The Government has recently confirmed the appointment of the Aged Care Pricing Commissioner and indicated it wants a process for setting accommodation payments that has less red tape, is transparent, open and fair.  One of the major steps is raising the level above which accommodation payments will require approval by the Aged Care Pricing Commissioner to $550,000.

On 20 November, the Assistant Minister for Social Services, Senator Mitch Fifield, issued a media release setting out the Government’s reform agenda in this area. 

In relation to the process for setting accommodation payment prices, the media release says:

  • The process to be used will be simpler;
  • The previous government’s requirements to follow a prescriptive process which had to be documented and detailed by reference to a list of factors (eg lights, flooring and views)  is to be scrapped.  This presumably is a reference  to the draft Fees and Payments Principles 2013 issued in late July 2013;
  • The process to be used will be transparent and open;
  • Providers will be required to publish all accommodation prices and information about their facility on the My Aged Care website, their own website and in documentation provided to prospective residents;
  • To protect consumers from unjustifiably high prices, any refundable deposits greater than $550,000 or daily payment equivalent will need to be approved by the Aged Care Pricing Commissioner.  This threshold will be reviewed after 12 months and means only about 5% of proposed accommodation prices in facilities will require approval.

Prices that begin on 1 July 2014 will be published from 19 May 2014, giving consumers notice of prices and payment options. 

Applications for approval above the threshold will be received from 31 January 2014.  The process for applying is to be determined following consultation with the industry.

There is no detail in the media release on the methodology to be adopted for linking refundable accommodation deposits and daily accommodation payments. Reading the release as a whole, it seems to suggest keeping the method currently proposed being determining the refundable deposit then equating the daily payment through the maximum permissible interest rate.

In relation to the Aged Care Pricing Commissioner, this has been confirmed to be Ms Kim Cull.

One of the subtle statements made in the media release is that the Aged Care Pricing Commissioner will consult with industry as to the process to claim a higher level of Government accommodation supplement after a significant refurbishment.  Presumably this hints at a revision of the earlier determination of what constitutes ‘major refurbishment’ which is relevant not only to the accommodation supplement but also the definition of ‘permitted use’ of bonds and refundable deposits.

It is hoped that the detail for these reforms arrive soon and that it not be left to the media release to provide the framework.