July 1999
Aged Care Reform
Aged Care in Australia is undergoing substantial change as a result of the introduction of the Federal government's Aged Care Reform package. The current reforms are aimed at reducing government expenditure on Aged Care by a range of measures including the withdrawal of $400million worth of capital works funding and the move to a more User Pays system. In addition, the government aims to substantially de-regulate Aged Care, and leave the provision and cost of Aged Care services to the market. The QNU believes that these changes will make Aged Care much less affordable, will reduce the quality of care for those who are not well off, reduce accountabilities for those government funds still being provided to the sector, and impact on staffing and skill levels within the Sector.
In order to understand the changes that are now taking place, it is necessary to explore the history of Aged Care in Australia, from the pre- 1960's when there was little regulation or support for the sector, through to the development and refinement of a system aiming to provide quality affordable and accessible Aged Care.
History
In 1963, the Federal government introduced a system of Nursing Home Benefits, primarily as a solution to problems with the health insurance system at that time. Prior to this date long term patients could receive Commonwealth Benefits only if they belonged to a private health insurance fund. The development of the Nursing Home Industry appears to be by default and Nursing Homes became the main publicly supported means of providing residential accommodation for the elderly. There were no eligibility criteria established for either the Benefit or for admission to a Nursing Home.
Partly as a result of this funding initiative 1963 to 1972 saw a substantial increase in the number of nursing home beds (50% growth principally in the private for profit sector) - apparently far greater than the increase in the population aged 65 and over.
In 1968 a Commonwealth Department of Health survey showed that the financial situation of not for profit homes (church and charity) had deteriorated with all having substantial funding deficits. Homes became reluctant to admit patients requiring higher levels of care because of the associated relative high cost of providing needed care. As a consequence an Intensive Care Benefit was introduced in 1969, which subsequently became known as the Extensive Care Benefit.
A 1970 review of Commonwealth benefit and pension entitlements of nursing home patients found that the unchecked expansion of private nursing homes and beds had resulted in a substantial over provision. At this stage there was no alternative to nursing home accommodation and the introduction of hostels was recommended.
In 1972 changes were made to the National Health Act to:
- control growth - by providing funding based on 50 beds per thousand head of population
- control unnecessary admission of patients - by requiring entry to be approved by a Government Medical Officer; and
- control fees - by not allowing proprietors to charge fees greater than those set by the Commonwealth Department of Health.
Legislation was also introduced in 1972 to allow for the establishment of Hostels and government incentives were provided to encourage people to care for aged relatives in their own home.
In 1975 legislation was introduced to allow a system of deficit funding for nursing homes run by church and charitable organisations.
In 1977, the Nursing Home Benefits scheme was changed to increase benefits to patients in non-government nursing homes, increase the Extensive Care Benefit and establish a percentage relationship between the minimum patient contribution and the level of pension entitlement.
In 1977 a Working Party established to review nursing home fees control reported a number of deficiencies and anomalies within the system, which was widely criticised by proprietors. In 1979 Regional Offices of the Commonwealth Department of Health reported instances of proprietors submitting false information in support of claims for fee increases. Legislation was amended in 1980 to ensure that proprietors maintained adequate accounting records and submitted true and correct financial statements and claims.
1986 TO 1996 NURSING HOMES AND HOSTELS REVIEW
This document was tabled in Parliament on 14th April 1986, its tabling initiating a comprehensive health care strategy including a plan of legislative changes comprising eight stages for completion in 1996.
Importantly, the recommendations of this report were underpinned by four philosophical points:
- Aged and disabled people should as far as possible be supported in their homes in their own communities;
- Aged and disabled people should be supported by residential services only where other support systems were not appropriate to meet their needs;
- Services should be provided in an atmosphere and using processes which promote as far as is possible rehabilitation and restoration of function. The manner in which services are provided should develop and enhance personal freedom and independent functioning of all residents;
- Services should be based on a recognition that for many people discharge to a less supported residential service or to a community-based support service would be a possible and desirable outcome.
In 1994, the Law Reform Commission produced a Discussion Paper which indicated:
"Most of the Aged Care Program is now governed by a complicated array of legislation, delegated legislation and funding agreements between the Minister and Service Providers.........The legislation is complex, has been amended many times and in many cases is difficult to follow. Much regulation occurs under delegated legislation. This includes regulations, principles, guidelines and general conditions which an organisation receiving funding must comply with. Because all this regulation is not in one place it is difficult to find. Some aged care services and initiatives are not regulated by legislation at all. These include Aged Care Assessment Teams, advocacy services and newer services such as multi-purpose centres and services.......They are regulated by administrative guidelines and funding agreements (Law Reform Commission, Discussion Paper No. 57 Aged Care Nursing Homes, Hostels, Community Aged Care Packages and the Domiciliary Nursing Care Benefit; April 1994, P. 8)
FUNDING
Funding mechanisms introduced between 1986 and 1996 included:
- CAM - Care Aggregated Model - this provided funding for Nursing and personal care staff in nursing homes and was originally tied to Award wage variations, (this nexus was broken in 1996). Funding levels were determined on the basis of the Resident Classification Instrument which categorised residents at levels of relative care required in terms of hours of care per week per resident. This assessment was conducted by the Nursing Home with the Commonwealth government employing a "Validation Team" to monitor and regulate the process. This funding package is very strictly audited by the Commonwealth.
- SAM - Standard Aggregate Model - introduced in July 1988. This was a flat rate which helped meet the costs of running a nursing home including food, electricity, salaries of cooks and domestic staff, pharmaceuticals and medical aids, toiletries, laundry, gardeners and return on capital investment (profit).
- OCRE - Other Costs Reimbursed Expenditure -This funding covered long service leave, and superannuation for nursing and personal care staff and workers' compensation and payroll tax for all staff.
- Capital Funding for non-profit organisations - this funding was based on a shared cost between the government and the organisation building the nursing home and took into account the different needs of elderly people in rural and remote areas, people from non-English speaking background Aboriginal and Torres Strait Islanders. (NOTE: This is now to be replaced by a user pays system. This was originally in the form of an accommodation bond, however, this has now been amended to a yearly fee.)
- Capital funding for Private for Profit - capital assistance to upgrade or to build or rebuild facilities. It was designed to assist proprietors meet interest on loan payments and was paid on a recurrent basis. Upgrading grants were provided to upgrade premises that do not meet health, safety or fire regulations. (NOTE: This is now to be replaced by a user pays system. This was originally in the form of an accommodation bond, however, this has now been amended to a yearly fee.)
- Funding for hostels - for profit operators received recurrent funding only, not for profit operators received recurrent and capital funding. Recurrent funding was dependent on the amount of service needed by residents and their financial status. A Personal Care Assessment Instrument was used to determine the level of funding available for each resident.
- Capital funding for hostels - was determined on the basis of need and also the number of disadvantaged persons the provider agreed to accommodate.
- Resident Contributions - The Commonwealth regulated the amount a resident in a Commonwealth funded hostel paid. Costs to a resident could include a weekly fee, set at a percentage of the age pension, an entry contribution (this was not payable if the person was left with assets equal to at least two and a half times the annual aged pension, administrative fees for non-entry or early departure, charges for additional services, respite resident booking fee (deducted from weekly fee when resident enters for respite care.)
ACAT (AGED CARE ASSESSMENT TEAM)
This was introduced as a cornerstone of the Aged Care Strategy as a means of providing assessment of the needs of the aged in gaining admission to a Nursing Home and later to Hostels and other Community Support Programs. ACAT must approve potential residents prior to being accepted by a service, but does not guarantee a place exists. Consultation was a cornerstone of this proposal and special strategies were targeted at people from non-English speaking backgrounds, Aboriginal and Torres Strait Islander people, people in rural and remote areas or those who were socially or financially disadvantaged. Extra funding was made available to provide services for those groups for Nursing Home, hostel and Community Care packages.
STANDARDS
Standards have been progressively developed following the introduction of the 1986 Aged Care Reform Strategy. Standards for Nursing Homes were first introduced in November 1987. These consisted of seven Objectives each of which includes a number of Standards. These are listed as:
- Health Care
- Social Independence
- Freedom of Choice
- Homelike environment
- Privacy and dignity
- Variety of experience
- Safety
Similar standards were introduced for Hostels. Standards Monitoring teams were introduced to check that the quality of care provided met the Outcome Standards. Each Nursing Home and Hostel was visited every 2 years or if they were identified as a "Home of Concern" they were visited more frequently. If the standards were not met sanctions included non-payment for new residents, requirement to employ an Administrator approved by the Department and removal of places. Some states also had legislation concerning building standards, fire regulations, facilities and equipment and staffing.
RESIDENT RIGHTS
Following the introduction of the Aged Care Reform Strategy in 1986, a further strategy was developed concerned with protecting and promoting the rights of elderly people who reside in Nursing Homes and Hostels. A Report "Residents Rights in Nursing Homes and Hostels, produced by Chris Ronalds was provided to the Minister on 10 May 1989.
Arising from a recommendation of this report came the introduction of the "Charter of Resident's Rights and Responsibilities" which was introduced in 1989. The report also recommended that proprietors of Nursing Homes and Hostels enter into contracts with individual residents, however this aspect has never been actioned. The report also gave recognition to the Objectives and Outcomes of the Outcome Standards for Australian Nursing Homes.
COMPLAINTS
The mechanism by which complaints raised by residents, their relatives, advocacy groups and staff about care and conditions in residential accommodation for the aged has never been properly understood by consumers of aged care. The method is an internal one involving the Standards Monitoring Team. When a complaint is received the Standards Monitoring Team is supposed to investigate and provide a solution acceptable to both parties. However, the receipt of a complaint usually sets up the mechanism for a Standards Monitoring Team inspection of the Nursing Home or Hostel. Complaints can be lodged anonymously and are supposed to be kept confidential.
CURRENT CHANGES
PHILOSOPHY
The Queensland Nurses’ Union has major concerns about the changes being made in the area of Aged Care. It is important to understand the philosophy behind the changes currently being made in order to assess their potential impact.
The current federal coalition government supports an ideology of "small government" and to this extent has been cutting government services and programs accordingly. This goes hand in hand with the widespread implementation of a "user pays" philosophy. To this end the government identified cuts of $400million to be made in the area of Aged Care provision.
Along with this is the pervasive attitude within the government that private sector provision is more efficient and effective than public sector provision of services and to this end the government is encouraging more private sector involvement in all forms of services to the public including aged care.
The notion of a competitive market place delivering efficiency and effectiveness is also widely supported within the government and to this end the government wishes to establish more competition between private for profit operators and not for profit establishments.
The changes have also resulted from the philosophy of de-regulation and greater self-regulation of the industry. Aged Care providers have complained about the number and range of regulations they need to comply with.
FUNDING
There are major changes being introduced regarding the funding of Aged Care in Australia. This has been spearheaded by $400million dollars worth of cuts by the government to Aged Care Funding in Australia.
MAKING USERS PAY
The cuts in government funding targeted capital spending in Aged Care, in particular. Capital works are now to be funded through a "user pays" system. The government's original proposal meant that people wishing to enter an aged care facility would have had to pay an "Accommodation Bond". The government set a minimum amount of $26000 for this bond, however no maximum limit had been set. Reports of Aged Care facilities charging accommodation bonds in excess of $250000 to residents were widespread in the media, along with countless stories of the impact of this change on our older citizens.
As a result of unprecedented public pressure, the government finally scrapped the accommodation bond proposal - to be replaced by an annual fee, set at around $4000 per annum. The underlying philosophy of user pays is still driving this reform.
Proprietors can now also charge more in on-going fees, for example, higher fees for single bed rooms and/or improved or enhanced services.
CAM/SAM/OCRE
Funding for Aged Care by government was previously broken up into CAM (Care Aggregated Model) which had to be acquitted to government and spent on providing nursing staff; SAM - (Standard Aggregate Model) which did not have to be acquitted but which was to be spent on infrastructure such as laundry, kitchen etc. and OCRE (Other Costs Reimbursed Expenditure) which covered the on-costs of staffing such as long service leave and which also had to be acquitted and accounted for.
Under the new system, funding will be provided to facilities based on accreditation. There will no longer be a requirement to account for public monies by proving that money has actually been spent on appropriate staffing, for example. Funding available for individual residents will be determined according to the "Resident Classification Scale". This scale establishes 8 levels of care, with levels 1 to 4 representing high need residents and level 8 attracting no extra funding. This comes into force on 1 October 1997, consists of 22 questions and comes with a DAM (Documentation and Accountability Manual) to assist with its completion.
STANDARDS
The procedures for ensuring that quality care is provided in the Aged Care Sector are changing dramatically. These procedures are being phased in and will then ultimately determine funding available from government for Aged Care facilities.
CERTIFICATION
In order to be able to charge residents, Aged Care facilities can apply to be Certified. At this stage the process only involves certification of buildings. Once an Aged Care facility has been certified it is able to charge an annual fee and receive "concessional resident subsidies. Those who do not pass Certification or who chose not to apply for Certification cannot charge an annual fee nor do they receive the concessional resident subsidy. They may still access CAM and SAM funding, but do not need to acquit that funding.
ACCREDITATION
Future funding from government will depend on a facility being accredited. The government is currently establishing the Aged Care Accreditation Agency, which will be a private body with reporting responsibilities to the federal Minister and funded through application fees from aged care facilities.
There are four categories of standards being developed for the Aged Care Industry as follows:
- Management systems, staffing etc.
- Health and personal care
- Resident lifestyle
- Physical environment and safe systems.
Between October 1, 1997 and January 1998 aged care facilities will be assessed on Categories 2 to 4. Category 1 will be assessed from January 1, 1998.
Aged care facilities will be required to be accredited by 2001.
Where facilities are not accredited by 2001, bed licenses will go into a ‘pool’ and will be distributed according to geographical area on the basis of applications by proprietors in accordance with needs identified by government. The current ratio set by government (which has remained unchanged ) is 50 beds per 1000 head of population.
OUR VIEW OF THE CURRENT CHANGES
While the system that has been developed since 1986 to address Aged Care in Australia has become cumbersome and complicated many of the changes made since that time have been made for the purpose of overcoming problems in the system. It is important to recognise the vast improvements that have occurred in the delivery of services to the aged since the implementation of the 1986 initiatives of the then federal government. QNU believes that changes in Aged Care funding introduced by the current government will result in the following:
Older Australians, unable to pay Nursing Home fees will be affected - effectively encouraging a ‘class system’ to develop in the area of Aged Care - moving away from the notion that all elderly Australians should be entitled to accessible, affordable, quality care in their later years;
The removal of the requirement to directly acquit money spent on ‘care’ staff such as nurses, will see many aged care facilities change their skill mix from qualified nursing staff to unqualified staff, in a bid to save money or use more of that funding for ‘profit’. The Union has already had an increase in the lead up to the changes of nurses complaining of hours reductions and pressure being applied to unqualified staff to perform nursing duties. In addition, in some cases pressure is being applied to nurses to perform non-nursing work such as laundry and food preparation. This, along with funding cuts is producing enormous downwards pressure on wages in the industry, with the likelihood of Aged Care becoming a low wage option for nursing staff
The strategy will provide providers, particularly private for profit operators with the means to make profit through non-auditing of their spending of PUBLIC MONIES. The more money directed towards making profits in the sector means the less money available to spend directly on care;
While regulations in the sector have been regarded as cumbersome by some they were introduced to ensure that elderly people (often the target of the unscrupulous) are provided with adequate care in a modern civilised society. While there were many examples of Aged Care facility operators providing below standard care, many of the regulations in place sought to stop this occurring. With less regulation, and indeed self-regulation, the ability to control the industry and ensure proper care for our elderly is much reduced. | 
