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Presented by Lorraine Poulos For Aged and Community Services Victoria Organisational Financial Implications of Consumer Directed Care in Home Care Packages Lorraine Poulos and Associates 1

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Thank you Acknowledgement of traditional owners Background to presentation 2 Lorraine Poulos and Associates

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Disclaimer LPA take no responsibility for business decisions based on todays presentation All providers are encouraged to seek legal and financial advice about any major financial decisions that may be need to be taken following this presentation Your peak body in your state is the most valuable advocate or source for any questions or concerns relating to CDC and community care matters 3 Lorraine Poulos and Associates

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This presentation Lorraine Poulos and Associates 4 Look at possible financial implications Consider what other providers are doing Challenges Opportunities The importance of recognising the implications if CDC is introduced into all of aged care Most significant change in community aged care in history of care provision

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Brief History Aged Care- Community Care 2002 Review of community programs nationally 2004- The Way Forward- a consultation for improving Community Care 2006- Decision by COAG to streamline systems and services 2007- Commonwealth agrees to manage aged care from 2012 2010- Consumer Directed Care pilots began 2011- new Community Care Common Standards (Home Care Standards)and accountability system 2011 Productivity Commission into aged care 2012- All HACC and other community aged care programs report to and managed by DoHA DSS 2013- (WA and Victoria delayed transition) 2013- Living Longer Living Better Aged Care Reforms 2013- CDC for new packaged care consumers 2014- Australian Quality Aged Care Agency 2014- Income testing for home care consumers 2015 all packaged care to be CDC 2015-New HSP and CSC, My Aged Care Website etc. 2015- National Fees Policy for all community services 5 Lorraine Poulos and Associates

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Background to CDC in Australia HACC services included case management services Original CACPs in mid 1990s were to be a combination of case management and at least 2 other home care (HACC) services e.g. personal care, domestic assistance etc. Packaged care was always intended to be an individualised model of care and not Block funded ( provider paid a sum of money to provide a number of outputs or services) Overseas models in UK, USA and NZ identified benefits to consumers as their care needs change if they have more involvement and access to unspent funds Lorraine Poulos and Associates 6

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Background Lorraine Poulos and Associates 7 Some providers have always operated CACPs or HCP as individualised budgets This has led to confusion with consumers, ACATs, other providers Inconsistencies in service delivery Providers have been able to use unspent funds at the end of the financial year to support other infrastructure or higher levels of service

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Brief overview of CDC 1000 were in operation across Australia 2010-12 Pilot learnings: Choice, control and flexibility Un-bundle Case Management from care Consumers manage with right tools, support and environment Consumers not always spending allocations KPMG report Department of Social Services website (remember this is the Pilot report) Lorraine Poulos and Associates 8

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Financial implications of CDC Consumers are assessed and have the power of choice- Consumer Directed Care- but providers will hold the fundsnot be funded Margins or profits have reduced or are unable to be planned for unless it is included in administration levy, unit cost for core advisory and direct care work provided by your own organisation Returns on Investments may have to be adjusted Requires a commitment to technology and assistive devices 9 Lorraine Poulos and Associates

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Financial implications of CDC Lorraine Poulos and Associates 10 Expectation that consumers will contribute to their care AP will have to collect fee from consumers based on Centrelink assessment Finance department now spending more time on the day to day processes in Home Care Policies need to be clear about agreements, non payment of fees, equipment purchases, using other providers, cash transactions, negotiations with admin charges etc.

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Biggest Change An organisation will have to be transparent to the consumer what it is they are paying for in the area of administration, case management or co-ordination and the unit costs of care and services Lorraine Poulos and Associates 11

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New Home Care Package subsidies Home Care Level 1 a new package to support people with basic care needs- around $7,500 pa Home Care Level 2 equivalent to the existing CACP- around $13,600 pa Home Care Level 3 a new package to support people with intermediate care needs- around $30,000 pa Home Care Level 4 equivalent to the existing EACH package around $45,500 pa 10 Lorraine Poulos and Associates

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Individualised Budget 13 1. Monthly statement 2. Format must be able to be understood by consumer 3. Must have income and expenditure line items 4. Time period agreed for review 5. Provider must keep a budget for each client regardless of the consumers desire or capacity to be involved in their budget 6. Must provide a monthly statement to consumer or Person Responsible Lorraine Poulos and Associates

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Income components 14 1. Income must identify the total funds available including: Full subsidy amount All supplements e.g. Dementia, DVA, Oxygen, Homelessness Consumer contribution Lorraine Poulos and Associates

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Expenditure 15 Grouped into 3 categories: Administration costs- (rostering included) Core advisory and care management services Service and support provision and/or purchasing Lorraine Poulos and Associates

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Contingency fund 16 Budget may include a small contingency fund for emergencies, unplanned services. This must be no more than 10% of the total budget Must be clearly identified in the budget and regular statement Lorraine Poulos and Associates

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Unspent funds 17 Change of package from 1-2 band to 3-4 band- funds move with the consumer Moving provider- unspent funds can be retained by the provider Excess leave there is discretion for provider to make the funds available for consumer later Subsidy reduces to 25% if leave is exceeded and package to be protected There is discretion for provider to agree to transfer unspent funds to another provider Unspent funds on cessation remain with provider-(no real data on what this amount may be or what may happen if DSS reduces annual subsidy) Lorraine Poulos and Associates

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Income testing implications Current funding (Grandfathered whilst consumer remains on program) Contribution fee 17.5% pension ( approximately $9.70 day)-NOT ALWAYS CHARGED PLUS DSS payment per day depending on Level 1,2,3,4 This is regardless of whether they are Part Pensioners or Self Funded Retirees Lorraine Poulos and Associates 18

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Pensioner Contribution fee 17.5% pension ( approximately $9.70day) PLUS Funding paid DSS depending on Level of HCP Expected that provider will charge the $17.5% contribution fee and consumers will have to complete a financial hardship form if they cannot afford to pay- (Many providers reducing the fee due to occupancy issues) Lorraine Poulos and Associates 19

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Part Pensioner Contribution fee 17.5% pension ( approximately $9.70 day) PLUS Income tested fee up to $5000 for part pensioner ( approximately 13.69 per day $95 per week) PLUS Difference paid by DSS depending on Level of HCP Lorraine Poulos and Associates 20

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New Income splits post July 2014 for NEW consumers SFR Contribution fee 17.5% pension ( approximately $9.70 day) PLUS Income tested fee up to $10,000 per year ( approximately 27.39 per day or $191.17 per week) PLUS Difference paid by DSS depending on Level of HCP Lorraine Poulos and Associates 21

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Basic Accounting Terms & Concepts staff at service level need to understand Accrual Accounting vs Cash Accounting (very important once income testing commences) Individualised Budget- what is it ? Who will do it with consumer? Unit Cost- do we know what it is? What about if consumers do not use our service? Contingency Fund- how much will DSS allow it to be? Budget / Income & Expenditure- this needs to be monitored regularly 22 Lorraine Poulos and Associates

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Checking your overheads Lorraine Poulos and Associates 23 Administration costs reflect establishment costs for the organisation and would also include the costs of meeting government quality and accountability requirements. Administrative costs include: insurance and government reporting corporate overheads capital costs ongoing research and service improvement CDC administrative overheads including staff and IT developing statements and other consumer communication establishing contracts with sub-contracted providers setting up and cancelling appointment ( i.e. rostering) Page 37 HCP guidelines)

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Feedback continued: Lorraine Poulos and Associates 25 No guidance on acceptable administration fee from DSS or level of unspent funds that can be retained each year and rolled over e.g. Level 4 may have a high retention of funds Transition issues (from non CDC to CDC) when providers are trying to charge a daily fee when they may have been asking for an hourly contribution (e.g $5 per hour ) or not been collecting fees at all! Accounts departments not understanding the changes and the impact on occupancy and budgets Only allowed to charge one month fees in advance (DSS recent briefings) Level 1 and 2 packages very hard to fill given the daily fee requirement Concern potential clients/consumers will say NO when fees are required Feedback about consumers who are now questioning what has been done with their allocated fees in the past i.e. 1-2 hours and no case management

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Check list for providers Lorraine Poulos and Associates 26 Check your past occupancy and average hours etc. to establish some budget assumptions Client agreement gain legal advice and ensure all requirements as per the Home Care Package guidelines are included Do you have a brokerage template? Have your staff received training in CDC and person centred care? What is your risk management processes and are they robust enough for consumers to be able to make choices that do not impact on your duty of care whilst recognising their right to choice in CDC ? What changes need to be made to your care plans to reflect the value and role of your case management?

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Lorraine Poulos and Associates 27 Accounting and budget software- ensure the system used meets the needs of the program i.e. monthly budget roll over and itemised hours etc. as per guidelines Have you separated your coordination (rostering) and case management costs to establish what your unit cost may be for the case management component of your services in line with Home Care package guidelines? (this may be called support and advisory services)? Gain some advice and assistance with establishing your unit costs

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Lorraine Poulos and Associates 28 What is your administration fee ? Will it differ for each level of package? Will it be a flat fee or a % of the income? Decide what your business rules will be e.g. are kilometres included in your unit cost for care workers? Who pays for equipment maintenance? What other providers will you be working with and what are your requirements when entering into an agreement with them? What is the protocol for staff to make purchases or consumers who wish to manage their own package? What if a client wants to bargain for a cheaper levy ?

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Lorraine Poulos and Associates 29 Will you allow contingency funds to be transferred to another provider if the consumer requests this? Does your Board or management committee understand the contingency funds roll over each year and are no longer profit/surplus for the organisation? What is your debt collection process for community care and under what circumstances will you continue or discontinue providing care if a consumer refuses to pay? ( remember to refer to the Aged Care Act for guidance)

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Other matters Lorraine Poulos and Associates 30 Case management skills Financial conversations Meaningful solutions Taxi vouchers, crock pots, assistive technologies Culture change E tools Russell Kennedy, GGJones Fixed cost and variable incomes

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Other matters Lorraine Poulos and Associates 31 Scenario budgets with and without fees Unspent funds ITA and the lifetime cap 60K Non charging of fees E tools MYOB live - $900 and $800 50 HCP 40K plus for software programs Office 365 access Rostering co-ordinators similar to DCW Case management and core advisory examples Lower fees or no fees level 1 and 2

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Other matters Lorraine Poulos and Associates 32 Case scenario planning 50% occupancy Marketing five clicks on website Brochures Home Care today information for consumers Examples of HCP being taken up very quickly/slowly Fees policy and non charging of fees Training expenses Financial skills of staff Interface between finance and co-ordinators/home care service ITA lifetime cap how to sell this

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Lorraine Poulos and Associates 33

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34 Thank You Further details contact lorraine@lorrainepoulos.com.au Lorraine Poulos and Associates