Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

Chapter 8 Aged care

Outline

Part 1 increases the compliance powers of the Secretary in relation to the Department of Health's reviews (audits) of care recipient appraisals submitted by aged care providers to receive Commonwealth subsidy. These appraisals are conducted using the Aged Care Funding Instrument (ACFI). When an appraisal is received, the Secretary must classify the care recipient according to the level of care he or she needs, relative to the needs of other care recipients.

In 2014-15 there was a $150 million overspend on ACFI subsidy, with one-in-eight of the 20,000 appraisals reviewed found to be incorrect or false.

This Part introduces a civil penalty of up to 60 penalty units if approved providers on more than one occasion in a two year period give false, misleading or inaccurate information in connection with an appraisal or reappraisal. Before the introduction of this item, the Aged Care Act 1997 did not include civil penalty provisions.

This Part makes it easier for the Secretary to require an approved provider to reappraise its care recipients or suspend it from making further appraisals if the provider gives false, misleading or inaccurate information in connection with an appraisal or re-appraisal.

In addition, if the Secretary suspects on reasonable grounds that a care recipient's care needs have decreased significantly, this Part gives the Secretary the power to require the approved provider to re-appraise the care recipient.

The Part also changes the date that a change in classification following a review by the Department is taken to have effect. These amendments will allow the Secretary to recover overpayments of subsidy from the date the care recipient was originally classified. Currently, the Secretary can only recover overpayments from a maximum of six months before a change in classification.

The Part also amends the Aged Care Act to allow for the charging of a fee if approved providers seek reconsideration by the Secretary of a classification downgrade.

This Part also amends the Aged Care Act to make it clear that in deciding on a classification level, the Secretary can take into account the manner in which care is provided to a care recipient, including but not limited to the qualifications of a person required to provide care or treatment.

Notes on Clauses

Aged Care Act 1997

5: After subsection 25-1(3)

Item 5 amends section 25-1 of the Aged Care Act to allow the Secretary in deciding on a classification level for a care recipient to take into account the manner in which care is provided, including but not limited to the qualifications of a person required to provide care or treatment.

7: Validation of Classification Principles

Item 7 provides that classification decisions before the commencement of these amendments that took into account the manner in which care was provided are valid. However this item does not affect the validity of any such decisions that have been the subject of proceedings heard and finally determined by a court.

This amendment ensures that classification decisions which considered the manner in which care was provided, including the qualifications of the person providing the care, in determining the amount of Commonwealth subsidy payable to an approved provider will be valid, even if made before commencement of this item.

It is a long standing practice that certain types of care must be provided by qualified health professionals for providers to be eligible for the commensurate level of Commonwealth funding under the ACFI.

10: Paragraph 25-4(1)(b)

Item 10 omits the word 'and' from paragraph 25-4(1)(b) of the Aged Care Act, which is required to give effect to the following item.

15: Paragraph 25-4(1)(c)

Item 15 repeals paragraph 25-4(1)(c) of the Aged Care Act to give the Secretary the discretion to suspend an approved provider, from making appraisals if the approved provider gave false, misleading or inaccurate information in an appraisal or reappraisal connected with a classification that was reviewed, and changed under section 29-1 of the Aged Care Act.

Currently, the Secretary may only suspend an approved provider from making appraisals, after the Secretary changed a classification under 29-1, the approved provider then gives further false, misleading or inaccurate information in connection with another appraisal.

20: At the end of subsection 25-4(1)

Item 20 adds a note to refer to section 27-3 (reappraisal required by the Secretary) and Division 29A (civil penalty for providing false, misleading or inaccurate information in connection with an appraisal or reappraisal) of the Aged Care Act.

25 Before subsection 27-3(1)

Item 25 inserts the heading 'false, misleading or inaccurate information' to improve the structure of this subsection.

30: Paragraph 27-3(1)(b)

Item 30 omits the word 'and' from paragraph 25-4(1)(b) of the Aged Care Act which is required to give effect to the following item.

35 Paragraph 27-3(1)(c)

Item 35 repeals paragraph 27-3(1)(c) of the Aged Care Act to give the Secretary the discretion to require a reappraisal to be made of the level of care needed by one or more care recipients, if the approved provider gave false, misleading or inaccurate information in an appraisal connected with a classification that was reviewed, and changed under section 29-1 of the Aged Care Act.

Currently, the Secretary may only require a reappraisal if, after the Secretary changed a classification under section 29-1, the approved provider then gives further false, misleading or inaccurate information in connection with another appraisal or reappraisal.

40 Application of amendments

Item 40 provides that the amendments to subsection 25-4(1) and 27-3(1) of the Aged Care Act apply to a change of classification that occurs on or after this item commences. However the appraisal or reappraisal may have occurred before this date.

45 At the end of subsection 27-3(1)

Item 45 adds a note to refer to section 25-4 (suspending approved providers from making appraisals and reappraisals) and Division 29A (civil penalty for providing false, misleading or inaccurate information in connection with an appraisal or reappraisal) of the Aged Care Act.

50 After subsection 27-3(3)

Item 50 inserts new subsection 27-3(3A) to give the Secretary discretion to issue a notice requiring an approved provider to reappraise the level of care needed by a care recipient, within the period specified in the notice, if the care recipient's care needs have decreased significantly.

This item provides that the Classification Principles may specify the circumstances in which the care needs of a care recipient are taken to decrease 'significantly'.

55 Subsection 27-3(4)

Item 55 amends subsection 27-3(4) to provide that the Secretary may vary or revoke a notice requiring an approved provider to reappraise the care needs of a care recipient under subsection 27-3(3A) (significant decrease in care needs).

60 Before subsection 27-3(5)

Item 60 inserts the heading 'Authorised reappraisers' before subsection 27-3(5) to improve the structure of this subsection.

65 At the end of subsection 27-3(5)

Item 65 amends subsection 27-3(5) to provide that the Secretary may authorise someone other than the approved provider to make the reappraisals required by subsection 27-3(3A) (significant decrease in care needs).

70 Section 29-2

Item 70 amends section 29-2 of the Aged Care Act to provide that a change of classification is taken to have had effect from the day on which the classification took effect.

This amendment will allow the Secretary to recover overpayments of subsidy from the date the care recipient was originally classified. Currently, the Secretary can only recover overpayments from a maximum of six months before a change in classification.

This change means that the Commonwealth can adjust payment of subsidy to approved providers where the original classification was based on an appraisal that was inaccurate or incorrect. Such an adjustment can result in either a recovery of an overpaid amount or the commensurate additional amount being added to subsidy payable to the provider.

75 Application of amendments

Item 75 provides that the amendments to section 29-2 of the Aged Care Act apply to a change of classification that occurs after this item commences. However, the appraisal or reappraisal may have occurred before that date.

80 At the end of Part 2.4

Item 80 introduces a civil penalty of up to 60 penalty units if approved providers give false, misleading or inaccurate information in connection with an appraisal on more than one occasion in a two year period.

The conduct enabling the Secretary to apply for a civil penalty will arise if:

•

the approved provider has received a written notice from the Secretary that it has provided false, misleading or inaccurate information in an appraisal or reappraisal connected with one or more classifications reviewed under subsection 29-1(3) of the Aged Care Act; and

•

within two years of the first written notice, it again provides false, misleading or inaccurate information in another appraisal or reappraisal.

The Secretary will be able to apply for a civil penalty in relation to each classification change based on false, misleading or inaccurate information. Therefore, if an approved provider gives false, misleading or inaccurate information in more than one appraisal that leads to a classification change, the Secretary will be able to apply for a civil penalty in relation to each classification change.

Approved providers will continue to be able to seek reconsideration by the Secretary of any change of classification under subsection 29-1(1) of the Aged Care Act. If dissatisfied with the reconsideration decision, providers will continue to be able to seek review by the Administrative Appeals Tribunal.

82 Before subsection 85-5(1)

Item 82 inserts the heading 'Request for reconsideration of reviewable decision' before subsection 85-5(1) to improve the structure of this subsection.

83 After subsection 85-5(4)

Item 83 introduces the requirement to comply with section 85-6, which deals with application fees, if the reviewable decision was made under subsection 29-1(1) (a decision to change the classification of a care recipient).

85 After section 85-5

Item 85 introduces an application fee for reconsideration of a decision under subsection 29-1(1) to change the classification of a care recipient.

The amount of the fee and any method of working out the fee may be specified in the Classification Principles. The Classification Principles may also deal with the waiver or refund of an application fee, or circumstances in which an approved provider is exempt from paying the fee.

The introduction of an application fee is intended to allow providers with material new information to apply for reconsideration of section 29-1 classification changes without charge, but to discourage providers without material new evidence and with little prospect of success from seeking reconsideration. This will reduce the current demand on Commonwealth resources arising from such processes.

95 Before Division 96

Item 95 inserts a new section 95C-1 into the Aged Care Act to trigger provisions of the Regulatory Powers (Standard Provisions) Act 2014 in relation to the imposition of the new civil penalties established by item 80. The Secretary is an authorised applicant who may apply to a relevant court for a civil penalty order under the Aged Care Act.

For the purposes of the new section 95C-1 of the Aged Care Act, a relevant court is the Federal Court of Australia, the Federal Circuit Court of Australia or a court of a state or territory which has the necessary jurisdiction.

100 Section 96-1 (at the end of the cell at table item 9, column headed "Part or provision")

Item 100 amends the table in section 96-1 of the Aged Care Act, to provide that the Minister may make Classification Principles necessary or convenient to give effect to section 85-6 (an application fee for reconsideration).

105 Clause 1 of Schedule 1

Item 105 inserts the terms 'civil penalty provision' and 'Regulatory Powers Act' in Schedule 1-Dictionary to the Aged Care Act. It provides that these terms have the same meaning as in the Regulatory Powers (Standard Provisions Act 2014 .

Part 2-Adviser and administrator panels

Outline

Part 2 will remove the requirement for approval by the Secretary of advisers that assist with conducting care recipient appraisals under the Aged Care Act. In place, the proposed amendments provide for restrictions on who can be an adviser to be set out in the Classifications Principles.

The measure will also remove the adviser and administrator panels currently used when approved providers are given a sanction. Rather than a pre-approved panel of providers, the proposed amendments provide for restrictions on who can be an adviser or administrator to be set out in the Sanctions Principles 2014 .

Providing the capacity for restrictions to be set out in the Classifications Principles and Sanctions Principles allows for the efficient and timely management of risks to care recipients and approved providers. Classes of persons will be restricted if they are likely to pose a risk if they take up that role, for example, those who are insolvent under administration may be excluded from being administrators.

There are two circumstances where advisers or administrators are used under the Aged Care Act .

Assisting with appraisals

To receive care an aged care recipient must be appraised and classified based on their care needs. Approved providers can conduct the necessary appraisals for the care recipients to which they provide care in certain circumstances. They then provide this information to the Department.

The Secretary can suspend approved providers from making appraisals if false, misleading or inaccurate information is provided for the purposes of classification.

When given the option by the Secretary, an approved provider can retain its ability to make appraisals if it agrees to appoint an adviser to assist it in conducting its appraisals.

Currently, the adviser must be approved by the Secretary, but does not have to be drawn from the adviser panel.

The amendments will remove the need for the Secretary to approve the adviser, but provide for restrictions on who can be an adviser to be set out in the Classification Principles.

Assistance to avoid the revocation of approved provider status

When an approved provider of aged care services has been non-compliant with one of its responsibilities it can have its approval under Part 2.1 of the Aged Care Act revoked. Rather than having its approved provider status revoked, the Secretary can offer the approved provider the option of agreeing to appoint an administrator and/or adviser to assist its return to compliance.

Under current arrangements, approved providers must select an administrator/adviser from panels that the Secretary manages. The Secretary also approves the administrator and/or adviser chosen by the approved provider.

The amendments in Part 2 of this Schedule will remove the panels and the need for the Secretary to approve the adviser or administrator. Under the amendments restrictions on who can be a relevant adviser or administrator can be set out in the Sanctions Principles.

Notes on Clauses

Aged Care Act 1997

Item 3: Paragraph 25-4A(1)(b)

Item 3 removes the requirement that the adviser be approved by the Secretary.

Item 4: Subsection 25-4A(2)

Item 4 will remove the requirement for the approved provider to give information to the Secretary about a proposed adviser. This is consistent with there no longer being the requirement for approval of the adviser by the Secretary.

Item 5: Subsection 25-4A(3)

Item 5 will amend the reference to the approval of the Secretary in determining the timeframe in which the adviser must be appointed. Following the amendment, the approved provider will need to appoint the adviser within the period specified in the agreement they enter to appoint an adviser. This is consistent with there no longer being the requirement for approval of the adviser by the Secretary.

Item 6: At the end of section 25-4A

Item 6 will add two additional subsections to section 25-4A of the Aged Care Act. Subsection (4) provides that the Classification Principles may exclude a class of persons from being appointed as an adviser. Subsection (5) provides that the Classification Principles may specify matters to be taken into account in specifying the timeframe within which an adviser must be appointed.

Item 7: Paragraph 25-4B(1)(a)

Item 7 will amend paragraph 24-4B(1)(a) in line with the repeal of subsection 25-4A(2).

Item 8: Subparagraphs 66-2(1)(a)(iii) and (iv)

Item 8 will remove the requirement that the adviser or administrator be approved by the Commonwealth.

Item 9: Subsections 66-2(2) and (3)

Item 9 will add to the current restriction preventing the Commonwealth from being appointed an adviser or administrator. The provision now also explicitly prevents Commonwealth officers or employees from being appointed.

Item 10: Division 66A (heading)

Item 10 will repeal the current heading and substitutes a new heading consistent with subsequent changes to the Division.

Item 11: Section 66A-1, 66A-2 and 66A-3

Item 11 will repeal sections 66A-1, 66A-2 and 66A-3 and substitutes new sections 66A-2 and 66A-3.

The repeal of section 66A-1 removes the requirement to establish a panel and removes consequent provisions.

Proposed sections 66A-2 and 66A-3 will no longer require notification to the Secretary of a proposed adviser or administrator. These sections will also no longer require approval by the Secretary of an appointment.

The new provisions will provide new eligibility requirements for being appointed an adviser or administrator consistent with the removal of the adviser and administrator panel. The sections provide that the Sanctions Principles may exclude a class of persons from being appointed and that a person is not eligible to be appointed if they are within a class of persons listed.

These new provisions will also provide that an approved provider must appoint the adviser or administrator within the time period specified in their agreement to appoint (section 66-2 of the Aged Care Act refers). This new provision provides that the Sanctions Principles may specify matters for the Secretary to take into account when setting the period in which an adviser or administrator must be appointed.

Item 12: Application provisions

Item 12 relates to application provisions that set out when the amendments to sections 25-4A, 25-4B and 66-2 apply to the Aged Care Act.

Part 3-Approved provider obligations

Outline

Part 3 will amend approved provider obligations under the Aged Care Act for an approved provider of aged care to notify the Secretary of certain changes to any of its key personnel. The Aged Care Act currently requires approved providers to notify the Department, within 28 days, of any changes to key personnel. The proposed changes will reduce administrative burden by making this a requirement only when the change in personnel would materially affect the provider's suitability to be a provider of aged care.

Notes on Clauses

Aged Care Act 1997

Item 13: Subsection 9-1(1)

Item 14: Subsection 9-1(3)

Item 15: Subsection 9-1(3A)(a)

Item 16: Subsections 9-1(6), (7) and (8)

Items 13 to 16 will amend or repeal sections of the Aged Care Act that impose a regulatory duty on approved providers of aged care to notify the Department of any changes in key personnel. Currently an approved aged care provider must notify the Department of any changes in key personnel within 28 days of the change occurring.

Item 17: Application provision

Item 17 is an application provision setting out when the amendments to section 9-1 apply to the Aged Care Act.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Aged care

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

This Schedule deals with proposed amendments to the Aged Care Act 1997 (the Aged Care Act) relating to the creation of civil penalties for approved providers of aged care who engage in certain behaviours and other matters.

The subsidy the Commonwealth Government pays to approved providers is substantially affected by appraisals (and classifications that are based on appraisals) of care recipients' care needs. This Schedule introduces a civil penalty of up to 60 penalty units if approved providers on more than one occasion in a two year period give false, misleading or inaccurate information in connection with an appraisal or reappraisal.

This Schedule makes it easier for the Secretary to require an approved provider to re-appraise its care recipients or suspend it from making further appraisals if the provider gives false, misleading or inaccurate information in connection with an appraisal or reappraisal.

In addition, if the Secretary suspects on reasonable grounds that a care recipient's care needs have decreased significantly, this Schedule gives the Secretary the power to require the approved provider to re-appraise the care recipient.

The Schedule also changes the date that a change in classification following a review by the Department is taken to have effect. These amendments will allow the Secretary to recover overpayments of subsidy from the date the care recipient was originally classified. Currently, the Secretary can only recover overpayments for a maximum of six months prior to a change in classification.

The Schedule also amends the Aged Care Act to allow for the charging of a fee if an approved provider seeks reconsideration by the Secretary of a classification downgrade.

This Schedule also amends the Aged Care Act to make it clear that in deciding on a classification level, the Secretary can take into account the manner in which care is provided to a care recipient, including but not limited to the qualifications of a person required to provide care or treatment.

This Schedule will abolish the adviser and administrator panel arrangements set out in the Aged Care Act 1997 . Approved providers under sanction would be able to choose their own advisers and administrators. The measure also includes the removal of the requirement that the Secretary approve advisers that assist with Aged Care Funding Instrument assessments for approved providers who are to be suspended from this activity.

Approved providers would be required to have the adviser and/or administrator appointed and on site within a specified timeframe, to mitigate risks to care recipients. The Secretary and the Australian Aged Care Quality Agency will retain capacity to monitor the approved provider, including during the sanction period. Further, the Secretary will still have the ability revoke approved provider status and withdraw Commonwealth funding.

This measure will amend the obligations in the Aged Care Act for approved providers to notify the Secretary of certain changes to any of its key personnel in circumstances that do not materially affect the approved provider's suitability to be a provider of aged care.

Human rights implications

This Schedule engages the following rights:

•

right to health (Article 12(1) of the International Covenant on Economic, Social and Cultural Rights);

•

right to an effective remedy (Article 2 of the International Covenant on Economic, Social and Cultural Rights);

•

right to a fair hearing and fair trial (Articles 14 and 15 of the International Covenant on Economic, Social and Cultural Rights)

Right to health

The Schedule promotes the human right to health contained in Article 12 of the International Covenant on Economic, Social and Cultural Rights. Under Article 12(2) the State Parties to the Convention agree to take steps to achieve the full realisation of this right. These steps include the creation of conditions which assures medical services and medical attention in the event of sickness.

In order to ensure the sustainability of the aged care system so that all Australians get the care they need, regard must be had to the limited resources available for support services and programs under the Aged Care Act. The reduction of some regulatory burden on approved providers will ensure care services remain affordable and appropriate to the needs of the people who require it. Strengthened compliance powers take into account the need for providers to be accountable for funding provided.

Right to effective remedy

This Schedule engages the right to an effective remedy under Article 2(3) of the International Covenant on Civil and Political Rights (ICCPR). Article 2(3) of the ICCPR protects the right to effective remedy for violation of rights or freedoms recognised by the ICCPR, and provides for a person's right to be determined by competent judicial authorities, by administrative or legislative authorities, or by any other competent authority provided for by the legal system of the State.

The Schedule amends the Aged Care Act to allow for the charging of a fee if an approved provider seeks reconsideration by the Secretary of a classification downgrade. However, the existing right to internal review via reconsideration, then merits review by the Administrative Appeals Tribunal is retained

The reconsideration process is resource intensive and the introduction of fees reflects the cost of providing this service. The Schedule provides that the amount of the fee is reasonably related to the expenses incurred by the Commonwealth. There is also capacity for exemption, waiver and refund of the fees.

Accordingly, any limitation of the right to access to justice is within the allowable limitation provided in Article 2(3) of the ICCPR. Any limitation on the right to access to justice by the application fee is reasonable, necessary and proportionate.

Right to a fair hearing and fair trial

The civil penalty provisions in the Bill, which in turn rely on the standard civil penalty provisions in the Regulatory Powers (Standard Provisions) Act 2014, may potentially engage the criminal process rights under Article 14 of the ICCPR, if the civil penalty provisions are classified as "criminal" under human rights law. Even though the Bill labels the provisions as civil penalties, this is not determinative and the nature and severity of the provisions must be assessed.

Under the civil penalty provisions, proceedings are instituted by a public authority with statutory powers of enforcement in a court. A finding of culpability precedes the imposition of a penalty. This might make the penalties appear 'criminal' however this is not determinative. While the provisions are deterrent in nature, these penalties generally do not apply to the public at large. Only approved providers of aged care who receive Commonwealth subsidy for the provision of aged care will be impacted by these penalties. Further, the severity of the penalties is not too high, with the pecuniary penalty being 60 units. This penalty is justified as the payment of Commonwealth subsidy is based on information that approved providers use to appraise its care recipients. In 2014-15 there was a $150 million overspend on subsidy, with one-in-eight of the 20,000 appraisals reviewed found to be incorrect or false. There needs to be a civil penalty to deter approved providers from relying on false, misleading or incorrect information in appraisals. In light of this analysis, the nature and application of the civil penalty provisions suggest that they should not be classed as criminal under human rights law.

Only the Secretary may seek the imposition of civil penalties, and this must be done via an application to a court. Matters can be considered by the Federal Court of Australia, Federal Circuit Court of Australia or certain courts of states or territories that will have jurisdiction. These arrangements ensure that the most serious matters are dealt with independently of the Department of Health.

Conclusion

The Schedule is compatible with human rights because to the extent that it promotes certain rights, including the right to health, and that for the right it limits, the limitation is reasonable, necessary and proportionate.