WHILE the transition from block-funding to activity-based funding will be challenging for providers, many of their clients will find it challenging to move from the gentler CHSP personal contribution arrangements to the very strict, and certainly more expensive, personal contribution regime under the new system.
This in itself presents a challenge to providers and certainly for the staff who interface with clients. The latter will have to ‘sell’ the change which sees personal contributions go up significantly from one day to the next.
As mentioned in these posts previously, the two discussion papers published so far do not go into detail about personal contributions. Given the relatively short period of time between now and 1 July 2024, when the new system starts, CPSA thinks it’s a fair assumption that the way personal contributions are calculated under the current HCP program will continue.
How CHSP raises personal contributions
As CHSP providers know, the CHSP works with a principles-based Client Contribution Framework. It is left to the providers to decide how this framework gets clad. Although the Department suggests hourly and per-service personal contributions ranges, providers have to decide what sort of means testing is to be applied. Anecdotally, CHSP clients pay a lot less than HCP clients.
How HCPP raises personal contributions
The HCP program charges every client a Basic Daily Care Fee. This Basic Daily Care Fee (currently $10.18 for HCP1 and $12.14 for HCP4) is payable every day of the week. Even if a client only receives a service on one day of the week, they will be charged seven Basic Daily Care Fees a week.
It is not certain that this most unreasonable fee will be carried over into the new In-Home Aged Care program. However, there’s no indication that it won’t be.
Incidentally, a lot of HCP providers waive the Basic Daily Care Fee, although there’s a suspicion they were making up for it by charging excessive admin and management fees. These latter fees have been capped from 1 January this year. It’s too early to tell whether charging of the Basic Daily Care Fee has increased since then.
In addition to the hefty Basic Daily Care Fee, the HCP program features an income-tested care fee structure. Whereas the CHSP Client Contribution Framework raises a proportion of the actual cost of a unit of service provision, the income-tested care fee structure does no such thing. It works out how much a client is able to contribute to the overall cost of the care they receive. For example, if income-testing determines a client can contribute $2,000 a year, it doesn’t matter how many units of service are provided: the client will pay $2,000, unless the overall cost is less than $2,000, in which case the client will pay the full overall cost. This is an important difference with the CHSP Client Contribution Framework.
Full rate pensioners do not pay an income-tested care fee, but part pensioners and self-funded retirees do if their income (including any Age Pension) exceeds $31,140 a year (for singles). In the case where this income is, say, $32,000, they could be up for an annual income-tested care fee of $6,341 (annual cap) on top of the annual minimum basic daily care fee amount of $3,971. That’s a total of $10,312 a year for a person with an income just short of around $22,000 after paying for home care.
The HCP income-tested care fee is also subject to a lifetime cap of $76,097, which means that pensioners paying the annual cap of $6,341, will be paying that for roughly twelve years, if they can survive that long on their severely depleted disposable income.
Implications for CHSP providers
CHSP providers themselves know how much they are asking their clients to contribute. They should compare those contributions with what’s in store for their clients, because it will be clear that from 1 July 2024, as former CHSP clients begin to realise how much more they are asked to pay in personal contributions, many will not be happy and won’t be able to pay.
Some will blame you, unless you prepare your clients for what’s coming.