Aged Care Legislation Amendment (Improved Home Care Payment Administration No. 2) Bill 2020

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Aged Care and Senior Australians, Senator the Hon Richard Colbeck)
This memorandum takes account of amendments made by the House of Representatives to the bill as introduced.
This revised explanatory memorandum responds to concerns raised by the Senate Standing Committee for the Scrutiny of Bills in Scrutiny Digest No. 15 dated 11 November 2020 and in Scrutiny Digest No. 17 dated 2 December 2020


The Bill amends the Aged Care Act 1997 (the Aged Care Act) and the Aged Care (Transitional Provisions) Act 1997 (the TP Act).

The purpose of the Aged Care Legislation Amendment (Improved Home Care Payment Administration No. 2) Bill 2020 (the Bill) is to improve the administration arrangements of paying home care subsidy to approved providers.

The Bill introduces more contemporary business practices into home care subsidy payment arrangements and brings these arrangements into alignment with other Government programs.

Approved providers are currently required to provide a monthly statement to their home care recipients that shows the care recipient's available funds, how the funds are being spent (i.e. care and services delivered) and the amount of unspent funds.

The measures in the Bill improve financial accountability and allow for better transparency over the actual use of funds for home care service delivery by requiring approved providers to also report to the Commonwealth the cost of care and services delivered to the home care recipient each month in order for the subsidies to be paid to the approved provider.

Currently, approved providers hold and manage any accumulated unspent funds (both Commonwealth subsidy and consumer contributions) that may arise over time on behalf of the home care recipient if the cost of the care and services they access is less than the sum of their home care fees and subsidies paid by the Commonwealth.

Once the measures in the Bill commence, the Commonwealth will retain, on behalf of care recipients, the Commonwealth subsidy that may be in excess of the services provided, to be drawn down in future.

These reforms will simplify home care subsidy payment arrangements and provide better transparency over the use of funds for home care

The Bill will introduce a mechanism whereby providers can elect to return unspent funds to the Commonwealth.

The Commonwealth portion of the provider held unspent funds will be taken into account for the purposes of the home care subsidy calculator if the provider elects to return unspent funds to the Commonwealth.

Providers who elect to return unspent funds will do this through a 100 per cent subsidy reduction from the cost of the care and services provided until the unspent funds are exhausted.

This Bill does not change how consumer contributions will be treated under home care packages. The income tested care fee will automatically be deducted prior to any subsidy being paid as per current practice.

The Bill will not affect the eligibility of consumers to home care subsidy or the amount of home care subsidy payable for eligible home care recipients.

The Bill makes a consequential amendment to the A New Tax System (Goods and Services Tax) Act 1999 to ensure that the supply of home care remains GST-free.

The Bill gives effect to the second stage of reforms to improve payment administration arrangements for home care packages announced by the Government in the 2019-20 Budget. The first stage of the reforms to change home care subsidy from being paid in advance to being paid in arrears was introduced by the Aged Care Legislation Amendment (Improved Home Care Payment Administration No. 1) Bill 2020.

Financial Impact Statement

The amendments in Schedule 1 of the Bill are required to implement the second stage of the home care payment administration reforms announced by the Government in the 2019-20 Budget. Government allocated $7.1 million to implement this measure.

Regulation Impact Statement

Consistent with the Government's Regulation Impact Statement (RIS) requirements, the Department certified that the attached excerpts from the Aged Care Financing Authority's review Consideration of the Financial Impact on Home Care Providers as a Result of Changes in Payment Arrangements represent a similar process and analysis to that required for a RIS.

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