Better health and ageing for all Australians

Evaluation of the consumer - directed care initiative - Final Report

9.3 Ongoing provider administration and care planning and management costs

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Consumer-directed care

How fees were determined

The majority of CDC providers did not differentiate between administration and care planning and management, and charged either an administration fee or a fee for care planning and management, but rarely both.
For CDC, there were a number of approaches to determining the administration fee charged:
  • the standard ‘overhead’ charge levied on all divisions of the organisation (for large organisations). For example, if an organisation levied an overhead charge of 20 per cent of the budget for each division, then the administration charge for CDC packages was 20 per cent.
  • a fee which was based on a ‘reasonable’ or ‘acceptable’ proportion of a package, typically without any reference to actual administrative costs.
  • the fee suggested in the guidelines (15 per cent of a package).
Where a fee for care planning and management was charged (in addition to or instead of an administration charge), again it was typically based on:
  • a predetermined amount per package based on an assumed number of hours of coordination per package. Some providers identified different amounts to be charged according to the degree to which a participant was self-managing their package (again based on an assumed number of hours).
  • what was considered ‘reasonable’ or ‘acceptable’ to charge, typically without any reference to actual costs.
  • actual time spent, based on a record of the number of hours that a coordinator spent on each participant.

Fees charged – CDC

The average administration charge per participant varied between care level – from $1,610 per CDCL participant per annum (July-September figures) to $3,573 per CDCHD participant. Care planning and management also varied – from $1,323 per CDCL participant to $5,815 per CDCHD participant per annum.

Administration and care planning and management charges together accounted for 22-23 per cent of a CDCL package subsidy, and 11-16 per cent of CDCH and CDCHD package subsidies.

This is illustrated in the table below.

Table 45: Average administration and care planning and management charges per participant (annualised)

CDCL
Apr-Jun
CDCL
Jul-Sep
CDCH
Apr-Jun
CDCH
Jul-Sep
CDCHD
Apr-Jun
CDCHD
Jul-Sep
Administration
$1,421
$1,610
$2,747
$2,775
$4,386
$3,573
Care planning and management
$1,612
$1,323
$4,133
$2,253
$3,237
$2,242
Combined
$3,033
$2,933
$6,880
$5,028
$7,624
$5,815
Proportion of package subsidy*
23%
22%
16%
11%
16%
12%

*note this is based on Commonwealth Government subsidy levels, rather than reported package expenditure
Source: 2nd CDC provider data collection (July-Sept 2011)

Ongoing administration and management costs – CDC provider estimates

As part of the evaluation, providers reported on their ongoing management, administration, care planning and support coordination and other expenditure relating to administering CDC and CDRC packages.

Providers were permitted to pass on these costs to participants’ packages, though data analysis reinforces the claims made by many providers that they did not fully pass on these costs (and that to some extent they did not understand the actual costs they incurred).

The table below outlines the estimated ongoing management, administration, care planning and management and other expenditure per CDC package, compared with the average administration and care planning and management charges passed on to participants.

The table illustrates that:
  • The estimated average cost for management and administration and participant selection was approximately $4,023 per package. This compared to an average administration charge passed on to CDC participants of $2,384 per package, indicating that providers were absorbing some of the ongoing management and administration costs.
  • Including care planning and management, the estimated average cost per package incurred by providers was $6,715 per package per annum, compared with the average combined administration and care planning and management charges passed on to CDC participants of $4,053 per package.

Table 46: Estimated average ongoing costs per CDC package incurred by CDC providers, per annum

Staffing
Non-staffing
Total
Management and administration
$3,033
$654
$3,686
Participant selection
$317
$21
$337
Total (excl care planning and management)
$3,349
$674
$4,023
Average administration charge – CDC participants
$2,384
Care planning and management
$2,565
$127
$2,692
Total
$5,914
$802
$6,715
Average administration and care planning and management charges– CDC participants
$4,053

Source: 2nd CDC provider data collection (July-Sept 2011)

It should be noted that these costs were being incurred during the initial 6-12 month period when the initiative was being implemented. It is not clear whether these costs would continue to be incurred as providers become more familiar and comfortable with the CDC model and refine their own approach, and as participants take on more of a self-management role.

Additional time spent on initiation, planning and coordination – CDC provider estimates

The tables below illustrate the amount of time spent by providers on initiation (providing information to potential participants), undertaking care planning with participants, coordinating packages, and undertaking regular reviews.

For CDC, it is estimated that providers spent between 2.4 and 2.8 hours per potential participant providing them with information about the initiative and explaining what the initiative was about, and seeking their agreement to participate. This was largely a one-off cost at the commencement of the initiative (and will be incurred whenever providers were allocated additional CDC packages), and represents additional time associated with CDC that would not have been incurred for standard packaged care packages.

The average amount of time spent on planning with participants increased as the care level increased, and is higher for CDC compared to standard packaged care. Providers were spending between 0.8 additional hours (CDCL) and 1.5 additional hours (CDCHD) on planning for CDC packages compared with standard packaged care packages. Again, this was largely a one-off cost incurred when participants commenced on a package.

The average amount of time spent on managing and coordinating a package per week also increased as the care level increased, and was also higher for CDC packages compared with standard packaged care. Providers were spending between 0.4 additional hours per week (CDCL) and 0.6 additional hours (CDCH) on managing and coordinating CDC packages compared with standard packaged care packages. This translates to:
  • approximately 19 additional hours per year managing and coordinating a CDCL package, or approximately $1,000 in additional costs per CDCL package
  • approximately 32 additional hours per year managing and coordinating a CDCH package, or approximately $1,600 in additional cost per CDCH package
  • approximately 27 additional hours per year managing and coordinating a CDCHD package, or approximately $1,350 in additional cost per CDCHD package.

Table 47: Time (hours) spent on initiation, planning and coordination - CDC

CDCL
CACP
CDCH
EACH
CDCHD
EACHD
Time spent providing information to potential CDC participants – per participant (hours) one-off
2.4
...
2.5
...
2.8
...
Time spent undertaking care planning – per participant (hours) one-off
2.9
2.1
3.9
2.5
4.2
2.7
Time spent managing and coordinating package– per participant per week (hours)
1.4
1.0
2.4
1.8
2.6
2.1
Time spent conducting formal review – per participant per review undertaken (hours) every 3-6 months
1.3
1.1
1.9
1.6
2.0
1.6

Source: 2nd CDC provider data collection (July-Sept 2011)

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Consumer-directed respite care

How fees were determined

For CDRC, providers received a separate allocation for administration ($4,200 per package), and did not charge an additional administrative fee.

CDRC providers also charged for case management and coordination, and used the range of approaches used by CDC providers (discussed above) to determine this charge, including:
  • a predetermined amount per package based on an assumed number of hours of coordination per package
  • what was considered ‘reasonable’ or ‘acceptable’ to charge
  • actual time spent, based on a record of the number of hours that a coordinator spent on each participant.

Fees charged

As noted in Table 7: Breakdown on CDRC package expenditure, the proportion of total package expenditure spent on case management and coordination was between 9 and 14 per cent.

However, not all CDRC participants were charged for case management and coordination, with providers meeting these costs from the $2,000 administration allocation paid in addition to the package budget. For those participants that were charged a fee for case management and coordination, the average fee reported by CDRC providers was between $237 and $284 per participant per quarter in the two quarters for which data was collected. There was also considerable variation in fees charged for case management and coordination.

Table 48: Case management and coordination fees charged – CDRC

Apr-June
July-Sept
No of participants charged a fee for case management and coordination
114
127
Prop. of participants charged a fee for case management and coordination
66%
65%
Range of fees charged
$29-$900
$29-$1470
Average fee per participant1 – case management and coordination
$284
$237

1Average fees relate only to those participants who paid a fee for case management and coordination from their package. Participants who were not charged a fee were not included in the calculation.
Based on package expenditure reported by providers as part of the CDRC provider data collections. Excludes the $2,000 administration allocation which does not form part of a package, and any fees associated with ‘administration’ reported by providers.
Source: 1st and 2nd CDRC provider data collection (April-June and July-Sept 2011)

Ongoing costs – CDRC provider estimates

The table below outlines the estimated ongoing management, administration, case management and coordination and other expenditure per CDRC package, compared with the administration payment per CDRC package ($2,000) paid in addition to CDRC package funding.

The table illustrates that the estimated average cost for management and administration and participant selection was approximately $1,843 per package. This was slightly less than the $2,000 administration payment per CDRC package, indicating that this payment was sufficient to cover CDRC providers’ ongoing costs.

Table 49: Estimated average ongoing costs per CDRC package incurred by CDRC providers, per annum

Staffing
Non-staffing
Total
Management and administration
$1,197
$251
$1,448
Participant selection
$374
$21
$395
Case management and coordination
$852
$29
$881
Total
$2,423
$301
$2,724
Total (excl care planning and management)
$1,571
$272
$1,843
Administration allocation per CDRC package
$2,000

Source: 2nd CDRC provider data collection (July-Sept 2011)

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Additional time spent on initiation, planning and coordination – CDRC provider estimates

For CDRC, it is estimated that providers spent 2.5 hours per potential participant during the initiation phase – similar to the amount of time spent with potential CDC participants.

It is estimated that CDRC providers spend approximately 1.2 additional hours with each CDRC participant on planning compared with NRCP consumers (again, similar to CDC).

The average amount of time spent on managing and coordinating a CDRC package per week was also higher for CDRC packages compared with standard respite care. It is estimated that providers were spending approximately an additional 0.5 hours per week on managing and coordinating a CDRC package compared with managing and coordinating supports for NRCP consumers, or 26 additional hours per year.

Table 50: Time spent (hours) on initiation, planning and coordination – CDRC

CDRC
NRCP
Time spent providing information to potential CDRC participants – per potential participant (hours) one-off
2.5
...
Time spent undertaking care planning– per participant (hours) one-off
3.0
1.8
Time spent managing and coordinating package– per participant per week (hours)
1.8
1.3
Time spent conducting formal review – per participant per review undertaken (every 3-6 months) (hours) every 3-6 months
2.3
1.1

Source: 2nd CDC provider data collection


Key points – Costs

  • Providers were incurring costs relating to the development and set-up of CDC and CDRC, and were meeting these costs themselves.
  • While some set-up costs will not be incurred again by existing providers if the initiative is expanded, new providers can be expected to will incur these similar costs. Further, there are likely to be additional costs incurred for systems development as the number of packages reaches a critical mass and processes need to be automated.
  • CDC providers were also incurring some ongoing costs which were not being met from package funds. Additional costs were largely due to the increased amount of time involved in administering and coordinating packages compared with standard care packages. In addition, CDC providers were largely determining their administration charges based on what they considered ‘reasonable’ rather than costs actually incurred. This was not the case for CDRC providers who were allocated a separate administrative amount per package.
  • The extent to which these ongoing costs are likely to continue is unclear, though they may decline over time as providers become more familiar with the approach and participants take on a greater self-management role.
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