3 Things to Consider Before the 2017 Reforms – Consumer Directed Care (CDC)

The proposed changes to the Aged Care Principles and Determinations are currently underway and will impact the sector from 27 February 2017.

There are 3 things to consider prior to the introduction of these changes:

1. Exit Fee – are you going to charge one and how much will you charge?
2. Record keeping – how will you keep track of the consumer & government contributions in order to calculate the refund amounts when the consumer exits their package?
3. Organisation’s Home Care Budget – how will you work out the budget for 2016/2017?

EXIT FEES

Are you going to charge one?

Definitely, with competition expected to increase there will be pressure to reduce your administration charge so this will help cover your costs and achieve your margin.

What will you charge?

There are a few options as to how you come up with the amount to charge however keep the following in mind:

• This amount has to be published as a maximum dollar amount in your Home Care Agreement & on the My Aged Care website. You can’t use a percentage.
• This amount can only be charged when the consumer exits your service.
• This amount can’t be more than the consumer’s package balance as they can’t go into debt.

This charge may be based on:

• The margin you want to achieve from each consumer eg.5% x Level 2 package funding.
• The cost of the resources required to finalise the account eg. Employee’s time x (rate of pay + on-costs).
• An amount based on what the competition is charging.

RECORD KEEPING

It is essential that you keep track of the consumer’s & government’s contribution as the refund to each party on exit of the package will be based on this percentage:

• The government’s contribution will include the home care subsidy & supplements.
• The consumer’s contribution will include the basic daily fee & income tested fee.

This information is usually stored in the Client Management System broken down by consumer. As the unspent funds balance rolls over into the next year, it will be essential that you keep a record of each party’s contribution from when the consumer signed up with you (earliest date can only be from 1 July 2015).

ORGANISATION’S HOME CARE BUDGET

From 27 February 2017 you will no longer be permitted to keep the consumer’s unspent funds balance however you will be allowed to charge an Exit Fee. This will impact your budget as most providers currently include that unspent portion as additional income in their Profit & Loss once the consumer exits their package.

There are many ways to budget for your Home Care Packages however I think the most conservative method is to allocate the funding directly to a Balance Sheet account (eg. HCP income received in advance) and only transfer to the Profit & Loss once you can match it to the consumer’s spending.

Contact Debra Ward at Care Collaborator via the web page: www.carecollaborator.com.au, email debra@carecollaborator.com.au or mobile 0438 020 728 for assistance with Consumer Directed Care or if interested in a demonstration of the software solution developed to:

• Ensure consumer satisfaction by providing full transparency and “buy in” through collaboration and efficiency of the process.
• Increase the case manager’s job satisfaction by simplifying the budget calculation and reducing the number of trips required to complete the process.
• Provide the Home Care Manager with information on each case manager’s case load and the number of outstanding agreements.
• Able to integrate data into other systems reducing the risk of errors.