Exit Fees, Administration and Case Management Charges – Home Care Packages

There has been a lot of negative talk in the news lately about organisations applying exit fees, administration and case management charges to consumers receiving a Home Care Package.

The assumptions are that the organisations who are managing these packages are stripping people of their hard earned money – in other words, ‘ripping them off!’

Are they? Let’s look at this issue more carefully.

Administration Charges

I employ an accountant to do my tax and to advise me on tax planning each year. Why? Because I hate doing it myself and know that he does a much better job than I could. Yes, I could save some money by doing it myself, however, I would probably miss something essential that would end up costing me.

I don’t have the same skill set or knowledge as my accountant, so I am essentially paying for his superior knowledge, gained from years of study, on-going professional development, connections and an understanding of the tax laws. I know that I need to pay for this expertise. I also realise that a percentage of what I pay my accountant goes towards his business operating costs, which include the wages of administration staff who answer the phones and store my data, and the bookkeeper who handles most of the standard process work. He has to pay for the electricity to run an office, along with renting the office space.

In short, there are so many overheads involved in operating a business and providing a service, but all we usually see is the end charge to us. Aged Care services are no different, so why should we be surprised that there is an administration fee?

But what about the amount charged – is that fair?

The media has been stating that organisations are charging administration fees up to 30% or more against a Home Care Package. This is no more than what has been applied in the past and, in some cases, is actually less. Discussions I’ve held with providers, and through my own experience, indicates that organisations traditionally allowed 40% for administration charges against a program, with the remaining 60% available to cover the direct care and support needs (e.g. direct care staff wages and allowances). The 40% administration fee included a portion of management and head office wages and overheads, including the Coordinator and Case Manager wages.

It should also be noted that the requirement for organisations to provide an individualised budget and monthly statements (whether the consumer wants it or not) is an additional administrative and management burden that has impacted on the costs of managing a Home Care Package on behalf of a consumer.

Case Management

Firstly, let’s remind ourselves that the Home Care Package subsidy comes from the Commonwealth Government and is designed to support quality care outcomes for individuals. They are not personal funds belonging to the individual, although some consumers may also need to contribute financially to their care where they have capacity to do so.

Home Care Packages are being provided to support vulnerable, older people who either do not have capacity to manage their own support, or lack the inclination to do so. Yes, there are exceptions to this, however, the current arrangement of Approved Provider management still supports consumers wishing to exercise more control over their package and allows for the negotiation of lower case management charges in recognition of their capacity. For the majority of consumers though, a case manager can help to attain a better overall outcome. Think of it as being similar to having a personal banker, someone to help negotiate a complex system and help you identify the best interest rate and product.

Like my earlier ‘Accountant’ analogy, a good Case Manager has specialised skills and knowledge, along with well-developed networks. They can work with both internal and external service providers to identify and gain the services an individual needs. They are often separate from the direct care support provided to the client, and can therefore advocate for the best outcomes for the individual and respond appropriately to complaints and feedback from the consumer and their family. Where an older consumer may want to hoard or save their package funds for a ‘rainy day’, a Case Manager understands the budgetary constraints and capacity of each package level, and is able to maximise the use of the package funds to assist the person to work towards their stated goals.

So, what about exit fees?

Exit Fees

Again, there has been a lot of negative observations made recently about organisations applying ‘unfairly high’ exit fees. Are exit fees necessarily unfair?

In the past, unused Home Care Package funds that remained after a person left the service were used by the organisation to further their service provision, often to the benefit of unfunded clients. Now organisations must forward any unused funding amounts to the new provider if a client changes service providers, or return the funds to the Commonwealth Government if the client dies. The time expended in the additional administration requirements of these changes includes adjustments to rosters, advising subcontractors of the changes, forwarding relevant information to the new provider and providing end of service financial reports. These tasks can take a significant amount of time to complete, particularly for higher-level packages and this is why some organisations are publishing exit fees of up to $3000 and more.

But wait, this is not the full story!

Exit Fees need to be identified by each organisation on the My Aged Care website, however, organisations do not necessarily need to charge them.

It needs to be recognised that the exit fee identified by the organisation on the My Aged Care website is the maximum amount that the organisation can charge, not what they will necessarily charge. Most remote organisations we are working with have indicated a maximum exit fee of $700. However, these organisations may be unable to charge the full amount listed, or indeed any exit fee, as many consumers will fully utilise their package.

It is important to note that there have always been case management and administration charges applied against Home Care Packages – the difference now is that these are often itemised on a budget or statement. If you don’t see them in the budget, or if an organisation is not charging an exit fee, then you may be assured that they have been incorporated into the unit cost of each service type. Consumers who are considering changing providers should note that while it is a requirement for Approved Providers to publish their exit fee on the My Aged Care website, there is no requirement to publish service fees.

So are consumers being ‘ripped off’?

In the grand scheme of things, I don’t think so. Aged Care services know that they have to be competitive in the new market place. Organisations are trying to keep overheads to a minimum, and maximise the support provided to consumers. With the changes introduced by ‘Consumer Directed Care’, they are more transparent than ever so that consumers are fully aware of the actual costs involved in running a business.