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Public consultation on Accommodation Pricing Guidelines

Bulk Information Distribution - 9 April 2013

PDF printable version of Public consultation on Accommodation Pricing Guidelines (PDF 189 KB)

Discussion Paper

Accommodation Pricing Guidelines

Submissions due Wednesday 1 May 2013

1. Introduction

This paper outlines the proposed guidelines that will support the new arrangements for accommodation payments in residential aged care, which will apply for new entrants to residential care from 1 July 2014.

The guidelines build on the framework for accommodation payments announced by the Minister for Mental Health and Ageing, the Hon Mark Butler MP, on 21 December 2012.

It is intended that the guidelines would be given legislative authority through amendments to relevant Aged Care Principles.

2. How to provide input

Comments are sought on the implementation details outlined in these guidelines (the broad framework as outlined in Background at section 3 has already been settled by Government).

Please note that, unless requested otherwise, comments received may be published, in whole or in part.

Comments can be submitted by Wednesday 1 May 2013 by email to FFBconsultation@health.gov.au

or by post to

Director, Aged Care Providers Policy
Finance and Funding Branch
Ageing and Aged Care Division
MDP 550
GPO Box 9848
CANBERRA ACT 2601

3. Background

On 21 December 2012, the Minister for Mental Health and Ageing, the Hon Mark Butler MP outlined the regulatory framework that will apply for accommodation payments for residents entering residential care from 1 July 2014. The key aspects of the announcement were:

• The classification of accommodation prices into 3 levels:
  • Level 1 – up to the level of the maximum Government accommodation supplement ($50 per day (2012 prices))
  • Level 2 – Prices between Level 1 and an upper threshold of $85 per day (2012 prices)
  • Level 3 – Prices above the Level 2 threshold.
• A requirement for all prices to be published in advance by providers, showing prices in the form of a daily accommodation payment, refundable accommodation deposit and examples of combination payments.
• A method for converting the daily accommodation payment into a refundable accommodation deposit amount by use of the maximum permissible interest rate.
• A requirement for Level 3 prices to be pre-approved (this will be a function of the new Aged Care Pricing Commissioner) with additional detail on the factors to be considered by the Pricing Commissioner in assessing applications to be set out in Guidelines to be developed in consultation with industry.
• A requirement that providers charging Level 2 prices be required to self-assess that prices have been set having due consideration to those same factors set out in the Guidelines.
• That residents will have up to 28 days after entering an aged care home to decide how to pay for their accommodation, that is, via a daily accommodation payment, refundable accommodation deposit of combination of both.
• That those with low means would continue to have their accommodation costs met by Government in full or capped at the Level 1 threshold and met in part through the Government accommodation supplement.

These guidelines provide additional detail on how the new arrangements will operate. It is intended that the requirements outlined in these guidelines will be given legislative backing via amendments to relevant Aged Care Principles.
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4. Factors to be considered in setting and proposing prices

In determining Level 1 and 2 prices, and in proposing Level 3 prices to the Pricing Commissioner, providers would be required to consider the following factors (with prices able to vary by room):

• Quality of the room, including size of room, bedding, other furnishings, fittings, storage, entertainment options (phone, television, radio, computer), heating and cooling (individually or centrally controlled), date of construction or refurbishment, views or other special features;
• Privacy of the room, in particular whether the room is shared, whether it has its own bathroom or uses shared bathroom facilities;
• Quality and scope of common areas in the facility; including dining areas, common rooms, entertainment areas, gardens, health and recreation facilities;
• Location of the facility; including consideration of geographical indicators of market value such as land, housing and rental markets in the area and localised cost including construction factors, and location relative to local shops and other community facilities;
• Other factors relevant to price; including any other features of the facility and its operations which are relevant to value, such as specific design or service considerations. Costs related to care services required to be provided to residents under the legislation governing the specified care and services can not be included. Where the price covers provision of additional services over and above those required under legislation, they must be clearly documented in writing and must not also be charged under a separate fee or charge (for example, extra service fees).

The relative wealth of an individual would not be an allowable factor to consider in determining published prices.

5. Information disclosure requirements (all price levels)

5.1 Prices must be published

Prices for particular rooms or types of rooms must be published by the provider in advance on their own internet site, on the Government’s My Aged Care website, and be available in relevant printed materials.

Prices must be published in the form of a daily accommodation payment and refundable accommodation deposit and at least 2 examples of combination payments.

5.2 Key Features Statement must be published

A Key Features Statement which describes the particular features of each room type and the facility must be published with the prices on the provider’s internet site.

The Key Features Statement is designed to support the provider’s assessment of prices by providing additional information to the prospective resident to assist them in understanding the key features of the accommodation. It would be a short document, suggested to be of 2-4 pages in length, which would outline the key characteristics of the facility itself (age, quality, common areas, location, special features) and provide additional detail on the different rooms available at different price points (making reference to factors such as those referred to under the quality and privacy sections above). An example is provided at Attachment A.

5.3 Self assessment certification must be published

Providers in all levels would be required to certify that their published prices have been determined after having regard to the factors listed at section 4 on page 4 (Factors to be considered in setting and proposing prices).

It is proposed that providers must certify and publish the following statement with their published prices.

I certify that the prices published have been determined having regard to the relevant legislation and Pricing Guidelines. In particular I certify that the prices take into account the standard of accommodation and other facilities available and have been determined having due regard to the list of factors specified in the Pricing Guidelines.

Providers would be required to keep supporting documentation that sets out their process for setting prices and justifies this certification and provide such documentation to the relevant Government authorities on request.
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6. Prices charged not to exceed published prices

Prices charged must not exceed the published prices, though providers could agree to a price lower than the published price.

7. Approval of Level 3 Prices

7.1 Process

Where a provider is proposing to charge Level 3 prices they must first seek approval from the Aged Care Pricing Commissioner. Applications will be able to be lodged from 1 January 2014. Application forms and processes will be settled in principle some months before the 1 January 2014 date.

7.2 Minimum Requirements

Certain minimum requirements will need to be met to apply for a Level 3 price.

The room will need to be a single (non shared, other than with a partner) large modern room with private ensuite.

The facility will need to have met all building and certification requirements under legislation.

7.3 Submission of Pricing Plan

As part of their application providers will be required to submit a pricing plan which will set out detailed information supporting their application.

The pricing plan will have to address in detail the prescribed factors specified in these guidelines and demonstrate how consideration of these and any other relevant factors justify the proposed price for each room or class of room.

It is expected that the pricing plan may contain commercially sensitive information relevant to the justification of the proposed prices.

The pricing plan is not required to be published.

The pricing plan would need to assess each of the key factors outlined in section 4 on page 4 in some detail, providing justifications for the price.

Quality and privacy of the room – detailed information, on size of room and layout and furnishings would need to be provided, supported by photographic evidence.

Quality and scope of common areas in the facility - detailed information, on size and layout and furnishings and facilities would need to be provided, supported by photographic evidence.

Location of the facility - detailed information on market factors in the local area, would need to be provided, including housing and rental prices and any local cost considerations.

Other factors relevant to price - detailed information on other specific factors, for example if the accommodation or facility caters for particular special needs, and details of any particular higher levels of quality or facilities or services that are provided.

7.4 Approval of prices

The Pricing Commissioner may seek additional information to assist in considering the application.

A provider may vary their application by providing additional information or seeking to alter the proposed prices at any time while their application is under consideration.

Once a decision is made the Pricing Commissioner will advise the provider of their decision and if approved the provider will be able to commence charging the approved price once they have met the information disclosure / publishing requirements. The approved price will be in the form of a daily accommodation payment (which will be subject to conversion to a refundable accommodation deposit) at the relevant rate at any point in time.

The Pricing Commissioner may determine that the approved price may vary within a specified range over a specified time period without requiring further approval.
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8. Other Matters

8.1 Interaction with Designated Extra Service

To the extent that a facility is charging a designated extra service fee in relation to particular accommodation it would not be able to also include a component in the accommodation price that is already covered by that extra service fee.

8.2 Interaction with additional amenity fees

As announced with the Living Longer Living Better reforms, providers will also be able to charge additional amenity fees from 1 July 2014 for additional amenities and services offered on a opt in – opt out basis (rather than under the existing designated extra service arrangements, though providers will still be able to offer designated extra service from 1 July 2014 as well).

These additional amenity fees are not part of the accommodation payment arrangements and where offered and charged they would be subject to the agreement of the provider and resident. Fees charged under such arrangements would be required to be clearly explained to the resident and documented to the resident.

Additional amenity fees could not be charged if the same amenities have already been charged for through the accommodation price.

8.3 Dealing with complaints

The requirements on approved providers as outlined in these Guidelines would be responsibilities of approved providers under the Aged Care Act 1997 (through relevant legislative Principles).

The Aged Care Complaints Scheme already provides a free service for individuals to raise concerns they have about providers not meeting their legislative obligations.

Accordingly, if a provider does not comply with their obligations under sections 4, 5 & 6 of these Guidelines, for example they do not follow the prescribed process and consider the factors outlined in section 4 for setting prices or they do not publish prices as required, an individual could raise such concerns through the Aged Care Complaints Scheme or otherwise through the Department.

The Scheme or Department would examine the complaint in that context (though would not overturn prices).

Example Key Features Statement – AAA Residential Care Home

The AAA Residential Care Home provides residential aged care to the AAA community. The home was built in 1991 and underwent a significant refurbishment in 2009. It consists of two wings with the rooms in Wing A being of a greater size and higher standard than rooms in Wing B.

Quality and Privacy of Room

Wing A Rooms are priced at . . .

The room is of x dimensions, with windows of x dimensions. Furnishings and fittings include . . .
Storage of . . . is provided

Heating and cooling is . . .

Entertainment and communication facilities include . . .

Clinical/service facilities include a call button and . . .

The bed is . . .

The room was last refurbished in . . .

The room has views of . . .

The room is private with own ensuite bathroom. Bathroom consists of . . ..

Wing B rooms are priced at . . . (as above)

Quality and scope of common areas in the facility

The facility has x dining areas, which are of (provide size, furnishings information)

The facility has x meeting rooms / common rooms (provide size, furnishings information) The facility has (describe gardens, health and recreation facilities)

Location of the facility

Describe location of facility, including location relative to local shops and other community facilities.

Other factors

Provide details of any other features of the facility and its operations which are relevant to value, such as specific design or service considerations.

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