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2019-2020-2021
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
Aged Care Amendment (Making Aged Care Fees Fairer) 2021
EXPLANATORY MEMORANDUM
and
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Circulated by authority of
Rebekha Sharkie MP
Aged Care Amendment (Making Aged Care Fees Fairer) Bill 2021
OUTLINE
The Bill amends the Aged Care Act 1997 (the Aged Care Act) to provide for measures to
make fees for aged care at home (home care) fairer and give older people and their
families an informed choice and greater autonomy relating to the care they receive and
what they pay for that care.
The Bill newly provides an inclusive definition of costs for which approved providers may
charge as 'administration and management' fees. The Bill makes clear that home care
fees charged for administration and management must be directly attributable to an
approved provider's cost to administer or manage the provision of home care to the
recipient. Other components of the home care fees may not be directly attributable to
administration and management, nor may they be inflated to offset such costs.
The Bill also limits the proportion of home care fees which an approved provider of home
care may charge to up to 25 per cent of the whole amount payable in home care fees for
administration and management under a level one or two home care package, and up to
20 per cent of fees for home care under a level three or four package.
This is designed to address the practice of some approved providers who charge up to 50
per cent of home care fees for administration and management fees, under existing
provisions which enable the charging of 'reasonable' fees for these purposes.
The Royal Commission into Aged Care Quality and Safety noted that for a $52,000, level
4, home care package, a recipient in 2018-29 received on average 8 hours and 45 minutes
of support per week.1
High administration and management fees have not rectified the chronic underpayment of
aged care workers who receive hourly rates reportedly up to 25 per cent lower than those
of people undertaking comparable duties in the disability sector.
The Bill also prohibits approved providers charging 'exit' fees when a recipient of home
care wishes to leave their service. This will better enable recipients to exercise their
autonomy and choice of provider based upon their satisfaction with the services provided
and the fees charged for their care.
The Bill also amends Aged Care Act to require providers to furnish a schedule to
prospective care recipients which lists the home care fees for at least five approved
providers of the care sought, in the area in which the recipient is seeking care, unless
there are fewer than five such providers of the care sought in that area, in which case a list
of fees must be provided for all of the approved providers in the area.
FINANCIAL IMPACT
The bill will have no financial impact.
1
Royal Commission into Aged Care Quality and Safety Final Report - Care, Dignity and Respect: Volume 2 accessed
21 October 2021, p. 63.
NOTES ON CLAUSES
Clause 1 Short title
1. This clause is a formal provision which specifies that this Bill, when enacted, will be cited as the
Aged Care Amendment (Making Aged Care Fees Fairer) Act 2021.
Clause 2 Commencement
2. This clause sets out in a table the date on which provisions of the Bill, when enacted, will
commence. It provides that information in column 3 of this table is not part of the Act, and that
the information in this column or information in it may be edited, in any published version of the
Act.
3. Item 1 of the table provides that the whole of the Act is to commence on a single day to be
fixed by Proclamation. If the provisions do not commence within 6 months of the Act receiving
Royal Assent, they commence on the day after the end of that period.
Clause 3 Schedules
4. This is the formal enabling provision for the Schedule to the Bill providing that legislation that is
specified in a Schedule to the Act is amended or repealed in accordance with the applicable
items of the Schedule concerned. In this Bill, the Aged Care Act 1997 (the Aged Care Act) is
being amended.
5. The clause also provides that other items of a Schedule to the Bill have effect according to their
terms. This is a standard enabling clause for transitional, savings and application items in
amending legislation.
Schedule 1 Amendments
Item 1
6. This item provides for a cap on administration or management fees charged as a proportion of
home care fees.
7. Item 1 amends subsection 52D-1(2) of the Act to provide for a cap on administration or
management fees of no more than 25 per cent of home care fees charged for any period under
a level one or two aged care package, and no more than 20 per cent of home care fees
charged for any period under a level three or four aged care package.
Item 2
8. This item defines administration and management costs and provides that fees for home care
cannot be structured so as to allow for administration and management fees to be reflected
other than in the administration and management fees.
9. Item 2 inserts at the end of section 52D-1 additional requirements that policies and practices
that an approved provider uses in setting home care fees must set administration or
management fees separately from the rest of the home care fees such that the whole amount
of administration and management fees are directly attributable to the cost of administering or
managing the provision of home care to the recipient.
10. Other components of the provider's home care fees must be set such that the amounts
charged for those components are not to any extent directly attributable to the cost of
administering or managing the provision of home care to the recipient.
11. The cost of administering or managing the provision of home care includes the cost of:
a. administration staff
b. insurance
c. workers' compensation
d. case management or care coordination
e. budget preparation.
12. The provider must identify to the home care recipient how much of the home care fees are
attributable to home care administration or management and how much are not for
administration or management of home care provision. The provider must also demonstrate to
the Secretary or care recipient on request how the fees comply with the requirements of the
cap, and the policies and practices required to be used in setting home care fees so as to
provide for separate administration and management fees.
Item 3
13. This item provides that an approved home care provider is prohibited from charging a fee for a
recipient of home care to exit from their service.
14. Item 3 inserts at the end of section 56-2(a) the words 'exit from' after 'entry to'.
Item 4
15. This item provides that an approved home care provider must provide a prospective care
recipient with a schedule setting out home care fees charged by other approved providers for
or in connection with home care of the kind sought by the care recipient. The schedule must
set out the fees of at least five other providers providing home care of that kind in the area, and
if there are fewer than five other providers then the fees of all of those providers.
16. Item 4 inserts section 56-2(ka).
Item 5
17. This item provides that the home care agreement must specify whether the provider will include
administration or management fees, and the policies and practices that will be used by the
approved provider in setting administration or management fees for home care.
18. Item 5 inserts at the end of section 61-1(1) the requirements that a home care agreement must
specify whether the home care fees will include administration or management fees and if so,
the policies and practices that will be used by the provider in setting those fees.
Item 6
19. Item 6 amends Clause 1 of Schedule 1 to provide that:
a. administration or management fees as the component of home care fees identified as
administration or management fees, under paragraph 52D-1(4)(a)
b. 'exit' in relation to a person and an aged care service as meaning the end of the
provision of care to the person through that aged care service
c. 'home care fees' has the meaning given by subsection 52D-1(1).
Item 7
20. This item provides that the amendments made by items 1 and 2 apply in relation to home care
fees prospectively, from the commencement of item 7.
21. The amendment made by item 3 applies only to a recipient's exit from an aged care service if
the recipient entered the service on or after the commencement of item 7, and does not apply
to a charge under a home care agreement entered into before that date. The amendment does
not apply retrospectively to an agreement made before the item comes into effect, unless the
home care agreement is otherwise varied after commencement of item 7.
22. The amendment made by item 5 applies in relation to a home care agreement entered into or
varied on or after the commencement of item 7, such that a home care agreement entered into
or varied before the commencement of item 7 is not required to specify the policies and
practices used by the approved provider in setting administration or management fees.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Aged Care Amendment (Making Aged Care Fees Fairer) Bill 2021
This bill 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 bill
The purpose of the Bill is to put in place a fairer fee structure for aged care at home, and
thus to better inform, and serve, older Australians, their families, carers and the taxpayer.
The Royal Commission into Aged Care Quality and Safety noted that for a $52,000, level
4, home care package, a recipient received on average only 8 hours and 45 minutes of
support per week.
High administration and management fees charged for aged care provided in the
recipient's home have not resulted in better payments to aged care workers, who receive
hourly rates reportedly 25 per cent lower than those of people undertaking comparable
duties in the disability sector.
The Bill will define which costs can be included by providers under 'administration and
management' fees, and cap the proportion of fees that may be charged as administration
and management fees to no more than 25 per cent of fees under a Level 1 and or Home
Care package and no more than 20 per cent of a Level 3 or 4 package. It is not intended to
impact hourly rates of pay received by workers in aged care.
Administration or management fees will need to be set and identified separately from the
rest of home care fees to prevent such fees from being 'hidden' in inflated hourly costs.
Administration and management fees will be defined as including administration staff,
insurance, workers' compensation, case management or care coordination and budget
preparation.
The Bill will ban home care providers from charging 'exit fees' which practice limits a
person's choices to change their home care provider if they are not satisfied with the care
provided or fees charged. This will improve the autonomy of older Australians who may
wish to change providers or indeed to move to self-management of the care they receive
in their homes.
Providers will be required to give to a prospective care recipient a schedule setting out the
home care fees charged by at least five other approved providers in the area, or if there
are fewer than five other such home care providers in the area, the schedule must set out
the fees of all other approved home care providers in the area. This will make comparative
pricing information more accessible to prospective recipients of care at the time when they
are deciding whether or not to enter into an aged care agreement, so that they may make
an informed choice of care provider and the terms on which that care is delivered.
The Bill will thus improve the autonomy of aged care recipients, and provide them with the
relevant information, putting them at the heart of decisions about the care they receive in
their own homes.
Human rights implications
This Bill engages the following human right:
• the right to the enjoyment of the highest attainable standard of physical and mental
health in Article 12 of the International Covenant on Economic, Social and Cultural
Rights (ICESCR).
The right to physical and mental health is advanced by increasing the autonomy of older
Australians to make informed choices regarding the aged care provided to them in their
own homes.
The Bill will do so by enabling older people eligible for aged care to:
• Access clear information regarding the proportion of fees charged for aged care at
home which is consumed by administration and management of their home care;
• Ensure that more of the fees paid for their home care are expended on safe, quality
care and fair pay for aged care workers rather than administration and management
fees;
• Choose to exit a home care agreement with an approved provider of home care without
incurring a financial penalty for exercising this choice;
• Access timely, relevant information regarding the pricing of relevant home care
provided by approved providers in their area before choosing whether or not to enter
into a home care agreement.
Evidence
Under existing legislation aged care providers are required to keep management fees to a
'reasonable amount'. This term is not defined and not being achieved e.g. through
'competition' between providers.
The Royal Commission into Aged Care Quality and Safety noted that for a $52,000, level
4, home care package, a recipient received on average just 8 hours and 45 minutes - a
little more than one day of support - for every week.
Recent research published by Dr Sarah Russell, Principal Researcher, Research Matters,
and Director of Aged Care Matters,2 indicates that:
• study participants reported feeling that case or care management fees were extremely
high, noting further separate charges were also deducted for administration, travel and
the like;
• several participants reported they rarely heard from their providers, despite paying high
fees;
2
Consumer experiences of self-managing a home care package, Dr Sarah Russell, September 2021, accessed on 11
October 2021 at: FinalReport_SelfManagement (agedcarematters.net.au)
• participants felt that too little was done to increase awareness of the option of self-
managed home care, by Government or providers.
A recent survey of 15,000 people aged over 75 years of age in the Federal electorate of
Mayo regarding their experience of aged care at home, garnering 1,200 responses,
showed that:
• One in three respondents were still waiting for a home care package;
• A third had been waiting for more than 12 months for home care at any level;
• Half of respondents on a home care package reported they were unhappy with or
uncertain of the administration fees charged on their packages;
• Many of those surveyed reported paying administration and management fees of up to
40 or 50 per cent, even on packages that are very minimal;
• Half of those respondents with packages said there had been no change to their
package over time, and yet they were still being charged considerable 'management'
fees, even for lower level packages which provided them with only an hour of
gardening or cleaning each fortnight;
• 94 per cent of respondents said they could not afford daily home care.
Conclusion
This Bill is compatible with human rights because it promotes human rights, specifically the
rights in Article 12 of the ICESCR, and does not otherwise raise human rights issues.
Rebekha Sharkie MP