First phase of new payments in arrears arrangements for home care providers to start 1 February – second phase from September

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Another Budget announcement, but one that will be less welcome.

Home care providers will shift from payment to advance to payment in arrears in just four months’ time after Tuesday’s Budget allocated $21 million from 2020-21 for the measures.

While the new arrangements are subject to legislation being passed in Parliament:

  • Phase 1 will begin on 1 February 2021. Home care subsidies and supplements will be paid in arrears, at the full subsidy.
  • Phase 2 will begin on 1 September 2021. Payments will continue to be paid in arrears, but they will be based on actual services provided to each care recipient.
  • The Government will begin to manage care recipients’ Commonwealth portion of unspent funds.
  • Services Australia will collect and manage these unspent funds (on behalf of care recipients) until these funds are needed in the future.

As we covered here, the Government put the new arrangements on hold back in March due to the pandemic, promising to consult with the sector as to when they could be put back in place.

The changes are supposed to align home care with other Government programs, such as the National Disability Insurance Scheme (NDIS) – and take away responsibility for holding unspent funds from the provider.

While providers have previously told us that they welcomed the measures, they warned that a staged implementation was needed to ensure businesses were not left out of pocket.

The Government says “transition support funding” will be available, but only for some providers.

Of course, home care providers that are financially viable should have no trouble giving up any unspent funds.

But for those lacking liquidity, stripping out those funds could leave many facing insolvency.

The Government’s announcement also includes a reference to its business advisory services provided by PwC – suggesting they are aware the changes will put some providers in the red.


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