The past 2 years have included some of the biggest Residential Care reforms we’ve ever seen. With ACFI behind us and new Strengthened Standards on the horizon, the focus has now shifted to who will fund the Aged Care system.
Why think about these changes now?
In the past 15 years of reconciling, advising and educating on compliant billing and reconciliation processes, we continue to find that many Providers and Residents still do not understand the fundamentals of Means-Testing, how assets and income are assessed and how to quickly identify incongruent and incorrect means assessment outcomes.
The “no-worse-off” (also known as “grandparenting”) rule ensures Residents entering Residential Care to 30 June 2025 will still be assessed under the current rules. This will mean that for the next 2 – 4 years, your teams will need to understand two very different, complicated, funding systems to ensure you charge compliant fees, receive your entitled revenue and keep your Residents informed.
Key changes to means-testing and Resident contributions
The proposed changes include:
- Removal of Means-Tested Care Fees (MTCF), Annual and Lifetime Caps.
- Implementation of a Lifetime Contribution Cap.
- Introduction of a Hotelling Contribution
- Introduction of a Non-Clinical Care Contribution
- Refundable Accommodation Deposit (RAD) retention amount for 5 years.
- Change in Assets per Day (APD) calculations with 7.8% of assets above the second, and subsequent, thresholds being considered. Currently, only 1% of assets between the first and second thresholds and 2% of excess assets are included in the test.
It’s clear that although Residents will no longer contribute to Clinical Care costs, they will be levied significant amounts through various contributions. The Department estimates around half of new Residents will contribute more under the new rules.
This will be driven by the adjustment of the assets per day calculation with more Residents eligible to contribute to their Non-Clinical Care costs and, generally, at a higher amount. For instance, under the previous rules, a Resident with $300,000 in assets for aged care purposes would return an APD amount of $66.26. Under the new rules, their APD will be $87.50 and result in additional contributions over their Accommodation Payment, irrespective of their Income per Day (IPD) amount.
What we can expect from the data
When we transitioned to the 1 July 2014 rules, we saw countless data and process errors resulting in millions of dollars in lost revenue to the industry. In the past 12 months alone, we have returned over $340,000 to the industry by finding and rectifying these errors.
Additionally, there can be a significant mismatch between the Residential Aged Care Fees letters and the Payment Statement. We are currently working on a case where a Resident has received both the Means-Tested Accommodation Supplement (MTAS) and been levied MTCFs in a single entitlement month with letters only mentioning an MTCF. In another example, a letter reconciliation resulted in an over-refund of $10,000 to a Resident compared to the Payment Statement reconciliation.
As we transition to a new funding model, and the Payments System is upgraded, Providers must remain vigilant in their payment statement, billing and fee letter reconciliation processes to ensure that compliant, correct fees are levied and all entitled revenue is captured.
What you can do now to prepare
There’s still a way to go before these changes are finalised, but we can do plenty now.
- Build your internal capacity by ensuring your team understands the current funding system completely and is able to identify incongruent fee advice and explain outcomes and means-testing processes to Residents.
- Ensure you are charging compliant fees by completing a monthly, quarterly and pre-departure MTCF and Accommodation Contribution (DAC) reconciliation between billing, fee letters and payment statements.
- Automate your data retrieval and storage processes. Automating your payment statement and fee letter download and storage process can give your team back weeks per year.
- Ensure the data you use in your tools and workbooks is cleansed, accurate and humanised. This is often the most difficult step in the entire process!
- Start thinking now about how you will update your reporting, Resident documentation and Resident information packs to accommodate both funding systems.
If you’d like help or advice on getting started or validation that your processes are future-proof, please reach out – we’d love to hear from you.
Shavin Perera
Funding & Performance Partner
