12th July 2021
Craig Porte, Managing Director, Civica Care
This article first appeared in Australia’s Aged Care Insite in July 2021
During the most recent budget announcement, the federal government reported changes to its payment systems called Improved Payment Arrangements (IPA) in an effort to streamline the administrative processes of Australia’s ageing population and improve the protection of funds for care recipients. But like any significant change, the latest announcement requires patience, communication and a strategy in place.
Under the reforms – rolled out in two stages – the government will take responsibility for unspent funds for care recipients, amounting to a national cash stockpile of $1.48 billion. The changes are supposed to align home care with other government-funded programs, such as the National Disability Insurance Scheme (NDIS).
This move means that providers will now be paid in arrears instead of receiving a monthly payment in advance and will only be able to claim for services delivered rather than receiving a lump sum.
This begs the question: are service providers equipped with the right digital tools to shift from receiving payment in advance to collecting it after the services are rendered and a claim has been made?
Why the change?
During the budget announcements, the government stated a major shift in how it delivers funds to aged care service providers.
In February 2021, we saw home care subsidies paid in full in arrears each month, regardless of the services provided. Providers will continue to hold unspent funds on behalf of their care recipients. Phase two will begin from September 2021 with home care subsidies to continue to be paid in arrears, but the payments will be for actual services delivered.
According to the government, the move will reduce the level of unspent funds held by providers and limit providers’ prudential risk over time.
Do we have the technology to support it?
The shift for aged care providers to payment in arrears is a new paradigm that will be difficult to manage without upgrading their IT systems. Aged care services, who haven’t already, will need to up their digital game to ensure the implementation of this new payment initiative is seamless.
Providers on the NDIS system will be accustomed to claiming as needed with payments processed in three days. But this won’t be the same for aged care. The systems aren’t built for that – yet.
Customers that don’t use NDIS are likely to be concerned by the latest changes because they’ve always received the payment in advance. This shift will pose a new obstacle for them, and they may even have to carry overdrafts to cover it.
The consequences for those who don’t get their systems in order, including falling behind on their claims and potential cash flow issues, could further damage the quality of care provided in our aged care system. Providers need to be resourceful and use the available technology to make sure the shift is seamless.
Automation can save time and money
The move to digital platforms across government entities is crucial to allow for more efficient and regular claiming for funds. Through our work with the NDIS we estimate that only around a third of service providers are currently as digitally enabled as needed to manage this transition successfully.
Another third will be ready within two to three months. Then you have the final third, who may not have resources and don’t have enough people to implement things, and so they continue to use paper-based systems. This group will need to access the government’s transition support funding that’s aimed at helping eligible providers to move to the new arrangements. The grant will help ensure these providers don’t fall between the cracks.
The right tools and technology can deliver significant value for our aged care facilities. Research from KPMG has shown that adopting technologies can improve quality and efficiency of care and help release staff from low-value administrative tasks and direct their focus to the individual. An improvement in the efficiency of aged care services could be exceedingly valuable.
The government’s new shift in payment strategies has the potential to bring positive change to the sector and push towards further digitalisation of our providers. But without investment in technology to streamline workflows and integrate fragmented systems, improving access to quality care for senior Australians, and ensuring the sector can move with the proposed changes, could remain a challenge.