Stronger Compliance to Protect Integrity of Aged Care Sector

A stronger compliance regime, including tough new fines, and better-targeting of funding will be introduced to protect the integrity of Australia’s residential aged care sector.

Page last updated: 16 December 2015

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Joint Media Release

The Hon Sussan Ley MP
Minister for Health
Minister for Aged Care
Minister for Sport

The Hon Ken Wyatt MP
Assistant Minister for Health

16 December 2015

A stronger compliance regime, including tough new fines, and better-targeting of funding will be introduced to protect the integrity of Australia’s residential aged care sector and the thousands of passionate providers delivering older Australians high quality care every day.

Minister for Aged Care Sussan Ley today announced that, for the first time, fines would be introduced for aged care providers caught making repeated false claims under the Government’s $10.6 billion Aged Care Funding Instrument (ACFI), which directly subsidises providers to deliver care services for residents based on their level of need.

The measure – part of the Turnbull Government’s Mid-Year Economic and Fiscal Outlook – responds to figures showing as many as one-in-eight of 20,000 ACFI claims audited last year (2014-15) were deemed to be incorrect or false. This figure is already tracking even higher at one-in-seven in 2015-16.

At the same time there was an unexpected $150 million overspend in the ACFI last year.

Ms Ley said the fine would be worth $10,800 per offence to ensure it had “teeth” and would also be supported by stronger auditing, better education and targeted funding for certain high claims for complex health care services to ensure they were reserved for those residents with the highest needs.

“Thousands of older Australians and their families rely on residential aged care providers every day to deliver high-quality care and the vast majority do it with pride and passion,” Ms Ley said.

“This has helped ensure Australia has a world-class aged care system that is the envy of our region and there is now great potential for our local providers to export their skills overseas as well.

“It’s for all these reasons and more that I therefore want to protect the integrity of Australia’s aged care sector.

“Unfortunately we’ve seen a concerning number of incorrect claims and unaccounted-for growth in spending in complex health care creeping into the system in recent years.

“This Government funding is designed to maximise care outcomes for older Australians.”

Assistant Minister for Health Ken Wyatt said these measures were designed to “nip any non-compliance or sharp practices in the bud” before they became a major problem.

“I want to continue to work with the aged care sector on the ground to ensure we maintain the long-term integrity and sustainability of the aged care system,” Mr Wyatt said.

A sharp practice is where a funding claim may be legitimate when assessed strictly against funding guidelines, but takes advantage of ambiguities in the rules for maximum financial gain. This can often be difficult to address without amendments to the rules to reduce any perverse incentives in the system.

Ms Ley said the MYEFO measure was estimated to save taxpayers more-than half-a-billion dollars across the forwards, including reducing the number of incorrect or false claims by a further $60 million over the next four years.

Ms Ley said $472 million would also be saved by placing better targeted funding, including reductions in subsidy prices, on certain high-value claims at the upper ‘Complex Health Care’ end of the scale that were consistently higher than expected and not consistent with claiming practices in other ACFI areas. This will commence from 1 July 2016.

“This measure will ensure the highest levels of funding go to the residents with the highest needs,” Ms Ley said.

Ms Ley said this would be backed up by new measures to ensure closer scrutiny of claims, including stronger auditing and IT system updates, as well as better education for aged care provider claiming requirements.

Ms Ley said this was also intended to ensure fines were restricted to those providers who had been caught making multiple, deliberate false claims, not genuine one-off mistakes.

Ms Ley said claims by some in the aged care sector that an increase in ‘frailty’ in older Australians was to blame for the unexpected increase in ACFI claims was not consistent with Government data on claims for other ACFI-funded services, which had not increased anywhere near the same amount, despite also being affected by increasing frailty.

A sharp increase in one year is also not consistent with genuine frailty growth.

Ms Ley said the new measures would begin rolling out in 2016 with stakeholder engagement to occur over the next six months.


Media contacts:
Troy Bilsborough, 0427 063 150 or Steve Block 0428 213 264 (Minister Ley)

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