply from 1 July 2008. The determination revokes the previous Aged Care (Residential Care Subsidy – Basic Subsidy Amount) Determination 2008 (No. 1).
Details of this Determination are set out in the Attachment.
Indexation
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.
Background
In the 2004 Budget, measures were announced to implement a new funding model for residential aged care with a reduced number of funding categories for personal care. The funding model is also designed to better target funding towards the care of care recipients with challenging behaviours related to dementia and complex nursing and health care needs including palliative care.
To initiate these changes the Aged Care Funding Instrument (ACFI) will replace the Resident Classification Scale (RCS) as the means of allocating basic subsidy to providers of residential aged care.
Consultation
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.
The Department of Health and Ageing has worked closely with a Reference Group to advise on the development of the new funding model. Members of this reference group include peak industry bodies, consumer bodies, the Aged Care Standards and Accreditation Agency and the Australian Nursing Federation.
ATTACHMENT
NOTES ON CLAUSES
Part 1 Preliminary
Section 1 Name of Determination
This determination is the Aged Care (Residential Care Subsidy – Basic Subsidy Amount) Determination 2008 (No.2). It is also known as ACA Ch. 3 No. 11/2008.
Section 2 Commencement
This determination commences on 1 July 2008.
Section 3 Revocation
The determination revokes the determination made under section 44-3 by the Minister on 17 March 2008, known as Aged Care (Residential Care Subsidy – Basic Subsidy Amount) Determination 2008 (No. 1).
Section 4 Definitions
ACFI classification – means a classification of a care recipient under the Act and the Classification Principles 1997 as in force on or after the commencement of this determination.
Act – means the Aged Care Act 1997.
domain amount – is the amount mentioned in Schedule 1 for the domain category.
domain category – has the meaning given by section 9.3 of the Classification Principles 1997 as in force on or after the commencement of this determination.
RCS classification – means a classification or renewal of a classification of a care recipient made under the Act and the Classification Principles 1997 as in force immediately before the commencement of this determination.
Part 2 Care recipients receiving residential care other than as respite care
The amount in paragraph 8(2)(a) is equivalent to the sum of the amounts against Domain Items 6 and 11 in Schedule 1 titled Domain Amounts.
Section 5 Application of Part 2
This Part applies to a care recipient receiving residential care other than as respite care.
Section 6 Amount for care recipient whose RCS classification is in effect
This section specifies the basic subsidy amount for a day for care recipients who have a RCS classification that is in effect. An amount is specified for the day on or after the RCS classification took effect and an amount is specified for a day on which the care recipient was taken, under subsection 25-1(4) of the Act, to have been classified at the lowest applicable RCS classification level.
Section 7 Care recipients whose RCS classification ceases to have effect on or after commencement – amount for day on or after date of effect of ACFI classification
For a care recipient whose most recent RCS classification ceased to have effect on or after commencement of the ACFI, if the daily basic subsidy amount payable for a care recipient classified under ACFI is not at least $15 more than the daily basic subsidy amount payable for the care recipient’s expired RCS classification, the daily basic subsidy amount payable will remain as the amount for the care recipient’s most recent RCS classification that has ceased to have effect.
If the daily basic subsidy amount payable for a care recipient with an ACFI classification is $15 more than the daily basic subsidy amount payable for the care recipient’s RCS classification that has ceased to have effect, the daily basic subsidy amount payable will be the ACFI amount. The ACFI amount is limited to a maximum of $138.11.
The amount ($138.11) in paragraphs 7(2)(a) and 8(2)(b) is equivalent to (RCS1 + $10) in 2008-09, (RCS1 + $20) in 2009-10 and (RCS + $30) in 2010-11.
Prior to commencement of the ACFI, a care recipient’s care needs must have increased above a threshold level before an increased rate of basic subsidy was payable. The requirement that the ACFI basic subsidy amount must exceed the RCS basic subsidy amount by $15 or more before the ACFI basic subsidy amount is payable mirrors this arrangement during the transition from RCS to ACFI. The $15 threshold represents the weighted average of one category increases in basic subsidy under the RCS. The ACFI Reference Group supports a single threshold rather than multiple thresholds for this purpose.
Section 8 Care recipients who do not have a RCS classification – amount for day on or after date of effect of ACFI classification
This section specifies the daily basic subsidy amount that applies to a care recipient who does not have a RCS classification that is in effect, or who had a RCS classification and it ceased to have effect before the commencement of this determination, and has an ACFI classification that is in effect. For these care recipients the daily basic subsidy amount will be:
(a) $44.14 if the care recipient has an interim low level classification; or
(b) the ACFI amount if it is less than or equal to $138.11; or
(c) $138.11 if the ACFI amount is more than $138.11.
The basic subsidy amount for an interim low level classification has been set at $44.14 as this is the lowest basic subsidy amount for a high level residential care classification that is possible in practice.
The maximum daily basic subsidy payable for an ACFI classification is limited to the maximum rate of the current RCS classification level 1 plus $10.00 which for this determination equals $138.11.
Section 9 Care recipients with an ACFI classification – amount for day before date of effect of ACFI classification (late receipt of appraisal or reappraisal)
Subsections 9(1) and (2) outline the amount of basic subsidy that will be paid if an appraisal or reappraisal is received within 3 months after the end of the appraisal or reappraisal period.
If the amount is at least $25, the amount paid will be reduced by $25. If the amount is less than $25, $0 will be paid. The full entitlement will be paid from the date of receipt of the appraisal or reappraisal.
The basic subsidy reduction applied to RCS classifications for the late receipt of an appraisal or reappraisal is $35 for high care and $20 for low care. The $25 basic subsidy reduction for the late submission of an ACFI appraisal or reappraisal is a substitute for this. Consultation with aged care providers indicated that a single late fee was preferable to a tiered approach.
Subection 9(3) outlines the amount of basic subsidy that will be paid if an appraisal or reappraisal is received more than 3 months after the end of the appraisal or reappraisal period. In these cases the amount will be $0. The full entitlement will be paid from the date of receipt of the appraisal or reappraisal.
This means that there is no potential for an approved provider to delay submitting an appraisal until the care needs of a care recipient have significantly increased in order to maximise the payment of basic subsidy from the date of the care recipient’s entry to the service.
Section 10 Amount for care recipients on extended hospital leave
Section 10 specifies that the amount of daily basic subsidy that will be paid in respect of a care recipient who is on extended hospital leave will be half of the daily basic subsidy amount that would otherwise be payable. Extended hospital leave occurs when a care recipient has taken leave for a continuous period of 30 days or more in order to attend a hospital for the purpose of receiving hospital treatment.
Prior to commencement of the ACFI, the daily basic subsidy amount for a care recipient on extended hospital leave with a RCS classification was reduced by two category levels, which in some cases could reduce the basic subsidy by more than half. For administrative simplicity a basic subsidy reduction of half is introduced from commencement of the ACFI.
Part 3
Section 11 Application of Part 3
This Part applies to a care recipient receiving residential care as respite care.
Section 12 Amount for days within maximum number for provision of respite care
This section specifies the daily basic subsidy rates for a care recipient who is receiving low or high level residential care as respite care.
The basic subsidy rates replicate the respite care rates set prior to commencement of the ACFI, i.e. low level respite care – RCS classification level 6 and high level respite care – RCS classification level 3.
Section 13 Amount for days exceeding maximum number for provision of respite care
This section specifies that a $0 daily basic subsidy amount will be paid if the number of days on which the care recipient has been previously provided with respite care in the financial year equals or exceeds the number specified in the Residential Care Subsidy Principles 1997.
Section 14 Amount for residential care service exceeding respite care proportion
This section specifies that a $0 daily basic subsidy amount will be paid if the residential care service provides a greater proportion of respite care to care recipients than that specified in the conditions attached to the allocation of places to the approved provider.
Schedule 1 - Domain amounts
This table outlines the daily basic subsidy amount paid for each domain category.