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What you need to know about changes to the price of your care  

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As of January 2023 the Australian Government is implementing sweeping changes to the way your home care provider can set prices for your care. These changes are designed to reduce excessive administration and management costs, but may also have an unwanted effect on the cost of your daily services.

28th November 2022

Hidden costs have been a problem in the Home Care Package program since it was introduced in early 2017. Excessive administration and care fees, surcharges, setup and cancellation fees are just some of the ways home care providers distort the true cost of their services when you are making a decision about which provider to choose for your Home Care Package.

The recent Royal Commission into Aged Care uncovered a raft of unfair practices in the aged care sector, triggering sweeping legislative reforms in 2022. This month further measures for improvement have passed the Parliament and will take effect in January 2023, including a ban on exit fees and the capping of administrative and management charges in the Home Care Package program.

But what impact will this have on consumers who still have limited access to information about the quality of services provided and other information which could help people meaningfully compare different services and providers? Providers who are forced to reduce their prices in one area may look to recoup the lost income in other ways, potentially resulting in a lower quality service and a higher hourly cost for day-to-day care.

What are the changes?

From 1 January 2023:

• care management prices will be capped at 20% of the package level

• package management prices will be capped at 15% of the package level

• providers cannot charge for package management in a calendar month where no services (other than care management) are delivered, except for the first month of care

• providers cannot charge separately for third-party services

• providers cannot charge exit amounts.

Care management prices will be capped at 20% of the package level and package management prices will be capped at 15% of the package level.

The new cap on fees for care and package management means no provider will be able to charge more than a total of 35% in fees. Currently there are providers in the sector with fees as high as 45%, with the average price currently around 32%.

Providers cannot charge for package management in a calendar month where no services (other than care management) are delivered, except for the first month of care.

So in a month where you are away from home, or pause your services for any reason, your provider cannot take a package management fee from your funding unless it is the first month you have been with them. They can still take a care management fee.

Don't know how much your provider charges you for these fees? Check your statement.
Providers are legally obliged to publish the cost of fees as two separate charges on your statement each month so you can clearly see what you are paying.

Providers cannot charge separately for third-party services.

Most home care providers charge some sort of extra fee for every third-party service you receive through your Home Care Package. This is usually either a travel fee or a purchase surcharge, and can run into the $1000's of dollars.

Under the new rules your provider must include the extra cost in the service price, and cannot charge for it separately.

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Providers cannot charge exit amounts.

Many home care providers charge an 'exit fee', which is a fixed fee that is charged to your home care package if you leave that provider for any reason. 

Under the new rules providers cannot charge an exit fee to when you leave their care, even if you previously agreed to it.

What does this mean for me?

These changes are designed to ensure fairer pricing practices in the home care industry, however some experts are predicting adverse consequences that may impact the price and quality of your care.

Here are some things to look out for in the new year that may indicate you are being negatively impacted by the changes:

A reduction in the quality of your care management & customer service.

The cap on care management fees is likely to put financial pressure on many home care providers who may look to cut costs to compensate. Even if you already pay less than the cap - perhaps because you self-manage or part-manage your funding - many providers will have to reduce their fees for other clients in their care who are currently paying more. Providers will therefore be looking to compensate for that loss by cutting costs across all areas of their business.

This may look like:

• slower response times from your care manager and other staff in the organisation

• longer processing times for service requests, reimbursements and invoice payments

• longer hold times when you call, or reaching call centres in overseas locations

• more frequent errors in your bills and statements

• more frequent errors in your schedule or services, and increased unavailability of carers and other service providers

An increase to your fees

As well as cutting costs in their business, providers may increase fees for clients who currently pay less than the cap, particularly during months where you don't use any services and they can't charge you a package management fee.

This may look like:

• an increase to your package management fee if you currently pay less than 15%

• an increase to your care management fee if you currently pay less than 20%

• enforced care management fees if you currently self-manage and don't pay them 

• enforced or increased care management fees in months where you don't use your Home Care Package services

An increase in the cost of your hourly care.

If you are paying separate fees for carer travel or purchase surcharges then the cost of your services, including the hourly cost of your care, will increase to include these charges. 

However, providers may also increase the cost of their services even further in order to recoup the money they lose from the cap to their fee prices. Providers may also try to charge you in advance of receiving services, sometimes called a 'holding charge', so they can get more money from the government to pay for short term-losses in their business.

This may look like:

• an increase in the hourly cost of your care, above and beyond what you pay for care hours and travel fees now

• an increase in the cost of other services and purchases such as equipment and meal delivery purchases

• Unusual charges on your statement for services that didn't happen or haven't happened yet, and increased difficulty getting them refunded if you never end up receiving those prepaid services

Increased difficulty getting large purchases approved.

Earlier this year, changes to the way home care providers get paid by the government meant many consumers started finding it harder to have large purchases approved from their Home Care Package. This was particularly evident for consumers who signed up with their provider before September 2021 because providers were allowed to continue keeping the unspent funds of those consumers in their business bank accounts.

With these new changes putting even more financial pressure on providers, some may try even harder to hold onto that money as a safety net, and therefore make it unreasonably difficult for consumers to use their unspent funds.

This may look like:

• unreasonably difficult approvals processes for large purchases 

• having purchases that you believe you are entitled to rejected by your provider without valid explanation

• increased pressure from your provider to save your unspent funds for 'a rainy day'

• encouragement from your provider to privately pay for purchases such as equipment and home modifications

• a reluctance from your care manager to put forward purchase recommendations for approval

Conclusion

Home care providers are legally obliged to publish their prices and help you understand your statements so that you know exactly what you are paying for. If you notice changes to what you are charged or experience poor service and are struggling to get answers from your provider, you can make a complaint to the Aged Care Quality and Safety Commission who will investigate on your behalf.

If you want to talk to someone about your experience with your provider or want more information about switching providers, you can speak to one of our home care experts for free by booking an appointment here.

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New to Home Care Packages?
Here's some more useful resources: 

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Need support with your Home Care Package?

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Our services are simple.

Expect a single fee and the same friendly face each time. And rest assured that our packages are flexible enough that you can make changes whenever you wish.

Contact us today to find out more.
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