Home care providers under cash pressure: Stage 2 of payments in arrears to start next week – plus potential three-month timeframe for new ‘assurance reviews’

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The second stage of the Government’s bid to claw back over $1.5 billion in unspent funds from home providers kicks off on 1 September – and the paperwork requirements will test all operators, according to StewartBrown Senior Partner, Grant Corderoy (pictured above).

Under Phase 2 of the improved payment arrangements for home care, providers will receive funding based on the actual services delivered to care recipients in the previous month, similar to the National Disability Insurance Scheme.

Services Australia will now hold a home care account for each care recipient to collect and hold the Commonwealth portion of unspent funds until they are needed.

Earlier this year, Grant warned operators that the moves to payments in arrears would require a stiff Scotch, with the guidance “almost impossible to understand”.

That was underlined yesterday at a webinar staged by the Department of Health on the updates to the HCP program regarding financial reporting requirements and new ‘Program Assurance Reviews’.

It was clear that many operators are confused by the requirements – and the Department also struggled to answer all of the questions posed by the audience, taking a few on notice.

In May, Grant had advised operators not to opt into the new system now and choose the option to acquit by provider – not at the client level.

Grant says most of the larger providers are not yet opting in, though some smaller providers are – but “there’s no real advantage” because of the level of work involved.

While Grant says Services Australia has done a good job so far on moving to the new systems, he says the real test will come when providers begin to use the software.

He identifies several issues that will test operators.

Firstly, provider software will take time to integrate – “very few providers are doing B2B,” he notes.

Secondly, the new legislation and guidelines are still to come for operators, for example, there is still a lack of clarity around exit fees.

The third issue is the ongoing need for reconciliation.

“Operators are going to need to reconcile their figures with those on Services Australia,” he said – a considerable amount of paperwork.

There may also be cash flow issues for providers with unspent funds that aren’t matched by funds in the bank.

While full subsidies have been paid to operators in the last few months, providing the opportunity to adjust their cash flow, cash-poor operators will see a “potential impact” on cash flow, added Grant.

By the end of the year, providers will need to report the Commonwealth portion of unspent funds for each care recipient to Services Australia.

The webinar also covered the new home care assurance reviews introduced in response to the Royal Commission Final Report which were announced in May.

The reviews will see the Department of Health target around 500 home care providers a year – so over 50% of the sector – from November, looking at a range of issues including the use of home care subsidies and home care recipient charges, the nature of home care services, and provider’s dealings with home care recipients.

Interestingly, the Department was unable to say how long the reviews would take to complete for each operator – with a potential timeframe of up to three months put forward.

What level of disruption to businesses would this entail?

With few answers, it seems there will be more testing times ahead for operators.