How will the new Aged Care Bill affect aged care approved providers?
Historic aged care reforms to enhance the quality of aged care in Australia and to cater for the country’s ageing population[1] are proposed under the Federal Government’s new Aged Care Bill 2024, recently introduced into Parliament and is due to commence on 1 July 2025.
The reforms respond to the recommendations of the Royal Commission into Aged Care Quality and Safety and the Final Report of the Aged Care Taskforce. We outline the Bill’s key changes for aged care providers, particularly how they will affect compliance, duties and obligations.
The Aged Care Bill replaces the Aged Care Act 1997 (Cth) (1997 Act) and the Aged Care Quality and Safety Commission Act 2018 (Cth), and brings together the funding and regulatory arrangements for multiple existing and new aged care programs including:
- residential care,
- the Commonwealth Home Support Programme (CHSP),
- the National Aboriginal and Torres Strait Islander Flexible Aged Care (NATSIFAC Program),
- the Multi-purpose Services (MPS) Program,
- the Transition Care Program (TCP), and
- the new Support at Home program.
The regulations and rules are yet to be released.
For now, the Prudential Standards apply only to residential aged care providers that manage Refundable Accommodation Deposits (RADs). In time, the Prudential Standards will also apply to residential aged care providers that do not hold refundable accommodation deposits and also to home care and Commonwealth Home Support Program providers.
- An earlier version of the Bill included criminal penalties for providers who breached standards, but they were removed as part of Labor's negotiations with the Coalition. The removal of criminal penalties from the Bill was prompted by concerns that it would spark an exodus of capable workers from the sector due to fears of punishment.
- The new Bill sets out arrangements for funding, including aged care participant contributions.
- Changes to Supporters – provisions overriding tribunal and court guardianship orders removed – now regard must be made of this.
- Duties of supporters increased to act in a manner that promotes the will, preferences and personal, cultural and social wellbeing of the individual.
- Offence of abuse of position as supporter introduced.
- Approved Providers may be required to establish of a Quality Care Worker Voice Body.
- Some changes to the whistleblowers’ provisions have changed.
- Providers will have to ensure their actions are guided by the Statement of Rights.
- Providers will have to register with the Aged Care Quality and Safety Commission (ACQSC) (with transitional arrangements in place for existing providers) and have any residential care homes approved.
- Providers who deliver NATSIFAC and CHSP services will be registered under the new Act and regulated by the ACQSC.
- The new Act will provide a revised set of provider obligations, including conditions on registration.
- Strengthened Aged Care Quality Standards will apply to some categories of providers.
- Providers will have to comply with new financial and prudential standards.
- Providers will have to ensure their workforce meets revised worker screening requirements.
- Providers and responsible persons will be subject to new statutory duties.
Under section 179, a registered provider must ensure, so far as is reasonably practicable, that the conduct of the provider does not cause adverse effects to the health and safety of individuals to whom the provider is delivering funded aged care services while the provider is delivering those services.
If the registered provider breaches that duty and without reasonable excuse engages in conduct that amounts to a serious failure to comply with that duty and that conduct results in the death or serious injury to or illness of an individual, then if the registered provider is a company, the civil penalty is 4,800 penalty units ($1,502,400). Currently 1 Commonwealth penalty unit equals $313.
Note that the penalty is that amount and not up to that amount depending upon severity and could be multiplied if multiple individuals are involved in an adverse event.
Under section 180, a responsible person of a registered provider, other than a person responsible for the day-to-day operations of the registered provider, must exercise due diligence to ensure that the provider complies with their duties under section 179.
As recommended by the Aged Care Taskforce, these measures include:
- larger means-tested contributions from new entrants.
- a higher maximum room price that is indexed over time.
- the retention of a small portion of refundable accommodation deposits by providers.
The treatment of the family home won't change.
A ‘no worse off’ principle will provide certainty to people already in aged care and they won't make a greater contribution to their care.
The new contributions and accommodation arrangements will only apply to new entrants to residential aged care from 1 July 2025. Everyone in residential care on 30 June 2025 will maintain their current arrangements until they leave care.
Increasing the maximum accommodation
Under current arrangements, providers must seek the agreement of the Independent Health and Aged Care Pricing Authority to charge above $550,000 for a room. This has not changed since 2014, despite significant increases in accommodation costs over the past decade.
The government has accepted the Aged Care Taskforce (Taskforce) recommendation to immediately increase this price and index it over time. From 1 January 2025, the government will increase the price requiring approval to $750,000 and index it on 1 July each year to the consumer price index. This is in line with a recommendation of the 2017 Legislated Review of Aged Care (the Tune Review).
Introducing Refundable Accommodation Deposit Retention
From 1 July 2025, providers will be required to keep a small portion of each new RAD, with the amount of retention capped at five years to protect residents who remain in care for a long time.
The amount retained would be calculated based on a retention rate of 2 per cent per annum of the RAD balance, with the amount debited monthly. This change would also apply to Refundable Accommodation Contributions (RACs) which are used by residents that receive support for some but not all of their accommodation deposits.
The ‘no worse off’ principle for existing residents means this change will not apply to the RADs or RACs of residents who enter residential care before 1 July 2025.
Introducing Daily Accommodation Payment Indexation
The Daily Accommodation Payment (DAP) that residents pay is currently fixed at the time of entry and this means that over time the value of the accommodation payments residents make to providers reduces in real terms, as the cost of maintaining that accommodation increases. To address this inconsistency, the government will require that the DAPs for all residents entering after 1 July 2025 be indexed.
Under this arrangement, providers will increase the DAP they charge residents twice per year in line with changes in the consumer price index. This is consistent with increases to the government-funded accommodation supplement for supported residents.
This change will not apply to Daily Accommodation Contributions (DACs).
The ‘no worse off’ principle for existing residents means this change will also not apply to the DAPs of residents who enter residential care before 1 July 2025.
Viable pathway to phase out RADs in the longer term
Subject to a review of sector readiness in 2030, the Taskforce recommended that the sector be transitioned to not accept new RADs by 2035. The Government will commission an independent review of sector readiness in 2029-30, to support consideration of phasing out RADs by 2035.
Contributions for everyday living costs
All residents are currently required to pay a Basic Daily Fee (BDF) which is set by government at 85 per cent of the single base rate of the Age Pension. This contribution partially funds services such as meals, cleaning and laundry.
The BDF will not change under these reforms. Fully supported residents will continue to only pay the BDF, and partially supported residents will continue to only pay the BDF and a contribution towards their accommodation costs. Residents who have more than $238,000 in assets, more than $95,400 in income, or a combination of the two, will make additional contributions towards their everyday living costs.
There will continue to be a Hotelling Supplement that tops up the BDF because there is a gap between the BDF and the full cost of providing everyday living services in residential care.
Contributions to non-clinical care
The current Means Tested Care Fee will be abolished. The Government will fully fund all clinical care costs in residential aged care.
A new means-tested Non-Clinical Care Contribution will be introduced to cover non-clinical care costs such as bathing, mobility assistance and provision of lifestyle activities. Individuals will not begin contributing to their non-clinical care until their income and assets are more than sufficient for them to fully fund the Hotelling Supplement.
Residents with sufficient means would contribute 7.8 per cent of their assets over $502,981 or 50 per cent of their income over $131,279 (or a combination of both) up to a daily limit of $101.16.
A new lifetime cap on the Non-Clinical Care Contribution will also be introduced. A resident who remains in care over four years would cease making contributions to their non-clinical care costs. After four years, the Government will cover their full care costs for the remainder of their time in residential care. This time-based cap will protect those residents who remain in care for a long time.
A $130,000 lifetime cap will also apply to the Non-Clinical Care Contribution. It will be indexed twice a year.
The treatment of the family home in the residential aged care means test will remain unchanged. The value of the family home is only assessable if the home does not have a ‘protected person’ still living in it (eg a spouse), and then only up to a capped amount ($206,039 as at 20 September).
‘No worse off’ principle for existing residents
A ‘no worse off’ principle will apply to everyone in residential aged care on 30 June 2025, such that existing residents will have their current arrangements maintained until they leave care. The new arrangements for means testing will only apply to new entrants to residential aged care from 1 July 2025.
For more information, see the Government’s accommodation reform paper.
There will be a new system of home care, called Support at Home.
Support at Home will provide support for:
- clinical care (eg nursing care, occupational therapy).
- independence (eg help with showering, getting dressed or taking medications).
- everyday living (eg cleaning, gardening, shopping or meal preparation).
The Government will pay 100 per cent of clinical care services, with individual contributions going towards independence and everyday living costs.
A lifetime contribution cap will apply across the aged care system and means no one will contribute more than $130,000 to their non-clinical care costs – whatever their means or duration of care – with every Support at Home contribution counted towards the cap.
Support at Home participants will also have expanded access to restorative support to get back on their feet after an illness or injury, through a 12-week program that works with a team of allied health and other professionals.
A new classification system
Participants will be assessed into one of 10 new funding classifications. The new classifications improve on the current four packages available through the Home Care Packages (HCP) program by better aligning funding to need. This includes eight ongoing classifications, and two short-term classifications – the restorative care pathway and end-of-life care pathway.
Under Support at Home, the highest ongoing classification exceeds the current Level 4 HCP, with a budget of almost $78,000 per year.
A defined service list
The program will have a service list that specifies the services available under Support at Home. This will provide clarity for older people and service providers about what can be accessed. The service list includes clinical care (such as nursing and physiotherapy), support for independence (such as personal care, respite, transport and social support), and help with everyday living (such as cleaning, meals delivery and gardening).
Quarterly budgets
Participants will receive a quarterly budget that aligns to their funding classification. Participants will work with their provider to choose how to spend their budget across some or all of the services they have been approved to receive.
Participants will be able to save up to $1000 or 10 per cent (whichever is higher) of the value of their quarterly budget across quarters, if available.
Capped prices
Service providers will draw down on participants’ budgets after services have been delivered. Prices for each service must not exceed price caps set by the government based on the advice of the Independent Health and Aged Care Pricing Authority.
Everyone who, as of 12 September 2024, is receiving a Home Care Package (a package), on the National Priority System, or assessed as eligible for a package, will make the same contributions, or lower, as they would have under Home Care arrangements. They will stay on the existing contribution arrangements when they move to residential care, unless they opt to move to the new program.
For more information, see the Government’s ‘Support at home’ fact sheet.
Part 3 of Chapter 5 of the Aged Care Bill introduces new regulatory powers for the Aged Care Quality and Safety Commission (ACQSC).[2] This includes the right to require enforceable undertakings and seek injunctive relief.
As the national regulator of funded aged care services, the ACQSC will play a greater role in protecting and enhancing the safety and wellbeing of people who access aged care services.[3]
Of note, there will be a new Independent Statutory Complaints Commissioner (Complaints Commissioner), who has powers and responsibilities independent of the Regulatory Commissioner and the ACQSC.
Under sections 357 and 358 of the Aged Care Bill, the Complaints Commissioner will address all complaints and feedback they directly receive, as well as make complaints when registered providers or responsible persons do not comply with the law.[4] This positions the Complaints Commissioner as a stand-alone statutory body, with its own authority and complaints functions.
The role of the Complaints Commissioner also extends to regulate the broader healthcare industry by identifying trends and systemic issues, promoting a culture of open disclosure and communicating feedback and complaints to the System Governor and Minister.
Under section 145, it is a condition of registration that a registered provider complies with the Aged Care Code of Conduct (Code) and takes reasonable steps to ensure that the aged care workers (and the responsible persons) of the registered provider comply with the Code.[5]
Registered provider duty
Section 179 outlines the registered provider’s duty to ensure that their conduct does not cause adverse effects to the health and safety of individuals to whom they are delivering funded care services to.
Section 179 states:
179 Registered provider duty
(1) A registered provider must ensure, so far as is reasonably practicable, that the conduct of the provider does not cause adverse effects to the health and safety of individuals to whom the provider is delivering funded aged care services while the provider is delivering those services.
(2) In this Act, reasonably practicable, in relation to a duty imposed under this Part, means that which is, or was at a particular time, reasonably able to be done, taking into account and weighing up all relevant matters including:
(a) the likelihood of the adverse effect concerned occurring; and
(b) the likely degree of harm from the adverse effect; and
(c) what the person concerned knows, or ought reasonably to know, about ways of preventing the adverse effect; and
(d) the availability and suitability of ways to prevent the adverse effect; and
(e) the rights of individuals under the Statement of Rights.
Note: Under the Statement of Rights, an individual has a right to exercise choice and make decisions that affect the individual’s life, including taking personal risks.
Of note, strict liability criminal offences have been removed from the Aged Care Bill for breach of statutory duties. The previously proposed strict liability offences eliminated the requirement to weigh evidence or make conclusions about whether a registered provider or responsible person was guilty or liable for the breach.
The removal places a greater burden on regulatory authorities such as the ACQSC and Complaints Commissioner to prove that a Registered Provider has breached their duties.
Duty for certain responsible persons
Under section 180, a responsible person of a registered provider, other than a person responsible for the day-to-day operations of the registered provider, must exercise due diligence to ensure that the provider complies with their duties under section 179.[6]
Section 180 states:
180 Duty for certain responsible persons
(1) A person who is a responsible person of a registered provider (other than a person referred to in subparagraph 12(1)(c)(ii)) must exercise due diligence to ensure that the provider complies with the provider’s duty under section 179.
(2) In this section, due diligence includes taking reasonable steps:
(a) to acquire and maintain knowledge of requirements applying to registered providers under this
Act; and
(b) to gain an understanding of the nature of the funded aged care services the registered
provider delivers and the potential adverse effects that can result to individuals when delivering those services; and
(c) to ensure that the registered provider has available for use, and uses, appropriate resources and processes to manage adverse effects to the health and safety of individuals accessing funded aged care services delivered by the provider; and
(d) to ensure that the registered provider has appropriate processes for receiving and considering information regarding incidents and risks and responding in a timely way to that information; and
(e) to ensure that the registered provider has, and implements, processes for complying with any duty or requirement of the registered provider under this Act.
(3) A person may be found liable to pay a civil penalty under this Act relating to a duty under this section whether or not the registered provider has been found liable to pay a civil penalty under section 179.
There has also been the elimination of strict liability offences for breaches of the duty for responsible persons. This means that breaches of both the registered provider duty and duty for responsible persons are subject to civil penalties only. Whether or not the registered provider is liable to pay a civil penalty under section 179 will not affect their liability under section 180 of the Act.
The new Statutory duties and civil penalties replace sanctions.
Of note, the general defence of reasonable excuse has also been removed from the Aged Care Bill.[7]
Compensation orders
The proposed compensation pathway remains under section 186 of the Aged Care Bill, but with variations. The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may order an entity to compensate an individual for serious injury or illness if the entity is liable to a civil penalty under sub sections 179(3) and (5) and the serious injury or illness resulted from the contravention. Therefore, for compensation to be ordered, the entity must have breached the registered provider duty.
The Aged Care Bill 2023 grants the Federal Court and the Federal Circuit and Family Court of Australia (Division 2) powers to order an entity to compensate an individual for serious illness or injury if the entity is found guilty of any offence against any of Part 5, Chapter 3. This means that an entity would have been ordered to compensate an individual for breach of the registered provider duty or the responsible person duty.
Comparatively, the Aged Care Bill restricts the compensation orders that can be sought.
New provider registration system
The new model will introduce universal provider registration – a single registration for each provider across all aged care programs.
If you currently deliver multiple programs (such as home care and residential aged care), you will only need to register once under the new regulatory model. This includes if you are registered in multiple registration categories.
A separate process – called deeming – will apply for current providers when the new Aged Care Act starts.
The standard registration period for providers will be three years. The ACQSC may specify a shorter or longer period, depending on certain factors.
To register in an additional category, you will need to submit a form to the ACQSC to vary your registration.
Registration categories
There will be six registration categories that group service types based on similar care complexity and risk.
Provider registration category | Description | Service types |
|---|---|---|
Category 1 | Home and community services |
|
Category 2 | Assistive technology and home modifications |
|
Category 3 | Advisory and support services |
|
Category 4 | Personal care and care support in the home or community (including respite) |
|
Category 5 | Nursing and transition care |
|
Category 6 | Residential care (including respite) |
|
Under section 11 of the Aged Care Bill, a registered provider will be required to be registered in one or more of the above categories. At a minimum, this must include registration in the residential care category.[8] The Department will contact providers to confirm their details and ensure that they are registered in the right categories.
Banning orders
Part 11 of Chapter 6 allows for banning orders to prevent workers and providers who contravene the law from operating in the sector. The Commissioner must provide written notice to an entity alerting them of the reasons why the Commissioner is considering making the banning order and must invite the entity to make written submissions to the Commissioner within 14 days of receiving the notice.[9] A notice of decision will be provided to the entity as soon as is practicable after the Commissioner decides whether to make a banning order.[10]
Under section 497, the Commissioner may make banning orders on current and former registered providers, which prohibit or restrict the delivery of funded aged care services generally or in a specified service type.[11]
In addition, under section 498, the Commissioner may make banning orders on individuals as aged care workers and responsible persons of registered providers which prohibit or restrict the involvement of the individual in the delivery of the funded aged care services generally, in a specified service type or within a specified activity of a registered provider.[12]
The banning orders provided in the Aged Care Bill are largely consistent with the exposure draft of the Bill.
The Aged Care Bill 2023 established that a banning order cannot prohibit or restrict delivery of funded aged care services in a specified service type if the entity is a registered provider (in a provider registration category) because the entity intended to deliver funded aged care services in that service type.
However, the Aged Care Bill 2024 introduces section 497(3), which renders this inapplicable if the Commissioner imposes a condition on the registration of the registered provider which results in the registered provider being unable to deliver the funded aged care services in the specified service type.
Penalty for contravening banning orders
An entity will be subject to a civil penalty of 1000 penalty units if:
- the entity breaches a banning order or a condition to which the banning order is subject; or
- the entity is a registered provider, and a banning order is in place for an individual who is an aged care worker or responsible person of the registered provider, and the entity fails to take reasonable steps to ensure that the individual does not engage in conduct that would breach the banning order or a condition to which the banning order is subject.[13]
Under the Aged Care Bill, registered providers remain obliged to ensure that aged care workers and responsible persons who make disclosures are not victimised.
A disclosure of information by an individual is classified as protected under section 547 if it is made on reasonable grounds and communicated to:
- an appointed commissioner (or other member of staff to the Commission);
- the system governor (or an official of the Department);
- a registered provider (or a responsible person of the registered provider);
- an aged care worker of a registered provider (which is broadly defined and includes a volunteer);
- a police officer; or
- an independent aged care advocate.
The disclosure can be made orally or in writing (and whether made anonymously or not).
The discloser must have reasonable grounds to suspect that the information indicates that an entity may have contravened a provision of the Act.
If a disclosure is made under section 547, the individual will not be subject to any liability for making the disclosure and no contractual right or remedy will be enforceable against the individual based on the disclosure.[14]
Section 549 requires entities, as the recipient of a disclosure, to take reasonable steps to preserve the anonymity of the individual where requested.[15]
Section 549 imposes a further measure on recipients and entities, in addition to sections 550-553, to uphold their obligations of confidentiality when receiving a disclosure from an individual. Entities are subject to 30 civil penalty units if they disclosure the identity of the discloser or any information that is likely to lead to the identification of the discloser.[16]
Importantly, section 551 operates to ensure that aged care workers and responsible persons who make disclosures are not victimised.
Entities will be subject to 500 penalty units if:
- they engage in conduct that causes detriment to an individual because they suspect or know that the individual’s disclosure qualifies for protection under section 547; or
- the entity makes a threat to an individual to inflict fear that the threat will be carried out and this threat is made on the basis that the entity suspects or knows that the individual has or intends to make a disclosure that qualifies for protection under section 547. It is not necessary to prove that the individual actually feared that the threat would be carried out or that the individual made (or had the intention to make) a disclosure.
This broader threshold provides greater protection to whistleblowers.
Independent Statutory Complaints Commissioner
Although the staff of the Commission will assist the Complaints Commissioner, they will not hold these complaints functions. The introduction of the Complaints Commissioner will promote the independence, transparency and accountability of the complaints handling process.[17]
Statutory duties and compensation
The removal of strict liability offences for breach of statutory duties imposes a greater threshold on decision-makers when holding entities and responsible persons accountable for safeguarding and protecting older people. While the statements of rights and principles enshrined in the Aged Care Bill promote the right of individuals to an adequate standard of living, it is important that there are sufficient penalties in place and avenues of compensation available to protect those in aged care. Nonetheless, it should be clearly stipulated in the Aged Care Bill that a plaintiff cannot recover damages under both civil liability legislation and the Aged Care Act.
The Aged Care Bill would be strengthened by addressing other considerations such as contributory negligence, proportionate liability and protections for volunteers – it is important to strike the right balance between protectory and punitive measures.
There are additional changes that space did not permit us to cover in this article. We have webinars planned and are currently providing presentations to boards and management of clients. If you want more details please contact Alison Choy Flannigan on the contact details below.
This article was written with the assistance of Emily Slocombe, Law Graduate.
[1] Once in a generation aged care reforms.
[2] Chapter 5, Part 3 of the Aged Care Bill 2024.
[3] Section 358 of the Aged Care Bill 2024.
[4] Section 358 of the Aged Care Bill 2024.
[5] Code of Conduct for Aged Care.
[6] Section 180 of the Aged Care Bill 2024.
[7] The Aged Care Bill 2023 (Exposure Draft).
[8] Section 11(3) of the Aged Care Bill 2024.
[9] Section 499 of the Aged Care Bill 2024.
[10] Section 502 of the Aged Care Bill 2024.
[11] Section 497 of the Aged Care Bill 2024.
[12] Section 498 of the Aged Care Bill 2024.
[13] Section 500 of the Aged Care Bill 2024.
[14] Section 548 of the Aged Care Bill 2024.
[15] Section 549 of the Aged Care Bill 2024.
[16] Section 550 of the Aged Care Bill 2024.
[17] Regulation and oversight under the new Aged Care Act.
