User Rights Amendment (Various Measures) Principle 2013

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Mental Health and Ageing

Aged Care Act 1997

User Rights Amendment (Various Measures) Principle 2013

The Aged Care Act 1997 (the Act) provides for the regulation and funding of aged care services. Persons who are approved under the Act to provide aged care services (approved providers) can be eligible to receive subsidy payments in respect of the care they provide to approved care recipients.

Section 96-1 of the Act allows the Minister to make Principles providing for various matters required or permitted by a Part or section of the Act. Among the Principles made under section 96-1 are the User Rights Principles 1997 (the Principles).

Part 4.2 of the Act is about the responsibilities of an approved provider to the users, and proposed users, of the provider’s aged care service. These Principles describe other rights and responsibilities applicable to the user (that is, the care recipient) and the approved provider.

On 20 April 2012, the Government announced the Living Longer Living Better aged care reform package. Included in the package of reforms was the creation of a new type of aged care – home care. From 1 August 2013, home care will replace community care and some forms of flexible care. There will be four levels of home care packages to provide for a seamless continuum of care at home.

The purpose of the User Rights Amendment (Various Measures) Principle 2013 (the Amending Principle) is to make changes to the Principles to remove references to ‘community care’ and replace them with references to ‘home care’. The changes to the Principles also broaden the permitted uses for accommodation bonds and make related changes to the Governance Standard and the Disclosure Standard. The opportunity has also been taken to make minor technical amendments to the Principles to improve their operation and to address unintended anomalies and remove redundant provisions.

The Amending Principle is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

A number of the proposed amendments set out in this Amending Principle rely on amendments described in the Aged Care (Living Longer Living Better) Act 2013 which commence on 1 August 2013. This Amending Principle is being made in advance of this commencement date. This is possible in accordance with section 4 of the Acts Interpretation Act 1901, which allows for the exercise of powers between enactment and commencement of an Act including, for example, the power to make changes to delegated legislation which flow from changes made to the primary legislation (in this case, changes to the Aged Care Act 1997).  

Consultation

The Living Longer Living Better aged care reform package was developed in close consultation with the aged care sector, including consumers, industry and professional bodies. 

As part of the reform, changes are needed to the Act. Many of the changes to the Principles flow from the changes to the Act.

Consultation on the proposed changes to the Act, and to delegated legislation, commenced in November 2012, with the public release of a paper providing an overview of the proposed legislative changes.

A video presentation detailing the changes was also made available through the Living Longer Living Better website, to assist with public understanding of the proposed changes. 

During November and December 2012, the Department of Health and Ageing (the Department) also held briefing sessions in Melbourne, Sydney and Canberra on the proposed changes.

Stakeholders and the general community were able to provide written comments during a four-week period (21 November – 21 December 2012). The comments were made publicly available on the Living Longer Living Better website, unless the author requested otherwise. The Department received 54 submissions from members of the public, peak bodies and approved providers in response to the published overview of legislative amendments. Submissions received via the consultation on the overview of the proposed legislative changes were used to inform drafting of the amending bills and the delegated legislation.

In March and April 2013, the Department held industry briefing sessions across Australia to provide information and to explain, in detail, the proposed legislative changes included in the package of Bills introduced into Parliament on 13 March 2013. The briefing sessions also outlined changes to delegated legislation such as this Amending Principle. For those who were unable to attend the briefings a copy of the presentation, supporting handouts, a detailed Questions and Answers document and an information video were made available on the Living Longer Living Better website.

The changes to permitted uses of accommodation bonds are a response to monitoring the effect of regulatory changes enacted in 2011. Engagement with the aged care sector about issues arising during implementation of the 2011 amendments indicated that the permitted uses may unnecessarily restrict legitimate business practices when the two-year transition period expires on 1 October 2013. As part of continuous improvement, a consultation paper was released in December 2012 to seek stakeholder views on amending the permitted uses to include a broader range of uses for loans made using bonds and investment in Religious Charitable Development Funds (RCDFs). Nineteen submissions were received from peak bodies, consumer groups and approved providers. These submissions informed the changes described in the Amending Principle.

An exposure draft of the Amending Principle was made available on the Living Longer Living Better website in May 2013.

Regulation Impact Statement

The Office of Best Practice Regulation has advised that no Regulation Impact Statement is required (OBPR ID 14985).

Commencement

The Amending Principle commences on 1 August 2013.

 ATTACHMENT

Details of the User Rights Amendment (Various Measures) Principle 2013

Clause 1 states that the name of the Amending Principle is the User Rights Amendment (Various Measures) Principle 2013.

Clause 2 states that the Amending Principle commences on 1 August 2013.

Clause 3 provides that the authority for the making of the Amending Principle is the Aged Care Act 1997 (the Act).

Clause 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 – Amendments

Item 1 – Subsection 23.3(2)

The maximum permissible interest rate (MPIR) is the maximum allowable interest a provider can charge a resident who is late in paying their accommodation bond. It is the mandatory rate of interest applied to an accommodation bond balance where a provider has not refunded the balance as, or when, it has fallen due. It is also used in working out amounts where a care recipient has elected to pay an accommodation bond by periodic payments and in working out interest on amounts owed to a provider under an accommodation bond agreement, resident agreement or extra service agreement.

Item 1 removes a redundant step from the calculation of the MPIR and makes clearer that the MPIR is the rate of the general interest charge, as defined by the Taxation Administration Act 1953, which is then annualised, minus three percentage points.

Item 2 - Section 23.3 (note relating to definitions)

Item 1 repeals the boxed note at the end of section 23.3 and replaces it with a new note that provides that a number of expressions used in the Principles are defined in the Act including capital expenditure, close relation and permitted (in relation to use of accommodation bonds). This amendment is consistent with current drafting conventions that terms used regularly within all aged care principles such as ‘approved provider’ and ‘aged care’ are removed from notes. These terms continue, for the purposes of the Principles, to have the meanings set out in the Dictionary in Schedule 1 of the Act. Terms used less commonly are specified in the note as expressions that are defined in the Act.

Items 3 to 6

Items 3 to 6 replace references to ‘community care’ with references to ‘home care’ in the heading for Part 3, in section 23.20, in paragraph 23.21(b) and in subparagraph 23.21(d)(i). These changes are consequential to changes made to the Act.

Item 7 - Subparagraph 23.21(d)(ii)

Item 7 subparagraph 23.21(d)(ii) omits a term to substitute it for another as a minor technical amendment to allow for an additional subparagraph after 23.21(d)(ii).

Item 8 - After paragraph 23.21(d)

Item 8 inserts a new paragraph 23.21(e). This paragraph provides that an approved provider may reallocate the care recipient’s place to another care recipient if the care recipient does not meet his or her responsibilities, as described in Schedule 2 – Charter of rights and responsibilities for home care, for a reason within the care recipient’s control.

For example, if the care recipient abuses a care worker (that is, the care recipient acts in a way that is not consistent with the responsibility to treat care workers without exploitation, abuse, discrimination or harassment) the approved provider may reallocate the care recipient’s place to another care recipient.

Items 9 to 15

Items 9 to 15 replace the term ‘community care’ with the term ‘home care’ in sections 23.22, 23.23, 23.24, 23.25 and 23.26. These changes are consequential to changes made to the Act.

Item 16 - Part 3A

Item 16 repeals the whole of Part 3A which refers to the user rights and responsibilities for flexible care. The purpose of Part 3A was to specify the rights and responsibilities of care recipients who are receiving flexible care in the form of Extended Aged Care at Home (EACH) or Extended Aged Care at Home-Dementia (EACH-D). Consequential to the amendments to the Act, EACH and EACH-D will no longer exist (as these types of care will transition to home care). Therefore, Part 3A is being repealed.

Item 17 - Subparagraph 23.38(2)(b)(v)

Item 17 repeals subparagraph 23.38(2)(b)(v) and replaces it with a new subparagraph. The new subparagraph addresses a drafting anomaly within the subparagraph. Currently, the subparagraph refers to the bond register including the entry contribution balance as at 1 July 2006. This should refer to the entry contribution balance as at the end of each calendar month (being a month commencing no earlier than 1 July 2006 and during which the approved provider held an entry contribution balance in respect of the care recipient). This amendment makes this necessary change.

Item 18 - Section 23.38B

Item 18 repeals section 23.38B and replaces it with a new section. The new section details the requirements for an investment management strategy (IMS).

Section 23.38B - Requirement for investment management strategy

As part of the Governance Standard, approved providers are required to implement and maintain a written IMS if they propose to invest accommodation bonds in permitted financial products other than a deposit taking facility (made available by an authorised deposit-taking institution (ADI) in the course of its banking business).

The purpose of an IMS is to ensure that, the approved providers have arrangements in place to make informed and prudent decisions on the investment of bonds, to assess the risks of financial investments, including to their liquidity and obligation to refund bonds, and respond to changing risk.

This item extends the requirement for an approved provider to implement and maintain an IMS for the new permitted use of investments of accommodation bonds into Religious Charitable Development Funds (RCDFs).

RCDFs are not prudentially regulated and do not have the same status as an Australian Prudential Regulation Authority (APRA) regulated ADI. For the purposes of the IMS, this amendment puts RCDFs on the same footing as investments in financial products managed by approved providers.

Item 19 - Subparagraph 23.40(1)(a)(xvi)

The Annual Prudential Compliance Statement (APCS) is a requirement of the Disclosure Standard. Information required in the APCS includes information designed to provide the Department with indictors of potential non-compliance with permitted use provisions. As the permitted uses of bonds have been broadened, the requirement for the APCS must also be amended to ensure that approved providers also report on these additional uses when completing their APCS. 

The new subparagraph 23.40(1)(a)(xvi) achieves this by requiring an approved provider to report on the amounts that have been expended (from any funding source) on each of the permitted uses under section 23.64B of the Principles (refer item 21).

Item 20 - Subparagraph 23.40(1)(a)(xvii)

This item repeals the subparagraph 23.40(1)(a)(xvii) and replaces it with a new subparagraph. This item expands the requirement for an approved provider to report in the APCS on the amounts that have been returned to the approved provider from sale, disposal of redemption of financial products so that the provider must also report on amounts returned from RCDFs.

Item 21 - Section 23.64B

Item 21 repeals section 23.64B and replaces it with a new section.

Section 23.64B – Additional permitted uses for accommodation bonds

This item carries forward the permitted uses in place under these Principles before the commencement of this new section, but also expands the purposes for which loans of bonds can be used and introduces the new permitted use of investments in RCDFs.

The section expands the purposes for which an approved provider may loan bonds to include the refunding of accommodation bond balances or entry contribution balances; and repaying debt accrued for the purposes of capital expenditure or refunding accommodation bond balances. As with other loans of bonds, these loans must not be made to an individual, must be made on a commercial basis and there must be a written agreement in relation to the loan.

This recognises the diverse corporate structures that exist in aged care including company group structures where, for example, companies that own the premises from which services are provided are separate from approved providers.  

This item also creates a new permitted use of investments of accommodation bonds into RCDFs. RCDFs are funds established by religious organisations for the purpose of seeking investment from the public to help further the funds' religious and charitable goals and objectives. This fundraising activity meets the definition of banking business under the Banking Act 1959. The Australian Prudential Regulatory Authority (APRA) determines which bodies to recognise as RCDFs and these are provided in Schedule 1 of the Banking exemption No. 1 of 2011. RCDFs are organisations within church or charitable structures that operate as bank-like institutions and which are exempted by APRA. Some approved providers conduct all their financial affairs through RCDFs. 

In order for an approved provider to invest accommodation bonds into RCDFs it is necessary for the approved provider to implement and maintain an IMS (see paragraph 23.38B). 

Where an approved provider entity invests in an RCDF and that RCDF is the same legal entity as the approved provider, the entity must only use bonds for permitted uses.

Item 22 - Paragraph 23.85(d) 

Item 22 repeals paragraph 23.85(d) which states that a resident agreement must comply with the requirement that the agreement must provide for its termination on 7 days’ written notice given by the care recipient to the provider. This provision causes confusion because 58-1(d) of the Act provides that if the care recipient dies or departs from the service, any fees paid in advance (in respect of a period after the care recipient dies or leaves) must be refunded in accordance with the User Rights Principles. As paragraph 23.85(d) could be read to be inconsistent with the Act, it is being repealed.

Items 23 to 29

Items 22 to 28 replace references to ‘community care’ with ‘home care’ in:

• the headings of: Part 7; Division 1 of Part 7; and sections 23.87 and 23.89;
• section 23.86;
• section 23.88; and
• subsection 23.89(1).

The changes are consequential to the creation of the new type of care (home care) which will replace community care from 1 August 2013.

Item 30 - After subsection 23.89(4)

Item 30 inserts a new subsection 23.89(4A). The new subsection states that the care recipient must not be charged an ongoing home care fee for any period during which the care recipient is on leave from the home care service and receiving transition care or respite care provided as residential care. This is because the care recipient will be paying fees to the provider who is providing the transition care or residential respite care so the person should not also continue to pay home care fees to the first provider.

Item 31 - Subsection 23.89(5)

Item 31 repeals subsection 23.89(5) and replaces it with a new subsection that includes definitions for ‘income’ and ‘transition care’. The definition of ‘income’ is exactly the same as it was in the Principles previously (except that redundant notes have been removed from the end of the definition).

The definition of ‘transition care’ is a new definition included because of the reference to transition care in new subsection 23.89(4A). Transition care has the meaning given by section 15.28 of the Flexible Care Subsidy Principles 1997. Those Principles define transition care as a form of flexible care that is provided to a care recipient:

• at the conclusion of an in-patient hospital episode; and
• in the form of a package of services that includes, at least low intensity therapy and either nursing support or personal care; and
• as care that can be characterised as goal-oriented, time-limited, therapy-focussed, targeted towards older people and necessary to: complete the care recipient’s restorative process; optimise the care recipient’s functional capacity; and assist the care recipient, and his or her family or carer (if any), to make long-term

arrangements for his or her care.

Items 32 to 34, 36, 37, 39 to 46 and 50 to 52

These items replace references to ‘community care’ with ‘home care’ in:

• the heading of Division 3 of Part 7;
• section 23.90;
• the heading of section 23.91;
• paragraph 23.91(1)(c);
• subsection 23.91(2);
• the heading of section 23.92;
• subsection 23.92(1);
• the heading of Part 8;
• section 23.93;
• the headings of sections 23.94 and 23.95;
• subsection 23.94(1);
• section 23.95; and
• Schedule 2, subitems 2(a), 2(b) and 5(b).

The changes are consequential to the creation of the new type of care (home care) which will replace community care from 1 August 2013.

Items 35

Subsection 23.91(1) currently provides that an approved provider may charge a care recipient only the following kinds of fees:

• ongoing fees;
• fees for the provision of major home maintenance services (including major home modification); and
• fees for the provision or arrangement of any care, other than community care, that is part of the agreed care plan.

Item 35 removes the reference to the approved provider charging fees for the provision of major home maintenance services (including major home modification). This is because from 1 August 2013, the concept of minor or major modifications will be replaced with the more appropriate concept of whether the home modification relates to the care recipient’s care needs. If the home modification relates to the care recipient’s care needs it may be provided as part of the home care package. If the home modifications are not related to the care recipient’s care needs the modifications cannot be provided as part of the home care package (and home care fees may not be charged for the home modifications).

Item 38 - Subsection 23.91(3),(4),(5) and (6)

Item 38 repeals subsections 23.91(3) to (6). This is because these provisions describe arrangements relating to the suspension of community care services. From 1 August 2013, community care will no longer exist and the suspension of home care services will be dealt with in the Home Care Subsidy Principles 2013.

Item 47 – Paragraph 23.95(a)

Paragraph 23.95(a) currently provides that a community care agreement (to be amended to refer to a home care agreement) must include a clear statement of the charges payable by the care recipient and how amounts of each charge are to be worked out. This paragraph is being repealed and replaced with a new and more comprehensive paragraph that provides that a home care agreement must include:

• a statement about whether the home care will be delivered on a consumer directed care basis;
• a statement about the level of home care to be provided to the care recipient (for example, level 1, 2, 3 or 4 home care);
• a clear itemised statement of the fees (if any) payable by the care recipient and how those fees are calculated; and
• a statement that the care plan, including any changes to the care plan, will be provided to the care recipient.

Item 48 - Paragraph 23.95(e)

Paragraph 23.95(e) currently states that the community care agreement must provide for the giving of financial information to the care recipient. Currently, it is not clear what type of financial information must be given by the provider. This paragraph is therefore being repealed and replaced with a new and more specific paragraph that provides that the home care agreement must provide for the giving of financial information, relevant to the care and services, to the care recipient.

Item 49 - Schedule 2 (heading and references after heading)

Item 49 repeals the heading in Schedule 2, along with the references under the heading. This is to reflect changes to terminology that are consequential to amendments in the Act. The heading is substituted with a new heading which omits the term ‘community care’ and replaces it with the term ‘home care’. Minor technical changes are also made to the relevant section references under the heading.

Statement of Compatibility with Human Rights

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

User Rights Amendment (Various Measures) Principle 2013

This legislative instrument 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 2011.

Overview of the Legislative Instrument

The User Rights Amendment (Various Measures) Principle 2013 (the Legislative Instrument) amends the User Rights Principles 1997 to better align the permitted use of accommodation bonds with the original policy intent that bonds are to be used for capital funding for investment in building stock (and the retirement of associated debt).  This Legislative Instrument broadens the permitted uses of accommodation bonds. Other complementary items have been included to support the changes to the permitted use of accommodation bonds and these include the expansion of the circumstances under which an approved provider must implement and maintain an investment management strategy to include the new permitted use of investing accommodation bonds in Religious Charitable Development Funds.

This Legislative Instrument also provides that if a care recipient takes a period of leave from a home care service in order to receive transition care or residential respite care, the care recipient must not be charged home care fees during the period of leave. The instrument also provides that a home care agreement between an approved provider and a care recipient must include, amongst other information, a statement about whether the home care will be delivered on a consumer directed care basis, a statement about the level of care to be provided to the care recipient, a clear statement of the charges payable by the care recipient and how the amounts of each charge are to be worked out, and a statement that the care recipient’s care plan, and any changes to the care plan, will be provided to the care recipient.

This Legislative Instrument also provides that an approved provider may reallocate a care recipient’s place in a home care service to another person if the care recipient does not meet his or her responsibilities as set out in the Charter of Rights and Responsibilities for Home Care in Schedule 2 to the Principles.

Human Rights Implications

The Legislative Instrument is compatible with the right to an adequate standard of living and the right to the enjoyment of the highest attainable standard of physical and mental health as contained in article 11(1) and article 12(1) of the International Covenant on Economic, Social and Cultural Rights , and article 25 and article 28 of the Convention on the Rights of Persons with Disabilities. The Legislative Instrument will assist in promoting the right to an adequate standard of living and the right to the enjoyment of the highest attainable standard of physical and mental health by strengthening consumer protection of accommodation bonds paid to aged care services.

This Legislative Instrument will also promote the right to an adequate standard of living and the right to health by ensuring that a recipient of home care is not required to pay fees to both an approved provider of home care and an approved provider of transition care or residential care if the care recipient needs to take leave from his or her home care package in order to receive transition care or residential respite care. This will help to ensure that a care recipient is not prevented from accessing the care they need on a temporary basis by the cost of paying two daily care fees.  

The Legislative Instrument will also promote the right of persons with disabilities to access to information as contained in article 21 of the Convention on the Rights of Persons with Disabilities. The amendments made by this Legislative Instrument will require approved providers of home care to provide care recipients with clear and comprehensive information about their home care package.

The amendments made by this Legislative Instrument will limit the rights of recipients of home care by permitting an approved provider to reallocate a care recipient’s place in a home care service to another person if the care recipient does not meet his or her responsibilities, for example by abusing care workers or by not paying care fees for a reason within the care recipient’s control. This amendment balances the rights of care recipients to health and to an adequate standard of living with the rights of others, such as care workers, that may be limited if a care recipient does not meet his or her responsibilities.

Conclusion

This legislative instrument is compatible with human rights as it promotes the human right to health, the right to an adequate standard of living and the right to access to information. To the extent that it limits the rights of recipients of home care by permitting the reallocation of their home care place if they do not meet their responsibilities, the limitation is reasonable, proportionate and necessary.

Senator the Hon Jacinta Collins

Minister for Mental Health and Ageing