In March 2018, the Minister for Senior Australians and Aged Care, the Hon Ken Wyatt AM MP, convened a policy roundtable, to discuss a proposed approach to transparency and comparability of home care pricing. This came in response to increasing concerns raised by senior Australians and their families about a lack of transparency and comparability of pricing information, and high administration prices being charged by some home care providers.
Following the policy roundtable, the Minister outline a phased, three-step approach to improving the transparency and comparability of home care pricing information.
Stages 1 & 2 - publication of pricing information
The first phase was simply to ‘encourage’ home care providers to publish their pricing information on the Service Finder on the My Aged Care website.
The current phase is to require providers to publish their current pricing information on the Service Finder, by 30 November 2018. The User Rights Amendment (Home Care Pricing) Principles 2018, which commenced on 30 August 2018, inserted new section 19A into the User Rights Principles 2014. This introduces an express requirement for home care providers to supply pricing information about the cost of the care and services, for publication by the Secretary. We understand that providers can upload a pricing schedule as a document or website URL link, using the My Aged Care provider portal.
Associated improvements to the My Aged Care website and Service Finder have been announced for implementation in March 2019.
Stage 3 - standardised pricing schedules
The new publication requirements under the User Rights Principles are not the end of the story. By 30 April 2019, providers will be required to publish their pricing information on the My Aged Care Service Finder according to a standardised pricing schedule. It is proposed that providers will need to review their Schedule every six months.
A draft home care pricing comparability schedule has been released but will be shaped through feedback on the ‘Home Care Pricing Transparency and Comparability’ consultation paper, which is currently out for comment. The stated purpose of the paper is ‘to promote conversation and discussion on a standardised approach to publishing home care pricing information’; the intended outcome being to empower older persons to readily compare ‘single unit costs for the most commonly requested home care package services’.
The draft Schedule is designed not as an exhaustive list; but rather, as a tool to help consumers identify the price of the most common services.
Implications for administrative charges and pricing generally
Many home care providers currently charge consumers a separate administrative charge (and indeed, are able to do so without infringing any of the legislative obligations). The Consultation Paper states, however, that the Minister has ‘outlined his expectation that administrative charges are kept to a minimum, in order to maximise service delivery for all home care recipients’.
In and of itself, a mere statement of ‘expectation’ might be seen as having little practical significance. More pertinent, perhaps, is the design of the draft pricing Schedule. There is no provision in the draft Schedule for discrete administration fees, nor other add-on charges currently seen in the market - for example a provider’s own margin that they may wish to apply when oncharging the cost of subcontracted or brokered service. The draft Schedule has therefore been designed so that prices will be expressed as total unit costs. In other words, all administration charges and subcontracting costs (and similar) are to be rolled into consolidated service prices, rather than being applied as separate and additional charges.
Presumably this consolidated pricing approach will increase raw service prices from their current levels, but not translate to overall price increases; and in theory consumers will be able to better compare the price of common services consistently across providers. So, whilst administration charges are not being phased out as such, the industry can expect to see the disappearance of administration charges expressed as standalone amounts.
In the lead up to 30 April 2019:
- Home care providers will need to amend their existing home care agreement templates, if they currently describe standalone administration fees. Further, it is proposed in the Consultation Paper that all new clients will be required to have a copy of the pricing Schedule included within their home care agreement. For existing home care recipients, it is proposed that providers will have a 12 month’ transition period to incorporate the Schedule into those clients’ home care agreements.
- The biggest task is likely to be faced by providers’ finance teams, who will need to review pricing structures and financial modelling, in preparation to absorb and redistribute administration charges which are reported as being as high as 40 per cent of the total value of some home care packages.
If you require any further information or would like review of your current home care agreement to ensure compliance, please contact David McMullen on 9321 0522.