Home care payments in arrears to start next week – $1.25B in unspent funds

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After a seven-month delay thanks to COVID, the new payment arrangements designed to reduce the billion-dollar-plus in unspent funds sitting in home care providers’ bank accounts are due to start next Monday, 1 February.

Under the reforms, providers will now be paid in arrears for services delivered with the Government to take responsibility for unspent funds for care recipients – in line with other Government-funded programs such as the National Disability Insurance Scheme (NDIS).

These changes are happening in two phases:

Phase 1 – 1 February 2021

Home care subsidies will start to be paid in full in arrears each month, regardless of the services provided in the past month. Providers will continue to hold unspent funds on behalf of their care recipients.

Phase 2 – 1 September 2021

Subject to legislation passing, payments will be for actual services provided, with the Government to hold any unspent Commonwealth funds.

The Government says the move will reduce the amount of unspent funds held by providers as quickly as possible, as well as limit providers’ prudential risk over time.

But as StewartBrown has pointed out above, it won’t reduce all of the unspent funds in the system – now estimated to be $1.25 billion by the accountants – which could potentially fund around 30,000 Home Care Packages.

Will there be further intervention then to redistribute these funds?