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Thursday, 21 June 2007
Page: 163


Senator JOHNSTON (Minister for Justice and Customs) (6:27 PM) —I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Aged Care Amendment (Residential Care) Bill 2007 proposes to amend the Aged Care Act 1997 (the Act) to implement the Government’s decision to reduce the number of funding levels in residential aged care and provide supplements for residents with complex health care needs, including palliative care, and for residents who have mental or behavioural conditions, including dementia.

Since coming to office in 1996, the Howard government has worked consistently to ensure that older Australians needing long-term care have access to a high-quality and affordable aged care system capable of meeting their needs and preferences.

The Government’s continuing commitment to aged care reform and investment has been demonstrated by substantially increased outlays on residential care, by the very significant growth in care places, and by its recognition of the complex care needs of residents of aged care facilities.

In 2005-06, the Government’s total expenditure on ageing and aged care was $7.1 billion, of which $5.3 billion was paid for residential care subsidies—an average subsidy per utilised place of $34,000. The budgeted amount for the subsidy in 2006-07 is another $300 million more than that.

In 2003, the Government commissioned a review of pricing arrangements in residential aged care. The Government immediately addressed the main recommendations raised in Professor Warren Hogan’s report by providing $2.2 billion as part of its 2004-05 budget package Investing in Australia’s Aged Care: More Places, Better Care the largest single investment in aged care by any Australian Government. The total investment by the Government for the care of older Australians between 1996 and 2008 is $67 billion.

As part of the 2004-05 Budget package the Government committed to introducing new funding arrangements for residential aged care. Aged care homes may claim government subsidy for providing care to a particular resident based upon their funding classification. The Resident Classification Scale has been the instrument used to assess the overall level of dependency of an aged care resident. The resident’s funding classification has been determined on the basis of this assessment.

Over the last two years, the Howard government has consulted and worked with the residential aged care industry, including nursing and care staff, to develop a more effective assessment and funding instrument, which will reduce administrative effort and costs for aged care providers.

The amendments proposed in this Bill will streamline the administration of the current system and free up nurses and other residential care staff to deliver higher quality care. This will occur through a number of measures to ensure that care needs are assessed more effectively, and that paperwork is required only where it serves a clear purpose.

Specifically, the Bill seeks to replace the Resident Classification Scale with the Aged Care Funding Instrument as the means of allocating basic subsidy in residential aged care. The Bill will introduce changes necessary to reduce the number of funding levels for basic care, as well as provide payments for residents with complex health care needs, including palliative care, and for residents who have mental or behavioural conditions, including dementia. Subsequent amendments to the Aged Care Principles will detail the manner in which specific levels of funding are calculated for residents with different care needs. To support the introduction of this Bill, I am tabling a policy paper today which outlines these changes.

The Aged Care Funding Instrument will remove unnecessary ‘red tape’ by reducing the amount of documentation and record-keeping which aged care staff generate and maintain in order to justify the funding received for each resident. Appraisal procedures using the Resident Classification Scale can sometimes be too subjective and very time consuming. In addition, many aged care homes currently invest considerable staff time in ongoing documentation to ensure that their residents’ care plans and progress notes are found to be consistent with their appraisals for funding purposes when the homes’ appraisals are reviewed for audit purposes. This process is known by industry as “validation”.

The Aged Care Funding Instrument is specifically designed to address these problems. The Aged Care Funding Instrument has fewer questions than the Resident Classification Scale and is targeted to assess an aged care resident’s need for care more objectively. The validation process will also be streamlined so that single questions, or specific groups of questions, can be reviewed rather than every aspect of the appraisal.

The Government and the aged care industry have worked together to develop the proposed funding model. A national trial was undertaken in 2005 in which nearly a quarter of all aged care homes participated. The trial found that aged care assessors and government review staff can achieve a much higher level of agreement on classification levels using the new instrument—over 90%. Another trial has been undertaken to refine the validation method and to clearly define the record-keeping requirements for funding.

A resident’s classification for funding purposes currently expires after twelve months. The Bill amends the Act to remove the requirement for providers to annually reappraise residents. This change will eliminate over 60,000 annual reappraisals completed by providers which result in no change in the amount of funding. It is also proposed that residents who enter aged care homes from hospital be reappraised after six months in recognition that their care needs can change more quickly than other residents’ care needs.

Approximately 12,000 residents move from one aged care home to another each year. The Bill will amend the Act to allow providers the choice either to accept the classification based on the appraisal by the previous home or to submit a new appraisal. Additionally, the integration of the new funding model into the proposed e-commerce platform for transactions between the Department of Health and Ageing, Medicare Australia and approved providers will reduce paperwork and improve efficiency in the longer term.

Maintaining the Resident Classification Scale and associated processes costs over $142 million involving a loss of 5.8 million hours. Within the $142 million, a cost of $116 million is attributed to the Resident Classification Scale appraisal process alone—this can be compared to the Aged Care Funding Instrument impact of $5.21 million.

The Howard government will continue to work closely with the aged care industry to implement the new system to make sure that it reduces unnecessary ‘red tape’ for funding purposes, and more efficiently directs funding towards the care of residents according to their needs. To ensure a smooth transition, a national training program for residential aged care is being developed and will be delivered to up to 10,000 aged care facility staff and managers right across Australia prior to the Aged Care Funding Instrument commencement.

Providers have a responsibility to appraise the level of care needed by residents accurately when claiming Australian Government subsidies. Currently, the Act allows the Departmental Secretary to suspend providers from making such appraisals in the small number of cases where providers have repeatedly failed to appraise accurately. The Bill proposes to amend the Act so that, in such cases, the Secretary may put a stay on a suspension from making appraisals or reappraisals subject to a provider entering into an agreement with the Secretary. The agreement may include additional training of management and care staff or the appointment of an advisor for a specified period of time to assist a provider to conduct proper appraisals.

The introduction of the Aged Care Funding Instrument will not change the responsibilities under the Act for aged care homes to provide quality care. Failing to provide the care required to meet the individual needs of residents constitutes a breach of the Act and this will continue to be the case.

The transition arrangements proposed in this Bill will ensure continuity of subsidy levels for all residents classified on the basis of an appraisal using the Resident Classification Scale before the Aged Care Funding Instrument start date until they require a higher level of care. In addition, this Bill will ensure the continuity of entitlement to specified care and services provided to high care residents who were eligible for these services before the Aged Care Funding Instrument start date.