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Millions of taxpayer dollars go unspent in home care

6th August 2018

Sandra Hills OAM, CEO Benetas
Dr Catherine Joyce, Research and Innovation Manager, Benetas

A recent study from Leading Aged Services Australia (LASA) has estimated between $200 and $350 million of taxpayer dollars go unspent in home care. In a time when demand for aged care exceeds supply, providers, consumers and peak bodies are calling for Government to take action on the complex issue of unspent funds.

The amount of unspent funds held by recipients of Home Care Packages (HCPs) has been estimated to total between $200 and $350 million nationally. A survey of aged care providers in late 2017, conducted by LASA, indicated that almost half (47.3%) of packages had unspent funds. Of those with unspent funds, 15.9% had unspent funds exceeding $10,000.

Likewise, a recent survey conducted by Stewart Brown found that average unspent funds per client has increased by $1,607 per client to $5,862, up from $4,255 in June 2017.

A Department of Health Fact Sheet identifies several possible contributing factors to unspent funds, including clients taking periods of temporary leave, automatic package upgrades, and holding funds for future needs. Clients are entitled to take up to 28 days of paid leave per year from their package, which they may do for a variety of reasons including being admitted to hospital or respite care, or taking a holiday with family. Automatic package upgrades occur when clients who have been on an interim package while approved for a higher level package are automatically upgraded when a package at their approved level becomes available. Finally, clients may choose to hold funds for future planned or unplanned needs, such as their carer being unavailable or unable to care for them, or a particular piece of equipment which may be needed in future.

The same Fact Sheet suggests providers work actively with clients to reduce unspent funds. Suggested strategies include timely review of needs and services following automatic upgrades, encouraging clients to opt out of the waiting list for a higher level package if they do not need more supports, and encouraging clients to use the care they are funded for.

The recommended strategies do not acknowledge the genuine uncertainty that clients face about their future care – which is exacerbated by the current long waiting list. And they represent only a fraction of the full range of potential causes and contributing factors to unspent funds.

For example, the Commonwealth and providers have been working together to increase transparency of home care pricing. However, an unexpected consequence of pricing transparency has been a rise in underspend. Following the introduction of Consumer Directed Care (CDC) in July 2015, consumers had visibility of their funding for the first time, primarily through development of individualised budgets and monthly statements. On one hand, this is a very positive outcome. Conversely, the extent of underspend has increased post-July 2015 and this could be attributed to increased transparency. Without initiatives to address underspend in parallel to pricing transparency, underspend may continue to grow.

For Government, the problem of unspent HCP funds is twofold. First, they represent inefficient allocation of public funds. Second, they appear as a potential source of funding to invest in additional packages for the more than 100,000 people on the home care waiting list.

Better use of home care funds is clearly in the interest of consumers. It is important for older people to get the care they need at home for their quality of life and also to avoid and/or defer a move to costlier permanent care. An unreasonable level of unspent funds may adversely affect the client in the long run.

Aged care providers exist to deliver much-needed services to older people. They do this by working with clients to develop care plans and talking about package funds and how to spend them. However, providers are hamstrung if a service recipient chooses not to utilise the full value of their package. The flexibility providers had prior to the introduction of Consumer Directed Care (CDC) to pool unspent funds for the benefit of groups of clients (e.g., for valued group activities) is no longer an option.

One voice has been conspicuously absent from the debate thus far. At no stage has anyone systematically investigated what HCP clients think. There have been a small number of published studies investigating consumers’ experiences of home care packages featured in the Australian Journal of Ageing (Day et al, 2018) and BMC Geriatrics (Gill et al, 2018). These published works are based on data collected in 2015 and 2016, have small samples, and do not focus specifically on expenditure of package funds. Nevertheless, researchers concluded that package recipients needed time, support and accessible information to understand packages and to develop the confidence and knowledge to be able to effectively exercise choice and control.

Solutions to the “problem” of unspent funds must be informed by data on the views and experiences of HCP clients. This will help clarify the extent to which unspent funds result from conscious choices by clients, as opposed to systemic issues such as automatic upgrading or perhaps assessment processes which are failing to characterise needs appropriately.

There is a clear parallel with the National Disability Insurance Scheme (NDIS) experience. A Productivity Commission review of the early, transitional stages of the Scheme found that in 2016-17, an estimated 30%-41% of committed funds were unspent. The Productivity Commission identified that contributing factors to this included: insufficient supply of appropriate services; ineffective planning processes resulting in NDIS participants (i.e., funding recipients) being allocated funding for supports they did not need; and NDIS participants experiencing difficulties in both accessing information about their allocated funding, and in navigating the system to access supports.

The Productivity Commission Report notes that there is a need for the market to mature, (on both the supply and demand sides), and quotes the National Disability Insurance Agency’s estimate of an expected 5%-20% underspend rate in a mature, consumer-funded system.

This raises some interesting questions for Government and the aged care sector. How important are factors such as supply of the right types of services, in the right locations? Are there problems with needs assessment processes? Do package recipients have sufficient transparency, as well as sufficient skills, competencies and supports, to navigate the home care market? What level of underspend is acceptable?

Aged care peak bodies, such as Anglicare Australia, Uniting Care Australia and LASA, have provided a range of ideas about how to reduce and better use unspent funds. The matter clearly requires further exploration including a better understanding of the views and interests of all key stakeholders. Minister Wyatt has asked the Department of Health to investigate this complex issue and identify the drivers of accumulating unspent funds in home care packages. The sector hopes this research will provide a firm foundation for action by Government to ensure public money is utilised to its fullest extent and the care needs of older Australians who want to stay at home are addressed.