Subsidy system

The Government has incentivised operators to extensively upgrade aged care facilities (facilities) by introducing an accommodation subsidy system.

Some operators, however, have carried out extensive refurbishments only to find that the facility is not eligible for a subsidy because the operator has not established that the works have significantly improved the quality or amenity of the service.

This update discusses why subsidy applications are being rejected and what operators need to do to protect their investment.

Why subsidy applications are rejected

The Government does not conduct on-site inspections prior to making a determination.  The Government relies entirely on what is submitted by the operator.

To receive an incentive, the operator must complete an Application for Standard Approval for the Higher Accommodation Supplement for a Significantly Refurbished Service (Application).  The Government then considers the Application by reference to the requirements set out in the Subsidy Principles 2014 (the Principles), which are expanded on in the Guidelines for Applying for the Higher Accommodation Supplement (the Guidelines).

Operators may believe that they will satisfy the Principles and Guidelines by responding directly to all parts of the Application form.  This does not appear to be the case.  The Application form does not directly request the operator to provide information in response to all of the criteria that will be considered in assessing a subsidy application.  Rather, the Application form merely seeks a statement as to what ‘has been done to benefit care recipients’.

There appears to be an assumption that the operator will:

  1. carefully consider, and perhaps seek legal advice in respect to, all of the relevant sections of the Principles and Guidelines; and  
  2. not only directly respond to all parts of the Application form, but also specify how each aspect of the works has met each relevant requirement under the Principles and Guidelines.

Common reasons for subsidy applications being rejected include:  

  1. The operator failed to demonstrate that the works were something other than routine repairs and maintenance.   That is, there was no evidence to establish that the works significantly changed the form, quality or function of the services.    
  2. The works improved the quality or amenity of services, but that improvement fell short of being ‘significant’.   
  3. The works conferred some benefit to residents, but that benefit fell short of being ‘significant’.

The Application form does not prompt the operator to specifically address any of these matters.

What do I do if my subsidy application is rejected?

If the operator wishes to appeal the determination, it must send a review application to the Secretary of the Department of Social Services (the Secretary) no later than 28 days from the date the operator received that determination.

The Secretary has absolute discretion as to whether or not to review the original determination.  It is important that any review application contain compelling arguments and evidence as to why the refurbishments have met all the requirements in the Principles and Guidelines.

Operators that do not carefully review the Principles and Guidelines or seek legal advice in respect to completing their review application will expose themselves to a real risk of undermining the value of their investment.